Ricardo plc

views updated

Ricardo plc

Bridge Works
Shoreham-by-Sea, BN43 5FG
United Kingdom
Telephone: (44 01273) 455611
Fax: (44 01273) 464124
Web site: http://www.ricardo.com

Public Company
Incorporated: 1927 as Ricardo & Co. Engineers Ltd.
Employees: 1,651
Sales: £173.1 million ($339.3 million) (2006)
Stock Exchanges: London
Ticker Symbol: RCDO
NAIC: 541330 Engineering Services

Ricardo plc is one of the world's most respected automotive engineering firms, and one of the last independent companies providing engineering design, development, and consulting services to the global automotive market. Based in the United Kingdom, Ricardo has long been a leading force in the design and innovation of internal combustion engines and components. The company designed and built the first successful British tank engine in 1917, and also pioneered the development of high-speed diesel engines. More recently, the company has been behind the redesign of the Rover Mini, launched in 2001, and the fuel-efficient Efficient-C power train developed for PSA Peugeot Citroën.

Ricardo has also made a mark in China, the world's fastest-growing automobile market, forming a partnership with market-leader Shanghai Automotive Industry Corporation, while also providing support to up-and-coming companies such as Chery and Geely. Other major projects completed by the company in the early years of the 21st century include the Hemi V8 engine for Chrysler; the four-cylinder Ecotec and Global V6 engines for General Motors (GM); and a diesel engine for the Suzuki Grand Vitari, in partnership with Suzuki and Renault. While the automotive market remains the group's core market, Ricardo also provides engineering support services for truck, motorcycle, motor racing (including Formula One racing), as well as marine, military, and locomotive applications.

Ricardo supports its operations with research and development facilities in the United Kingdom; in Detroit and Chicago in the United States; Shanghai, China; Stuttgart, Germany; Prague in the Czech Republic, and in South Korea and Japan. The company also operates sales and liaison offices in France, India, and Italy. Listed on the London Stock Exchange, Ricardo posted revenues of £173 million ($339 million) in 2006. Marcus Beresford, chairman, and Dave Shemmans, CEO, lead the company.

FOUNDED BY SIR HARRY RICARDO IN 1917

Born in 1885, Harry Ralph Ricardo became one of the United Kingdom's foremost automotive engineers. Ricardo had begun to tinker with engines as a boy, designing his first coal-fired, steam-powered motorcycle while still a student at Rugby in addition to an engine for pumping water at his family's Sussex home. Ricardo went on to study at Trinity College in Cambridge, and following school, Ricardo joined his grandfather's engineering firm, where he worked on the development of locomotive engines. By this time, Ricardo had developed a two-stroke, gas-powered engine, and in 1905 he founded his own business, The Two-Stroke Engine Company, based in Shoreham. Ricardo's company launched production of his own automobile, called the Dolphin. Ricardo then adapted the Dolphin engine for use with fishing boats for the local Shoreham fishing community.

During World War I, however, Ricardo was called to join the Mechanical Warfare Department of the British Ministry of Defense. There, Ricardo set to work developing a "smokeless" tank engine, based on an innovative horizontal valve design. By the end of the war, more than 7,000 tanks had been built around Ricardo's engine. The powerful, 150-horsepower, gasoline-powered engine was also successfully adapted to a large number of applications, such as generators, as well as for seagoing vessels and locomotives. By 1918, Ricardo had joined the Air Ministry as a consulting engineering.

By then, Ricardo had founded a new business, initially called Engine Patents Ltd., in order to develop and improve on internal combustion engines and component designs. Ricardo's company opened a research laboratory and testing grounds on its own campus in Shoreham, which soon became a center of British automotive innovation. Launched in 1917, Engine Patents Ltd. spearheaded the search for more powerful and fuel-efficient gas and diesel powered engine designs. Among the earliest of the company's designs was the Turbulent Cylinder Head combustion system, launched in 1919, which was rapidly adopted by much of the world's automotive community. The success of its systems encouraged Engine Patents Ltd. to create its own patent licensing program, which became a major source of company revenues. The Turbulent Cylinder Head system, for example, continued to generate licensing revenues for the company into the 1930s.

The ever-inventive Ricardo remained the driving force behind the company, which incorporated as Ricardo & Co. Engineers Ltd. in 1927. An important area of focus for the company was in solving problems of engine knock. To this end, Ricardo developed a test engine, used to establish the modern Octane Rating system. Diesel engines also became an important category for the company, as it sought to develop the first high-speed diesel engine. The company succeeded with this in 1931, launching the Comet combustion system. The London Transport system quickly converted its entire fleet of buses to the new engine design; by the end of the decade, the Comet engine had become a mainstay in the European public transport sector. In the years leading up to and following World War II, the company built up an impressive list of more than 50 licensees across 11 countries. In the meantime, the Comet system provided a breakthrough for the automotive industry as well, and by 1935 served as the platform for the Citroën Rosalie, the world's first diesel-powered motorcar. The strength of Ricardo's design could be seen in its role as the foundation of modern diesel engine designs into the next century.

By the early 1940s, Ricardo had become one of the major figures in the world's automotive industry, earning the moniker, "the high priest of the internal combustion engine." Ricardo's engineering expertise played a vital role in the British war effort during World War II, as Ricardo worked with the Rolls-Royce Company to help solve a number of technical problems in the development of the British jet engine. Ricardo himself designed the Barostat, which compensated for pressure changes in the fuel mixture at high altitudes. The company also patented the single sleeve-valve engine, which became an industry standard for high-performance aircraft engines. Through the end of the war and into the 1950s and 1960s, the design was featured in more than 130,000 craft built by the United Kingdom's aerospace industry.

COMPANY PERSPECTIVES

With our commitment to excellence, industry leadership in technology and knowledge, our greatest asset is our people, approximately 70 per cent of whom are highly qualified multi-disciplined professional engineers, consultants and technicians. Together, our vision is to make Ricardo the natural partner of choice for all our customers in all sectors.

PUBLIC COMPANY IN 1962

Into the 1960s, Ricardo's revenues were as much based on its consulting fees as its licensing royalties. The company had established a three-prong focus for its operations, including practical engine design and development; research and development on the internal combustion engine and processes; and research and development of other areas related to the automotive and internal combustion market, such as air compressors, gas turbines, and the like. Increasingly, however, Ricardo's operations came to be characterized especially by its consulting operations, with clients including most of the world's major automotive manufacturers.

Through the 1960s, Ricardo sought to expand beyond its focus on the automotive and aircraft markets. As part of that process, the company went public in 1962, listing its shares on the London Stock Exchange. The company then began developing technologies in two new categories, air compressors and residential oil-based heating systems. In 1965, Ricardo moved into the engineering test and teaching equipment market, acquiring Manchester-based G. Cussons Ltd. That purchase enabled the company to roll out a new range of equipment, including complete internal combustion test bed and equipment. The company also opened a new Lubricating Oil Test Laboratory, which developed strong demand among the major oil and additives manufacturers. This facility was complemented by the opening of a new Atmospheric Pollution Laboratory in 1967, which helped position Ricardo in the fast-emerging market for automotive emissions control and reduction.

ADDING AEROSPACE

At the same time, Ricardo continued developing its list of clientele. The 1960s saw the company move beyond its core European market to begin operating on a more global scale. Japan provided a strong growth market for the company, which had signed on as a consultant for two major Japanese automobile makers. At the same time, the company expanded into the United States, forming its first partnerships with the Big Three automakers.

The development of these new markets helped compensate for the coming reduction in the company's license royalties, as a number of its major patents were set to expire in the early 1970s. At the same time, the growing concerns over the environmental impact of automobiles encouraged the company to continue investing in developing its emissions control technologies. By the mid-1970s, this area became one of the most important for the company, helping further to take up the slack of falling royalties. The focus on emissions also provided a strong revenue stream through the years of economic recession brought on by the Arab oil embargo during the decade.

In the 1980s, Ricardo returned its attention to the aircraft and aerospace markets. The company took part in the development of the Voyager, which in 1986 became the first aircraft to fly around the world without refueling. The company, which had been one of the pioneers of direct fuel injection technologies, used in aircraft engines in the years leading up to World War II, adapted this technology to the automotive market. By the 1990s, the company had become a leading provider of direct injection systems to the industry.

By then, Ricardo had made an effort to shield itself from the cyclical nature of the automotive industry. In 1990, the company agreed to merge with SAC International, forming the "new" Ricardo. SAC had been founded in 1961 by three partners, Smedley, Allard and Creer, and had grown into a leading U.K. engineering group, focused on the aerospace industry. SAC went public in 1985, listing its stock on the Unlisted Securities Market of the London Stock Exchange. By then, SAC had built up its own impressive client list, including British Aerospace, Rolls-Royce, Saab, and Shell, among many others. The U.K. company also had operations in Germany, providing it with a base for its European operations.

KEY DATES

1885:: Birth of Harry Ralph Ricardo.
1905:: Ricardo launches first business to build Dolphin motorcars.
1917:: Ricardo forms new company, Engine Patents Ltd., to develop and license new internal combustion technologies.
1927:: Company incorporates as Ricardo & Co. Engineerings Ltd.
1962:: Ricardo goes public on London Stock Exchange.
1990:: Ricardo merges with SAC International, adding aerospace division.
2007:: Contract to design new series of small and midsized cars for SAIC in China is announced.

The merger of automotive and aerospace operations quickly appeared to be a fruitful one, at least as far as the aerospace wing was concerned. Indeed, by 1992 the former SAC operations, battered by the sharp drop in the aerospace sector, had slumped into losses. Ricardo's own strong performance helped the group maintain its expansion. The difficulties in the aerospace market continued, as the industry was hit hard by the drastic reduction in military spending following the end of the Cold War. By the end of the 1990s, Ricardo had largely exited the aerospace market, and refocused around its core automotive market.

LAST OF THE INDEPENDENTS IN THE NEW CENTURY

Ricardo continued to build its automotive operations through the 1990s and into the next century. In 1994, the company bought FF Developments, a provider of engineering and prototyping service to automakers. Formerly owned at 49 percent by Chrysler, FFD counted Jaguar and Ford among its major clients. The £13.65 million purchase by Ricardo enhanced the U.K. company's presence in the U.S. market, adding revenues of nearly £16.5 million.

As its main rivals, including Cosworth and Lotus, were being bought by automakers, Ricardo stood by its status as the last of the United Kingdom's independently operating, public automotive engineering specialists. The British automotive industry was then undergoing a major transition. A number of major names in British automotive history, including Rolls-Royce and Rover, were being transferred to foreign ownership, especially to Germany. In response, Ricardo established its own operations in Frankfurt, Germany.

Similarly, Ricardo took steps to position itself for the new century in the fast-growing Chinese automotive market. There the company established its operations in Shanghai, and joined in a partnership with Shanghai Automotive Industry Corporation (SAIC). The move into China helped boost the company's international presence, while also strengthening its relationship with such major SAIC customers as GM and BMW.

While China claimed an increasing share of Ricardo's attention, the company nonetheless remained committed to building its European and North American operations. The company made a high-profile entry into the motors sports market, forming a dedicated division in 2001. In 2002, the company expanded that division with the acquisition of Gemini Transmissions, based in Northant, England. The following year, the company completed two new acquisitions, of Tarragon Embedded Technology, based in Cambridge, an onboard systems software specialist; and of IFT, based in Schwabisch Gmund, Germany, which focused on high-performance and niche engine systems.

Ricardo's Chinese operations took off toward mid-decade; at the same time, the company began looking to expand its range of operations elsewhere in the Asian markets, especially into Malaysia and India. In the meantime, the company had also successfully moved into the Central European market, setting up a branch in the Czech Republic in 2000. By 2005, that office had doubled in size.

After SAIC failed in its bid to buy MG Rover, it turned to Ricardo for consolation. As a result, Ricardo signed on to design an entire new range of cars for SAIC. The first of the new series of small and midsized cars was expected to be launched as early as 2009. In the meantime, Ricardo was clearly profiting from the increasing trend of automakers to outsource part or all of their engineering and design needs. Ricardo plc appeared certain to remain a major driver of automotive innovation in the new century.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Ricardo (2010) Consultants Ltd.; Ricardo Deutschland GmbH (Germany); Ricardo GmbH (Germany); Ricardo Japan K.K.; Ricardo MEDA Technical Services LLC (55%); Ricardo Prague S.R.O. (Czech Republic); Ricardo Strategic Consulting GmbH (Germany); Ricardo UK Ltd.; Ricardo, Inc. (United States).