J C Bamford Excavators Ltd

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J C Bamford Excavators Ltd.

Rocester, Staffordshire ST14 5JP
United Kingdom
Telephone: ( + 44) 1889-590312
Fax: ( + 44) 1889-590588
Web site: http://www.jcb.com

Private Company
Incorporated: 1956 as J. C. Bamford (Excavators) Limited
Employees: 6,300
Sales: £1.42 billion ($2.44 billion) (2005)

NAIC: 333111 Farm Machinery and Equipment Manufacturing; 333120 Construction Machinery Manufacturing; 333618 Other Engine Equipment Manufacturing

J C Bamford Excavators Ltd. (JCB) is one of the world's largest manufacturers of construction, industrial, and agricultural equipment and ranks as Europe's biggest maker of construction equipment. Its wide-ranging model line numbers more than 250 and includes back-hoe loaders, excavators, dump trucks, forklifts, and tractors. JCB has also developed its own fuel-efficient diesel engine, which powers more than half of the product line and is produced at a company plant in Foston, Derbyshire. The company's acronym, JCB, is so famous in its home country of the United Kingdom that it has become a generic term there for a backhoe loader (often called a "digger"), and it appears as such in the Oxford English Dictionary, just as Kleenex is often included in U.S. dictionaries as a generic term for facial tissue. Yet the company has also increased its profile overseas. It operates 17 plants on four continents—ten in the United Kingdom, three in India, and one each in the United States (Savannah, Georgia), Brazil, China, and Germany—and sells its equipment in more than 150 countries around the world. Approximately one-quarter of JCB's sales are generated at home, about 40 percent in continental Europe, and one-fifth in the United States.

POSTWAR TRAILER MAKING
BEGINNINGS

JCB was founded and named after Joseph Cyril Bamford. The founder was born in 1916 into a well-to-do Staffordshire family that had run a family business, Bamfords Limited, since 1871. He was the great-grandson of the founder of Bamfords, a producer of agricultural equipment. After graduation from Stony-hurst College in Lancashire, Bamford worked for some time at Alfred Herbert, at the time the largest machine tool producer in Europe. He next spent several years working on the African Gold Coast as a diesel engineer before joining the family firm in 1938. Three years later, however, he was recruited into the Royal Air Force working first for the Ministry of Supply and then returning to the Gold Coast at the behest of the Ministry of Aircraft Production. He returned to the United Kingdom in 1944, whereupon he spent a year developing welding equipment for English Electric. He rejoined the family firm but, finding the atmosphere stifling, became determined to set out on his own. His first entrepreneurial venture, selling hair-care products, however, was a failure.

On October 23, 1945, the very same day that his first son, Anthony, was born, Bamford launched a new venture in a 12-foot-by-15-foot garage in Uttoxeter, Staffordshire, that he had rented for 30 shillings ($2.48) per week. Using a secondhand electric welder he had purchased for £1, Bamford built a two-wheeled tipping trailer for agricultural use from war-surplus materials, including steel from bomb shelters and Jeep axles. He took it to the Uttoxeter market with an asking price of £90, eventually selling it for £45 ($74) plus the buyer's old cart. After sprucing up the cart, he sold it a week later at the market for £45. During his first year in business, Bamford built and sold a total of three trailers.

In early 1947 Bamford moved the business to a section of the stabling and coach-house block at Crake-marsh Hall located halfway between Uttoxeter and nearby Rocester. There, while continuing to make trailers, Bamford took on his first full-time employees for a new operation: refurbishing ex-Services vehicles, such as Jeeps, vans, and trucks, into commercial vehicles designed for general hauling. Then in 1948 Bamford built his first hydraulic machine, Europe's, and perhaps the world's, first two-wheeled, hydraulic tipping trailer. This innovation enabled the operator to tip the trailer without leaving the seat of the tractor hauling the trailer.

Farmers at this time were still loading their trailers by hand, so Bamford next began tinkering with the idea of a hydraulic loader. He developed the first European hydraulic loader, which sold initially in 1948 for £110 ($181). It was called the Major Loader, because early development work was carried out on the leading tractor of that era, the Fordson Major. The Major Loader was sold in kit form for mounting on a tractor by either the farmer or a dealer. Bamford and his workforce, which numbered six in 1948, eventually expanded the line for mounting on all the popular tractor brands. Attention to overseas markets began early at Bamford's company, and by the end of the 1940s the firm was exporting its loader kits to France.

DEVELOPMENT OF FIRST
BACKHOE LOADER

Late in 1950 Bamford moved his growing company's operations to an old milk and cheese factory in Rocester, a site that was renamed Lakeside Works. The following year a smaller version of the Major Loader, the Master Loader, was introduced, having been designed specifically for farm work, such as loading muck into carts and trailers. Around this same time, the primary color painted onto the company's loaders and trailers was changed from green to the bright yellow that continued to distinctively adorn JCB vehicles into the 21st century. In a further development of its corporate identity, the company in 1953 first used the JCB logo on an experimental and unsuccessful vehicle called the Loadover. Bamford elected to use his initials because he wished to play down his last name and thereby distance his firm from the family's Bamfords company.

During this period, the Major Loader, eventually renamed the High Speed Major Loader, was one of the firm's key products. The company built one a day between 1949 and 1956, and it was marketed not only for agricultural use but also for construction, industrial, and forestry applications, thus laying the foundation for JCB's significant penetrations of all of these markets in succeeding years. The company next, in 1953, introduced the Si-draulic Loader, which was mounted on the side of a tractor and provided superior lift and forward reach. Yet it was with the introduction of the backhoe loader one year later that JCB made its breakthrough.

COMPANY PERSPECTIVES

Mission Statement: To grow our company by providing innovative, strong and high performance products and solutions to meet our global customers' needs.

We will support our world class products by providing superior customer care. Our care extends to the environment and the community.

We want to help build a better future for our children, where hard work and dedication are given its just reward.

The birth of this key product started in Norway. During a business trip to Scandinavia to sell his company's half-track conversions for tractors, Bamford came across a lightweight, hydraulic, articulated backhoe that had been placed on a trailer hitched to the back of a tractor. Recognizing its potential, he bought one and brought it back to his workshop for study. After making improvements to the design, including having the back-hoe mounted directly on the back of the tractor, Bam-ford quickly realized that a loader could simultaneously be mounted on the front to create an extremely versatile piece of equipment. The Mark I, introduced in 1954, thus became if not the first-ever backhoe loader, as the company later claimed, at least Europe's first commercially produced backhoe loader. In any case, the success of this and future models of the backhoe loader without a doubt propelled JCB onto its path of global prominence.

By 1955 Bamford's workforce totaled more than 60, and one year later the founder officially incorporated his company as J. C. Bamford (Excavators) Limited. Profits for 1956 totaled £10,000 on the sale of 118 machines. The following year JCB introduced an improved backhoe loader called the Hydra-Digga. This model, advertised as "the earth mover that could dig through rock," was larger and more powerful than previous ones and was also the first to provide the operator with a comfortable cab, complete with a heater. JCB sold 2,000 of these before the debut of the successor model, the JCB 4, in 1960. The JCB 4 was the first to feature dual hydraulics and a two-lever excavator control system. Throughout this period, Bamford plowed profits back into the business, expanding his factory and building up a larger and more efficient dealer network.

VENTURING OVERSEAS AND
INTRODUCING NEW PRODUCTS

Geographic and product-line diversification were main parts of the agenda for the 1960s and early 1970s. In 1962 JCB set up its first overseas subsidiary in the Netherlands. Two years later the company began exporting its machines to the United States. Further North American expansion occurred in 1968 through the establishment of the Canadian subsidiary JCB Excavators, Ltd. Then in 1971 JCB, Inc. was set up as a North American headquarters based in White Marsh, Maryland. Sales offices were opened in a number of locations in the early 1970s, including Singapore and Johannesburg. Back in Europe a French subsidiary was created in 1972. By 1969, meanwhile, approximately half of JCB's machines were being exported.

JCB began expanding its product line in 1965 with the introduction of the JCB 7, the firm's first crawler excavator, which was produced under a licensing deal with Warner Swasey. In 1968 Joseph Bamford attempted to take over Bamfords Ltd., the family firm for which he once worked, but the lengthy bid dissolved in an acrimonious dispute that caused a split in the family and ended up in the courts. (Bamfords' long history came to a sad finale in a 1980 bankruptcy stemming from a severe worldwide recession in the agricultural industry and increased overseas competition.) Bamford quickly followed this setback, however, with the 1968 acquisition of Chaseside Engineering for £823,000 ($1.4 million). Chaseside was a producer of wheeled loading shovels based in Blackburn, Lancashire. Among the new products introduced in the early 1970s was the 110 crawler loader, which debuted in 1971.

KEY DATES

1945:: Joseph Cyril Bamford launches a venture to build two-wheeled trailers out of a garage in Uttoxeter, Staffordshire.
1948:: Bamford develops the first European hydraulic loader.
1953:: JCB logo is used for first time.
1954:: Company introduces its first backhoe loader.
1956:: Bamford incorporates his company as J. C. Bamford (Excavators) Limited.
1962:: First overseas subsidiary is established in the Netherlands.
1967:: The 3D backhoe loader debuts; company is renamed J C Bamford Excavators Ltd.
1975:: Bamford retires; his son, Anthony Bamford, takes over.
1977:: JCB launches a new type of product, the telescopic rough-terrain forklift truck.
1990:: JCB unveils its first tractor, the Fastrac.
1991:: Company enters into joint venture with Sumitomo Construction Machinery.
1997:: JCB enters material handling equipment segment, launching the Teletruk.
1998:: JCB Heavy Products Ltd. is formed to carry on production of excavators after the Sumitomo joint venture ends.
2000:: First wholly owned manufacturing plant located outside the United Kingdom begins production near Savannah, Georgia.
2004:: John Patterson is named managing director, with Anthony Bamford remaining chairman.
2005:: German-based compaction equipment maker Vibromax is acquired.
2006:: Company opens its first Chinese factory, in Pudong, near Shanghai.

In the meantime, JCB continued to develop its core backhoe loader product line. In 1963 the company introduced its first "mini" backhoe loader, which became known as the "little grave digger." In an oft-told tale of clever marketing, one that generated loads of publicity at the time, JCB introduced the 3D backhoe loader in 1967 equipping it with a fiberglass cab that came with a plug for a 12-volt teakettle. Bamford had figured that operators would appreciate the chance to make a cup of tea without having to leave the cab. To promote the new product, advertisements promised that for the first 100 3Ds sold, Bamford himself would personally visit the buyer and present a free teakettle. The extremely strong response to this promotion helped make the 3D an overnight success.

JCB gained additional publicity through the development during the 1960s of what would later be called the Dancing Diggers. Early in the decade the company began demonstrating the power of its backhoe loaders by using the hydraulic power of the back bucket to raise the entire chassis off the ground. Toward the end of the 1960s JCB formed a demonstration team with its own workshop and yard to develop routines for demonstrations. The first official appearance of what was initially called the JCB Circus came in 1970 at a celebration of the 25th birthday of Anthony Bamford, the founder's son. The later renamed Dancing Diggers drew large crowds at equipment shows and trade fairs.

By 1972 production had reached a record 6,000 machines. The ever growing company needed to expand its factory but regulators blocked the move. Thus in 1973 JCB built a 350,000-square-foot plant in the Welsh town of Bronington. The new £3 million plant served as a support facility for the main Rocester operation, fabricating chassis and frame parts.

Bamford had managed to keep the Rocester plant nonunion since the company's founding through a sort of benevolent paternalism. He was a demanding boss but rewarded his workers with regular pay increases and annual bonuses that in 1964 totaled £250,000 ($370,000). He had also surrounded the Rocester works with 10,000 acres of landscaped grounds where the employees could shoot, fish, swim, and sail. The work-force responded with an extremely high productivity rate, in the mid-1960s an estimated seven times the U.K. industrial average. In 1971, when a unionization drive began to pick up steam, Bamford headed off the move by granting his workers more paid holidays, sickness pay for the first time, life insurance coverage, and an improved pension program. In June 1974, however, workers at the plant staged a 12-day strike that ended with their vote to join the General and Municipal Workers' Union. In August, JCB signed its first agreement with the union.

Bamford's vigorous opposition to unions perhaps spurred his retirement in November 1975 at age 59. Over 30 years of leadership, Bamford had created a company with a workforce of 1,300, a dominating 50 percent share of the U.K. excavator/loader market, and an export operation that spanned more than 100 countries. Revenues reached £43 million ($70.9 million) in 1975. Bamford's knack for innovation and clever marketing coupled with his resolve to plow profits back into the company and his refusal to carry debt enabled JCB to remain a private company, and one that was successfully competing with the global giants of the construction and agricultural equipment industry.

NEW LEADERSHIP, THRIVING IN
COMPETITIVE, RECESSIONARY
PERIOD

While Bamford remained involved in the company during his retirement—an unconventional one in which he moved to Switzerland for tax purposes (becoming a "tax exile"), living there with his former secretary, Jayne Ellis (his wife being a strict Roman Catholic and refusing to grant him a divorce)—his son Anthony took over as chairman and managing director. Only 29 years old at the time and, as he later admitted, "absolutely petrified" at the prospect of succeeding his father, Anthony Bam-ford had set aside his ambitions to become a professional photographer to pursue a career at JCB, which began in 1964. Among the major projects he had worked on over the years were the acquisition of Chaseside and the establishment of the French subsidiary.

One of the hallmarks of the younger Bamford's tenure at the head was a steady expansion of the product range. This diversification began early on when in 1977 JCB launched a new type of product, the telescopic rough-terrain forklift truck, also known as the telescopic handler. Marketed as the Loadall, this product proved to be a big hit. By 1984 sales exceeded 1,000 units per year, and the line became the company's second biggest seller, after the flagship backhoe loaders, which still accounted for about two-thirds of overall sales.

Also in 1977 JCB made a bid for the financially troubled French company Poclain, the largest manufacturer of hydraulic excavators in the world, but its offer was bested by the U.S. firm J.I. Case Company. The following year, when turnover exceeded £100 million for the first time, JCB opened a factory in Wrexham, North Wales, to build axles, as part of a drive to bring more of the production of the major components of its machines in-house; a transmission plant was later added to this same site. In 1979 the company formed its first ever joint venture. JCB and tractor manufacturer Escorts Limited of India formed Escorts JCB Limited, 40 percent owned by JCB, to produce backhoe loaders in India. A plant was subsequently built in Ballabgarh, near Delhi, and began production in 1980.

Starting in 1979 Case made a major push into the U.K. market, sensing that JCB was vulnerable and could be weakened further by a price war. This threat intensified in early 1980 when the value of the British pound soared (making exports from the United Kingdom more expensive) and the U.K. economy went into a deep recession. Bamford responded in a decisive manner. He took the unusual step, for JCB at least, of borrowing money, if only for a short period, in order to fund a workforce reduction and capital spending. By launching a three-year, £24 million ($39.6 million) investment program to update the product lines, and cutting the workforce from 1,850 to 1,285, output per employee jumped from 9.7 machines per year to 15.2. From 1979 to 1985 JCB increased its global share of the backhoe loader market from 11 percent to 17.5 percent. Part of this increase stemmed from the launch in 1980 of the bestselling 3CX backhoe loader. The company was also one of the few construction equipment companies in the world that was profitable during this period (those operating in the red being led by Case). After slumping to just £300,000 in 1980, pretax profits reached a record £20 million ($28 million) in 1984, the same year the firm recorded record revenues of £154 million ($216 million).

Also aiding JCB during these years were improving results in the huge U.S. market. After more than a decade of red ink, the U.S. subsidiary began a turnaround in 1981 when it launched machines that were specifically designed for the American market. As a result, JCB increased its share of the U.S. backhoe loader market from less than 2 percent to approximately 8 percent by 1985. One other change during this period was a 1984 decentralization of the company's operations into four product-driven groups centering around JCB's four main product lines: backhoe loaders, articulated loading shovels, hydraulic excavators, and telescopic handlers.

By 1986 JCB had become so entrenched in the United Kingdom as a synonym for backhoe loader that the initials were added to the Collins English Dictionary as an eponymous noun. The Oxford English Dictionary soon followed suit. Also in 1986, the 100,000th back-hoe loader rolled off the Rocester plant's assembly line. In addition, JCB explored a bid to take over sport-utility vehicle maker Land Rover, but the sale fell victim to political controversy.

SURVIVING ANOTHER
RECESSION, EXPANDING THE
PRODUCT RANGE

JCB enjoyed stellar growth through most of the remainder of the 1980s before the industry fell into another deep recession starting in 1989. Revenue growth slowed that year and profits were cut by one-fifth. Between 1988 and 1992 the company's sales volume dropped from 20,000 units a year to 9,000. Pretax profits fell during this period from nearly £50 million to £9 million. As was the case during the previous downturn, Bamford again focused on cutting costs and above all developing new products. In 1990 the company unveiled the Fastrac, a high-speed tractor with a carlike suspension that was developed in response to farmers' requests for a speedier tractor. The following year a new version of the 3CX backhoe loader hit the market after a three-year, £25 million design process. In the spring of 1993 JCB launched the Robot skid-steer loader, a compact machine with a great deal of versatility, able to be used for anything from light civil engineering work to clearing out chicken coops. In the meantime, the company moved into the heavy end of the crawler excavator market by creating, in 1991, a joint venture with Sumitomo Construction Machinery. Called JCB-SCM and 51 percent owned by JCB, the venture began producing crawler excavators designed by Sumitomo at a new factory in Uttoxeter for sale throughout Europe.

By the mid-1990s a strong economic recovery coupled with the expanding array of products pushed JCB to record heights. Pretax profits reached a record £103.4 million ($157.2 million) in 1995 on record revenues of £704.6 million ($1.07 billion), a 25 percent jump from the previous year. JCB produced more than 22,000 machines that year, making it the world's fourth largest producer of construction equipment. Surging demand prompted the company to build a new factory in Cheadle, Staffordshire, where production of compact and mini machines began in 1995. A second plant was later added to this location to produce wheel-loading shovels, dump trucks, and agricultural machines.

By 1996, JCB's product range included a total of more than 75 models, up from 29 at the beginning of the decade, and the workforce had expanded to more than 3,000. In 1997 alone, the company introduced 30 new products, including the Teletruk, JCB's entry into material handling equipment. The Teletruk was a new type of forklift truck featuring a one-armed telescopic lift able not only to lift but to reach forward as well. In 1998 Sumitomo Construction Machinery pulled out of the JCB-SCM joint venture, prompting JCB to set up a subsidiary called JCB Heavy Products Ltd. to continue manufacturing both tracked and wheeled excavators. At decade's end, the company was producing nearly 100 different models overall, and this diversification had helped lessen JCB's reliance on the backhoe loader. The firm's flagship product had accounted for nearly 60 percent of overall sales at the beginning of the 1990s but only 44 percent by the end. Revenues for 1999 totaled £833 million ($1.2 billion), an increase of nearly 6 percent over the previous year, while pretax profits were also up slightly, to £91.2 million ($131 million). Output increased as well, totaling more than 27,600 machines.

BECOMING A GLOBAL
MANUFACTURER

In part to combat the effects of the continued strong British pound, JCB developed a strategy to expand its manufacturing base into its major markets around the world. In 2000 operations began at the company's first wholly owned manufacturing plant located outside the United Kingdom. The 500,000-square-foot, state-of-the-art facility located in Pooler, Georgia, near Savannah, cost $62 million to build and also became the new site for JCB's U.S. headquarters. About 2,000 machines, all backhoe loaders, were built during the plant's first year, but its ultimate capacity was 10,000 per year. In 2001 JCB opened another new plant, this one located in São Paulo, Brazil, and also concentrating on backhoe loaders.

Joseph Cyril Bamford died in March 2001, at the age of 84. His death left control of the company he founded in some doubt as he had still owned half the company and had left his estate to his longtime mistress, Jayne Ellis. His sons and his widow, Marjorie, contested his will, leading to a protracted legal dispute that continued on after Marjorie Bamford's death in December 2003. By the spring of 2005 the parties apparently reached an out-of-court agreement to resolve the dispute, one leaving the Bamford family as sole owners of JCB and Ellis with an undisclosed settlement.

In 2002, meantime, JCB gave its flagship backhoe loader its most significant overhaul in decades. The new model not only traveled 15 percent faster than its predecessor and was able to carry loads 25 percent heavier, it also featured a cab equipped with air conditioning, power steering, heated seats, a cigar lighter, and holders for a coffee flask and a lunchbox. Also unveiled in 2002 were the company's smallest machines yet, the JCB 808 and 8012 micro- and mini-excavators.

In 2003 JCB took full control of its Indian joint venture, renaming it JCB India Ltd. The Ballabgarh plant, with a capacity to produce 5,000 machines per year, was to both serve the Indian market and function as an export hub for the larger South Asian region. JCB soon opened a second Indian plant in Pune for the production of fabricated and machined components.

Back in the United Kingdom, JCB reached another milestone in March 2004 when a backhoe loader rolled off the Rocester assembly line as the company's 500,000th machine. That year also saw the company take another step toward self-sufficiency when production of fuel-efficient diesel engines commenced at a new factory in Foston, Derbyshire. In December 2004 Anthony Bamford relinquished his position as managing director, while remaining chairman. John Patterson, who had served as chief executive since January 1998, was named managing director. He had worked his way up after joining JCB in 1971 as a service engineer. Also in 2004, JCB's U.S. plant expanded its production to include skid-steer loaders.

JCB enjoyed its best year ever in 2005 when it set a slew of new records. Pretax profits doubled compared to the previous year, hitting a record £110 million ($189 million), while revenues jumped 23 percent to a record £1.42 billion ($2.44 billion). Global production reached the highest level yet, more than 45,000 machines, 21 percent more than the figure for 2004. JCB also increased its global market share from 8.6 percent to 9.6 percent, claiming fourth place among the world's construction equipment manufacturers. The number of models it produced totaled more than 250, an increase attributable in part to the firm's 2005 purchase of Leipzig, Germany-based Vibromax Compaction Equipment GmbH, in just the second acquisition in JCB's 60-year history and its first since the 1968 deal for Chaseside. Vibromax, renamed JCB Vibromax, produced a full line of rolling machines used to prepare and compact earth prior to road building. The firm had annual sales of EUR 40 million (£27.5 million), half of which was generated in the United States.

JCB continued to expand its global manufacturing base in 2006. Production of heavy excavators was launched in India at a new factory at Pune, and the U.S. plant began building telescopic handlers. JCB also turned its attention to the burgeoning Chinese market. After setting up a sales office in 2003, JCB built a new factory at Pudong, near Shanghai, where production of backhoe loaders and mini-excavators began in late 2006. This increased the firm's global manufacturing operations to 17 plants on four continents. At the same time, JCB expressed interest in further building its line of products through additional acquisitions. One surprise, however, was Bamford's expression of interest in purchasing the troubled Jaguar automobile brand from Ford Motor Company. Such a deal seemed unlikely to occur, and Ford in fact quickly denied that Jaguar was for sale, but JCB was so well-run that the idea received a quite respectful response in the press. In a little more than 60 years, JCB had built itself into one of the world leaders in construction equipment, achieving a level of consistency in a cyclical industry that few others could match.

David E. Salamie

PRINCIPAL SUBSIDIARIES

JCB Earthmovers Ltd.; JCB Finance Ltd.; JCB Heavy Products Ltd.; JCB Insurance Services Ltd.; JCB Land-power Ltd.; JCB Power Systems Ltd.; JCB Sales Ltd.; JCB Sales Ltd. (Australia); JCB NV (Belgium); JCB do Brasil Ltda. (Brazil); JCB SA (France); JCB Deutschland GmbH (Germany); JCB India Ltd.; JCB S.p.A. (Italy); J.C. Bamford N.V. (Netherlands); JCB Maquinaria S.A. (Spain); JCB Inc. (U.S.A.).