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Company Perspectives:
Resolutely focused on its business of strong technological competence , the Delachaux group has confirmed itself year after year as a leadi ng international player in its markets and has a presence on five con tinents.
Delachaux S.A. is a diversified industrial company grouped around thr ee primary divisions: Railroads; Conductic; and Special Products. The company, based in Gennevilliers, France, is one of the world's leadi ng producers of railway equipment, primarily through subsidiary Railt ech. The group's railway operations include welding, track maintenanc e, and electrification systems, and, since the group's acquisition of Pandrol in 2004, is the world's leading producer of rail fastening s ystems. Following that acquisition, Delachaux's Railroad division rep resents nearly 65 percent of the group's total sales of EUR 400 milli on ($500 million) in 2004. The Conductic division produces system s and equipment for transferring energy and data for applications suc h as cranes and other lifting equipment, "people movers," including t rams, trains, amusement rides, and the like, as well as equipment for the production of fiber-optic cables and other special cables. Under Special Products, Delachaux groups its production of chrome (the com pany is the world leader in this segment) as well as magnets and magn etic systems, specialty steels, and plastic injection systems. Delach aux has long had an international presence, and foreign sales account for 82 percent of the group's total revenues. The company is listed on the Euronext Paris Stock Exchange. The founding Delachaux family, through its holding Sogrepar, nonetheless controls nearly 67 percent of company shares, and nearly 80 percent of the group's voting rights . Francois Delachaux, grandson of the founder, is the group's chairma n.
20th-Century Industrial Success
Clarence Delachaux founded a business in Saint Ouen, France in 1902, based on an aluminothermic welding process developed in Germany. Dela chaux adapted the process for the production of overhead electrical l ines for tramways. The company's production played a role in the boom of the tramway market in France in the early years of the century. M ost of the country's major cities developed their own tramway system, using aerial electrical lines as an energy source.
Delachaux soon recognized the opportunity for diversifying the compan y's operations. As the aluminothermic welding process required specia l metals and alloys, Delachaux itself launched production of not only pure metals, but also alloys, into the years leading to World War I. Delachaux supported this operation by building its own foundry. The company developed its own specialty metals, including its "Infatigabl e" (Tireless), which remained a core company product into the next ce ntury.
As World War I drew to a close, Delachaux began preparations to lead the company into new directions. In 1917, the company purchased a 20- hectare lot in Gennevilliers, which became the company's base of oper ations by 1920. The company built a new factory and foundry and began producing special high-resistance steels.
The growth of the French automobile industry, then in its first expan sion phase, encouraged Delachaux to adapt its production to enter the new market. In 1925, the company launched production of molded steel wheel hubs and centers. In the meantime, the company had successfull y extended its other operations, adapting its production for the rail road industry--which became a core industry for the company--and also for use in construction cranes and related equipment. These activiti es formed the basis for the company's Conductic division. At the same time, the company continued to add to its range of railway expertise , adding the production and welding of railroad rails, as well as the production of overhead supports and rail attachment systems, and the production of rail welding machinery and other rail maintenance equi pment.
In the years leading up to World War II, Delachaux also became a majo r producer of chrome, among its other specialty steels operations. Th e company became a prominent supplier of chromium metals to the Unite d States, playing a significant part in enabling the country to build up its strategic metal supply prior to the war.
Clarence Delachaux died in 1941. The company remained in the family, however, as son Philippe Delachaux and his brothers took over the bus iness. By the end of World War II, the company had shifted much of it s production to focus on providing traction systems for industrial eq uipment, as well as the production of wheel hubs for the agricultural market. The company also had taken its first steps into the internat ional market, establishing a factory in Barcelona, Spain in 1942. By the 1950s, the company had added operation producing systems and equi pment for injection molding, which, with the development of the plast ics industry, represented a strong area of growth.
Divisional Structure in the 1960s
By the early 1960s, the company had become a successfully diversified industrial operation. The growth of each of its core production area s encouraged the company to restructure in 1963, regrouping its produ ction operations into dedicated divisions. These included Railway, in cluding the company's various operations for the railroad industry, n ot only in France but in foreign markets as well. Other divisions wer e formed for the company's electrical energy transfer systems and mag netic lifting and conveyance systems operations, and for its metals p roduction, primarily focused on the production of pure chrome metal a nd specialty steels business.
Into the mid-1970s, Delachaux sought further growth, especially on an international scale. A major step forward in the group's ambitions c ame in 1976, with the acquisition of Insul 8 Corporation. Based in Ca lifornia, Insul 8 had pioneered the market for protected conductor sy stems for use in cranes and similar equipment in the 1950s. By 1961, Insul 8 had added a production subsidiary in the United Kingdom. By t he 1970s, Insul 8 was also present in Canada and Australia. The addit ion of Insul 8, and then, in 1979, of U.K.-based Protected Conductors Limited, established Delachaux as a leading producer of these system s.
Francois Delachaux, the oldest grandson of the company's founder, too k over as CEO in 1977. The younger Delachaux prepared to lead the com pany into a new period of expansion in the mid-1980s. As part of that effort, the company went public in 1985, listing on the Paris Stock Exchange's Secondary Market. The Delachaux family nonetheless maintai ned control of the business. Into the mid-2000s, the family's shareho lding remained at nearly 67 percent, while controlling nearly 80 perc ent of the company's voting rights.
Delachaux began expanding through acquisitions in the late 1980s and through the 1990s. In 1987, for example, the company acquired Enroule ur Electrique Modern--Matérial Industriel Cefilav, which speci alized in producing electrical power supply and transfer systems for mobile engines. The company also boosted its rail welding business by acquiring Aluminothermique, also based in France.
Acquisitions formed a part of the company's continuing effort to bran ch out internationally. In 1989, the company entered Portugal, buying a minority share in that country's Porsol. The group also moved into Germany that year, establishing a distribution subsidiary for that m arket. In 1991, the company reinforced its presence in Spain through the purchase of Fecoinsa.
International Industrial Company in the 2000s
As it entered the 1990s, the company carried out a new restructuring of its businesses. In 1991, the company created Railtech Internationa l as the holding company for its railway-related operations. The foll owing year, the company continued its restructuring, creating its Con ductic Division, including the Insul 8 business and the company's oth er industrial conductor systems businesses.
The company's acquisitions continued into the mid-1990s as well. In 1 992, the company acquired 85 percent of Italy's MEC, a specialist in magnetism systems. The following year, Delachaux merged MEC with its Italian distribution subsidiary, Sofint, creating MEC Delachaux Itali e. The company next acquired Godderich International, a conductors sp ecialist, in 1994, and then returned to Italy in 1995, buying up majo rity control of that country's Comes, which specialized in conductor and connection systems.
Through the end of the decade, Delachaux maintained an interest in ex panding its international operations. The company targeted growth in the Asian region, particularly in the railway sector in markets such as India and Thailand. In 1995, the company also entered China, formi ng the Han-Fa joint venture to begin production and distribution of c onductor systems. Delachaux's share of that joint venture stood at 50 .5 percent.
Delachaux continued to build up market share into the mid-2000s, part icularly through a regular series of acquisitions. In 1999, for examp le, the company bought Stedef, a maker of flexible fasteners for rail ways, and then Drivecon, which produced electronic controls for elect ric motors. In 2002, the company bought Métal Forme Technologi e (MFT), based in France, a specialist in the production of high-pres sure iron and steel.
For the most part, the company's acquisitions had remained relatively minor; the MFT purchase added just EUR 15 million to the group's sal es. At the end of 2003, the company launched a more ambitious takeove r, paying EUR 242 million in cash and assumed debt to acquire Pandrol . Based in the United Kingdom, Pandrol had captured the world leaders hip position in the production of rail fastening systems. Pandrol was especially strong in the elastic fastenings segment, claiming some 4 0 percent of the world market.
The integration of Pandrol into Delachaux represented a significant s tep in the company's development. The addition of the new operation b oosted Delachaux's annual revenues by more than one-third, topping EU R 387 million (pro forma) for 2003, and EUR 400 million by the end of 2004. The company's railway division, historically at the group's co re, once again became the major part of the company's business, accou nting for more than 64 percent of sales. The company also had become firmly international in focus, posting more than 80 percent of its sa les from outside of France. After more than a century, Delachaux had established a prominent name as an international industrial player.
Principal Subsidiaries: Comes - Italia S.R.L.; Csa Italia; Del achaux Conductique; Delachaux Conductique; Delachaux GmbH (Germany); Delachaux Metal Inc. (United States); Delachaux Metaux; Delachaux Sys temes D'injection; Ets Raoul Lenoir; Han-Fa Electrification Co. Ltd. (China; 50.5%); Insul 8 Australie Pty. Ltd.; Insul 8 Corporation Canada; Insul 8 Corporation (United States); Matweld Inc. (United Sta tes); Mec Delachaux S.R.L. (Italy); Railtech (UK) Ltd.; Railtech Aust ralia Ltd.; Railtech Boutet USA Inc.; Railtech Calomex (Mexico); Rail tech China; Railtech Contracting Corporation (United States); Railtec h International; Railtech Porsol (Portugal); Railtech Schlatter Syste ms (Rss); Railtech Slavjana (Czech Republic); Railtech Stedef (Usine De Douai); Railtech Stedef Thailande Co. Ltd.; Railtech Sufetra-Trano sa; Railweld (Canada); Railweld; Tamaris Industries.
Principal Competitors: Robert Bosch GmbH; Unio S.A.; Seiko Eps on Corporation; Faurecia; Egyptian Company for Metallic Construction / Metalco; Metalurgica Gerdau S.A.; MAN Nutzfahrzeuge AG; W.C. Heraeu s GmbH; Revdinskiy Steel and Wire Works Joint Stock Co.; Hydro Alumin ium A.S.
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