The Adelphi, 1-11 John Adam Street
The mission of Cookson is to add value to its customers' businesses by providing materials, equipment, processes, and services that allow them to increase the efficiency, quality, and profitability of their operations. Throughout the world, Cookson companies are known for supplying products that represent the best technology, supported by the best technical service.
Cookson Group plc is an international materials technology group that provides advanced materials, equipment, and enabling technologies to customers in 100 different countries. The group operates three divisions--Electronics, Ceramics, and Precious Metals. Cookson Electronics, responsible for securing nearly half of the group's sales in 2000, operates as a leading supplier of materials, equipment, process chemistries, and services to manufacturers of printed circuit boards, semiconductor packaging components, and various electronic-related items.
Cookson's Ceramics division manufactures ceramic refractory systems and lining materials, which control and monitor liquid steel, glass, and ferrous and nonferrous metals. This division's products are found in every steel, glass, or foundry market in the world. The company's Precious Metals division supplies precious metals fabricated into wire, sheet, tubing, and chains to the jewelry industry. It also serves the electronics, dental, and electrical industries.
Early History: 1704-1800s
The family was established in Tyneside, England, in 1704 when Isaac Cookson, the son of a brazier from Penrith, Cumberland, moved to Newcastle upon Tyne to seek his fortune. He began operations near South Shields, where the company has had a continuous presence to the present day. The family developed major industrial links in coal mining and the manufacture of iron, salt, and glass, but its direct involvement with a company that came to be part of the present group did not occur until it entered lead manufacturing in the middle of the 19th century.
The earliest direct link with the present group also came in lead manufacture, when in 1778 a Rotherham-based family of ironmasters, the Walkers, began to diversify, and set up its first white lead works at Elswick, Newcastle. White lead--basic lead carbonate--was then the base for virtually all decorative paints and, as the population grew rapidly and the Industrial Revolution gathered pace, the market for white lead and other lead products expanded. Lead, although a long way behind iron, was the second most heavily utilized metal and was to remain so throughout the 19th century, with British firms processing around a quarter of a million tons a year by 1900.
This initial diversification into lead had been made at a propitious time and the Walkers' network of lead works became larger than its original base in iron. By the end of the Napoleonic Wars, the Walkers' partnership was employing a total capital of approximately £500,000 in lead manufacture, with works in London (Islington, Lambeth, and Southwark), Chester, Derby, Liverpool, and Newcastle under Lyme, as well as the original Elswick works. Although some of the smaller works were closed during the 19th century, large smelting and manufacturing sites were purchased at Bagillt and Dee Bank, in north Wales, to work local lead ores, and the Scottish market was supplied by a works in Glasgow.
Although white lead remained important, the output of other lead chemicals--especially red lead, used as the base for protective paints for the increasing output of iron and steel in the country--was developed. The Walkers' partnerships were the first to adopt a new process for the manufacture of lead shot, and built several shot towers at the turn of the 18th century--including one at the Chester works, which is the only early tower still in operation in the United Kingdom. The Walkers' works processed a large amount of blue lead, especially rolled sheet lead and extruded pipe. These products were in great demand as a result of the large increase in both public and private building in the Victorian years, with sheet being used for roofing, and pipe to convey the newly developed water supplies. As a result of these developments, the partnerships--each works was run by a managing partner, and interlocking partnerships between various works provided some overall control--were the largest single force in the British lead manufacturing industry throughout the 19th century.
Despite its large size and considerable potential, the Walkers' partnership lacked initiative and did not dominate the industry in the second half of the 19th century as it might have done. By then the third and fourth generations of partners from the family were managing the firm, and there was evidence that it was suffering the classic symptoms of hardening of the arteries of commercial instinct. Capital employed grew very little over the 19th century; profitability was never high; the innovation of new techniques was left to competitors; and several of the partners became more interested in their country houses and small landed estates than in the fortunes of the firm. A dispute between the partners with regard to profitability led the partnership into the chancery court with the eventual outcome in 1889 that the assets were sold to a newly formed public company, Walkers Parker and Company. The new company experienced even less financial success, with a number of losses in the highly competitive years up to 1914.
Expansion into Lead Manufacture: 1851
In the second half of the 19th century, innovation in the lead manufacturing industry came in large part from newly established firms that were subsequently drawn into what is now the Cookson Group. It was in 1851 that the Cookson family became involved in lead manufacture. In that year, two of the sons of Isaac Cookson III purchased land at Hayhole on the River Tyne in Northumberland, where they built a white lead works. In the mid 1840s their father and his partner had sold the family's glass manufacturing companies, because of increasing competition in this area, and the sons needed to find an outlet for their considerable talents. William Isaac Cookson was a very capable scientist and businessman. At the age of 20 he had spent a year in Michael Faraday's laboratory, and he was later to take out several patents for improvements to metal-smelting and chemical processes.
Under William Isaac and later his son Norman, Cookson rapidly became a significant force in the British lead manufacturing industry. In 1854, the partners bought from the Hawthorn engineering family a second lead works at Howdon on Tyne, close to the Hayhole works. Since lead smelting and refining and the manufacture of red lead were already in operation at Howdon, the Cooksons had developed the capacity for fully integrated production within less than a decade. Over the next 50 years, the works were expanded and were regularly modernized with the introduction of new processes, the major instance being the first successful British introduction of an alternative to the centuries-old stack process for the manufacture of white lead. In the late 1890s Norman Cookson, like his father an amateur scientist of some distinction with several patents to his name, introduced a German-developed chamber process at Hayhole, which doubled Cookson's output of white lead to some 10,000 tons per annum in the early 1900s, around 20 percent of U.K. output. Cookson's growth brought considerable profitability and, increasingly, leadership of the industry.
By the turn of the 19th century lead manufacturing, like many British industries, was experiencing severe competition, not only from the development of new firms at home but also from imports from continental producers. Most British firms were small family-run companies that were ill-prepared to cope with the competition, although the example of Walkers Parker suggests that the adoption of limited liability status alone was not a satisfactory solution. For most of the companies, salvation was seen in cooperation, common pricing policies, and the formation of cartels. By 1914, there were British conventions of the red, white, and blue lead manufacturers; each of these conventions in its turn negotiating market shares within international, primarily European, conventions.
The Formation of Associated Lead Manufacturers: 1924
Whereas the formation of cartels remained important internationally in the years between World War I and World War II, British manufacturers saw amalgamation as the best way to maintain profitability in the face of increasing competition. The earliest proposals date from World War I but in 1924, under the leadership of Cookson and with Clive Cookson as the first chairman, Associated Lead Manufacturers (ALM) was formed. Two years before Imperial Chemical Industries Ltd. was to perform the same function for the British chemical industry, lead manufacturing had a central focus. The initial merger, with a capital of slightly less than £2 million, was of Cookson and the firm of Locke, Lancaster and W.W.&R. Johnson & Sons, the latter being an earlier amalgamation of several London producers that was now by far the dominant London firm.
ALM thus began its existence with the two major firms in two of the three most significant production areas in the United Kingdom. It lacked a presence, however, in the remaining geographical area of significance, the Northwest, and still faced the regionally diversified competition of Walkers Parker. The first of these deficiencies was overcome rather surprisingly by the 1925 purchase of Rowe Bros. & Company, traditionally a builders' merchant and thereby involved in the supply of lead products. Although this purchase would have given ALM an outlet for some of its sheet and pipe production, its true function was to nullify the potential threat of Rowe's growing involvement in lead manufacture. Before World War II, Rowe, in conjunction with Cookson, had purchased the patent rights to a newly invented process for the manufacture of red lead and, perhaps more important, had acquired the Runcorn White Lead Company, which brought with it the plant required for a new "quick" process. Even using Cookson's new chamber process the corrosion period for the production of white lead was almost two months, which involved considerable additional costs as compared with the potential of the as yet little-used quick process, wherein corrosion took only a few days.
ALM continued to act in the predatory way in which it had begun its existence. Within five years of its inception, the company had purchased all of the major lead manufacturers in the country with the exception of the Mersey White Lead Company, which was eventually taken over by ALM in 1972. Although there were significant numbers of small, regional producers of lead pipe--and to a lesser extent of lead sheet--in which scale economies were not essential to the producers' survival, ALM dominated the production of lead chemicals. In 1925, ALM took over the Brimsdown Lead Company, another company with a new white lead process, which had been financed by Ludwig Mond and supported by a research laboratory with a number of impressive young scientists, including Stephen Miall, who was to write what was for a long time the standard history of the chemical industry. This acquisition was followed in the years 1926-28 by the mopping up of several of the smaller Tyneside and London manufacturers and, in 1929, after negotiation had failed, by the aggressive purchase of Walkers Parker shares, which eventually led to an agreed merger.
Formation of Holding Company in 1930
Achieving a dominant position in lead manufacturing was not to be the end of ALM's aims. Not only was there no growth in market size--a result of the Depression during the interwar years and increased foreign competition--there were also new substitutes for lead products. Copper was beginning to make inroads into the market for lead pipe but, more significant, white lead no longer had the virtual monopoly of the paint market. Titanium-based paints and the entry into the market of Imperial Chemical Industries (ICI) with its Dulux brand were to cause ALM increasing problems, although, in large part as a result of the former Brimsdown chemists' work on titanium, the group had a small share in a company set up in the 1930s to produce titanium dioxide. That company, later known as Tioxide Group plc, was jointly owned by Cookson Group and ICI until December 1990 up until which time, as the world's second largest titanium dioxide producer, it made a significant contribution to the Group. In 1930, before the impact of these new paints had become serious, however, ALM purchased Goodlass, Wall & Company (GW) of Liverpool, a large paint manufacturer with retail outlets. Although this might have been a useful diversification, particularly since GW owned the Valspar patents with considerable potential for expansion in the market for varnishes, the merger caused problems. The price paid for GW proved too high in the light of subsequent profits, ALM's capital had to be written down, and GW was never integrated, being run as a separate organization until its sale in 1984.
The ALM board had become distinctly unwieldy in the late 1920s as a result of the appointment of additional directors following the takeover of various family-owned firms. In 1930, Clive Cookson set up Goodlass Wall & Lead Industries (GWLI) as a holding company, and the power of the ALM board withered. The original GW directors were soon pruned from the board of GWLI, and the power of Clive Cookson and his supporters was complete. It is surprising that rationalization was not taken further in the 1930s. A number of lead works closed in London and on Tyneside and production was concentrated geographically to obtain scale economies. The constituent companies essentially remained independent, however, certainly in name (even in the late 1940s at Elswick the switchboard operator had to answer different lines with different company names), and to a considerable extent competed with each other in the market.
Diversification Enforced by World War II
World War II enforced further rationalization. Imports of lead were reduced and controlled by the government, while demand fell, in large part as a result of the almost complete cessation of private building work. The group had to expand several existing businesses, one being the production of solder, as it gradually became clear that diversification away from lead was necessary. After the war, for a number of lead products, there was only limited recovery of demand. White lead was the major casualty, as it was replaced by other bases for paints, and although a new market was found in stabilizers for the plastics industry, the tonnage needed was small. Most of the white lead plant had to be closed. Owing to the motor industry's growing demand for lead in petrol and batteries, total U.K. demand for lead products continued to expand, reaching a peak in the mid-1960s. In this area and in the supply of lead for cables, GWLI faced competition and found the basic lead products business less profitable than its traditional business.
As early as 1943, GWLI had begun to diversify into what Clive Cookson called "some allied field of industry." Fry's Metal Foundries of Merton, Surrey was purchased for £500,000, overlapping with Cookson's existing business in the production of solder but otherwise concentrating on printers' metals and nonferrous alloys. In 1954, another acquisition in this field, Fry's Diecastings, was made. As with the lead side, where a number of plants had been set up overseas during the interwar years to avoid import duties, the purchase of the Fry's companies brought an expansion in foreign holdings. A further area of expansion was at Howdon, where Roland Cookson--nephew of Clive, later to become chairman of the group from 1963 to 1972--added zircon in 1950 to the production of antimony, in which the Cooksons had been involved since the mid-19th century. As with stabilizers for plastics, where GWLI had negotiated for existing U.S. technology through its links with the National Lead Company of the United States, Cookson negotiated a U.K. license to produce zirconium products with TAM Ceramics. These highly refractory materials were beginning to make inroads into the group's existing markets in the ceramics industry and, therefore, offered a sensible diversification, which was to be considerably reinforced in the 1960s with the purchase of two Staffordshire companies--Harrison & Sons (Hanley) Ltd. and E.W.T. Mayer Ltd.--involved in the production of ceramic glazes.
Focusing on Chemicals, Metals, and Paints: 1970s-80s
Although diversification had not taken the group far outside its original activities, it had resulted in a lack of focus. In 1949, the lead business, which included antimony and subsequently zircon, had been reorganized into a single company, ALM, with regionally structured management. This offered little opportunity, however, to concentrate its resources on those products which were most profitable. This problem was exacerbated by the accretion of additional companies and the growing tendency toward inter-company trading below market prices. Gradually, beginning in 1977 with the creation of the antimony and zircon operation Anzon Limited, the group--which had changed its name in 1966 to Lead Industries Group Ltd. (LIG)--began to adopt a divisional structure. Two years later, ALM was divided into three product divisions: chemicals, metals, and paints.
By this time, it was clear that the lead business was in permanent decline. U.K. consumption had declined by more than 25 percent in the previous ten years, and this had necessitated the closure of several works. Although to some extent offset by the development of new products such as lead-clad steel for buildings, and by overseas expansion in Europe and in the United States, where the lead interests of NL Industries were purchased for $40 million in 1979, making LIG the world's leading producer of lead products, the future of the group clearly lay elsewhere. Already, by the early 1970s ALM accounted for only one-third of group turnover and its contribution to total profits was declining. Further diversification was required.
Changes Under a New Name: Middle to Late 1980s
Fortunately for the group, leadership had moved in the 1970s toward a new set of directors who had only limited links, if any, with the company's traditional lead business and who increasingly recognized the need to reduce those links, not only because of the declining financial returns from lead but also because of its unattractive public image. Leading the new developments were I.G. Butler, group chairman from 1976, and M.J.G. Henderson, his successor in 1990. They recognized that the group was actually less than the sum of its parts, because many of the 100 or so operating subsidiaries, in various parts of the world, did not associate themselves with the name of the group and were directing resources for individual rather than corporate benefit. Since 1983, the change of name from Lead Industries Group to Cookson provided the focus for a new and much more high-profile corporate image for all the subsidiaries worldwide.
A second step was the creation of a clearer divisional structure and the appointment of a chief executive for each division who was responsible for isolating and developing those of its products with major growth potential. The third step was to make further major overseas acquisitions, in recognition of the fact that the U.K. market was not large enough to offer significant opportunity for expansion and profit growth. Among the acquisitions, all by agreed takeover, were A.J. Oster Company in 1978, an American producer of nonferrous metals, and in 1987, Vesuvius Crucible Company of Pittsburgh, a U.S. supplier of ceramics to the steel industry, which was subsequently set up as the Vesuvius Group, with headquarters in Brussels. As a result, the 1980s experienced growth in group turnover from £400 million to £2 billion and in pre-tax profit from £16 million to £183 million. Over the decade, earnings per ordinary share rose from 6.7 to 31.2 pence.
Cookson proved one of the fastest growing British industrial groups during the 1980s. By then, it had established a reputation as supplier of a wide range of specialist products to industry, including nonferrous and precious metals, ceramics and refractories, chemicals, and plastics. The group saw itself as "the name behind many big names of industry." Claiming that its products were almost ubiquitous in daily life--they were incorporated in most things from washing machines to motor cars, flame retardants in children's toys to filaments in light bulbs, and printing on drinks cans to household paint--the group became almost worldwide in its diffusion, with manufacturing plants in more than 40 countries, and 70 percent of its turnover plus 80 percent of profit coming from abroad by the late 1980s.
Acquisition and Divestiture During the 1990s
Cookson spent the majority of the 1990s involved in unloading unprofitable businesses to cut costs. Its first move was the sale of its holding in Tioxide Group plc due to the dismal conditions plaguing the titanium dioxide industry. It also sold its A.J. Oyster brass mill product business and divested its holdings in Cookson Plibrico Ltd. Japan as well as Plibrico's European operations. In 1992, the firm sold its interest in Nanshing Color and Chemical Company, a Far East distributor of materials related to the electronics and plastics industry. That year, the firm was also forced to lay off company employees due to weakening economic conditions.
The group also made certain key acquisitions to strengthen its core operations. In 1991, the firm purchased the dielectric powders business of DuPont, incorporating it into its TAM Ceramics Inc. subsidiary. The following year, Stern Leach, a leading precious metal fabricator, became a wholly owned subsidiary of Cookson. The company also expanded its magnet operations in 1993 by forming a joint venture with New York-based Magnetic Technologies Corp.
Cookson strengthened its hold on the printed circuit board (PCB) industry in 1993 by purchasing the electronic laminates business of Swedish firm Perstorp as well as Brent Electronic Chemicals, a supplier to the PCB market. In 1995, SMT, a California-based printing stencil manufacturer, was acquired. The firm's refractories business, operating under the name Vesuvius, also expanded by acquiring the U.S.-based Technical Ceramics Division of LECO Corp. and the assets of HTCI, a manufacturer of advanced ceramic filters.
By 1996, Cookson's acquisition spree appeared to be paying off. Working with an increased net cash flow of £117 million, the group was able to pay down debt as well as continue expansion and divestiture efforts. As such, Cookson made an $87 million purchase of U.S.-based Engineered Polymers Corp. and bought GRP Inc., a distributor of fused cast refractory materials. In 1996, the group sold its organic pigment business to Hoechst AG. The following year, it sold its antimony products business (Anzon) to Great Lakes Chemical Corp. in a $90 million deal. Stephen Howard, Cookson's CEO, commented on the group's actions in a 1997 Extel Examiner article, stating, "Cookson continues to focus management and financial resources on those businesses where it has or is able to achieve leading market and technological positions on a world-wide basis. The sale of the Anzon business completes our exit from the manufacture of plastics additives and releases capital which Cookson will employ in those businesses which are key to its future growth."
Under the leadership of Howard, Cookson continued expanding in the areas deemed profitable. In 1998, the group purchased the U.K. refractories businesses, Flogates Ltd. and KSR International Ltd. It also acquired the European Laminates manufacturing operations of AlliedSignal Inc. and U.S.-based Matrix, a manufacturer of micron-tolerance precision engineered products.
In 1999, the Plaskon Electronics Materials business of BP Amoco was purchased, along with Premier Refractories International Inc. for $410 million. The group also announced the $503 million purchase of Enthone-OMI Inc., a manufacturer of specialty chemicals used in the electronics, surface metal finishing, and jewelry industries. In 1999, as part of the group's divestiture program, TAM Ceramics Inc. was sold to Ferro Corp.
During the late 1990s, Cookson Group renewed its focus on its core operations: electronics, ceramics, and precious metals. Although sales were up 17 percent in 1999, profits slipped to £149 million from £151 million in the previous year. Management cited the strength of the British pound, the unstable Asian economy, and unremarkable performance in the electronics industry as cause for its lackluster profits.
Cost Cutting and Growth in Key Segments in the New Millennium
During the first year of the new millennium, however, Cookson's profits rebounded, especially in its Electronics division, which reported a doubling of operating profits due to favorable market conditions. The group continued its growth through acquisition policy, acquiring the laminates division of Achem Technology Corp. to bolster its Asian operations in the PCB market. It also disposed of its Neptco, Focas, and Polyflex businesses and planned to continue its divestiture of its Plastic Moldings segment.
Its profit rebound did not last long, however, and in 2001, the electronics industry once again saw a decrease in demand. The U.S. market, as well as the Asian and European markets, experienced a sharp downturn in the industry. Cookson's Ceramics division also came upon hard times as steel production faltered in North America.
Cookson management remained intent on future growth, however, and set forth a strategy dedicated to delivering advanced productivity-driven process solutions to customers, further integration of new acquisitions, and a constant renewal of operations dedicated to changing customer demands. As management continued to cut costs to combat market downturns, Cookson remained well positioned to maintain a leading role as a supplier to the electronics industry.
Principal Divisions: Electronics; Ceramics; Precious Metals.
Principal Operating Units: Polyclad Technologies; Speedline Technologies; Alpha-Fry Technologies; Cookson Performance Solutions; Vesuvius Group; Sterns Metal Group.
Principal Competitors: Asahi Glass Company Ltd.; E.I. du Pont de Nemours; Johnson Matthey plc.