Smiths Industries PLC

765 Finchley Road
Childs Hill
London NW11 8DS
England
011 44 181 458 3232
Fax: 011 44 181 458 4380
Web site: http://www.smiths-industries.com

Public Company
Incorporated: 1914 as S. Smith & Sons (Motor Accessories) Ltd.
Employees: 14,000
Sales: £1.076 billion (1997)
Stock Exchanges: London
Ticker Symbol: SMIN
SICs: 3728 Aircraft Parts & Equipment; 3643 Current-carrying Wiring Devices; 3841 Surgical & Medical Instruments; 3842 Surgical Appliances & Supplies; 3822 Environmental Controls; 3670 Electronic Components & Accessories; 3823 Industrial Measuring Instruments

Smiths Industries PLC is a diversified multinational corporation with core businesses in aerospace electronics; medical instruments, appliances, and supplies; and specialized industrial products. The company has garnered a reputation for its design and production of high-technology avionic systems, especially for the commercial aircraft market, and for military and marine fighting aircraft and vehicles. Smiths Industries also provides an extensive array of single use disposable medical products for critical care applications, and a host of other medical equipment and supplies. With its corporate headquarters located on the north side of London, the company has gradually expanded its manufacturing and sales offices around the world and presently operates facilities and offices in 51 countries.

Early History

The roots of Smiths Industries PLC date back to 1851, when Samuel Smith established his own clock and watch business in

London, not far from the landmark Elephant & Castle Pub. Because of his attention to detail and his friendly manner, gentlemen throughout London flocked to Smith’s small shop, and by 1871 the proprietor had opened his second location. Smith’s death in 1875 did not interrupt the prosperity of his enterprise, which was taken over by his son, Samuel Smith, Jr. In fact, the company was growing so rapidly that Samuel Smith, Jr. decided not only to move to a larger space in London, but to open three new shops in different parts of the city.

By the turn of the century, the Smith family clock and watch business had become one of the notably successful enterprises in the imperial city of London. It was not surprising then when the company turned its attention to the needs of the nascent automobile industry. Employing the skills of watchmaking from his father, Allan Gordon Smith diversified into the design and manufacture of automobile instruments and was one of the driving forces behind the creation of the odometer. In just a few short years Smith had garnered a reputation as one of the most innovative designers of instrumentation for the automobile industry. As a result, at the request of King Edward VII, Smith invented the speedometer and had the first one inserted in the monarch’s Mercedes. By 1908 the family business was selling more than 100 speedometers each week.

With the company taking advantage of the increasing popularity of the automobile, Smith decided to incorporate the family enterprise as S. Smith & Sons (Motor Accessories) Ltd. in July of 1914. Business was booming, and the firm employed more than 300 people. More than 50,000 Smith speedometers were being used in cars of various design and manufacture throughout the United Kingdom, while more and more orders were received at company headquarters every day. Yet it was the advent of World War I that not only increased the firm’s productivity, but made it a reputation throughout Europe.

When the conflict began in August of 1914, the British government immediately contracted Smith & Sons to design and manufacture a wide range of products for the war effort, including such items as wristwatches, kite balloon wind indicators, and tachymeters. As the war progressed and the British Isles were drained of manpower and material goods, the government called upon Smith & Sons to expand its product line to include wire rope, signal lamps, spark plugs for airplane engines, and shell fuses. In 1917 the company originated the standard Clift airspeed indicator, which soon became the most widely used airspeed indicator within the aviation industry.

The 1920s, 1930s, and War Years

When World War I ended in 1919, Smith & Sons continued the diversification program that it started during the conflict. Soon the company was selling ebonite batteries and spark plugs and manufacturing jacks for automobiles. Throughout the decade of the 1920s Smith & Sons continued its emphasis on manufacturing automotive accessories, such as speedometers. Allan Gordon Smith was well aware of the burgeoning demands of the aviation industry, however, and this led him to form Smiths Aircraft Instruments Division during the late 1920s. At approximately the same time, Smith established the All British Escarpment Company LTD to manufacture platform lever escarpments for clocks.

Although the company maintained its strong presence in the automotive accessories market, including the manufacture of ignitions, starters, and automotive lights, it was the Aircraft Instruments Division that came up with innovative designs throughout the decade of the 1930s. In 1932 the company produced the first electrical aviation fuel gauge, and not long afterwards the Aircraft Instruments Division established and opened its own aircraft manufacturing factory. Within this facility during the middle and late 1930s company engineers were at the forefront of experimenting with and developing oil pressure gauges for aircraft and electrical thermometers. By 1936 the company’s system of remote indication has been installed on almost all aircraft built in Britain and soon would become the standard within the industry.

As the clouds of war once again began to hover over the European continent and the aggressive expansionist policy and theories of racial superiority promulgated by the Nazi Regime in Germany started to concern many governments around the world, in 1937 Allan Gordon Smith was invited to the United States to discuss developments in the aviation industry. Along with seven of his best engineers, Smith conducted a comprehensive analysis of U.S. aviation technology and manufacturing methods and also discussed how Britain and the United States could best share this technology in the event of another world war. Gathering as much information from the United States as he could, upon returning to London Smith and his management team decided to decentralize the company’s operations in anticipation of Nazi aircraft raids on Britain. Management’s first move was to relocate many of the company’s manufacturing facilities to rural areas outside London.

When World War II started on September 1, 1939, as the Nazi war machine invaded Poland, S. Smith & Sons (Motor Accessories) Ltd. was well prepared for the conflict. Almost immediately, the company’s manufacturing facilities were retooled to produce war material and supplies, including large quantities of aircraft spark plugs, gauges, clocks, watches, speedometers, and a wide variety of aviation instruments. In May of 1940, with the fall of France to the Nazi Regime imminent, the British government helped the company to open a new manufacturing facility for highly sophisticated aviation clocks in Cheltenham, England.

With high-volume production methods learned from the United States a short time earlier, Smith & Sons significantly contributed to the Royal Air Force’s ability to prevent Nazi Germany from invading the British Isles. Pilots from Britain’s famous Spitfire fighter aircraft relied heavily on the aviation instrumentation and accessories provided by Smith & Sons. As the tide of war turned in favor of Britain and its Allies, especially after the invasion of Nazi-occupied Europe on June 6, 1944, the company began to focus its attentions on the opportunities that would present themselves in the postwar period. Approving a comprehensive strategic plan near the end of 1944, management reorganized the entire firm, first by changing the name to S. Smith & Sons, Ltd., and then by dividing its commercial operations into four subsidiaries: Smiths Motor Accessories, Ltd., Smiths Aircraft Instruments Ltd., Smiths English Clocks, Ltd., and Smiths Industrial Instruments, Ltd. In addition, the company formed a joint venture to manufacture car radios, as well as another joint venture, the Anglo-Celtic Watch Company.

The Postwar Era

The late 1940s and the entire decade of the 1950s were years of rapid expansion and growth for the company. In 1947 management at the firm implemented a strategic plan that led to the establishment of the company’s first subsidiaries outside the United Kingdom. A factory in Witney, Oxfordshire was purchased in 1949 to enhance the company’s automotive product line, while at the same time management decided to diversify product lines in its other operating divisions. One of the most important acquisitions during this time involved the purchase of Portland Plastics and its subsidiary, Surgical Plastics, two companies well positioned for growth in the burgeoning medical equipment business. As the company grew, it did not ignore the welfare of its workers. Sympathetic to the ideals and vision of the postwar socialist-leaning governments of Britain, the company joined with housing authorities near Smith & Sons factories to build a total of 192 employee dwellings.

By the early 1960s Smith & Sons had grown so large that management initiated a comprehensive reorganization strategy, including the decentralization of its operations, greater diversification of its product lines, and a broader delegation of authority. Although the primary source of revenue continued to be the automotive accessories division, nonetheless, the company was making a strong move to capture more of the aviation instruments market. This aggressiveness paid off handsomely in 1961 when the company won a large contract to make aviation instruments for the Boeing Company, one of the largest aircraft manufacturers in the United States. During the middle of the decade the company expanded its capacity to produce automotive spark plugs through the acquisition of Lodge Plus, Ltd. and established a technical service center at Heathrow Airport, one of the first of its kind. The one engineering feat that brought the company international recognition was the design of an innovative autopilot equipment system that enabled a civil airliner to land in foggy weather with no more than 50 feet of visibility. From this time forward, the company’s reputation in the civil aircraft instrumentation market was assured. To reflect the growing diversity of its product line, management changed the company name from Smith & Sons to Smiths Industries PLC.

Decline in the 1970s and Resurgence in the 1980s

Yet trouble was just over the horizon. During the late 1960s the company’s clock business suffered from the glut of Eastern European imports and low-cost components manufactured in Asia. Smiths Industries attempted to counterbalance these trends with a network of its own low-cost suppliers from foreign countries, but sales for the firm’s clock business continued to decline throughout the 1970s. In 1979 management decided finally to discontinue the firm’s clock business and permanently closed all related manufacturing facilities. Simultaneously, the automotive industry across Britain entered into a lengthy period of sluggish sales, and the firm’s motor accessories production output dropped dramatically.

Traditionally, Smiths Industries has revealed the talent and resourcefulness of its management at times when the company has been confronted with major problems. Acting quickly and decisively, management implemented a new strategic policy that involved divesting all of the less profitable operations, while expanding the more lucrative and promising businesses. During the early 1980s the company sold its automotive instrumentation business and ceased operations in the automotive radio business. These two divestitures were followed by an announcement that Smiths Industries no longer would manufacture or supply original equipment to the automotive industry in Europe.

Building upon the foundation already established in the 1950s and 1960s, management focused on developing the company’s medical and aerospace businesses. Portex, formed from the firm’s Portland Plastics and Surgical Plastics subsidiaries, quickly grew into the most lucrative operation within the company. An ever-increasing line of new products and an aggressive acquisitions strategy catapulted Portex into a leadership position within the medical supplies market. The company’s newly created Smiths Industries Aerospace and Defense Systems division also grew rapidly. Adhering to a similar aggressive acquisitions policy in the aerospace business, the company purchased Lear Siegler Holdings Corporation in 1987 and immediately skyrocketed to a leadership role within the American aerospace industry. By the end of the 1980s Smiths Industries had reorganized its operations into three divisions, including Aerospace and Defense, Medical Systems, and Industrial. In 1988 the company reported a rise in pre-tax profits of nearly 50 percent.

The 1990s and Beyond

During the early 1990s Smiths Industries not only consolidated its share in the aerospace, medical systems, and industrial components markets, but continued an aggressive and unabated campaign to grow through strategic acquisitions, research and development, and new manufacturing technologies. The company placed particular emphasis on increasing its presence in the United Kingdom, Germany, Japan, and the United States. Two of the major achievements by the company at this time involved the acquisition of Japan Medico, a large medical equipment manufacturer that provided Smiths Industries with access to a burgeoning Asian market, and a contract with Boeing to supply electrical load management systems for the newly designed Boeing 777 commercial jumbo-jet.

In the mid-1990s the company’s Aerospace business had become known as one of the most innovative manufacturers within the industry. The company’s Flight Management System, autothrottles, standby instruments, and fully integrated sattelite-based navigation system were purchased by commercial airlines around the world. Smiths Industries’ Medical Systems, manufacturing a wide array of products such as disposable colostomy pouches, speaking aids for tracheostomy patients, and single use devices for administering anaesthesia, also became known for its innovative approach to health care products. And the Industrial components business, focusing on international ducting and hosing manufacturing, and airmoving products for consumer, industrial, and commercial applications, such as heating elements for clothes dryers, had developed into one of the most lucrative operations in the company’s recent history, with an annual increase in sales of more than 20 percent from 1994 to 1997.

Smiths Industries PLC is not only well positioned for future growth, but has one of the best management teams in the corporate sector. When these two facts are added to the creativity and innovation of the company’s engineers, the success of Smiths Industries seems assured for many years to come.

Principal Subsidiaries

Smiths Industries Aerospace & Defense Systems Ltd.; SIMS Portex Ltd.; Eschmann Bros. & Walsh Ltd.; Smiths Industries Industrial Group Ltd.; Air Movement (Holdings) Ltd.; Lighthome Ltd.; SI Properties Ltd.; Smiths Industries, Inc.; Smiths Industries Aerospace & Defense Systems, Inc.; SIMS Portex, Inc.; SIMS Deltec, Inc.; SIMS Level 1, Inc.; Tutco, Inc.; Flexible Technologies, Inc.; Japan Medico Co., Ltd.