Carbo PLC - Company Profile, Information, Business Description, History, Background Information on Carbo PLC

Trafford Park Road, Trafford Park
M17 1HP
United Kingdom

Company Perspectives:

Carborundum has a proud history, but we are not content to rest on past glories. The Company's commitment to product quality, technological excellence and exemplary customer service confirm our continued leadership in an industry founded by Edward Goodrich Acheson over a century ago.

History of Carbo PLC

Carbo PLC, through subsidiary Carborundum Abrasives GB Ltd., is one of the world's leading manufacturers of abrasives products. The company focuses on high-specification abrasives for the professional sector, leaving the consumer do-it-yourself (DIY) market to competitors such as Saint-Gobain's Norton. Carbo produces a full range of bonded, and coated, abrasives, as well as high-performance superabrasives. The company's production takes place in Manchester, England, as well as in company-owned sites in Germany. Carbo is also one of the leading distributors of its own and others' abrasives products in the United Kingdom through subsidiaries Anglo-Abrasives and Abrafract. The company operates a countrywide network of distribution centers, ranging from Glasgow to Newton Abbot in far south England, and including sites in Sheffield, Manchester, Nuneaton, Strensham, Worcester, Kingston, Surry, New Milton, and Newton Aycliffe. Carbo has been hit hard by the economic slowdown at the beginning of the 21st century and has been battling losses in the early 2000s. By 2004, however, with sales at £53 million ($96 million), the company started to see signs of a turnaround, as orders began to rise. Carbo PLC is listed on the London Stock Exchange, and is led by Managing Director Lars Nyquist.

Abrasives Import in the 20th Century

Carbo's origins traced back to the foundation of the Carborundum Company in the United States at the end of the 19th century. Edward Acheson had been performing experiments using electricity in order to create artificial diamonds. Instead of diamonds, Acheson discovered a new type of crystal created as a byproduct of his experiments.

Acheson quickly determined that the crystals were able to cut not only glass, but diamonds as well. The crystals also possessed excellent refractory properties. Acheson decided to commercialize the new product, adopting the name Carborundum because he mistakenly believed that the crystals were a combination of carbon and aluminum oxide, also known as corundum. The crystals were later revealed to be silicon carbide, and recognized as the world's first man-made mineral. Acheson set up his company in 1891 and began producing grinding wheels using the new substance.

Carborundum's first market came from the New York diamond trade, replacing traditional materials used for polishing gemstones. The company's first big contract, however, came from George Westinghouse, who placed an order for 60,000 grinding wheels in 1893. The company initially produced only bonded abrasives; by 1898, however, Carborundum had developed a range of coated adhesives as well.

For many, the invention of Carborundum represented a milestone in the history of industrial growth. The crystals' abrasives capability, coupled with their high level of heat tolerance, played an important role in the development of mass production techniques. Demand for the crystals rose quickly throughout the world. The company also continued to research new abrasives materials, and in 1905 introduced a fused aluminum oxide called Aloxite. The new substance proved even more resistant than Acheson's original silicon carbide.

To supply strong demand from Europe, Carborundum began investing in overseas production. In 1906, the company built a factory near Düsseldorf, Deutsche Carborundum Werke. Germany quickly emerged as a major world center for abrasives production. Meanwhile, Carborundum continued to seek new production sites, launching a French subsidiary in 1910. England came next, with the establishment of a British subsidiary, The Carborundum Company Ltd., in Manchester, England. The Trafford Park site remained the British operation's main site into the next century.

The U.S. Carborundum Company expanded rapidly in the United States, then focused on continuing its international expansion. In the years following World War II, the parent company entered a number of new markets, including Switzerland, Belgium, Brazil, Australia and New Zealand, and India. Carborundum also began an ambitious diversification effort, adding production of metals, ceramics, other minerals, and various manufacturing operations as well.

New Owners in the 1980s and 1990s

The U.K. Carborundum meanwhile remained focused on its core abrasives products. The company made a series of investments in order to increase its manufacturing capacity. At the same time, it expanded its abrasives line, building a dedicated Resin Plant in 1960. This allowed Carborundum UK to begin producing a line of resin bonded abrasive wheels, as well as coated papers and cloths.

By the mid-1970s, the U.S. parent company had begun to attract a series of takeover offers, starting with a hostile offer from Eaton Corporation. After successfully fighting off that attempt, Carborundum accepted a $571 million cash offer from Kennecott Copper Corporation in 1978. Within just three years, however, Kennecott was scooped up by Standard Oil of Ohio, also known as Sohio.

Soon after, Sohio began stripping its abrasives operations, especially Carborundum's international operations. Like much of Carborundum's international businesses, the British unit had slumped into losses with the 1970s economic recession. Sohio had named a new management team to try to turn the British subsidiary around. Then, after Sohio announced its intention to shed its foreign abrasives holdings, Carbo's management, led by Ken Jackson, engineered a buyout of the British subsidiary. The purchase price amounted to just £2.6 million. The company, primarily composed of Carborundum's British and German operations, then adopted the name Carborundum Abrasives GB Ltd. (Carbo). Carbo listed its shares on the London Stock Exchange's OTC market that year, before moving to a full listing in 1988.

The abrasives market during the 1980s remained a highly fragmented, and highly cyclical, market, in which profits proved difficult to realize. As Carbo was unable to gain a significant market share in its core markets, Jackson led the company on a diversification drive, expanding into a number of areas including drainage products and plastics. The company's largest single market during this period was West Germany. Yet the deep economic difficulties in that country during the recession at the beginning of the 1990s were slated to be exacerbated by the German reunification.

In response, Jackson sought a buyer for the company. In 1991, Carborundum agreed to be acquired by the United Kingdom's Hopkinsons Group for £33 million. Hopkinsons was itself in the process of restructuring, having sold off its main Hopkinsons Limited business in 1987, and its large valve business to the Weir Group in 1990. The "new" Hopkinsons now operated through two primary divisions, Carborundum, and Bryan Donkin, for gas distribution equipment and systems.

Focusing on Abrasives for the New Century

In 1993, Ken Jackson took over as Hopkinsons' chief executive, backed up by another Carborundum alumnus, Martin Sanderson, as finance director. The pair now began to refocus Hopkinsons around its abrasives operations. The company also plotted a strategy to build market share in bonded abrasives in its core U.K. and German markets, in order to position itself as a major player in the global abrasives market.

Acquisitions formed an important part of this strategy. In 1996, Hopkinsons launched its acquisition drive in earnest. The purchase of Abrafract Abrasives that year boosted the group's U.K. operations by some 25 percent, and gave it a leading 20 percent share of the British market. The company also bought Hodges Jacques, which enabled the company to target the French market. The company boosted its capacity in Germany by acquiring Acton & Borman.

By 1997, abrasives accounted for 70 percent of the company's turnover, prompting Hopkinsons to change its name to Carbo PLC that year. The company continued building up its abrasives operations, while phasing out its noncore operations. The Bryan Donkin business was sold off in 1998.

As it approached the end of the decade, Carbo restructured its German operations, shifting its exports business to the United Kingdom. In 1998, Carbo announced its plans to spend £10 million on new acquisitions, starting with abrasives distributor Noble & Macauley. In Germany, Carbo bought family-owned Dilumit that year as well. In 1999, the company attempted to enter Italy, acquiring the country's BMA Group for £4 million. The purchase added some 21 percent to the company's coated abrasives revenues and a 10 percent boost to the company's overall sales.

Yet Carbo's hopes for gaining a significant stake in the wider European market were thwarted by the rise of the Saint-Gobain group's abrasives subsidiary, which had acquired world leader Norton in 1990 and also controlled another major abrasives maker, Unicorn/Universal. As Saint-Gobain continued to buy abrasives companies--including the remains of the original Carborundum group in 1995--Carbo was forced to draw back to its core German and U.K. markets.

The economic slump at the start of the 2000s also began to grind down on Carbo. The company's revenues began to slip, and its profits disappeared. As its losses began to mount, Carbo worked at consolidating its manufacturing operations. By 2002, the company's difficulties caused it to place its Trafford Park plant under bankruptcy protection; the company later bought the facility back for £150,000. Payroll at the site, the company's home for nearly 100 years, was slashed to a minimum. Not all of Carbo's efforts were negative, however. In 2002 the company bought Ekamant UK Ltd., extending its business into the conversion and distribution of abrasives for the woodworking sector.

Nonetheless, Carbo's losses continued to sap the company's health. By 2004, its net assets had dwindled from £26.5 million at the end of the 1990s, to just £200,000. In dire straits, the company found temporary relief from GMAC, which pledged £9.5 million ($15 million) in working capital facilities. The company's major shareholders then brought in a new management team, led by Lars Nyquist, who had been active in the abrasives market in Sweden, as company CEO.

Under Nyquist, Carbo moved to complete the restructuring of the group's operations, announcing in September 2004 its decision to shut down the Trafford Park plant and shift production to the company's Düsseldorf factories. In this way, the company expected to cut some £700,000 per year in operating costs. Carbo nonetheless remained committed to maintaining its position in the U.K. abrasives sector, now focused on its Anglo-Abrasives distribution network.

Principal Subsidiaries: Abrafract Abrasives; Anglo-Abrasives Ltd.; Carborundum Abrasives GB Ltd.

Principal Competitors: GE Superabrasives; Universal Superabrasives Inc; Saint-Gobain Abrasives Inc.; Ilyich Abrasive Co.; Sia Abrasives Holding AG; 3M Nederland B.V.; Flugger A/S.


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