GKN plc

views updated May 23 2018

GKN plc

Post Office Box 55
Ipsley House
Ipsley Church Lane
Redditch, Worcestershire B98 0TL
United Kingdom
Telephone: (+44 1527) 517715
Fax: (+44 1527) 517700
Web site: http://www.gkn.com

Public Company
Incorporated: 1900 as Guest, Keen and Co. Limited
Employees: 36,117
Sales: £3.63 billion ($7.12 billion) (2006)
Stock Exchanges: London
Ticker Symbol: GKN
NAIC: 336350 Motor Vehicle Transmission and Power Train Parts Manufacturing; 336399 All Other Motor Vehicle Parts Manufacturing; 332117 Powder Metallurgy Part Manufacturing; 336412 Aircraft Engine and Engine Parts Manufacturing; 336413 Other Aircraft Parts and Auxiliary Equipment Manufacturing

DEVELOPMENT OF THE PREDECESSOR COMPANIES

CONCENTRATING ON STEEL, SCREWS, AND FASTENERS

MAJOR TRANSFORMATION, MOVING THE COMPANY INTO DEFENSE AND AUTO SECTORS

MAJOR MOVES INTO INDUSTRIAL SERVICES

STRENGTHENING A THREE-LEGGED STRUCTURE

FOCUSING ON GLOBAL AUTOMOTIVE AND AEROSPACE ENGINEERING

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

DEVELOPMENT OF THE PREDECESSOR COMPANIES

Although the mergers that created GKN took place at the beginning of the 20th century, the companies out of which GKN evolved were considerably older. The group, however, has changed so much in the intervening years that there is little left of its original elements. They were essentially family companies and typical of the entrepreneurial spirit responsible for the United Kingdom’s leading position in the iron and steel industry during much of the 19th century.

One segment of the story begins in 1759 when nine businessmen formed an iron-smelting works at Dowlais in southern Wales that was initially called Dowlais Iron Works. John Guest took over as works manager in 1767. When Guest died, his son Thomas succeeded him and he was followed in turn by his son Sir Josiah “John” Guest, an able entrepreneur, who raised the renamed Dowlais Iron Company to prominence and became its sole owner in 1851. Sir John Guest’s wife, Lady Charlotte Guest, was one of the most striking characters to emerge in the company’s formative period. After her husband’s death in 1852 she ran the company for three years. In 1889 the company built a new integrated steel works on the coast at Cardiff, at which iron was produced from 1891 and steel from 1895.

The second strand of the tripartite merger was centered on Arthur Keen, who was responsible for the two mergers that created GKN. Keen went into business in 1856 with a U.S. businessman who had acquired the British patent rights for an automatic bolt-making machine. In 1864 the business went public as the Patent Nut & Bolt Company. Keen’s requirement for steelmaking technology led to the amalgamation with the Dowlais Iron Company and the incorporation of Guest, Keen and Co. Limited in 1900.

The third element in the merger, Nettlefolds, was centered on the manufacture of custom woodscrews, and stemmed from a partnership comprising John Sutton Nettlefold and his brother-in-law Joseph Chamberlain, who in 1854 set up a woodscrew factory at Smethwick. The company flourished to become the leading screwmaker in the United Kingdom. In 1880 it took over the Birmingham Screw Company, and also registered as a public company, Nettlefolds Limited.

Further diversification took place in 1887 when a wire-rods, steel-hoops, bars, and wires plant was set up in Rogerstone, Newport.

CONCENTRATING ON STEEL, SCREWS, AND FASTENERS

In 1902 Guest, Keen and Co. acquired Nettlefolds, linking companies with diverse activities in a bid to exploit the benefits of horizontal integration. The first chairman of the newly created company was Arthur Keen, under whom the business was consolidated. This consolidation, based upon steel, continued throughout the first half of the 20th century, with Guest, Keen, and Nettle-folds Limited moving into areas such as rolling, forging, pressing, stamping, and machining.

Arthur Keen died in 1915, to be succeeded by his son, Arthur T. Keen, who died in 1918. The company emerged from World War I still centered on steelmaking, fasteners, and coal mining, primarily aimed at the railway and construction markets.

In 1919 the Earl of Bessborough took over as chairman, and the company took the lead in the nut and bolt industry with the acquisition of F.W. Cotterill. The group continued on the acquisition trail with the takeover in 1920 of John Lysaght, which had subsidiaries involved in steelmaking and rerolling in the United Kingdom and Australia. This acquisition was particularly significant. With the Lysaght purchase came Joseph Sankey, which produced steel presswork, including wheels, chassis, and motor body parts, marking the group’s entrance into the motor industry.

In 1920 Edward Steer, a member of the Nettlefolds family, became chairman, a position he was to hold until 1927 when H. Seymour Berry took over. After Berry’s death following a riding accident in 1928, Sir John Field Beale headed the company. He was to preside over GKN during the Great Depression and the economic recovery of the 1930s.

In 1929 the steel industry was hit by the Great Depression, which resulted in a new wave of mergers. Three years later, the government introduced duties on imported steel to make domestic steel more attractive, and these moves, combined with rearmament in the latter part of the decade, provided the impetus for a further round of new investment in the industry.

COMPANY PERSPECTIVES

Our technology and engineering are at the heart of vehicles and aircraft from the world’s leading automotive, offhighway and aerospace manufacturers.

There are over 40,000 GKN people in more than 30 countries and every day we harness our global technology and manufacturing resources to supply the highest quality components, systems, structures and services.

When we fulfil the trust our customers place in us we can enrich our shareholders and support the communities of which we are a part. And because we care for the environment and the dignity and human rights of others we are all building a business which can be sustained by future generations.

Every stakeholder in a great company should expect nothing less. But those with a stake in GKN should expect more.

Expect more from the people of GKN.

Against this background, GKN continued to expand. In 1930 the group took over Exors. of James Mills, one of the world’s largest manufacturers of bright steel bars, and entered the Swedish market with the acquisition of Aug. Stenman A.B., a Swedish manufacturer of hinges and fasteners. Four years later, the iron and steel operations of the Dowlais works, which had once stood at the forefront of the iron and steel industry, were transferred within the group to the Cardiff, Margam, and Port Talbot works of Guest Keen Baldwins Iron and Steel Company. This was a newly formed company created to acquire the heavy iron and steel operations of GKN Ltd. and Baldwins Ltd.

KEY DATES

1759:: Nine businessmen form an iron-smelting works in southern Wales called Dowlais Iron Works.
1767:: John Guest becomes manager of Dowlais Iron Works, the beginning of the involvement of the Guest family in the business.
1851:: The grandson of John Guest becomes sole owner of Dowlais Iron Company.
1854:: John Sutton Nettlefold enters into a partnership to make custom woodscrews.
1856:: Arthur Keen enters into a partnership to manufacture an automatic bolt-making machine.
1864:: Keen’s business goes public as the Patent Nut & Bolt Company.
1880:: Nettlefold’s business goes public as Nettlefolds Limited.
1900:: Dowlais Iron Company and the Patent Nut & Bolt Company merge to create Guest, Keen and Co. Limited.
1902:: Guest, Keen and Co. acquires Nettlefolds; the company changes its name to Guest, Keen and Nettlefolds Limited (GKN).
1920:: Company acquires John Lysaght and with it, Joseph Sankey, maker of steel auto parts, marking GKN’s entrance into the auto industry.
1951:: The U.K. government nationalizes the steel industry, including GKN’s steelmaking companies.
1955:: The steel industry is denationalized and GKN buys back its steel companies.
1962:: GKN enters the defense sector.
1966:: Company acquires Birfield and its minority stake in Uni-Carden, maker of constant velocity joints.
1967:: The company’s steel operations, now called GKN Steel Company, are renationalized.
1974:: One of the company’s founding operations, the Dowlais plant, leaves the company orbit; GKN Chep, a joint venture pallet pooling service, is formed with Brambles Industries of Australia.
1979:: GKN Bolts and Nuts Ltd. is divested.
1980:: Company suffers first full-year net loss; major restructuring commences.
1981:: GKN and Brambles join forces again to take over waste disposal firm Redland Purle, which is later known as Cleanaway.
1983:: GKN acquires Meineke Discount Muffler Shops.
1986:: Company adopts the name GKN plc; most of its remaining steel operations are divested.
1988:: A minority stake in Westland, a U.K. helicopter maker, is acquired.
1994:: GKN gains full control of Westland through a hostile takeover.
1995:: Company makes its final exit from steelmaking.
1999:: GKN acquires Interlake Corporation.
2001:: GKN and Finmeccanica of Italy merge their helicopter businesses into a 50-50 joint venture called AgustaWestland; the industrial services division is spun off and merged into Brambles, enabling GKN to concentrate on automotive and aerospace engineering.
2004:: Company sells its stake in AgustaWestland to its joint venture partner; major restructuring is launched to shift production from Western Europe and the United States to lower-cost sites in Eastern Europe, Asia, and Latin America.

The company was expanding steadily under the chairmanship of Sir Samuel Beale, the younger brother of Sir John Field Beale. Sir Samuel Beale led GKN through World War II, and was to remain a director until 1957. Under government direction, GKN turned military contractor during the war, producing millions of steel helmets and ammunition boxes as well as more than 800 Spitfire fighter planes.

After the war, the Labour government set about economic reconstruction. The industry was asked to draw up a five-year plan for reorganization and modernization, to reverse the deterioration in its competitive position.

GKN expanded its iron-using and steel-using businesses, such as castings and pressings, to support the fast-expanding U.K. motor industry. J. H. Jolly took over as chairman in 1947, and in 1948, just three years before the nationalization of the steel industry, the group acquired Brymbo Steel Works in North Wales. In the same year it transferred its trading activities to two new companies. GKN (Midlands) took over the bolt and nut works at Darlaston and the screw works at Smethwick, while GKN (South Wales) Ltd. took over the rerolling works and wire and nail plants at Cardiff.

Then in 1951 came the much heralded and controversial Iron and Steel Act under which the three steelmaking companies, Brymbo, G.K. Baldwin, and John Lysaght, together with GKN (South Wales), were nationalized. Two years later Sir Kenneth Peacock took over as chairman.

Steel nationalization proved to be relatively short-lived, and with the return of the Conservative government the industry was denationalized in 1955. GKN bought back its four companies and at the same time Guest, Keen, Baldwins, which had been jointly owned with Baldwins and had been the group’s largest source of steel supply, became a wholly owned subsidiary named Guest, Keen Iron and Steel Company.

MAJOR TRANSFORMATION, MOVING THE COMPANY INTO DEFENSE AND AUTO SECTORS

The group was still largely dependent on its original core businesses, but the 1960s were to see a transformation that gathered speed in the ensuing decades. During the 1960s, when the U.K. economy proved far less buoyant, GKN undertook major restructuring and reinforced its links with the growing motor industry, primarily through the acquisition of Birfield Ltd., which supplied components for the Austin-Morris mini. The group entered the defense-equipment market, winning an order for the FV432 armored personnel carrier for the British Army in 1962.

In 1967 the Labour government renationalized the steel businesses. Restructuring, which began in 1961 and was aimed at streamlining the businesses to make them more competitive, resulted in a series of subdivisions. The steel operations were the first to be restructured, with the creation of GKN Steel Company, which was nationalized in 1967.

The shake-up continued with the regrouping of its fastener, forgings, and castings, rolled and bright steel, building supplies and services, and engineering operations. GKN International Trading was created to deal with exports, and the group’s overseas interests in Australia, New Zealand, South Africa, and Sweden were also reorganized. The group continued to expand in its traditional areas and to diversify, for example into gasfired central-heating systems.

In 1963 GKN bought three suppliers of forgings to the motor industry: Ambrose Shardlow, in partnership with United Steel, Smethwick Drop Forgings, and Smith’s Stampings. Three years later it took over the diversified Birfield Ltd., which brought with it a 39.5 percent stake in Uni-Cardan AG, a European automotive-components maker based in West Germany. GKN later raised its stake in Uni-Cardan to nearly 100 percent. The Uni-Cardan acquisition proved to be of primary significance to the group’s strategy. Among Uni-Cardan’s products were constant velocity joints, which permit the full transmission of torque from a car’s engine to the wheels. These joints, originally designed for front-wheel-drive vehicles, were to play a crucial role in the growth of GKN’s automotive business both at home and abroad.

In 1969 GKN unveiled a joint venture with Broken Hill Proprietary (BHP) of Australia to build a new steel complex at Westernpoint, Australia. The complex was constructed in two phases, the second of which was completed in 1978. The following year GKN sold its half interest to BHP.

In the 1970s GKN continued to increase its involvement in the automotive business and to build up its presence in distribution at home and abroad and its investment in service businesses. The decade also posed major problems. In the latter part of the 1970s group Chairman Sir Barrie Heath, who took over from Sir Raymond Brookes in 1975, had to contend with hyperinflation, the oil crisis, and a collapse in demand for steel and automotive parts.

During the chairmanship of Sir Barrie, a management committee under Trevor Holdsworth undertook strategic restructuring to pull the company through, moving out of Australia and broadening the manufacturing base in the United States.

During the 1970s, GKN acquired a large number of small distribution companies, largely in the fastener and steel sectors. It later extended this strategy to automotive components, signaling a move into vehicle-parts and accessories distribution on a worldwide scale. The acquisitions continued on the steel and automotive sides, including Kirkstall Forge Engineering, the largest independent manufacturer of heavy-duty axles in the United Kingdom.

In 1974 the Brymbo Steel Works were returned to GKN by the then government-owned British Steel Corporation (BSC) in exchange for GKN Dowlais, in a deal that, while ending the group’s long historical association with the Dowlais plant, gave it an internal source of supply. In the same year GKN took another significant step on the steel side with the purchase of Miles Druce & Company, making GKN the largest steel stockholder in the U.K. private sector. In 1974 GKN invested in the services sector with the formation of the United Kingdom’s first national cargo-pallet hire pool, GKN Chep, with Brambles Industries of Australia.

In 1976 GKN stepped up its attack on the U.S. market with the formation of GKN Automotive Components Inc. to supply constant velocity, universal, joints for the new generation of front-wheel-drive cars. Within a year the group announced a further U.S. move, unveiling plans to set up a production plant, costing $50 million, in Sanford, North Carolina. Three years later, GKN announced that a second constant-velocity joint factory was to be built in North Carolina, in Alamance County, costing some $80 million. The two plants were commissioned in 1980 and 1981.

In 1977 the group was still stepping up investment in steelmaking and rerolling with the opening of a new rod mill and steel works in Cardiff, costing £52 million. It announced a £48 million rolling mill for Brymbo Steelworks.

The group’s U.S. involvement was enhanced in 1979 with the acquisition of Parts Industries Corporation of Memphis, Tennessee, the fourth largest vehicle parts and accessories distributor in the United States. It raised its European profile in this area with the purchase from Unilever of Unigep Group of France and in the United Kingdom with the purchase of Armstrong Auto-parts and Sheepbridge Engineering, both possessing large distribution chains.

The company sold off operations that did not fit into its strategy, which in 1979 included its 50 percent stake in John Lysaght (Australia) and the divestment of GKN Bolts and Nuts Ltd., one of the pillars of the company when it was formed in 1902. This sector had been suffering heavy financial losses.

The year 1979 also brought its frustrations. GKN had bid for Fitchell and Sachs, the largest supplier of car parts in West Germany, after taking a minority stake in 1976. After three years of patient negotiations, however, the bid was blocked by the West German courts.

At the end of the decade, GKN set about further restructuring that reflected the increasing importance of automotive components and the nonmanufacturing businesses. It was preparing for the 1980s, which were to prove another period of rapid change, under the initial chairmanship of Sir Trevor Holdsworth, who retired in 1988, and then of David Lees.

MAJOR MOVES INTO INDUSTRIAL SERVICES

The cold wind of recession hit the group in the early 1980s, and the decade started with a shock. GKN announced a loss of £1 million for 1980, the first since it was incorporated in 1902. Holdsworth, who was responsible for fundamental changes to group strategy, set about slimming down and reshaping the group. Its workforce, for instance, had shrunk from 93,000 in 1980 to 38,000 by the time he retired. As the new structure evolved, the group moved out of steel, further internationalized through local investments and joint ventures, built up the automotive side, and developed industrial service businesses from its involvement in distribution.

The decade brought a series of sales and acquisitions, reflecting deep-rooted changes. In 1981 GKN and Brambles of Australia took a 50-50 interest in Redland Purle, the largest private-sector waste-disposal operator in the United Kingdom. This business was later known as Cleanaway Ltd. In the same year there was another major change when GKN and BSC merged their steel rerolling and associated businesses to create Allied Steel and Wire Ltd. In the following year, when the group became Guest, Keen and Nettlefolds plc, it won a large contract from the British Army for its Saxon armored personnel carrier.

In 1983 another strand of the business took shape with GKN and Costain of the United Kingdom merging their scaffolding and building-services operations to create GKN Kwikform, which became a market leader in the United Kingdom. That year the group expanded further in the United States with the acquisition of Meineke Discount Muffler Shops, one of the largest franchised exhaust-system fitters, while in the United Kingdom it set up a facility to produce fiberglass-reinforced road springs for commercial vehicles. Another success in the defense area came in 1984 when the group was awarded a contract for its Warrior tracked armored personnel carrier.

During 1984 and 1985, the group expanded its vehicle-parts-distribution businesses in the United States and in Australia with the acquisition of Quinton Hazell Automotive. Viscodrive GmbH was created in West Germany to develop viscous drive-control units, and a year later, in 1985, Viscodrive Japan and Translite were set up to market the units and composite leaf springs to the Japanese motor industry.

Another name change came in 1986 when the group became GKN plc, reflecting the move away from its original businesses. This change was underlined when in the same year the group sold its steel-stockholding operations and merged its engineering steels and forgings activities with BSC to form United Engineering Steels, with operating assets of about £600 million.

The group’s international expansion continued apace. In 1986 and 1987, GKN made further European acquisitions in Spain and Italy, in the driveshaft and powder metallurgy areas, respectively. During 1987 it became a market leader in vending services following several acquisitions, and sold Allied Steel and Wire, which did not fit in with its strategy. In 1988 the group sold the underperforming GKN Autoparts distribution business.

Also in 1988 the group hit the headlines by taking a 22.02 percent stake in Westland, the troubled U.K. helicopter and aerospace group. The deal roughly doubled the group’s defense sales, which then accounted for about 5 percent of its £2 billion turnover.

It also forged an alliance with Jaguar cars. The two companies created a joint venture to supply all the major body pressings for the Jaguar/Daimler range of saloon and high-performance sports cars. In the United States GKN made some important changes, selling its imported-vehicle-parts distribution business and expanding the distribution of domestic-vehicle parts through the acquisition of Mid-America Industries.

In 1989 the group reported record pretax profits of £214.8 million, a far cry from the beginning of the decade. During that decade the group’s emphasis had clearly shifted overseas. Sales of the U.K. subsidiaries in 1989 accounted for less than 37 percent of total sales of £2.7 billion against 68 percent a decade before. The transformation of GKN from its original businesses was quite apparent in the breakdown by sector at the end of the 1980s: the automotive side accounted for 61 percent of sales; industrial services, 35 percent; and defense, 4 percent.

STRENGTHENING A THREE-LEGGED STRUCTURE

GKN suffered in the early 1990s as recession cut into automobile sales in the United Kingdom and elsewhere, including the major U.S. market. The company’s defense operations also felt the effects of the economic downturn as the aerospace sector was hit particularly hard. Under the leadership of Lees, GKN once again responded aggressively during recession, further streamlining operations through a series of divestments. Along with more recently acquired businesses, such as vending and scaffolding, GKN also severed its ties to its remaining founding operations. The last of the fasteners operations were jettisoned, and in February 1995 the company’s only tie to steelmaking, its 40 percent stake in United Engineering Steels, was sold. GKN had recovered sufficiently by 1994 to take the bold, if widely criticized at the time, action of a hostile takeover of Westland, completed for approximately £557 million. By 1996 Westland had orders totaling £4 billion ($6.2 billion) for its Lynx, SuperLynx, and EH101 helicopters. Other key moves during the first half of the decade included the extension of Chep into the lucrative U.S. market, and the expansion of the automotive components business into the fast-growing markets of Asia and Latin America.

In late 1996 a jury in Charlotte, North Carolina, ruled against GKN and its Meineke subsidiary in a class-action lawsuit brought in 1993 on behalf of 2,500 franchisees and former franchisees of Meineke. The plaintiffs had charged that GKN and Meineke had defrauded them out of millions of dollars of payments that were earmarked for the chain’s advertising fund. In March 1997 a federal judge set the damage award at $591 million but this was reduced two months later to $390 million. While it appealed, GKN was forced to take a provision of £270 million ($436 million) in its 1996 accounts to cover the award, leading to a net loss for the year of £187 million ($302 million). In August 1998, however, a U.S. appeals court overturned both the ruling and the damage award, freeing GKN to write back £248 million ($413 million) in its 1998 accounts, swelling net profits that year to £567 million ($941 million).

Meanwhile, in January 1997, Lees, in a possibly unprecedented move for GKN, ventured outside the company to find the person he hired that month as chief executive, Chung Kong Chow. Lees had decided to split the chairman and chief executive positions, and to remain nonexecutive chairman. Chow, a citizen of Hong Kong, had been chief executive of BOC Gases, the main division of the industrial gases group BOC.

In late 1997 Chow set a goal of increasing annual sales, which then stood at £3.38 billion ($5.61 billion), by 40 percent over the next five years. Acquisitions were slated to fuel this growth in part, and one of the key areas for such growth was the company’s powder metallurgy division, which was part of the automotive components operations. Using the technology of sintered metal, which involved the compressing of granules of iron and other materials, GKN was able to make light, strong auto parts—and there were applications outside the auto industry as well. After acquiring Sinter Metals in 1997, GKN made several more acquisitions in this field in 1998 and 1999, including six in the latter year alone. The most significant acquisition of the late 1990s came in February 1999, when the company acquired Interlake Corporation, based in Lisle, Illinois, for £348 million ($570 million). Interlake brought to GKN not only a powdered metals firm called Hoeganaes Corporation but also Chem-tronics Inc., a maker of lightweight aircraft engine components that became part of GKN’s aerospace unit, and Interlake Material Handling Inc., a manufacturer of racking systems used in warehousing that was added to the company’s group of industrial services subsidiaries. GKN also began restructuring its aerospace and defense operations in the late 1990s. In late 1998 the company combined its armored vehicle business with that of Alvis plc in return for a 29.9 percent stake in Alvis.

By 1999, GKN was approaching Chow’s goal of a 40 percent revenue increase as sales reached £4.64 billion ($7.51 billion), a 37 percent increase over 1997. Net income for 1999 stood at £358 million ($579 million). Already considered the top U.K. engineering firm as a result of the market leading companies that comprised GKN’s three legs, GKN under Chow’s leadership attempted to shed its reputation as an establishment firm run by engineers and accountants and adopt a more entrepreneurial culture and more growth-oriented focus.

FOCUSING ON GLOBAL AUTOMOTIVE AND AEROSPACE ENGINEERING

The restructuring of the aerospace operations continued in the early 21st century. In mid-2000 GKN reached a final agreement with Finmeccanica S.p.A. of Italy on a merger of their respective helicopter businesses into a 50-50 joint venture called AgustaWestland, which became the number two helicopter maker in the world, trailing only the Boeing Company, when the deal was consummated in February 2001. Then in October 2000 GKN announced that it had agreed to acquire from Boeing a factory in St. Louis, Missouri, where fuselage and wing parts for certain Boeing military aircraft were made. This was essentially an outsourcing deal in which GKN agreed to continue to supply the same parts to Boeing. In conjunction with this purchase, which closed in January 2001, GKN said that it would combine all of its aerospace operations, with the exception of the AgustaWestland venture, under a newly created subsidiary called GKN Aerospace Services.

In another key development from 2001, GKN divested one of its three main areas of operation. In August of that year, the company’s industrial services division was spun off and merged into Brambles Industries. Among the divested assets were GKN’s 50 percent stakes in Chep and Cleanaway plus the Interlake Material Handling and Meineke Discount Muffler Shops businesses; collectively these operations had generated about 19 percent of GKN’s overall revenues. This transaction enabled GKN to move ahead as a more focused but global company, specializing in automotive and aerospace engineering. The automotive side generated about 65 percent of sales, with the aerospace operations contributing the remaining 35 percent. Upon the deal’s conclusion, Chow left the company to take over as chief executive of Brambles. Marcus Beresford, a GKN veteran, was tapped as Chow’s successor.

Beresford remained at the helm only through the end of 2002, a period of economic difficulties. GKN in particular felt the effects of the precipitous decline in civil aviation following the September 11, 2001, terrorist attacks on the United States. A sharp decline in revenue from this sector prompted a company restructuring of its civil aerospace operations, part of an overall reduction in the workforce of approximately 4,000.

Kevin Smith took over as chief executive at the beginning of 2003. Smith was a relative newcomer, having joined GKN only in 1999 as head of the aerospace business. Prior to that, Smith had spent 19 years at BAE Systems plc when that U.K. defense and aerospace giant was still known as British Aerospace plc. During the new chief’s first year, GKN completed its exit out of the armored vehicle business by selling its 29 percent stake in Alvis to BAE Systems for £73 million. GKN also spent £36 million to acquire Pilkington plc’s aerospace transparencies business. This deal made GKN the leading global supplier of transparencies (canopies and windows) to the military aircraft market and the number two supplier to the civil side.

In early 2004 Lees stepped down from the company board after 16 years as chairman. Joining the board as the new chairman was Roy Brown, a former managing director at food and consumer products giant Unilever. One of the highlights of Lees’s tenure was the takeover of Westland, and so it was with a bit of irony that his departure coincided with GKN reaching an agreement to sell its stake in AgustaWestland to its joint venture partner, Finmeccanica. Proceeds from the divestment, which closed in November 2004, totaled £1.06 billion ($2.03 billion) and were earmarked for repayment of debt and acquisitions in both the automotive and aerospace sectors. In 2004 GKN completed one key purchase, increasing its stake in Tochigi Fuji Sangyo KK (TFS) from 33 percent to 84 percent. TFS was a leading supplier of torque management devices to Japanese automakers. GKN purchased full control of TFS in 2005, when the subsidiary was renamed GKN Driveline Torque Technology KK.

In March 2004, meanwhile, GKN launched a major, multiyear restructuring program aimed at reducing costs in its automotive operations by shifting production to lower-wage economies. By early 2007 around 4,000 jobs had been moved from production facilities in North America and Western Europe to ones located in Eastern Europe, Asia, and Latin America. The cost of this restructuring totaled around £280 million, and it achieved annual cost savings estimated at £73 million. Simultaneously, GKN reduced its net debt from around £1 billion to a much more manageable £400 million. In the area of acquisitions, the company focused on smaller, bolt-on acquisitions, particularly in the aerospace sector, which was both growing faster and more profitable than the troubled global auto industry. In September 2006 GKN acquired Stellex Aerostructures, Inc., for £93 million. Based in Lebanon, New Jersey, Stellex produced titanium fuselage structures for Boeing civilian aircraft. Between 2004 and 2006 GKN increased the portion of its revenues generated by the aerospace side from 15 to 20 percent. The company eventually hoped to push this percentage up to 40 percent.

Even as it worked to become less dependent on the automotive industry, GKN did complete some smaller purchases in this area, and in late 2005 the company announced what it touted as the first major breakthrough in constant velocity joint technology in 70 years. The company’s countertrack and crosstrack CV joints were designed to weigh less than standard CV joints and could result either in a vehicle with an improved turning circle or one with an increased wheelbase with the same turning circle. GKN secured its first orders for these new products in early 2007. In the company’s related activities in off-highway vehicles, the August 2006, £29 million acquisition of another U.S. company, Rockford Powertrain Inc., transformed GKN into a global leader in driveshafts for off-highway vehicles.

With the major restructuring program launched in 2004 nearing completion, GKN enjoyed stellar results in 2006, when net profits more than doubled to £177 million ($347 million). During the first half of 2007, the company continued to pursue opportunities to augment its aerospace operations. In April, GKN reached an agreement to acquire Teleflex, Inc.’s Teleflex Aerospace Manufacturing Group (TAMG), a producer of precision-machined engine parts, including engine and fan cases, blades, and cowls. TAMG, which had sales of more than $130 million in 2006, had operations in the United States, Mexico, France, and the United Kingdom. GKN was also one of the leading candidates to take over several Airbus industrial sites in Europe that were on the auction block, including one in the United Kingdom at Filton, near Bristol, where composite wing components were produced for Airbus aircraft.

Bob Vincent

David E. Salamie

PRINCIPAL SUBSIDIARIES

AUTOMOTIVE—DRIVELINE: GKN Driveline Headquarters Ltd.; GKN Driveline Birmingham Ltd.; GKN Driveline Walsall Ltd.; GKN Driveline SA (France); GKN Driveline Florange SARL (France); GKN Driveline Deutschland GmbH (Germany); GKN Gelenkwellenwerk Kaiserslautern GmbH (Germany); GKN Driveline Trier GmbH (Germany); GKN Automotive Umformtechnik GmbH (Germany); GKN Driveline Bruneck AG (Italy); GKN Driveline Firenze SpA (Italy); GKN Driveline Polska Sp. z o.o. (Poland); GKN Driveline Slovenija d.o.o. (Slovenia); GKN Drive-line España SA (Spain); GKN Driveline Zumaia SA (Spain); GKN Driveline Vigo SA (Spain); GKN Drive-line Legazpi SA (Spain); GKN Driveline Lazpiur SL (Spain; 51%); GKN Driveline North America Inc. (U.S.A.); GKN do Brasil Ltda. (Brazil); GKN Driveline Celaya SA de CV (Mexico); GKN Driveline Uruguay SA; GKN Driveline Singapore Pte Ltd; Unidrive Pty Ltd (Australia; 60%); GKN Driveline (India) Ltd. (97%); GKN Driveline Utsunomiya Ltd. (Japan); GKN Driveline Malaysia Sdn Bhd (68.4%); GKN Driveline Korea Ltd.; GKN Driveline (Thailand) Ltd.; GKN Driveline TOYODA Manufacturing Ltd. (Thailand; 51%); GKN Driveline Torque Technology KK (Japan); Viscodrive Japan KK; GKN Driveline International GmbH (Germany); GKN Japan Ltd.; GKN Freight Services Ltd. AUTOMOTIVE—POWDER METALLURGY: Hoeganaes Corporation (U.S.A.); Hoeganaes Corporation Europe GmbH (Germany); Hoeganaes Corporation Europe SA (Romania); GKN Sinter Metals Ltd.; GKN Sinter Metals Inc. (U.S.A.); GKN Sinter Metals St Thomas Ltd. (Canada); GKN Sinter Metals de Argentina SA; GKN Sinter Metals Ltda. (Brazil); GKN Sinter Metals Holding GmbH (Germany); GKN Sinter Metals Engineering GmbH (Germany); GKN Sinter Metals GmbH (Germany); GKN Sinter Metals Components GmbH (Germany); GKN Sinter Metals GmbH & Co KG (Germany); GKN Sinter Metals Filters GmbH (Germany); GKN Sinter Metals SpA (Italy); GKN Sinter Metals AB (Sweden); GKN Sinter Metals Danyang Ltd. (China); Krebsoge Feida Danyang Filters Co. Ltd. (China); GKN Sinter Metals Ltd. (India); GKN Sinter Metals Cape Town (Pty) Ltd. (South Africa). AUTOMOTIVE—OTHER: GKN AutoStructures Ltd.; GKN Sheepbridge Stokes Ltd. OFFHIGHWAY: GKN OffHighway Systems Ltd.; GKN Wheels Nagbøl A/S (Denmark); GKN Armstrong Wheels Inc. (U.S.A.); GKN FAD SpA (Italy); GKN Geplasmetal SA (Spain); GKN Wheels (Liuzhou) Company Ltd. (China); GKN Walterscheid Belgium Sprl; GKN Walterscheid Denmark A/S; GKN Walter-scheid GmbH (Germany); GKN Walterscheid Getriebe GmbH (Germany); GKN Powertrain Holding Corporation (U.S.A.); GKN Rockford Inc. (U.S.A.); GKN Walterscheid Inc. (U.S.A.); GKN Walterscheid Canada Inc.; GKN Walterscheid Agritech Components (Shanghai) Co. Ltd. (China). AEROSPACE—AERO-STRUCTURES: GKN Aerospace GmbH (Germany); GKN Aerospace North America Inc. (U.S.A.); GKN Aerospace Bandy Machining Inc. (U.S.A.); GKN Aerospace Monitor Inc. (U.S.A.); GKN Aerospace Precision Machining Inc. (U.S.A.); GKN Westland Aerospace Inc. (U.S.A.); GKN CEDU Ltd.; GKN Aerospace Engineering Services Pty Ltd (Australia). AEROSPACE—PROPULSION SYSTEMS: GKN Aerospace Services Ltd.; ASTECH Engineered Products Inc. (U.S.A.); GKN Aerospace Chem-tronics Inc. (U.S.A.). AEROSPACE—SPECIAL PRODUCTS: GKN Aerospace Transparency Systems (Luton) Ltd.; GKN Aerospace Transparency Systems Inc. (U.S.A.); GKN Aerospace Transparency Systems (Thailand) Ltd.; GKN Aerospace Transparency Systems do Brasil Ltda. (Brazil). AEROSPACE—OTHER COMPANIES: GKN Westland Services Ltd.; GKN Aerospace Inc. (U.S.A.). CORPORATE: GKN Holdings plc; GKN Industries Ltd.; GKN America Corp. (U.S.A.); Westland Group plc; Ipsley Insurance Ltd. (Isle of Man); GKN UK Holdings BV (Netherlands).

PRINCIPAL COMPETITORS

American Axle & Manufacturing Holdings, Inc.; ArvinMeritor, Inc.; Dana Corporation; ZF Friedrichshafen AG.

GKN plc

views updated May 11 2018

GKN plc

Post Office Box 55
Redditch, Worcestershire B98 OTL
United Kingdom
(0527) 517715
Fax: (0527) 517715

Public Company
Incorporated: 1902 as Guest, Keen & Nettlefolds Ltd.
Employees: 36,000
Sales: £2.68 billion (US$4.33 billion)
Stock Exchanges: London Tokyo Frankfurt Düsseldorf Amsterdam Antwerp Brussels

GKN was born out of the mergers of three companies. Since the mergers in 1900 and 1902, it has evolved into an industrial giant centered on three main businesses, automotive, industrial services, and defense.

Although the mergers took place at the beginning of the 20th century, the companies out of which GKN evolved were very much older. The group, however, has changed so much in the intervening years that there is little left of its original elements. They were essentially family companies and typical of the entrepreneurial spirit responsible for the United Kingdom’s leading position in the iron and steel industry during much of the 19th century.

One segment of the story begins with John Guest, who in 1767 ran an iron-smelting works at Dowlais in southern Wales. When Guest died his son Thomas succeeded him and he was followed in turn by his son Sir Josiah “John” Guest, an able entrepreneur, who raised Dowlais Iron Company to prominence. Sir John Guest’s wife, Lady Charlotte Guest, was one of the most striking characters to emerge in the company’s formative years. After her husband’s death in 1852 she ran the company for three years. In 1889 the company built a new integrated steel works on the coast at Cardiff, at which iron was produced from 1891 and steel from 1895.

The second strand of the tripartite merger is centered on Arthur Keen, who was responsible for the two mergers which created GKN. Keen went into business with a U.S. businessman who had acquired the British patent rights for an automatic bolt-making machine. In 1864, the business went public as the Patent Nut & Bolt Company. Keen’s requirement for steelmaking technology led to the amalgamation with the Dowlais Iron Company and the creation of Guest, Keen & Company in 1900.

The third element in the merger, Nettlefolds, was centered on the manufacture of custom woodscrews, and stemmed from a partnership comprising John Sutton Nettlefold and his brother-in-law Joseph Chamberlain, who in 1854 set up a woodscrew factory at Smethwick. The company flourished to become the leading screwmaker in the United Kingdom. In 1880 it took over the Birmingham Screw Company, and also registered as a public company, Nettlefolds Ltd. Further diversification took place in 1887 when a wire-rods, steel-hoops, bars, and wires plant was set up in Rogerstone, Newport.

In 1902, Guest, Keen & Company and Nettlefolds Ltd. came together, linking companies with diverse activities in a bid to exploit the benefits of horizontal integration. The first chairman of the newly created company was Arthur Keen, under whom the business was consolidated. This consolidation, based upon steel, continued throughout the first half of the 20th century, with Guest, Keen & Nettlefolds moving into areas such as rolling, forging, pressing, stamping, and machining.

Arthur Keen died in 1915, to be succeeded by his son, Arthur T. Keen, who died in 1918. The company emerged from World War I still centered on steelmaking, fasteners, and coal mining, primarily aimed at the railway and construction markets.

In 1919 the Earl of Bessborough took over as chairman, and the company took the lead in the nut and bolt industry with the acquisition of F. W. Cotterill. The group continued on the acquisition trail with the takeover in 1920 of John Lysaght, which had subsidiaries involved in steelmaking and re-rolling in the United Kingdom and Australia. This acquisition was particularly significant. With the Lysaght purchase came Joseph Sankey, which produced steel press work, including wheels, chassis, and motor body parts, marking the group’s entrance into the motor industry.

In 1920 Edward Steer, a member of the Nettlefolds family, became chairman, a position he was to hold until 1927 when H. Seymour Berry took over. After Berry’s death following a riding accident in 1928, Sir John Field Beale headed the company. He was to preside over GKN during the Depression and the economic recovery of the 1930s.

In 1929 the steel industry was hit by the Depression, which resulted in a new wave of mergers. Three years later, the government introduced duties on imported steel to make domestic steel more attractive, and these moves, combined with rearmament in the latter part of the decade, provided the impetus for a further round of new investment in the industry.

Against this background, GKN continued to expand. In 1930 the group took over Exors. of James Mills, one of the world’s largest manufacturers of bright steel bars, and entered the Swedish market with the acquisition of Aug. Stenman A.B., a Swedish manufacturer of hinges and fasteners. Four years later, it acquired 46.8% of Guest, Keen, Williams Ltd., the steel and engineering group, which is an associate company and one of the largest steel fabricating and engineering companies in India.

Also in 1934, the iron and steel operations of the Dowlais works, which had once stood at the forefront of the iron and steel industry, were transferred within the group to the Cardiff, Margam, and Port Talbot works of Guest Keen Baldwins Iron and Steel Company. This was a newly formed company created to acquire the heavy iron and steel operations of GKN Ltd. and Baldwins Ltd.

The company was expanding steadily under the chairmanship of Sir Samuel Beale, the younger brother of Sir John Field Beale. Sir Samuel Beale led GKN through World War II, and was to remain a director until 1957.

After the war, the Labour government set about economic reconstruction. The industry was asked to draw up a five-year plan for reorganization and modernization, to reverse the deterioration in its competitive position.

GKN expanded its iron-using and steel-using businesses, such as castings and pressings, to support the fast-expanding United Kingdom motor industry. J.H. Jolly took over as chairman in 1947, and in 1948, just three years before the nationalization of the steel industry, the group acquired Brymbo Steel Works in North Wales. In the same year it transferred its trading activities to two new companies. GKN (Midlands) took over the bolt and nut works at Darlaston and the screw works at Smethwick, while GKN (South Wales) Ltd. took over the re-rolling works and wire and nail plants at Cardiff.

Then in 1951 came the much heralded and controversial Iron and Steel Act under which the three steelmaking companies, Brymbo, G.K. Baldwin, and John Lysaght, together with GKN (South Wales), were nationalized. Two years later Sir Kenneth Peacock took over as chairman.

Steel nationalization proved to be relatively short-lived, and with the return of the Conservative government the industry was denationalized in 1955. GKN bought back its four companies and at the same time Guest, Keen, Baldwins, which had been jointly owned with Baldwins and had been the group’s largest source of steel supply, became a wholly owned subsidiary, Guest, Keen Iron and Steel Company.

The group was still largely dependent on its original core businesses, but the 1960s were to see a transformation which gathered speed in the ensuing decades. During the 1960s, when the United Kingdom economy proved far less buoyant, it undertook major restructuring and reinforced its links with the growing motor industry, primarily through the acquisition of Birfield Ltd., which supplied components for the Austin-Morris mini. The group entered the defense-equipment market, winning an order for the FV432 armored personnel carrier for the British Army in 1962.

In 1967 the Labour government renationalized the steel businesses. Restructuring, which began in 1961 and was aimed at streamlining the businesses to make them more competitive, resulted in a series of subdivisions. The steel operations were the first to be restructured, with the creation of GKN Steel Company, which was nationalized in 1967.

The shake-up continued with the regrouping of its fastener, forgings, and castings, rolled and bright steel, building supplies and services, and engineering operations. GKN International Trading was created to deal with exports, and the group’s overseas interests in Australia, New Zealand, South Africa, and Sweden were also reorganized. The group continued to expand in its traditional areas and to diversify, for example into gas-fired central-heating systems.

In 1963 GKN bought three suppliers of forgings to the motor industry: Ambrose Shardlow, in partnership with United Steel, Smethwick Drop Forgings, and Smith’s Stampings. Three years later it took over the diversified Birfield Ltd., which brought with it a 39.5% stake in Uni-Cardan AG, a European automotive-components maker based in West Germany. GKN has since raised its stake in Uni-Cardan to nearly 97%. The Uni-Cardan acquisition proved to be of primary significance to the group’s strategy. Among Uni-Cardan’s products were constant-velocity joints, which permit the full transmission of torque from a car’s engine to the wheels. These joints, originally designed for front-wheel-drive vehicles, were to play a crucial role in the growth of GKN’s automotive business both at home and abroad.

In 1969 GKN unveiled a joint venture with Broken Hill Proprietary (BHP) of Australia to build a new steel complex at Westernpoint, Australia. The complex was constructed in two phases, the second of which was completed in 1978. The following year GKN sold its half interest to BHP.

In the 1970s GKN continued to increase its involvement in the automotive business and to build up its presence in distribution at home and abroad and its investment in service businesses. The decade also posed major problems. In the latter part of the 1970s the group’s chairman Sir Barrie Heath, who took over from Sir Raymond Brookes in 1975, had to contend with hyperinflation, the oil crisis, and a collapse in demand for steel and automotive parts.

During the chairmanship of Sir Barrie, a management committed under Trevor Holdsworth undertook strategic restructuring to pull the company through moving out of Australia and broadening the manufacturing base in the United States.

During the 1970s, GKN acquired a large number of small distribution companies, largely in the fastener and steel sectors. It later extended this strategy to automotive components, signaling a move into vehicle-parts and accessories distribution on a worldwide scale. The acquisitions continued on the steel and automotive sides, including Kirkstall Forge Engineering, the largest independent manufacturer of heavy-duty axles in the United Kingdom.

In 1974 the Brymbo Steel Works were returned to GKN by the then-government-owned British Steel Corporation (BSC) in exchange for GKN Dowlais, in a deal which, while ending the group’s long historical association with the Dowlais plant, gave it an internal source of supply. In the same year GKN took another significant step on the steel side with the purchase of Miles Druce & Company, making GKN the largest steel stockholder in the U.K. private sector. In 1974 GKN invested in the services sector with the formation of the United Kingdom’s first national cargo-pallet hire pool, GKN Chep, with Brambles Industries of Australia.

In 1976, GKN stepped up its attack on the United States market with the formation of GKN Automotive Components Inc. to supply constant-velocity—universal—joints for the new generation of front-wheel-drive cars. Within a year the group announced a further United States move, unveiling plans to set up a production plant, costing $50 million, in Sanford, North Carolina. Three years later, GKN announced that a second constant-velocity joint factory was to be built in North Carolina, in Alamance County, costing some $80 million. The two plants were commissioned in 1980 and 1981.

In 1977, the group was still stepping up investment in steelmaking and rerolling with the opening of a new rod mill and steel works in Cardiff, costing £52 million. It announced a £48 million rolling mill for Brymbo Steelworks.

The group’s United States involvement was enhanced in 1979 with the acquisition of Parts Industries Corporation of Memphis, Tennessee, the fourth-largest vehicle parts and accessories distributor in the United States. It raised its European profile in this area with the purchase from Unilever of Unigep Group of France and in the United Kingdom with the purchase of Armstrong Autoparts and Sheepbridge Engineering, both possessing large distribution chains.

The company sold off operations which did not fit into its strategy, which in 1979 included its 50% stake in John Lysaght (Australia) and the divestment of GKN Bolts and Nuts Ltd., one of the pillars of the company when it was formed in 1902. This sector had been suffering heavy financial losses.

1979 also brought its frustrations. GKN had bid for Fitchell and Sachs, the largest supplier of car parts in West Germany, after taking a minority stake in 1976. However, after three years of patient negotiations, the bid was blocked by the West German courts.

At the end of the decade, GKN set about further restructuring which reflected the increasing importance of automotive components and the non-manufacturing businesses. It was preparing for the 1980s, which were to prove another period of rapid change, under the initial chairmanship of Sir Trevor Holds worth, who retired in 1988, and then of David Lees.

The cold wind of recession hit the group in the early 1980s, and the decade started with a shock. GKN announced a loss of £1 million for 1980, the first since it was incorporated in 1902. Sir Trevor Holdsworth, who was responsible for fundamental changes to group strategy, set about slimming down and reshaping the group. Its work force, for instance, had shrunk from 93,000 in 1980 to 38,000 when he retired. As the new structure evolved, the group moved out of steel, further internationalized through local investments and joint ventures, built up the automotive side, and developed industrial-service businesses from its involvement in distribution.

The decade brought a series of sales and acquisitions, reflecting deep-rooted changes. In 1981 GKN and Brambles of Australia took an 50/50 interest in Redland Purle, the largest private-sector waste-disposal operator in the United Kingdom. The business is now known as Cleanaway Ltd. In the same year there was another major change when GKN and BSC merged their steel re-rolling and associated businesses to create Allied Steel and Wire Ltd. In the following year, when the group became Guest, Keen and Nettlefolds pic, it won a large contract from the British Army for its Saxon armored personnel carrier.

In 1983, another strand of the business took shape with GKN and Costain of the United Kingdom merging their scaffolding and building-services operations to create GKN Kwikform, now a market leader in the United Kingdom. That year the group expanded further in the United States with the acquisition of Meineke Discount Muffler Shops, one of the largest franchized exhaust-system fitters, while in the United Kingdom it set up a facility to produce fiber-glass reinforced road springs for commercial vehicles. Another success in the defense area came in 1984 when the group was awarded a contract for its Warrior tracked armored personnel carrier.

During 1984 and 1985, the group expanded its vehicle-parts-distribution businesses in the United States, and in Australia with the acquisition of Quinton Hazell Automotive. Viscodrive GmbH was created in West Germany to develop viscous drive-control units and a year later, in 1985, Viscodrive Japan and Translite were set up to market the units and composite leaf springs to the Japanese motor industry.

Another name change came in 1986 when the group became GKN pic, reflecting the move away from its original businesses. This change was underlined when in the same year the group sold its steel-stockholding operations and merged its engineering steels and forgings activities with BSC to form United Engineering Steels, with operating assets of about £600 million.

The group’s international expansion continued apace. In 1986 and 1987, GKN made further European acquisitions in Spain and Italy, in the driveshaft and powder-metallurgy areas, respectively. During 1987 it became a market leader in vending services following several acquisitions, and sold Allied Steel and Wire, which did not fit in with its strategy.

In 1988, the group hit the headlines by taking a 22.02% stake in Westland, the troubled U.K. helicopter and aerospace group. The deal roughly doubled the group’s defense sales which then accounted for about 5% of its £2 billion turnover.

It also forged an alliance with Jaguar cars. The two companies created a joint venture to supply all the major body pressings for the Jaguar/Daimler range of saloon and high-performance sports cars. In the United States GKN made some important changes, selling its imported-vehicle-parts distribution business and expanding the distribution of domestic-vehicle parts through the acquisition of Mid-America Industries.

In 1989 the group reported record pre-tax profits of £214.8 million, a far cry from the beginning of the decade. During that decade the group’s emphasis has shifted overseas. Sales of the United Kingdom subsidiaries in 1989 accounted for less than 37% of total sales of £2.7 billion against 68% a decade before.

The automotive side has attained international prominence by developing local supplies. It now accounts for 61% of sales and numbers Ford, Toyota, and Honda among its customers. In 1988 the group sold off the underperforming GKN Autoparts distribution business.

The automotive division has rapidly increased sales to Japanese vehicle manufacturers on a worldwide basis. This link was enhanced in 1989 when GKN was granted a listing on the Tokyo Stock Exchange.

The industrial services sector has become increasingly significant and represents 35% of group sales. It covers an array of businesses including the highly successful Chep pallet and container hire operations, waste management, scaffolding, and vending.

The defense side, which makes Warrior and Saxon military personnel carriers, is the smallest division, responsible for 4% of 1989 sales. It will have to contend with the repercussions of changes in Eastern Europe, but these could provide GKN with a wealth of opportunities in other areas. In 1990 the group also began looking at possible ventures in East European countries.

Principal Subsidiaries

Ayra Durex, SA (Spain, 64.8%); Bir-field Extrusions Ltd.; Birfield Trasmissioni SpA (Italy, 96.7%); GKN Automotive, Inc. (U.S.A.); Glaenzer Spicer SA (France, 96.5%); Hardy Spicer Ltd.; Industrias Mecanicas de Galicia, SA (Spain, 66%); Lohr & Bromkamp GmbH (Germany, 91.4%); Uni-Cardan AG (Germany, 96.7%); Viscodrive GmbH (Germany, 96.7); Walterscheid Schmiede und Presswerk GmbH (Germany, 96.7%); GKN Cardantec International GmbH (Germany, 96.7%); Ayra Cardan, SA (Spain, 64.8%); BRD Company Ltd; Birfield Trasmissioni SpA Cardantec Operations (Italy, 96.7%); Gelenkwellenbau GmbH (Germany, 96.7%); Glaenzer Spicer SA Cardantec Operations (France, 96.5%); Nordiska Kardan AB (Sweden, 96.7%); Jean Walterscheid GmbH (Germany, 96.7%); Walterscheid Agmaster, Inc. (Canada, 96.7%); Walterscheid, Inc. (U.S.A., 96.7%); GKN Axles Ltd; GKN Comaxle SpA (Italy); Laycock Engineering Ltd; GKN Bound Brook Ltd; GKN Bound Brook Italia SpA (Italy); GKN Firth Cleveland Ltd.; GKN Saini SpA (Italy); GKN Sheepbridge Ltd.; GKN Composites Ltd.; GKN Tadchurch Ltd.; Translite KK (Japan, 60%); GKN Technology Ltd.; GKN Sheepbridge Stokes Ltd.; GKN Sankey Ltd.; GKN Defence; GKN Kwikform Ltd. (60%); GKN Kwikform BV (Netherlands, 60%); GKN Kwikform Industries Ltd. (Australia); GKN Rentals (Australia); GKN Chep Ltd. (70%); Sankey Vending Ltd.; GKN Vending Services Ltd.; Automatic Catering Supplies Ltd.; ACS Coffee Service Ltd.; GKN Sankey Finance Ltd.; GKN Property Maintenance Ltd.; GKN Occupational Health Ltd.; BKL Extrusions Ltd.; Econopack Ltd; Stenman Holland BV (Netherlands); GKN Chep SA (Pty) Ltd. (South Africa); GKN Parts Industries Corporation (U.S.A.); Meineke Discount Muffler Shops, Inc. (U.S.A.); Sparks Tune-up Centers, Inc. (U.S.A.); GKN Group Management Services Ltd.; GKN Group Services Ltd.

GKN plc

views updated May 29 2018

GKN plc

Post Office Box 55
Redditch, Worcestershire B98 OTL
United Kingdom
Telephone: (01527) 517715
Fax: (01527) 517700
Web site: http://www.gknplc.com

Public Company
Incorporated: 1900 as Guest, Keen and Co. Limited
Employees: 40,700
Sales: £4.64 billion (US$7.51 billion) (1999)
Stock Exchanges: London
Ticker Symbol: GKN
NAIC: 336350 Motor Vehicle Transmission and Power Train Parts Manufacturing; 332117 Powder Metallurgy Part Manufacturing; 336411 Aircraft Manufacturing; 336412 Aircraft Engine and Engine Parts Manufacturing; 321920 Wood Container and Pallet Manufacturing; 562110 Waste Collection; 562210 Waste Treatment and Disposal; 562920 Materials Recovery Facilities; 811112 Automotive Exhaust System Repair

Born out of the early 20th-century mergers of three companies, GKN plc has evolved into a global industrial giant centered on three main businesses: automotive components, industrial services, and aerospace. In the automotive sector, GKN is a world leading manufacturer of driveline systems and constant velocity joints, and is also one of the largest producers of powder metal and powdered metal components—notably those used in automobiles—in the world. Industrial services includes four main businesses: Chep, a joint venture offering pooling services for pallets, automotive crates, and containers; Cleanaway, another joint venture and the leading waste management and recycling firm in Europe; Interlake Material Handling, a U.S.-based supplier of racking systems used in warehouses and distribution centers; and Meineke Discount Muffler Shops, a U.S. franchised chain of shops specializing in muffler and other car repair. In aerospace, GKN manufactures helicopters, supplies aircraft propulsion systems and components, and offers engineering services to clients in the aerospace, automotive, rail, marine, and defense sectors. The global nature of the company’s operations are quite evident in its geographical revenue breakdown: about 39 percent of revenues are generated in the United Kingdom, about 31 percent on Continental Europe, and about 27 percent in the Americas.

Development of the Predecessor Companies

Although the mergers that created GKN took place at the beginning of the 20th century, the companies out of which GKN evolved were considerably older. The group, however, has changed so much in the intervening years that there is little left of its original elements. They were essentially family companies and typical of the entrepreneurial spirit responsible for the United Kingdom’s leading position in the iron and steel industry during much of the 19th century.

One segment of the story begins in 1759 when nine businessmen formed an iron-smelting works at Dowlais in southern Wales that was initially called Dowlais Iron Works. John Guest took over as works manager in 1767. When Guest died, his son Thomas succeeded him and he was followed in turn by his son Sir Josiah “John” Guest, an able entrepreneur, who raised the renamed Dowlais Iron Company to prominence and became its sole owner in 1851. Sir John Guest’s wife, Lady Charlotte Guest, was one of the most striking characters to emerge in the company’s formative years. After her husband’s death in 1852 she ran the company for three years. In 1889 the company built a new integrated steel works on the coast at Cardiff, at which iron was produced from 1891 and steel from 1895.

The second strand of the tripartite merger is centered on Arthur Keen, who was responsible for the two mergers that created GKN. Keen went into business in 1856 with a U.S. businessman who had acquired the British patent rights for an automatic bolt-making machine. In 1864, the business went public as the Patent Nut & Bolt Company. Keen’s requirement for steelmaking technology led to the amalgamation with the Dowlais Iron Company and the incorporation of Guest, Keen and Co. Limited in 1900.

The third element in the merger, Nettlefolds, was centered on the manufacture of custom woodscrews, and stemmed from a partnership comprising John Sutton Nettlefold and his brother-in-law Joseph Chamberlain, who in 1854 set up a woodscrew factory at Smethwick. The company flourished to become the leading screwmaker in the United Kingdom. In 1880 it took over the Birmingham Screw Company, and also registered as a public company, Nettlefolds Limited. Further diversification took place in 1887 when a wire-rods, steelhoops, bars, and wires plant was set up in Rogerstone, Newport.

1900s Through 1950s: Concentrating on Steel, Screws, and Fasteners

In 1902, Guest, Keen and Co. acquired Nettlefolds, linking companies with diverse activities in a bid to exploit the benefits of horizontal integration. The first chairman of the newly created company was Arthur Keen, under whom the business was consolidated. This consolidation, based upon steel, continued throughout the first half of the 20th century, with Guest, Keen, and Nettlefolds Limited moving into areas such as rolling, forging, pressing, stamping, and machining.

Arthur Keen died in 1915, to be succeeded by his son, Arthur T. Keen, who died in 1918. The company emerged from World War I still centered on steelmaking, fasteners, and coal mining, primarily aimed at the railway and construction markets.

In 1919 the Earl of Bessborough took over as chairman, and the company took the lead in the nut and bolt industry with the acquisition of F.W. Cotterill. The group continued on the acquisition trail with the takeover in 1920 of John Lysaght, which had subsidiaries involved in steelmaking and rerolling in the United Kingdom and Australia. This acquisition was particularly significant. With the Lysaght purchase came Joseph Sankey, which produced steel presswork, including wheels, chassis, and motor body parts, marking the group’s entrance into the motor industry.

In 1920 Edward Steer, a member of the Nettlefolds family, became chairman, a position he was to hold until 1927 when H. Seymour Berry took over. After Berry’s death following a riding accident in 1928, Sir John Field Beale headed the company. He was to preside over GKN during the Great Depression and the economic recovery of the 1930s.

In 1929 the steel industry was hit by the Great Depression, which resulted in a new wave of mergers. Three years later, the government introduced duties on imported steel to make domestic steel more attractive, and these moves, combined with rearmament in the latter part of the decade, provided the impetus for a further round of new investment in the industry.

Against this background, GKN continued to expand. In 1930 the group took over Exors. of James Mills, one of the world’s largest manufacturers of bright steel bars, and entered the Swedish market with the acquisition of Aug. Stenman A.B., a Swedish manufacturer of hinges and fasteners. Four years later, the iron and steel operations of the Dowlais works, which had once stood at the forefront of the iron and steel industry, were transferred within the group to the Cardiff, Margam, and Port Talbot works of Guest Keen Baldwins Iron and Steel Company. This was a newly formed company created to acquire the heavy iron and steel operations of GKN Ltd. and Baldwins Ltd.

The company was expanding steadily under the chairmanship of Sir Samuel Beale, the younger brother of Sir John Field Beale. Sir Samuel Beale led GKN through World War II, and was to remain a director until 1957.

After the war, the Labour government set about economic reconstruction. The industry was asked to draw up a five-year plan for reorganization and modernization, to reverse the deterioration in its competitive position.

GKN expanded its iron-using and steel-using businesses, such as castings and pressings, to support the fast-expanding U.K. motor industry. J.H. Jolly took over as chairman in 1947, and in 1948, just three years before the nationalization of the steel industry, the group acquired Brymbo Steel Works in North Wales. In the same year it transferred its trading activities to two new companies. GKN (Midlands) took over the bolt and nut works at Darlaston and the screw works at Smethwick, while GKN (South Wales) Ltd. took over the rerolling works and wire and nail plants at Cardiff.

Then in 1951 came the much heralded and controversial Iron and Steel Act under which the three steelmaking companies, Brymbo, G.K. Baldwin, and John Lysaght, together with GKN (South Wales), were nationalized. Two years later Sir Kenneth Peacock took over as chairman.

Steel nationalization proved to be relatively short-lived, and with the return of the Conservative government the industry was denationalized in 1955. GKN bought back its four companies and at the same time Guest, Keen, Baldwins—which had been jointly owned with Baldwins and had been the group’s largest source of steel supply—became a wholly owned subsidiary named Guest, Keen Iron and Steel Company.

Company Perspectives:

Our Vision: GKN is a global industrial company that is committed to growth and fosters entrepreneurship. We shall lead and excel in every market we serve.

Our Mission: Create, grow and manage dynamically, a focused group of industrial businesses. Create an environment that encourages our people to realise their maximum potential. Exceed our customers’ expectations through innovation, quality and total service. Achieve operational excellence. Deliver sustained outstanding value to our shareholders.

1960s and 1970s: Major Transformation, Moving the Company into Defense and Auto Sectors

The group was still largely dependent on its original core businesses, but the 1960s were to see a transformation that gathered speed in the ensuing decades. During the 1960s, when the U.K. economy proved far less buoyant, GKN undertook major restructuring and reinforced its links with the growing motor industry, primarily through the acquisition of Birfield Ltd., which supplied components for the Austin-Morris mini. The group entered the defense-equipment market, winning an order for the FV432 armored personnel carrier for the British Army in 1962.

In 1967 the Labour government renationalized the steel businesses. Restructuring, which began in 1961 and was aimed at streamlining the businesses to make them more competitive, resulted in a series of subdivisions. The steel operations were the first to be restructured, with the creation of GKN Steel Company, which was nationalized in 1967.

The shake-up continued with the regrouping of its fastener, forgings, and castings, rolled and bright steel, building supplies and services, and engineering operations. GKN International Trading was created to deal with exports, and the group’s overseas interests in Australia, New Zealand, South Africa, and Sweden were also reorganized. The group continued to expand in its traditional areas and to diversify, for example into gas-fired central-heating systems.

In 1963 GKN bought three suppliers of forgings to the motor industry: Ambrose Shardlow, in partnership with United Steel, Smethwick Drop Forgings, and Smith’s Stampings. Three years later it took over the diversified Birfield Ltd., which brought with it a 39.5 percent stake in Uni-Cardan AG, a European automotive-components maker based in West Germany. GKN later raised its stake in Uni-Cardan to nearly 100 percent. The Uni-Cardan acquisition proved to be of primary significance to the group’s strategy. Among Uni-Cardan’s products were constant velocity joints, which permit the full transmission of torque from a car’s engine to the wheels. These joints, originally designed for front-wheel-drive vehicles, were to play a crucial role in the growth of GKN’s automotive business both at home and abroad.

In 1969 GKN unveiled a joint venture with Broken Hill Proprietary (BHP) of Australia to build a new steel complex at Westernpoint, Australia. The complex was constructed in two phases, the second of which was completed in 1978. The following year GKN sold its half interest to BHP.

In the 1970s GKN continued to increase its involvement in the automotive business and to build up its presence in distribution at home and abroad and its investment in service businesses. The decade also posed major problems. In the latter part of the 1970s the group’s chairman Sir Barrie Heath, who took over from Sir Raymond Brookes in 1975, had to contend with hyperinflation, the oil crisis, and a collapse in demand for steel and automotive parts.

During the chairmanship of Sir Barrie, a management committee under Trevor Holdsworth undertook strategic restructuring to pull the company through, moving out of Australia and broadening the manufacturing base in the United States.

Key Dates:

1759:: Nine businessmen form an iron-smelting works in southern Wales called Dowlais Iron Works.
1767:: John Guest becomes manager of Dowlais Iron Works, the beginning of the involvement of the Guest family in the business.
1851:: The grandson of John Guest becomes sole owner of Dowlais Iron Company.
1854:: John Sutton Nettlefold enters into a partnership to make custom woodscrews.
1856:: Arthur Keen enters into a partnership to manufacture an automatic bolt-making machine.
1864:: Keen’s business goes public as the Patent Nut & Bolt Company.
1880:: Sutton’s business goes public as Nettlefolds Limited.
1900:: Dowlais Iron Company and the Patent Nut & Bolt Company merge to create Guest, Keen and Co. Limited.
1902:: Guest, Keen and Co. acquires Nettlefolds; the company changes its name to Guest, Keen and Nettlefolds Limited.
1920:: Company acquires John Lysaght and with it, Joseph Sankey, maker of steel auto parts—marking GKN’s entrance into the auto industry.
1951:: The U.K. government nationalizes the steel industry, including GKN’s steelmaking companies.
1955:: The steel industry is denationalized and GKN buys back its steel companies.
1962:: GKN enters the defense sector.
1966:: Company acquires Birfield and its minority stake in Uni-Carden, maker of constant velocity joints.
1967:: The company’s steel operations, now called GKN Steel Company, are renationalized.
1974:: One of the company’s founding operations, the Dowlais plant, leaves the company orbit; GKN Chep, a joint venture pallet pooling service, is formed with Brambles Industries of Australia.
1981:: GKN and Brambles join forces again to take over waste disposal firm Redland Purle, which is later known as Cleanaway.
1983:: GKN acquires Meineke Discount Muffler Shops.
1986:: Company adopts the name GKN plc; most of its remaining steel operations are divested.
1988:: A minority stake in Westland, a U.K. helicopter maker, is acquired.
1994:: GKN gains full control of Westland through a hostile takeover.
1995:: Company makes its final exit from steelmaking.
1998:: Company combines its armored vehicle operations with those of Alvis, in return for 29.9 percent stake in Alvis.
1999:: GKN acquires Interlake Corporation.
2000:: GKN and Finmeccanica of Italy merge their helicopter businesses into a 50-50 joint venture called AgustaWestland.

During the 1970s, GKN acquired a large number of small distribution companies, largely in the fastener and steel sectors. It later extended this strategy to automotive components, signaling a move into vehicle-parts and accessories distribution on a worldwide scale. The acquisitions continued on the steel and automotive sides, including Kirkstall Forge Engineering, the largest independent manufacturer of heavy-duty axles in the United Kingdom.

In 1974 the Brymbo Steel Works were returned to GKN by the then government-owned British Steel Corporation (BSC) in exchange for GKN Dowlais, in a deal which, while ending the group’s long historical association with the Dowlais plant, gave it an internal source of supply. In the same year GKN took another significant step on the steel side with the purchase of Miles Druce & Company, making GKN the largest steel stockholder in the U.K. private sector. In 1974 GKN invested in the services sector with the formation of the United Kingdom’s first national cargo-pallet hire pool, GKN Chep, with Brambles Industries of Australia.

In 1976, GKN stepped up its attack on the U.S. market with the formation of GKN Automotive Components Inc. to supply constant velocity—universal—joints for the new generation of front-wheel-drive cars. Within a year the group announced a further U.S. move, unveiling plans to set up a production plant, costing $50 million, in Sanford, North Carolina. Three years later, GKN announced that a second constant-velocity joint factory was to be built in North Carolina, in Alamance County, costing some $80 million. The two plants were commissioned in 1980 and 1981.

In 1977, the group was still stepping up investment in steel-making and rerolling with the opening of a new rod mill and steel works in Cardiff, costing £52 million. It announced a £48 million rolling mill for Brymbo Steelworks.

The group’s U.S. involvement was enhanced in 1979 with the acquisition of Parts Industries Corporation of Memphis, Tennessee, the fourth largest vehicle parts and accessories distributor in the United States. It raised its European profile in this area with the purchase from Unilever of Unigep Group of France and in the United Kingdom with the purchase of Armstrong Autoparts and Sheepbridge Engineering, both possessing large distribution chains.

The company sold off operations that did not fit into its strategy, which in 1979 included its 50 percent stake in John Lysaght (Australia) and the divestment of GKN Bolts and Nuts Ltd., one of the pillars of the company when it was formed in 1902. This sector had been suffering heavy financial losses.

The year 1979 also brought its frustrations. GKN had bid for Fitchell and Sachs, the largest supplier of car parts in West Germany, after taking a minority stake in 1976. After three years of patient negotiations, however, the bid was blocked by the West German courts.

At the end of the decade, GKN set about further restructuring which reflected the increasing importance of automotive components and the nonmanufacturing businesses. It was preparing for the 1980s, which were to prove another period of rapid change, under the initial chairmanship of Sir Trevor Holdsworth, who retired in 1988, and then of David Lees.

1980s: Major Moves into Industrial Services

The cold wind of recession hit the group in the early 1980s, and the decade started with a shock. GKN announced a loss of £1 million for 1980, the first since it was incorporated in 1902. Sir Trevor Holdsworth, who was responsible for fundamental changes to group strategy, set about slimming down and reshaping the group. Its workforce, for instance, had shrunk from 93,000 in 1980 to 38,000 when he retired. As the new structure evolved, the group moved out of steel, further internationalized through local investments and joint ventures, built up the automotive side, and developed industrial service businesses from its involvement in distribution.

The decade brought a series of sales and acquisitions, reflecting deep-rooted changes. In 1981 GKN and Brambles of Australia took a 50/50 interest in Redland Purle, the largest private-sector waste-disposal operator in the United Kingdom. The business is now known as Cleanaway Ltd. In the same year there was another major change when GKN and BSC merged their steel rerolling and associated businesses to create Allied Steel and Wire Ltd. In the following year, when the group became Guest, Keen and Nettlefolds plc, it won a large contract from the British Army for its Saxon armored personnel carrier.

In 1983, another strand of the business took shape with GKN and Costain of the United Kingdom merging their scaffolding and building-services operations to create GKN Kwikform, which became a market leader in the United Kingdom. That year the group expanded further in the United States with the acquisition of Meineke Discount Muffler Shops, one of the largest franchised exhaust-system fitters, while in the United Kingdom it set up a facility to produce fiberglass-reinforced road springs for commercial vehicles. Another success in the defense area came in 1984 when the group was awarded a contract for its Warrior tracked armored personnel carrier.

During 1984 and 1985, the group expanded its vehicle-parts-distribution businesses in the United States, and in Australia with the acquisition of Quinton Hazell Automotive. Viscodrive GmbH was created in West Germany to develop viscous drive-control units and a year later, in 1985, Viscodrive Japan and Translite were set up to market the units and composite leaf springs to the Japanese motor industry.

Another name change came in 1986 when the group became GKN plc, reflecting the move away from its original businesses. This change was underlined when in the same year the group sold its steel-stockholding operations and merged its engineering steels and forgings activities with BSC to form United Engineering Steels, with operating assets of about £600 million.

The group’s international expansion continued apace. In 1986 and 1987, GKN made further European acquisitions in Spain and Italy, in the driveshaft and powder metallurgy areas, respectively. During 1987 it became a market leader in vending services following several acquisitions, and sold Allied Steel and Wire, which did not fit in with its strategy. In 1988 the group sold off the underperforming GKN Autoparts distribution business.

Also in 1988 the group hit the headlines by taking a 22.02 percent stake in Westland, the troubled U.K. helicopter and aerospace group. The deal roughly doubled the group’s defense sales, which then accounted for about five percent of its £2 billion turnover.

It also forged an alliance with Jaguar cars. The two companies created a joint venture to supply all the major body pressings for the Jaguar/Daimler range of saloon and high-performance sports cars. In the United States GKN made some important changes, selling its imported-vehicle-parts distribution business and expanding the distribution of domestic-vehicle parts through the acquisition of Mid-America Industries.

In 1989 the group reported record pretax profits of £214.8 million, a far cry from the beginning of the decade. During that decade the group’s emphasis had clearly shifted overseas. Sales of the U.K. subsidiaries in 1989 accounted for less than 37 percent of total sales of £2.7 billion against 68 percent a decade before. The transformation of GKN from its original businesses was quite apparent in the breakdown by sector at the end of the 1980s: the automotive side accounted for 61 percent of sales; industrial services, 35 percent; and defense, four percent.

1990s and Beyond: Strengthening a Three-Legged Structure

GKN suffered in the early 1990s as recession cut into automobile sales in the United Kingdom and elsewhere, including the major U.S. market. The company’s defense operations also felt the effects of the economic downturn as the aerospace sector was hit particularly hard. Under the leadership of Lees, GKN once again responded aggressively during recession, further streamlining operations through a series of divestments. Along with more recently acquired businesses, such as vending and scaffolding, GKN also severed its ties to its remaining founding operations. The last of the fasteners operations were jettisoned, and in February 1995 the company’s only tie to steelmaking, its 40 percent stake in United Engineering Steels, was sold off. GKN had recovered sufficiently by 1994 to take the bold—if widely criticized at the time—action of a hostile takeover of Westland, completed for approximately £557 million. By 1996 Westland had orders totaling £4 billion (US$6.2 billion) for its Lynx, SuperLynx, and EH 101 helicopters. Other key moves during the first half of the decade included the extension of Chep into the lucrative U.S. market and the expansion of the automotive components business into the fast-growing markets of Asia and Latin America.

In late 1996 a jury in Charlotte, North Carolina, ruled against GKN and its Meineke subsidiary in a class-action lawsuit brought in 1993 on behalf of 2,500 franchisees and former franchisees of Meineke. The plaintiffs had charged that GKN and Meineke had defrauded them out of millions of dollars of payments that were earmarked for the chain’s advertising fund. In March 1997 a federal judge set the damage award at US$591 million but this was reduced two months later to US$390 million. While it appealed, GKN was forced to take a provision of £270 million (US$436 million) in its 1996 accounts to cover the award, leading to a net loss for the year of £187 million (US$302 million). In August 1998, however, a U.S. appeals court overturned both the ruling and the damage award, freeing GKN to write back £248 million (US$413 million) in its 1998 accounts, swelling net profits that year to £567 million (US$941 million).

Meanwhile, in January 1997, Lees, in a possibly unprecedented move for GKN, ventured outside the company to find the person he hired that month as chief executive, Chung Kong Chow. Lees had decided to split the chairman and chief executive positions, and to remain nonexecutive chairman. Chow, a citizen of Hong Kong, had been chief executive of BOC Gases, the main division of the industrial gases group BOC.

In late 1997 Chow set a goal of increasing annual sales, which then stood at £3.38 billion (US$5.61 billion), by 40 percent over the next five years. Acquisitions were slated to fuel this growth in part, and one of the key areas for such growth was the company’s powder metallurgy division, which was part of the automotive components operations. Using the technology of sintered metal, which involved the compressing of granules of iron and other materials, GKN was able to make light, strong auto parts—and there were applications outside the auto industry as well. After acquiring Sinter Metals in 1997, GKN made several more acquisitions in this field in 1998 and 1999, including six in the latter year alone. The most significant acquisition of the late 1990s came in February 1999, when the company acquired Interlake Corporation, based in Lisle, Illinois, for £348 million (US$570 million). Interlake brought to GKN not only a powdered metals firm called Hoeganaes Corporation but also Chem-tronics Inc., a maker of lightweight aircraft engine components that became part of GKN’s aerospace unit, and Interlake Material Handling Inc., a manufacturer of racking systems used in warehousing that was added to the company’s group of industrial services subsidiaries.

GKN also restructured its aerospace and defense operations in the late 1990s. In late 1998 the company combined its armored vehicle business with that of Alvis plc in return for a 29.9 percent stake in Alvis. In mid-2000 GKN reached a final agreement with Finmeccanica S.p.A. of Italy on a merger of their respective helicopter businesses into a 50-50 joint venture called AgustaWestland, which instantly became the number two helicopter maker in the world, trailing only the Boeing Company. Then in October 2000 GKN announced that it had agreed to acquire from Boeing a factory in St. Louis, Missouri, where fuselage and wing parts for certain Boeing military aircraft were made. In conjunction with this purchase, GKN said that it would combine all of its aerospace operations, with the exception of the AgustaWestland venture, under a newly created subsidiary called GKN Aerospace Services.

Already by 1999, GKN was approaching Chow’s goal of a 40 percent revenue increase as sales reached £4.64 billion (US$7.51 billion), a 37 percent increase over 1997. Net income for 1999 stood at £358 million (US$579 million). Already considered the top U.K. engineering firm as a result of the market leading companies that comprised GKN’s three legs, GKN under Chow’s leadership was attempting to shed its reputation as an establishment firm run by engineers and accountants and adopt a more entrepreneurial culture and more growth-oriented focus. Chow was expected to pursue additional acquisitions to drive growth in the early 21st century.

Principal Subsidiaries

AUTOMOTIVE: GKN Automotive Ltd.; GKN Automotive International GmbH (Germany); GKN Automotive AG (Germany; 98.5%); GKN Hardy Spicer Ltd.; GKN Driveshafts Ltd.; GKN Automotive Umformtechnik GmbH (Germany); GKN Automotive Polska Sp. z o.o. (Poland); GKN Transmisiones España SA (Spain); GKN Indugasa SA (Spain); GKN Automotive Inc (U.S.A.); GKN Viscodrive GmbH (Germany; 98.5%); Hoeganaes Corporation (U.S.A.; 80%); GKN Sinter Metals Inc. (U.S.A.); GKN OffHighway Systems Ltd.; GKN Wheels Nagbol A/S (Denmark); GKN Armstrong Wheels Inc (U.S.A.); Walterscheid Rohrverbindungstechnik GmbH (Germany); GKN Sankey Ltd.; GKN Autostructures Ltd.; GKN Sheepbridge Stokes Ltd.; GKN Squeezeform; GKN Sankey Ltd. INDUSTRIAL SERVICES: Chep South Africa (Pty) Ltd (South Africa); Meineke Discount Muffler Shops Inc. (U.S.A.); Interlake Material Handling Inc. (U.S.A.). AEROSPACE: GKN Westland Helicopters Ltd.; GKN Westland Industrial Products Ltd.; GKN Westland do Brasil Comércio e Representaçoes Ltda (Brazil); GKN Westland Aerospace Ltd.; GKN Westland Aerospace (Avonmouth) Ltd.; Aerospace Composite Technologies Ltd.; GKN Aerospace GmbH (Germany); GKN Westland-Sitec GmbH (Germany); GKN Aerospace Inc. (U.S.A.); GKN Aerospace Chem-tronics Inc. (U.S.A.); GKN Westland Aerospace Inc. (U.S.A.); GKN Westland Design Services Ltd.; Westland Systems Assessment Ltd.; GKN Westland Ltd.; GKN Westland Inc. (U.S.A.); CORPORATE: GKN (United Kingdom) plc; GKN Industries Ltd.; Ipsley Insurance Ltd (Isle of Man); GKN North America Inc. (U.S.A.); The Interlake Corporation (U.S.A.).

Principal Competitors

American Axle & Manufacturing Holdings, Inc.; Dana Corporation; Delphi Automotive Systems Corporation; Kaman Corporation; Magna International Inc.; MascoTech, Inc.; Midas, Inc.; Monro Muffler Brake, Inc.; Pacific Aerospace & Electronics, Inc.; United Technologies Corporation; Valeo S.A.

GKN plc

GKN plc

DEVELOPMENT OF THE PREDECESSOR COMPANIES

CONCENTRATING ON STEEL, SCREWS, AND FASTENERS

COMPANY PERSPECTIVES

KEY DATES

MAJOR TRANSFORMATION, MOVING THE COMPANY INTO DEFENSE AND AUTO SECTORS

MAJOR MOVES INTO INDUSTRIAL SERVICES

STRENGTHENING A THREE-LEGGED STRUCTURE

FOCUSING ON GLOBAL AUTOMOTIVE AND AEROSPACE ENGINEERING

PRINCIPAL SUBSIDIARIES

PRINCIPAL COMPETITORS

FURTHER READING

GKN plc

GKN plc

Principal Subsidiaries

Further Reading

GKN plc

GKN plc

Development of the Predecessor Companies

1900s Through 1950s: Concentrating on Steel, Screws, and Fasteners

Company Perspectives:

1960s and 1970s: Major Transformation, Moving the Company into Defense and Auto Sectors

Key Dates:

1980s: Major Moves into Industrial Services

1990s and Beyond: Strengthening a Three-Legged Structure

Principal Subsidiaries

Principal Competitors

Further Reading

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GKN PLC

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