Watts of Lydney Group Ltd.

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Watts of Lydney Group Ltd.

High Street
Lydney
GL15 5DB
United Kingdom
Telephone: +44 1594 847100
Fax: 44 1594 847401
Web site: http://www.wattsonline.co.uk

Private Company
Incorporated: 1880
Employees: 655
Sales: £60 million ($104 million) (2002 est.)
NAIC: 326211 Tire Manufacturing (Except Retreading); 325212 Synthetic Rubber Manufacturing; 423130 Tire and Tube Merchant Wholesalers; 423830 Industrial Machinery and Equipment Merchant Wholesalers; 441110 New Car Dealers; 441310 Automotive Parts and Accessories Stores; 447110 Gasoline Stations with Convenience Stores; 531190 Lessors of Other Real Estate Property; 551112 Offices of Other Holding Companies; 811111 General Automotive Repair

Watts of Lydney Group Ltd. is the holding company for a group of businesses predominantly focused on the production of industrial and specialist tires for the aviation, materials handling, and related markets. The company's main tire production subsidiary is Watts Industrial Tyres, which produces a wide range of industrial tires, including both solid and pneumatic tires, as well as puncture proofing systems, wheels, tire fitting presses, and the like. This company operates a small production site in Lydney, England, where the company was founded, but has shifted the bulk of its production to joint ventures in Sri Lanka, China, and Brazil. Watts Industrial accounts for approximately one-third of the group's sales, which topped £60 million ($104 million) in 2002. Watts Aviation is responsible for the group's production of aviation and aircraft tires and tubes, including for commercial and corporate aircraft. Watts Polymers is a leading producer of rubber compounds for use in the OEM and retread sectors. Watts Truck & Van Centres specializes in sales of DAF Trucks and LDV vans. The company also owns Watts Urethane, a manufacturer of castable polyurethane-based products, including squeegees. Another subsidiary is Watts Plysolene, which produces polycarbonate sheeting, insulation materials, and other specialist waterproofing materials for the construction industry. Privately held Watts remains controlled by the founding Watts family, under the leadership of John Thurston, chairman, Cecil Watts, director, and Melville Watts, president.

Founding a Local Dynasty in the 1850s

The Watts family arrived in Lydney, in Gloucestershire, England, in the mid-1850s and quickly became one of the driving forces behind the region's local industrial development. The first of the family to come to Lydney was David Lazarus Watts, a native of Devon, who traveled to Lydney in 1850 at the age of 39. Watts married local resident Elizabeth Stephens, and the couple opened a general store together in 1851. Watts died in 1862, and Elizabeth Watts took over management of the store, aided by her five children. The family then opened a bakery, and later added a supply store as well.

One of the Watts sons, 14-year-old Josiah, left home to become an apprentice in an ironmonger's shop in Bristol in 1870. After completing his apprenticeship, Josiah Watts returned to Lydney to set up in business on his own. Borrowing £300 from an uncle, Watts launched his own ironmonger's shop near the Lydney port. Watts's business flourished, with orders coming not only from the town's port operations, but also from the nearby railroad. The company also began providing parts and equipment for the town's main industry, a tin plate factory.

Josiah Watts's sons Arthur and John, born in 1887 and 1890, respectively, inherited the Watts family talent for entrepreneurship. The brothers joined their father's business at the dawn of the 20th century, and the company became known as JS Watts & Sons. Arthur Watts went on to become an apprentice to a motor dealership in Bristol, before returning to Lydney to add that business to JS Watts & Sons. Meanwhile, the Watts family continued to operate its original grocery and supply shops and bakery. The family's presence in the town's commercial life led to the adoption of the slogan: "You can get it from Watts."

The family continued to display its entrepreneurial drive in the years leading up to World War I. In 1910, for example, JS Watts & Sons began operating a motor vehicle service garage in Lydney. At the same time, the Watts family began a mail collection and delivery service for the local areas. By 1912, the family had branched out again, now launching a Ford automobile dealership.

Both brothers served in the British armed forces during the war; Arthur joined the air force, while John Watts joined the Army's Motor Transport Division. That experience was to serve the brothers in good stead after the war, as the family's involvement in motor vehicles deepened. In 1920, Arthur Watts arranged to buy a fleet of more than 200 surplus vehicles, including support workshops and spare parts, left behind by the departing U.S. troops. The fleet provided the basis for John Watts's launch of a bus service in 1921. That company initially served a route between Ebbw Vale and Tredegar, but by 1922 had been expanded to include the Forest of Dean area. The family's involvement in busing led it to spearhead the merger of a number of area bus companies, creating the Red & White Bus Company, in 1937.

In the meantime, Arthur Watts had emerged as a prominent player in the local motor vehicle sales and service market. Watts had also entered manufacturing by this time, producing, among other things, Watney motorcycles. In 1938, Watts formed a new business, which served as the basis of the later Watts of Lydney group: a tire remolding and retreading business that became known as the Watts Tyre and Rubber Co. The Watts family interest in tire retreading led to the formation of Tyresoles Limited in 1941.

Continued expansion of its tires operation led to the opening of new warehouses in Cardiff and Neath in 1948. By 1948, Watts Tyre & Rubber Co. had opened a new, larger retreading facility in Lydney at the site of the town's old tin plate factory. The family's retread business was boosted again when it acquired a franchise for the Vaculug retread process, introduced in England just one year earlier. That method, pioneered in the United States, was initially developed to retread agricultural tires. The process was later expanded for use with other vehicles, particularly heavy construction and other industrial vehicles.

Tire Manufacturing in the 1950s

Watts's interests in tires expanded beyond retreads and into manufacturing in the early 1950s. In 1953 the company began producing its first industrial tires, under the Duratrack brand. This led the company to establish a new dedicated Tyre division the same year. By the mid-1960s, the company's production of tires for the industrial market had grown strongly. In 1966, the Watts family founded a new dedicated tire company, Watts Industrial Tyres Limited. In the meantime, the Watts family continued to expand their business interests, notably establishing its first service stations in 1958, and then adding the Watts Truck Centre in 1960. In 1968, Watts Tyre & Rubber formed a partnership with Avon Rubber to create a nationally operating tire and battery service.

The company's interest in tire making led it to diversify into new materials. In 1974, Watts established a new subsidiary, Watts Urethane, which began processing castable polyurethane. Watts Urethane later added a range of products, including squeegees. The diversification led Watts to adopt a new structure, placing its operations under a new holding company, Watts of Lydney Group. The company also had come under the leadership of a new generation of the Watts family, including Melville and Cecil Watts and John Thurston.

Watts's expansion continued through the 1990s. In 1983, for example, the company built a new rubber compounding plant. In the mid-1990s, Watts extended its tire operations into the retail sector, launching Watts Tyre and Autocentres. That year, also, the company opened a new tire manufacturing plant. The company's tire and other production operations were then regrouped under a new subsidiary, Watts Industrial Group, in 1998. In that year, the company spent some £4.5 million to expand its production capacity to some 18,000 tires per week.

Watts's industrial operations were expanded again in 1999 with the acquisition of the rubber compounding division of Wellington Holding. The acquisition gave Watts control of two Ondura Ltd. tire compound plants in Yorkshire and a rubber compounder in Hertford. These operations were placed into a new subsidiary, Watts Industrial Polymers, together with Watts's own rubber compounding operations. Also joining the company as part of the Wellington sale was Plysolene Ltd., a company specialized in the production of waterproofing materials and products for the construction industry.

Outsourcing Manufacturing in the New Century

Into the mid-2000s, Watts remained one of Europe's top producers of industrial tires. More than 60 percent of the company's revenues now came from outside of the United Kingdom, with strong sales not only throughout Europe, but in the United States as well.

Company Perspectives:

Watts Group of Companies—History and Ethos

Over a century has elapsed since a single-minded young man, with £300 borrowed from his uncle, purchased a small ironmongery shop in Lydney, Gloucestershire. Josiah Watts and his wife Clara, the driving force behind the Company's early success, both have a lot to answer for. The ambition, inspiration, dedication and pride they took in owning their own business have been the cornerstones for the success of one of the few great family businesses remaining in Britain today.

A commitment to customer service, the quality of innovation and the pursuit of excellence now manifest themselves in a high performance group of companies serving industry across the world.

Yet Watts began a transition during the early 2000s as it, too, entered the United Kingdom's post-industrial age. In the early 2000s, the company announced its intention to reduce its manufacturing presence to a minimum in England. As Doug Pearson, the division's managing director, told European Rubber Journal: "Our intention is to retain a limited manufacturing capability in the UK, but substantially we will source our manufactured products from the Far East. The UK is just not a competitive base in which to manufacture."

As part of the group's new strategy, the company reached its first outsourcing agreement in 2001, setting up a joint venture with China's Guizhou Tyres Inc., establishing the largest industrial tire manufacturing operation in China. Under terms of the deal, Guizhou provided the manufacturing deal while Watts controlled the technology and designs, as well as sales and distribution.

Watts continued looking for new joint venture partners in China, and in Sri Lanka, which had emerged as a major tire manufacturing center. The company also formed a joint venture in Brazil, with that country's Souza Pinto Industria e Comercio de Artefatos de Borracha Ltda. The new subsidiary began production of Watts's solid industrial tires for the South American market.

In 2004, Watts acquired a 50 percent stake in Sri Lanka's Eu-retec, a tire manufacturer and retreader. The purchase marked the end of Watts's tire production in the United Kingdom, as it shut down its rubber tire production at the beginning of May in that year. The companies' manufacturing presence in Sri Lanka enabled it to compete in the OEM market as well, leading to an agreement to produce solid tires for Germany's Continental AG in December 2004. As John Thurston, chairman of the company and a member of the founding Watts family, told European Rubber Journal: "We have transformed our tyre company business model over the past few years and this has allowed us to cooperate with Continental in this way. Supply chain agreements between competitors are not unusual in other industries and it is a trend we are keen to develop." Given the Watts' family's long history of entrepreneurship, Watts of Lydney appeared in a strong position as it entered the new century.

Principal Subsidiaries

Watts Aviation; Watts Industrial; Watts Plysolene; Watts Polymers; Watts Truck & Van; Watts Urethane.

Principal Competitors

Bridgestone Corporation; Compagnie Financiere Michelin; Goodyear Tire and Rubber Co.; Sibtyazhmash Joint Stock Co.; Continental AG; Guizhou Rubber Industry Co.; Pirelli C S.p.A.; Yokohama Tire Corporation; Hangzhou Zhongce Rubber Company Ltd.; Liaoning Tyre Factory; Carlisle Tire and Wheel Co.; Trelleborg AB.

Key Dates:

1851:: David Lazarus Watts opens a general store in Lydney.
1880:: Son Josiah Watts founds an ironmonger's shop in Lydney.
1905:: The company becomes J.S. Watts & Sons as sons Arthur and John Watts join.
1910:: The company opens a garage in Lydney.
1912:: The company begins Ford motor car sales.
1921:: The company acquires a fleet of 200 surplus vehicles, including mobile workshops and spare parts.
1938:: The Watts Tyre and Rubber Co. retreading factory is founded in Lydney.
1951:: The company receives a franchise for the Vaculug retreading process.
1953:: The company begins manufacturing Duracraft industrial tires, forming the new Tyre Division.
1966:: Watts Industrial Tyres Ltd. is formed.
1974:: The company diversifies with Watts Urethane Product Ltd.
1979:: The business reorganizes under holding company Watts of Lydney Group.
1983:: A new rubber compounding plant is opened.
1996:: A new tire production site is established.
1998:: The company spends £4.5 million expanding tire production.
1999:: The rubber compounding division is acquired from Wellington Holdings.
2001:: The company announces production joint ventures in China and Brazil and its intention to reduce tire production operations in the United Kingdom.
2004:: The company acquires 50 percent of tire producer and retreader Eu-retec in Sri Lanka and shuts down the remaining tire production in the United Kingdom.