8155 T&B Boulevard
Every day, all day, Thomas & Betts products are all around us. From the first cup of coffee in the morning, to the last cartoon at night, our products help capture electricity for everyday use. For over 100 years, we've provided the connectors, fittings, conduit, raceway, terminals and related products that make electrical wires come to life and make life, as we know it, possible.
Thomas & Betts Corporation (T&B) is a leading global manufacturer of electrical connectors and components. The company's electrical segment, responsible for nearly 77 percent of net sales, produces fittings and accessories for electrical raceways; wire fastening products; crimp and mechanical connectors for wiring and cables; indoor and outdoor switch and outlet boxes, covers, and accessories; emergency lighting products; and safety switches. Generating more than 9 percent of revenues is the steel structures segment, which manufactures tubular steel poles and lattice steel structures used in power transmission applications. The communications segment, contributor of about 7 percent of revenues, is involved in producing electromechanical components, subsystems, and accessories for cable television and telecommunications networks. The remaining 7 percent of sales belong to the HVAC segment, which specializes in heating and ventilation products for commercial and industrial buildings. T&B has more than 150 manufacturing, distribution, and office facilities located in about 20 countries. Three-quarters of T&B's revenues originate in the United States, 13 percent in Canada, and 9 percent in Europe.
Early 20th-Century Beginnings
From its earliest years in business, T&B demonstrated an ability to transform electrically charged business ideas into readily marketable products. In 1898, Robert McKean Thomas and Hobart D. Betts, both engineering graduates from Princeton University, established an agency in New York City for selling electrical conduit. Within a year, they were joined by Adnah McMurtrie, another engineer whose in-house designs added to the fledgling agency's list of salable products. The partners formed a New York corporation, Thomas and Betts Company, in 1905. As early as 1906, T&B's innovative products changed the electric industry. The Erickson coupling, for example, permitted electricians to join two conduits without having to rotate either, or to separate conduits without disassembling the whole conduit run. These early patents set industry standards and were still widely used nearly a century later. Such products made for healthy sales around the beginning of the 20th century.
To accelerate their young firm's growth, however, the three colleagues realized that they had to begin manufacturing the goods they designed and sold. To that end, in 1912 they purchased the Standard Electric Fittings Company of Stamford, Connecticut. The following year, they solicited the expertise of Robert Thomas's nephew, George C. Thomas, Jr., who pushed the company's manufacturing capabilities to unprecedented levels. With design, manufacturing, and sales efforts all advancing at a healthy rate by 1917, it was time to centralize resources and consolidate operations. That year, Thomas & Betts sales agency and the Standard Electric Fittings Company were merged to form one, new corporation, Thomas & Betts Co. Central headquarters were established on Butler Street in Elizabeth, New Jersey, a site that remained T&B's largest manufacturing facility into the early 1990s.
Following its incorporation, T&B entered a period of diversification and geographic expansion that would last uninterrupted until the outbreak of World War II. In 1928, G.C. Thomas, Jr., rose to the position of chief executive officer, a tribute to the importance of the manufacturing initiatives he had managed over the previous decade and would continue to expand into the 1970s. Under Thomas, Jr.'s leadership, T&B also pushed into broader markets, founding Thomas & Betts Limited in order to sell products in Canada.
The onset of World War II forced T&B into product development that it may have otherwise neglected. The military's drive to reduce weight in aircraft, for example, spurred the firm's development of the first successful compression lugs for connecting aluminum conductors. This breakthrough led to the development of a complete line of color-coded compression connectors, as well as hand and hydraulic tools and dies. After the war, these and other innovations served numerous civilian applications, adding significantly to the company's product line.
Postwar Era: Going Public, Expanding into New Fields and New Markets
Product changes were accompanied by organizational changes as the company entered the 1960s. T&B became a public company in 1959 and was first listed on the New York Stock Exchange in 1962. The company changed its name to Thomas & Betts Corporation in 1968. Meanwhile, in 1960, Thomas, Jr., retired as CEO and was replaced by Nestor J. MacDonald, the former vice-president of marketing.
Early in MacDonald's tenure, T&B continued to stride assiduously into new, international markets. Building on its existent Canadian presence, a new international division was established in 1962. By 1963, the company was emphasizing closer field contact with licensees in Great Britain, Europe, and Mexico. In order to speed up the development of European markets, the company also established a new European subsidiary, Thomas & Betts of Belgium, S.A. in June of that year. By 1983, a Luxembourg facility had been established to produce electronic connectors for even broader European markets. Moreover, Ouest Electronic Connecteurs, a French maker of electronic connectors and custom components of which T&B had acquired 80 percent in 1982, provided additional R&D and manufacturing capabilities in Europe. Other international points of contact included an Australian location to supply the South Pacific.
While delving into foreign markets in the 1960s and 1970s, T&B also began to push aggressively beyond its traditional expertise in electric supplies and into electronic components. Its initial forays in that direction were bolstered by the purchase of Arthur Ansley Manufacturing Company in 1966 and Digital Sensors, Inc. (DSI) in 1968. After J. David Parkinson--former head of the company's electrical business--succeeded MacDonald as CEO in 1974, electronic product development was stepped up yet again. In 1975, T&B merged its Ansley and DSI divisions into Ansley Electronics Division (subsequently renamed Thomas & Betts electronics division in 1981).
Progress in electronics built on a solid foundation of innovation that had already distinguished T&B as a market leader in the electrical market. Through the 1980s, many of the company's past developments were still considered milestones in the industry at large: conduit fitting with integrally insulated throats in 1954; new cable ties and straps in 1959; use of steel in rigid conduit fittings line in 1968; new designs in floor boxes in 1970; heat shrinkable insulating covers and caps in 1974; and a line of flat conductor cable for under-carpet wiring systems in 1980. That list was supplemented by a growing line of electronic interconnection products for professionals in electronic engineering, telecommunications, and automotive electronics. Some of T&B's best performers included: the FLEXPAC Termination system, consisting of flexible conductor cables, jumpers, and circuits; connectors for leadless chip carriers, designed for multilayer printed circuit boards in advanced computer systems; and dual in-line package (DIP) sockets for interconnecting integrated circuits (ICs).
Strategic Acquisitions: 1980s and Early 1990s
Through the late 1980s, T&B continued to aggressively seek out new markets. The firm began a series of strategic acquisitions under the guidance of T. Kevin Dunnigan--a seasoned veteran who had progressed from Canadian sales in the 1960s to president and COO in 1980, and finally to president and CEO in 1985. In 1987, the company acquired Vitramon, Inc., a manufacturer of surface-mount ceramic chip capacitors (an integral part of the power management process in all electronic systems). Vitramon's surface-mount technology permitted direct soldering of the chips onto printed circuit boards, thereby simplifying the manufacturing process and saving space. This acquisition was quickly followed by the 1988 acquisition of Nevada Western Supply Co., specializing in voice and data wiring products that could be easily and cost effectively installed using ordinary telephone wiring. Both these acquisitions were a step away from T&B's core line of electrical and electronic connectors, and both were intended to capitalize on new demands related to computer and communications networking.
The 1989 acquisition of Holmberg Electronics Corp., a manufacturer of electronic connectors, was more in line with T&B's historical field of specialty. The effect of that acquisition on core business was soon eclipsed, however, by the largest acquisition in the company's history. On January 2, 1992, T&B acquired FL Industries Holdings, Inc., known in the electrical industry as American Electric, a firm with annual revenues of nearly $500 million. The corporation's electrical business and American Electric were merged into a new Thomas & Betts electrical division, which, along with the existing corporate headquarters, was relocated to Memphis, Tennessee, on the site of the former American Electric, in 1993. By the first quarter of 1994, T&B's electronics division headquarters also moved to Memphis, thereby joining the newly energized core. (T&B itself reincorporated in Tennessee in 1996.)
Critical to that core was the competitive edge that American Electric would contribute to T&B. Founded in 1958, American Electric had undergone a series of transformations and buyouts. In 1968, when American Electric still focused on its original business of manufacturing lighting and related products to the utility market, it was acquired by ITT Corporation. After becoming the nation's largest street light manufacturer, American Electric was sold to Forstmann Little & Co., a leveraged buyout firm, in June 1985. Under that management, the company began a rapid chain of acquisitions, including the Electrical Products Division of Midland-Ross Corp., the Lighting Division of North American Phillips, Anchor Metals, and American Pole. With such a dynamic range of constitutive parts, American Electric was better suited to give T&B "a broader market presence, and [to] function more effectively as a single global unit," as Chairperson and CEO Dunnigan remarked in the 1993 letter to shareholders.
T&B's acquisition of American Electric triggered a series of other strategic moves and organizational changes designed to consolidate operations and optimize efficiency of the larger company. On January 1, 1994, Clyde R. Moore became president and COO. He brought to the post experience as previous president of Thomas & Betts electrical division and president of American Electric before the acquisition. Six months later, T&B sold Vitramon--the manufacturer of ceramic chip capacitors it had acquired in 1987--to Vishay Intertechnology, Inc. for $184 million. The move represented an effort to focus on T&B's core businesses of electrical and electronic connectors, components, and systems. In continuation of that process, on September 16, 1994, the company announced pretax charges of approximately $90 million to cover the costs for various initiatives to "optimize operations," according to a T&B press release on that date. According to Dunnigan, "the actions covered by these charges are expected to result in savings of approximately $8 million in 1995 and over $20 million annually in subsequent years."
In the effort to optimize operations, one of the first areas of concentration was quality control. Starting in 1987, the firm launched its Total Quality Excellence (TQE) program, involving all employees in an ongoing effort to improve product quality and reduce costs. T&B began implementing statistical quality control and just-in-time manufacturing techniques in all its plants, as well as computer-aided design and manufacturing. The program's ultimate goal was to provide "each customer with the right product, on time delivery, zero defects, and competitive pricing," according to Jim Dailey, vice-president of marketing for the T&B electrical division, in a July 1990 Industrial Distribution article.
Declaring in its promotional literature that "the era of electronic commerce has arrived," T&B also dedicated significant resources to marketing strategies employing electronic data interchange with its customers. In an effort to optimize customer service for its electrical distributors, T&B's largest single market, the company designed Signature Services, a marketing package that sped up the order entry process and reduced paperwork for shipping billing. Taking that system a step further in 1993, T&B implemented Distributor/Manufacturer Integration, an interactive system that made inventory management a responsibility--and ideally a simple one--shared by both the distributor and the company. A similar service, Easy Access, was designed for electronics customers. Distributors and buying manufacturers in that market could check T&B's inventory and pricing, as well as the status of their orders, while corresponding instantaneously via electronic mail. These state-of-the-art systems represented important steps toward reducing costs while increasing direct contact with market trends via the company's customers.
Revenues during 1994 topped the $1 billion mark for the first time, while profits increased 20 percent, hitting $67.8 million. In August of that year, T&B acquired a minority stake of about 29 percent in Leviton Manufacturing Co., Inc., the leading manufacturer of wiring devices in the United States. The purchase was seen as a possible prelude to a full acquisition, but the CEO of the privately held, family-run Leviton, who with his wife held more than half of the common stock, opposed T&B's investment in the company, and the two companies were soon involved in litigation. Through relationships between T&B and certain Leviton managers, T&B was able to have some influence over the company, but this influence by and large ended in January 2002 when T&B's main liaison with Leviton retired from that company.
Acquiring Amerace and Augat in the Latter 1990s
For T&B, the mid-1990s were dominated by acquisitions. During 1995 the company acquired E.K. Campbell Company, a maker of custom industrial heating and cooling equipment based in Osawatomie, Kansas, and Catamount Manufacturing, Inc., located in Orange, Massachusetts, which specialized in cable ties, wire connectors, and various nylon hardware products. The former purchase bolstered T&B's heating mechanical refrigeration division, which sold commercial and industrial heating and ventilation equipment under the Reznor brand. Two more acquisitions negotiated in 1995 were consummated in January 1996: Bowers Manufacturing Corporation, a Southgate, California-based supplier of metallic and nonmetallic electrical boxes for the construction industry, and Amerace Corporation, based in Chicago. Bowers was purchased from Masco Corporation for $8.5 million, while Amerace was purchased from Eagle Industries Inc. for $220.6 million. The latter firm, which had 1995 sales of $215 million, produced electrical products for utility and industrial markets, with its most important product line being underground power and distribution connectors and components sold under the Elastimold brand name.
Six more acquisitions were completed in 1996, with the most significant being a December deal for Augat Inc. The stock swap, which cost T&B $560 million in stock, eclipsed the deal for American Electric as the largest in T&B history. Based in Mansfield, Massachusetts, Augat produced electronics connectors for the communications, computer, automotive, and industrial markets. The firm had 1995 revenues of $535 million. The addition of Augat made T&B one of the five largest connector makers in the United States. Merger, restructuring, and other charges totaling $97.1 million were taken in the fourth quarter of 1996, resulting in a net earnings total for the year of just $59.9 million. As a result of the heavy acquisition activity, revenues for the year increased 15 percent, finishing just a shade below $2 billion.
In May 1997 Moore took over as CEO of Thomas & Betts, with Dunnigan remaining chairman. That year T&B spent another $62 million on six smaller acquisitions, and the company also formed a joint venture with Exemplar Manufacturing Company, a private company based in Ypsilanti, Michigan, to manufacture and market power distribution, battery cable, and wiring systems to the U.S. automotive industry.
Acquisition activity increased again in 1998 as nine purchases were completed. The largest was the acquisition in November of Kaufel Group Ltd. for $100 million in cash and the assumption of $60 million in debt. Based in Montreal, Kaufel was a maker of emergency lighting products and systems with 1997 sales of C$230 million ($152 million). T&B also gained entrance into a new market sector with the purchase of Telecommunication Devices, Inc. (TDI) in July 1998 for about $74 million in stock. The privately held TDI, which had three plants in the Chicago area and a fourth in Scotland, was a major manufacturer of battery packs for cellular telephones and laptop computers. TDI recorded revenues of $145 million for 1997. Soon after completion of this deal, T&B announced a major restructuring involving several plant closures and the loss of more than 750 jobs. The cost-cutting came in response to a downturn in the electronic connector industry as well as fallout from the Asian economic crisis that erupted the previous year. Special charges of $108.5 million once again led earnings to fall dramatically, from $154.9 million in 1997 to $87.5 million in 1998.
In January 1999 T&B reached an agreement to acquire AFC Cable Systems Inc. for $504 million. AFC produced armored cable, modular wiring systems, and other devices used in transmitting power, voice, and data. The deal began unraveling, however, after the Securities and Exchange Commission (SEC) began an inquiry into the compensation that the chairman of AFC would receive as part of the deal. The delay in completing the deal enabled other suitors to move in, and Tyco International Ltd. trumped T&B's bid with an offer of $578 million. T&B ended up completing three acquisitions during 1999 for $70.7 million: Ocal, maker of PVC-coated conduit and components for corrosive industrial environments; L.E. Mason Co., Boston-based manufacturer of weatherproof electrical boxes; and Shamrock Conduit Products Inc., a small Ohio-based maker of steel and aluminum conduit elbows, couplings, and nipples. Acquisition activity slowed down considerably in the final months of 1999 as T&B began contending with a whole host of problems, including difficulties arising from relocating a number of plants to low-cost locations, such as Mexico and Eastern Europe, and the botched launch of a new Internet-based order management system. In November 1999 the company restated earnings for two quarters of 1999 after finding accounting errors that were related to the system conversion.
Major Restructuring in the Early 21st Century
The early 2000s proved turbulent for Thomas & Betts. Executive turnover, divestment of significant operations, accounting problems, and net losses replaced the management continuity, acquisitions, and profits of the previous decade. In May 2000 Moore replaced Dunnigan as company chairman, but only three months later Moore resigned, and Dunnigan was called back to become chairman and CEO once again. In July, meantime, John R. Mayo was hired away from competitor Framatome Connectors International as president and COO of T&B, but Mayo also resigned after only a brief stint, leaving in October 2000. Dunnigan assumed the additional title of president. In July 2000, during this period of turmoil, T&B completed the sale of its global electronics connectors business to Tyco International for $750 million. The divestment, which represented 27 percent of the firm's 1999 revenues and included virtually all of the product lines acquired through the acquisition of Augat, was intended to return the company to a focus on electrical connectors and components. Proceeds were earmarked for debt reduction and a stock repurchase program.
In late August 2000, soon after Moore's resignation, T&B replaced a complex matrix organizational structure that had been adopted in 1997--and that was now blamed for some of the operational difficulties that were plaguing the company--with a much simpler market-focused divisional structure. Also in August, T&B announced an unexpected loss for the year's second quarter thanks to a revenue decline of 40 percent and $223.9 million in special charges stemming from restated sales, disputed customer invoices, excess and obsolete inventory, and other items. The company also announced that it would revise its 1999 financial statements. In response, T&B's stock plunged to a 52-week low of $18.94, down from the high of $53.44 that had occurred in September 1999. Investors soon began suing the company, alleging that securities laws had been broken and that the company had issued false financial statements. In early 2001 the SEC initiated a formal investigation into the firm's accounting practices. For 2000, T&B reported a net loss of $25.8 million on revenues of $1.76 billion. Additional pretax charges of $60 million were recorded for the final quarter, and the company also restated its results for 1996 through 1999.
Restructuring efforts continued in 2001 and 2002. During the two years, the workforce was reduced from 14,000 employees to 10,000. Late in 2001 a plan to reduce costs and improve profitability was announced whereby about one-third of the 30 plants in the electrical products division would be shuttered. Restructuring charges of $110.2 million contributed to a net loss for the year of $146.4 million, while 2001 revenues of $1.5 billion represented a 15 percent drop from the preceding year. Continuing to focus more tightly on core operations, T&B in late 2001 sold its American Electric and Dark-to-Light commercial lighting product lines to National Service Industries, Inc. for $80 million. As the turnaround efforts continued in 2002--and appeared to be making progress in spite of the difficult economic conditions--T&B announced in October that it had reached an agreement to settle five class-action lawsuits that had been filed against the company alleging violations of securities laws. The company agreed to pay the plaintiffs $46.5 million, without admitting liability or wrongdoing, in exchange for dismissal of the suits.
Principal Subsidiaries: Thomas & Betts Caribe, Inc.; Thomas & Betts International, Inc.; Thomas & Betts Limited (Canada); Thomas & Betts Commander LP (Canada).
Principal Competitors: Tyco International Ltd.; Cooper Industries, Ltd.; Molex Incorporated; Hubbell Incorporated; Framatome Connectors International; ITT Industries, Inc.; Amphenol Corporation; 3M Company; Methode Electronics, Inc.; Valmont Industries, Inc.; ROHN Industries, Inc.
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