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Cookson Group plc

Cookson Group plc

The Adelphi, 1-11 John Adam Street
London, WC2N 6HJ
United Kingdom
Telephone: ( + 44) (20) 7766-4500
Fax: ( + 44)(20)7747-6600
Web site: http://www.cooksongroup.co.uk

Public Company
Incorporated:
1924 as Associated Lead Manufacturers Ltd.
Employees: 21,161
Sales: £2.4 billion ($3.7 billion) (2000)
Stock Exchanges: London
Ticker Symbol: CKSN
NAIC: 327112 Vitreous China, Fine Earthenware, and Other Pottery Product Manufacturing; 331419 Primary Smelting and Refining of Nonferrous Metal (Except Copper and Aluminum); 334412 Bare Printed Circuit Board Manufacturing; 335999 All Other Miscellaneous Electrical Equipment and Component Manufacturing

Cookson Group plc is an international materials technology group that provides advanced materials, equipment, and enabling technologies to customers in 100 different countries. The group operates three divisionsElectronics, Ceramics, and Precious Metals. Cookson Electronics, responsible for securing nearly half of the groups sales in 2000, operates as a leading supplier of materials, equipment, process chemistries, and services to manufacturers of printed circuit boards, semiconductor packaging components, and various electronic-related items.

Cooksons Ceramics division manufactures ceramic refractory systems and lining materials, which control and monitor liquid steel, glass, and ferrous and nonferrous metals. This divisions products are found in every steel, glass, or foundry market in the world. The companys Precious Metals division supplies precious metals fabricated into wire, sheet, tubing, and chains to the jewelry industry. It also serves the electronics, dental, and electrical industries.

Early History: 1704-1800s

The family was established in Tyneside, England, in 1704 when Isaac Cookson, the son of a brazier from Penrith, Cumberland, moved to Newcastle upon Tyne to seek his fortune. He began operations near South Shields, where the company has had a continuous presence to the present day. The family developed major industrial links in coal mining and the manufacture of iron, salt, and glass, but its direct involvement with a company that came to be part of the present group did not occur until it entered lead manufacturing in the middle of the 19th century.

The earliest direct link with the present group also came in lead manufacture, when in 1778 a Rotherham-based family of ironmasters, the Walkers, began to diversify, and set up its first white lead works at Elswick, Newcastle. White leadbasic lead carbonatewas then the base for virtually all decorative paints and, as the population grew rapidly and the Industrial Revolution gathered pace, the market for white lead and other lead products expanded. Lead, although a long way behind iron, was the second most heavily utilized metal and was to remain so throughout the 19th century, with British firms processing around a quarter of a million tons a year by 1900.

This initial diversification into lead had been made at a propitious time and the Walkers network of lead works became larger than its original base in iron. By the end of the Napoleonic Wars, the Walkers partnership was employing a total capital of approximately £500,000 in lead manufacture, with works in London (Islington, Lambeth, and Southwark), Chester, Derby, Liverpool, and Newcastle under Lyme, as well as the original Elswick works. Although some of the smaller works were closed during the 19th century, large smelting and manufacturing sites were purchased at Bagillt and Dee Bank, in north Wales, to work local lead ores, and the Scottish market was supplied by a works in Glasgow.

Although white lead remained important, the output of other lead chemicalsespecially red lead, used as the base for protective paints for the increasing output of iron and steel in the countrywas developed. The Walkers partnerships were the first to adopt a new process for the manufacture of lead shot, and built several shot towers at the turn of the 18th centuryincluding one at the Chester works, which is the only early tower still in operation in the United Kingdom. The Walkers works processed a large amount of blue lead, especially rolled sheet lead and extruded pipe. These products were in great demand as a result of the large increase in both public and private building in the Victorian years, with sheet being used for roofing, and pipe to convey the newly developed water supplies. As a result of these developments, the partnershipseach works was run by a managing partner, and interlocking partnerships between various works provided some overall controlwere the largest single force in the British lead manufacturing industry throughout the 19th century.

Despite its large size and considerable potential, the Walkers partnership lacked initiative and did not dominate the industry in the second half of the 19th century as it might have done. By then the third and fourth generations of partners from the family were managing the firm, and there was evidence that it was suffering the classic symptoms of hardening of the arteries of commercial instinct. Capital employed grew very little over the 19th century; profitability was never high; the innovation of new techniques was left to competitors; and several of the partners became more interested in their country houses and small landed estates than in the fortunes of the firm. A dispute between the partners with regard to profitability led the partnership into the chancery court with the eventual outcome in 1889 that the assets were sold to a newly formed public company, Walkers Parker and Company. The new company experienced even less financial success, with a number of losses in the highly competitive years up to 1914.

Expansion into Lead Manufacture: 1851

In the second half of the 19th century, innovation in the lead manufacturing industry came in large part from newly established firms that were subsequently drawn into what is now the Cookson Group. It was in 1851 that the Cookson family became involved in lead manufacture. In that year, two of the sons of Isaac Cookson III purchased land at Hayhole on the River Tyne in Northumberland, where they built a white lead works. In the mid 1840s their father and his partner had sold the familys glass manufacturing companies, because of increasing competition in this area, and the sons needed to find an outlet for their considerable talents. William Isaac Cookson was a very capable scientist and businessman. At the age of 20 he had spent a year in Michael Faradays laboratory, and he was later to take out several patents for improvements to metal-smelting and chemical processes.

Under William Isaac and later his son Norman, Cookson rapidly became a significant force in the British lead manufacturing industry. In 1854, the partners bought from the Hawthorn engineering family a second lead works at Howdon on Tyne, close to the Hayhole works. Since lead smelting and refining and the manufacture of red lead were already in operation at Howdon, the Cooksons had developed the capacity for fully integrated production within less than a decade. Over the next 50 years, the works were expanded and were regularly modernized with the introduction of new processes, the major instance being the first successful British introduction of an alternative to the centuries-old stack process for the manufacture of white lead. In the late 1890s Norman Cookson, like his father an amateur scientist of some distinction with several patents to his name, introduced a German-developed chamber process at Hayhole, which doubled Cooksons output of white lead to some 10,000 tons per annum in the early 1900s, around 20 percent of U.K. output. Cooksons growth brought considerable profitability and, increasingly, leadership of the industry.

By the turn of the 19th century lead manufacturing, like many British industries, was experiencing severe competition, not only from the development of new firms at home but also from imports from continental producers. Most British firms were small family-run companies that were ill-prepared to cope with the competition, although the example of Walkers Parker suggests that the adoption of limited liability status alone was not a satisfactory solution. For most of the companies, salvation was seen in cooperation, common pricing policies, and the formation of cartels. By 1914, there were British conventions of the red, white, and blue lead manufacturers; each of these conventions in its turn negotiating market shares within international, primarily European, conventions.

The Formation of Associated Lead Manufacturers: 1924

Whereas the formation of cartels remained important internationally in the years between World War I and World War II, British manufacturers saw amalgamation as the best way to maintain profitability in the face of increasing competition. The earliest proposals date from World War I but in 1924, under the leadership of Cookson and with Clive Cookson as the first chairman, Associated Lead Manufacturers (ALM) was formed. Two years before Imperial Chemical Industries Ltd. was to perform the same function for the British chemical industry, lead manufacturing had a central focus. The initial merger, with a capital of slightly less than £2 million, was of Cookson and the firm of Locke, Lancaster and W.W.&R. Johnson & Sons, the latter being an earlier amalgamation of several London producers that was now by far the dominant London firm.

Company Perspectives:

The mission of Cookson is to add value to its customers businesses by providing materials, equipment, processes, and services that allow them to increase the efficiency, quality, and profitability of their operations. Throughout the world, Cookson companies are known for supplying products that represent the best technology, supported by the best technical service.

ALM thus began its existence with the two major firms in two of the three most significant production areas in the United Kingdom. It lacked a presence, however, in the remaining geographical area of significance, the Northwest, and still faced the regionally diversified competition of Walkers Parker. The first of these deficiencies was overcome rather surprisingly by the 1925 purchase of Rowe Bros. & Company, traditionally a builders merchant and thereby involved in the supply of lead products. Although this purchase would have given ALM an outlet for some of its sheet and pipe production, its true function was to nullify the potential threat of Rowes growing involvement in lead manufacture. Before World War II, Rowe, in conjunction with Cookson, had purchased the patent rights to a newly invented process for the manufacture of red lead and, perhaps more important, had acquired the Runcorn White Lead Company, which brought with it the plant required for a new quick process. Even using Cooksons new chamber process the corrosion period for the production of white lead was almost two months, which involved considerable additional costs as compared with the potential of the as yet little-used quick process, wherein corrosion took only a few days.

ALM continued to act in the predatory way in which it had begun its existence. Within five years of its inception, the company had purchased all of the major lead manufacturers in the country with the exception of the Mersey White Lead Company, which was eventually taken over by ALM in 1972. Although there were significant numbers of small, regional producers of lead pipeand to a lesser extent of lead sheetin which scale economies were not essential to the producers survival, ALM dominated the production of lead chemicals. In 1925, ALM took over the Brimsdown Lead Company, another company with a new white lead process, which had been financed by Ludwig Mond and supported by a research laboratory with a number of impressive young scientists, including Stephen Miall, who was to write what was for a long time the standard history of the chemical industry. This acquisition was followed in the years 192628 by the mopping up of several of the smaller Tyneside and London manufacturers and, in 1929, after negotiation had failed, by the aggressive purchase of Walkers Parker shares, which eventually led to an agreed merger.

Formation of Holding Company in 1930

Achieving a dominant position in lead manufacturing was not to be the end of ALMs aims. Not only was there no growth in market sizea result of the Depression during the interwar years and increased foreign competitionthere were also new substitutes for lead products. Copper was beginning to make inroads into the market for lead pipe but, more significant, white lead no longer had the virtual monopoly of the paint market. Titanium-based paints and the entry into the market of Imperial Chemical Industries (ICI) with its Dulux brand were to cause ALM increasing problems, although, in large part as a result of the former Brimsdown chemists work on titanium, the group had a small share in a company set up in the 1930s to produce titanium dioxide. That company, later known as Tioxide Group plc, was jointly owned by Cookson Group and ICI until December 1990 up until which time, as the worlds second largest titanium dioxide producer, it made a significant contribution to the Group. In 1930, before the impact of these new paints had become serious, however, ALM purchased Goodlass, Wall & Company (GW) of Liverpool, a large paint manufacturer with retail outlets. Although this might have been a useful diversification, particularly since GW owned the Valspar patents with considerable potential for expansion in the market for varnishes, the merger caused problems. The price paid for GW proved too high in the light of subsequent profits, ALMs capital had to be written down, and GW was never integrated, being run as a separate organization until its sale in 1984.

Key Dates:

1851:
The Cookson family becomes involved in lead manufacture.
1924:
Associated Lead Manufacturers (ALM) is formed.
1925:
Rowe Bros. & Company is purchased.
1929:
The firm begins the process of acquiring Walker Parkers and Company.
1930:
Paint manufacturer Goodlass, Wall & Company is acquired; Goodlass Wall & Lead Industries is set up as a holding company.
1943:
Due to decreasing demand, the firm is forced to begin diversification efforts.
1949:
The firms lead business is reorganized into a single entity, ALM.
1954:
Frys Diecastings is acquired.
1966:
The firm adopts the name Lead Industries Group Ltd. (LIG).
1978:
LIG purchases the A.J. Oyster Co.
1979:
The lead business of NL Industries is purchased; LIG operates as the worlds leading producer of lead products.
1983:
The firms name is changed to Cookson Group.
1987:
As part of its overseas expansion efforts, Cookson purchases U.S.-based Vesuvius Crucible Company.
1990:
Cookson sells its 50 percent interest in Tioxide Group plc.
1992:
Economic hardships force Cookson to cut costs and lay off employees.
1995:
HTCI, a U.S.-based ceramic filter manufacturer, and SMT, a California-based printing stencil manufacturer, are acquired.
1996:
The firm buys Engineered Polymers Corp. and GRP Inc. and sells its organic pigment business.
1998:
The company purchases the European Laminates manufacturing business of AlliedSignal Inc.
1999:
Cookson sells TAM Ceramics Inc. to Ferro Corp.; the company purchases Enthone-OMI Inc. and Premier Refractories.
2000:
The firm focuses on three cores businesses: electronics, ceramics, and precious metals.

The ALM board had become distinctly unwieldy in the late 1920s as a result of the appointment of additional directors following the takeover of various family-owned firms. In 1930, Clive Cookson set up Goodlass Wall & Lead Industries (GWLI) as a holding company, and the power of the ALM board withered. The original GW directors were soon pruned from the board of GWLI, and the power of Clive Cookson and his supporters was complete. It is surprising that rationalization was not taken further in the 1930s. A number of lead works closed in London and on Tyneside and production was concentrated geographically to obtain scale economies. The constituent companies essentially remained independent, however, certainly in name (even in the late 1940s at Elswick the switchboard operator had to answer different lines with different company names), and to a considerable extent competed with each other in the market.

Diversification Enforced by World War II

World War II enforced further rationalization. Imports of lead were reduced and controlled by the government, while demand fell, in large part as a result of the almost complete cessation of private building work. The group had to expand several existing businesses, one being the production of solder, as it gradually became clear that diversification away from lead was necessary. After the war, for a number of lead products, there was only limited recovery of demand. White lead was the major casualty, as it was replaced by other bases for paints, and although a new market was found in stabilizers for the plastics industry, the tonnage needed was small. Most of the white lead plant had to be closed. Owing to the motor industrys growing demand for lead in petrol and batteries, total U.K. demand for lead products continued to expand, reaching a peak in the mid-1960s. In this area and in the supply of lead for cables, GWLI faced competition and found the basic lead products business less profitable than its traditional business.

As early as 1943, GWLI had begun to diversify into what Clive Cookson called some allied field of industry. Frys Metal Foundries of Merton, Surrey was purchased for £500,000, overlapping with Cooksons existing business in the production of solder but otherwise concentrating on printers metals and nonferrous alloys. In 1954, another acquisition in this field, Frys Diecastings, was made. As with the lead side, where a number of plants had been set up overseas during the interwar years to avoid import duties, the purchase of the Frys companies brought an expansion in foreign holdings. A further area of expansion was at Howdon, where Roland Cooksonnephew of Clive, later to become chairman of the group from 1963 to 1972added zircon in 1950 to the production of antimony, in which the Cooksons had been involved since the mid-19th century. As with stabilizers for plastics, where GWLI had negotiated for existing U.S. technology through its links with the National Lead Company of the United States, Cookson negotiated a U.K. license to produce zirconium products with TAM Ceramics. These highly refractory materials were beginning to make inroads into the groups existing markets in the ceramics industry and, therefore, offered a sensible diversification, which was to be considerably reinforced in the 1960s with the purchase of two Staffordshire companiesHarrison & Sons (Hanley) Ltd. and E.W.T. Mayer Ltd.involved in the production of ceramic glazes.

Focusing on Chemicals, Metals, and Paints: 1970s-80s

Although diversification had not taken the group far outside its original activities, it had resulted in a lack of focus. In 1949, the lead business, which included antimony and subsequently zircon, had been reorganized into a single company, ALM, with regionally structured management. This offered little opportunity, however, to concentrate its resources on those products which were most profitable. This problem was exacerbated by the accretion of additional companies and the growing tendency toward inter-company trading below market prices. Gradually, beginning in 1977 with the creation of the antimony and zircon operation Anzon Limited, the groupwhich had changed its name in 1966 to Lead Industries Group Ltd. (LIG)began to adopt a divisional structure. Two years later, ALM was divided into three product divisions: chemicals, metals, and paints.

By this time, it was clear that the lead business was in permanent decline. U.K. consumption had declined by more than 25 percent in the previous ten years, and this had necessitated the closure of several works. Although to some extent offset by the development of new products such as lead-clad steel for buildings, and by overseas expansion in Europe and in the United States, where the lead interests of NL Industries were purchased for $40 million in 1979, making LIG the worlds leading producer of lead products, the future of the group clearly lay elsewhere. Already, by the early 1970s ALM accounted for only one-third of group turnover and its contribution to total profits was declining. Further diversification was required.

Changes Under a New Name: Middle to Late 1980s

Fortunately for the group, leadership had moved in the 1970s toward a new set of directors who had only limited links, if any, with the companys traditional lead business and who increasingly recognized the need to reduce those links, not only because of the declining financial returns from lead but also because of its unattractive public image. Leading the new developments were I.G. Butler, group chairman from 1976, and M.J.G. Henderson, his successor in 1990. They recognized that the group was actually less than the sum of its parts, because many of the 100 or so operating subsidiaries, in various parts of the world, did not associate themselves with the name of the group and were directing resources for individual rather than corporate benefit. Since 1983, the change of name from Lead Industries Group to Cookson provided the focus for a new and much more high-profile corporate image for all the subsidiaries worldwide.

A second step was the creation of a clearer divisional structure and the appointment of a chief executive for each division who was responsible for isolating and developing those of its products with major growth potential. The third step was to make further major overseas acquisitions, in recognition of the fact that the U.K. market was not large enough to offer significant opportunity for expansion and profit growth. Among the acquisitions, all by agreed takeover, were A.J. Oster Company in 1978, an American producer of nonferrous metals, and in 1987, Vesuvius Crucible Company of Pittsburgh, a U.S. supplier of ceramics to the steel industry, which was subsequently set up as the Vesuvius Group, with headquarters in Brussels. As a result, the 1980s experienced growth in group turnover from £400 million to £2 billion and in pre-tax profit from £16 million to £183 million. Over the decade, earnings per ordinary share rose from 6.7 to 31.2 pence.

Cookson proved one of the fastest growing British industrial groups during the 1980s. By then, it had established a reputation as supplier of a wide range of specialist products to industry, including nonferrous and precious metals, ceramics and refractories, chemicals, and plastics. The group saw itself as the name behind many big names of industry. Claiming that its products were almost ubiquitous in daily lifethey were incorporated in most things from washing machines to motor cars, flame retardants in childrens toys to filaments in light bulbs, and printing on drinks cans to household paintthe group became almost worldwide in its diffusion, with manufacturing plants in more than 40 countries, and 70 percent of its turnover plus 80 percent of profit coming from abroad by the late 1980s.

Acquisition and Divestiture During the 1990s

Cookson spent the majority of the 1990s involved in unloading unprofitable businesses to cut costs. Its first move was the sale of its holding in Tioxide Group plc due to the dismal conditions plaguing the titanium dioxide industry. It also sold its A.J. Oyster brass mill product business and divested its holdings in Cookson Plibrico Ltd. Japan as well as Plibricos European operations. In 1992, the firm sold its interest in Nanshing Color and Chemical Company, a Far East distributor of materials related to the electronics and plastics industry. That year, the firm was also forced to lay off company employees due to weakening economic conditions.

The group also made certain key acquisitions to strengthen its core operations. In 1991, the firm purchased the dielectric powders business of DuPont, incorporating it into its TAM Ceramics Inc. subsidiary. The following year, Stern Leach, a leading precious metal fabricator, became a wholly owned subsidiary of Cookson. The company also expanded its magnet operations in 1993 by forming a joint venture with New York-based Magnetic Technologies Corp.

Cookson strengthened its hold on the printed circuit board (PCB) industry in 1993 by purchasing the electronic laminates business of Swedish firm Perstorp as well as Brent Electronic Chemicals, a supplier to the PCB market. In 1995, SMT, a California-based printing stencil manufacturer, was acquired. The firms refractories business, operating under the name Vesuvius, also expanded by acquiring the U.S.-based Technical Ceramics Division of LECO Corp. and the assets of HTCI, a manufacturer of advanced ceramic filters.

By 1996, Cooksons acquisition spree appeared to be paying off. Working with an increased net cash flow of £117 million, the group was able to pay down debt as well as continue expansion and divestiture efforts. As such, Cookson made an $87 million purchase of U.S.-based Engineered Polymers Corp. and bought GRP Inc., a distributor of fused cast refractory materials. In 1996, the group sold its organic pigment business to Hoechst AG. The following year, it sold its antimony products business (Anzon) to Great Lakes Chemical Corp. in a $90 million deal. Stephen Howard, Cooksons CEO, commented on the groups actions in a 1997 Extel Examiner article, stating, Cookson continues to focus management and financial resources on those businesses where it has or is able to achieve leading market and technological positions on a world-wide basis. The sale of the Anzon business completes our exit from the manufacture of plastics additives and releases capital which Cookson will employ in those businesses which are key to its future growth.

Under the leadership of Howard, Cookson continued expanding in the areas deemed profitable. In 1998, the group purchased the U.K. refractories businesses, Flogates Ltd. and KSR International Ltd. It also acquired the European Laminates manufacturing operations of AlliedSignal Inc. and U.S.-based Matrix, a manufacturer of micron-tolerance precision engineered products.

In 1999, the Plaskon Electronics Materials business of BP Amoco was purchased, along with Premier Refractories International Inc. for $410 million. The group also announced the $503 million purchase of Enthone-OMI Inc., a manufacturer of specialty chemicals used in the electronics, surface metal finishing, and jewelry industries. In 1999, as part of the groups divestiture program, TAM Ceramics Inc. was sold to Ferro Corp.

During the late 1990s, Cookson Group renewed its focus on its core operations: electronics, ceramics, and precious metals. Although sales were up 17 percent in 1999, profits slipped to £149 million from £151 million in the previous year. Management cited the strength of the British pound, the unstable Asian economy, and unremarkable performance in the electronics industry as cause for its lackluster profits.

Cost Cutting and Growth in Key Segments in the New Millennium

During the first year of the new millennium, however, Cooksons profits rebounded, especially in its Electronics division, which reported a doubling of operating profits due to favorable market conditions. The group continued its growth through acquisition policy, acquiring the laminates division of Achem Technology Corp. to bolster its Asian operations in the PCB market. It also disposed of its Neptco, Focas, and Polyflex businesses and planned to continue its divestiture of its Plastic Moldings segment.

Its profit rebound did not last long, however, and in 2001, the electronics industry once again saw a decrease in demand. The U.S. market, as well as the Asian and European markets, experienced a sharp downturn in the industry. Cooksons Ceramics division also came upon hard times as steel production faltered in North America.

Cookson management remained intent on future growth, however, and set forth a strategy dedicated to delivering advanced productivity-driven process solutions to customers, further integration of new acquisitions, and a constant renewal of operations dedicated to changing customer demands. As management continued to cut costs to combat market downturns, Cookson remained well positioned to maintain a leading role as a supplier to the electronics industry.

Principal Divisions

Electronics; Ceramics; Precious Metals.

Principal Operating Units

Polyclad Technologies; Speedline Technologies; Alpha-Fry Technologies; Cookson Performance Solutions; Vesuvius Group; Sterns Metal Group.

Principal Competitors

Asahi Glass Company Ltd.; E.I. du Pont de Nemours; Johnson Matthey plc.

Further Reading

Alpine Refractories Unit Sold to Cookson, American Metal Market, August 10, 1999, p. 1.

Cookson Buys PCB Laminates, Chemical Market Reporter, May 1, 2000, p. 3.

Cookson Buys Plaskon from BP Amoco and Sells TAM Ceramic Unit to Ferro, Chemical Market Reporter, July 19, 1999, p. 7.

Cookson Group Acquisition, Extel Examiner, April 22, 1992.

Cookson Group Buys Matrix for $13m, Financial Times London, September 18, 1998, p. 24.

Cookson Group Buys U.S. Ceramic Manufacturer HTCI, Extel Examiner, July 4, 1995.

Cookson Group Completes Antimony Products Business Sale for 90 mln USD, Extel Examiner, November 4, 1997.

Cookson Group on Target with 68 Percent Rise Midway, Financial Times London, September 6, 1985.

Cookson Group plc Announces Disposal and Acquisition, Universal News Services, August 16, 1991.

Cookson to Acquire Enthone-OMI, Machine Design, April 20, 2000, p. 30.

Debo, David, Acquisition Strengthens Cookson Presence in WNY, Business First of Buffalo, October 28, 1996, p. 5.

Hedley, W.P., and C.R. Hudleston, Cookson of Penrith, Cumberland and Newcastle upon Tyne, Kendal: Cookson, 1966.

Jarvis, Paul, Cookson Plans to Trim 700 Jobs in Cost-Cutting Bid, Wall Street Journal Europe, February 12, 1999, p. 8.

John, A.H., ed., The Walker Family: Iron Founders and Lead Manufacturers 1741-1893, London: Council for the Preservation of Business Archives, 1951.

Minutes Relating to the Proceedings of the Foundry Co. begun by S. and A. Walker, 1741, and of the Lead Company, begun by Samuel Walker, 1778, Chester, 1879.

Rowe, D.J., Lead Manufacturing in Britain: A History, London: Croom Helm, 1983.

Sales Up at Cookson But Not Profits, Electronics Weekly, March 8, 2000, p. 2.

Taylor, Paul, Cookson Group Builds Laminates Side in Europe, Financial Times London, September 1, 1993, p. 20.

D.J. Rowe

update: Christina M. Stansell

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Cookson Group plc

Cookson Group plc

130 Wood Street
London, EC2V 6EQ
United Kingdom
(071) 606-4400
Fax: (071) 606-2851

Public Company
Incorporated: 1924 as Associated Lead Manufacturers Ltd.
Employees: 14,500
Sales: £1.98 billion (US$3.20 billion)
Stock Exchange: London

Cookson is an international group which specializes in the refining, casting, and fabricating of non-ferrous and precious metals and the manufacture of ceramics, chemicals, plastics, and printing and refractory products.

The family was established in Tyneside, England, in 1704 when Isaac Cookson, the son of a brazier from Penrith, Cumberland, moved to Newcastle upon Tyne to seek his fortune. He began operations near South Shields, where the company has had a continuous presence to the present day. The family developed major industrial links in coal mining and the manufacture of iron, salt, and glass, but its direct involvement with a company which came to be part of the present group did not occur until it entered lead manufacturing in the middle of the 19th century.

The earliest direct link with the present group also came in lead manufacture, when in 1778 a Rotherham-based family of ironmasters, the Walkers, began to diversify, and set up its first white lead works at Elswick, Newcastle, a site which is still in the ownership of Cookson Industrial Materials. White leadbasic lead carbonatewas then the base for virtually all decorative paints and, as the population grew rapidly and the Industrial Revolution gathered pace, the market for white lead and other lead products expanded. Lead, although a long way behind iron, was the second most heavily utilized metal and was to remain so throughout the 19th century, with British firms processing around a quarter of a million tons a year by 1900.

This initial diversification into lead had been made at a propitious time and the Walkerss network of lead works became larger than its original base in iron. By the end of the Napoleonic Wars, the Walkerss partnership was employing a total capital of approximately £500,000 in lead manufacture, with works in London (Islington, Lambeth, and Southwark), Chester, Derby, Liverpool, and Newcastle under Lyme, as well as the original Elswick works. While some of the smaller works were closed during the 19th century, large smelting and manufacturing sites were purchased at Bagillt and Dee Bank, in north Wales, to work local lead ores, and the Scottish market was supplied by a works in Glasgow.

While white lead remained important, the output of other lead chemicalsespecially red lead, used as the base for protective paints for the increasing output of iron and steel in the countrywas developed. The Walkerss partnerships were the first to adopt a new process for the manufacture of lead shot, and built several shot towers at the turn of the 18th centuryincluding one at the Chester works which is the only early tower still in operation in the United Kingdom. The Walkerss works processed a large amount of blue lead, especially rolled sheet lead and extruded pipe. These products were in great demand as a result of the large increase in both public and private building in the Victorian years, with sheet being used for roofing, and pipe to convey the newly developed water supplies. As a result of these developments, the partnershipseach works was run by a managing partner, and interlocking partnerships between various works provided some overall controlwere the largest single force in the British lead manufacturing industry throughout the 19th century.

Despite its large size and considerable potential, the Walkerss partnership lacked initiative and did not dominate the industry in the second half of the 19th century as it might have done. By then the third and fourth generations of partners from the family were managing the firm, and there is evidence that it was suffering the classic symptoms of hardening of the arteries of commercial instinct. Capital employed grew very little over the 19th century; profitability was never high; the innovation of new techniques was left to competitors, and several of the partners became more interested in their country houses and small landed estates than in the fortunes of the firm. A dispute between the partners with regard to profitability led the partnership into the chancery court with the eventual outcome in 1889 that the assets were sold to a newly formed public company, Walkers Parker and Company. The new company experienced even less financial success, with a number of losses in the highly competitive years up to 1914.

In the second half of the 19th century, innovation in the lead-manufacturing industry came largely from newly established firms which were subsequently drawn into what is now the Cookson Group. It was in 1851 that the Cookson family became involved in lead manufacture. In that year, two of the sons of Isaac Cookson III purchased land at Hayhole on the River Tyne in Northumberland, where they built a white lead works. In the mid 1840s their father and his partner had sold the familys glass-manufacturing companies, because of increasing competition in this area, and the sons needed to find an outlet for their considerable talents. William Isaac Cook-son was a very capable scientist and businessman. At the age of 20 he had spent a year in Michael Faradays laboratory, and he was later to take out several patents for improvements to metal-smelting and chemical processes.

Under William Isaac and later his son Norman, Cookson rapidly became a significant force in the British lead-manufacturing industry. In 1854, the partners bought from the Hawthorn engineering family a second lead works at Howdon on Tyne, close to the Hayhole works. Since lead smelting and refining and the manufacture of red lead were already in operation at Howdon, the Cooksons had developed the capacity for fully integrated production within less than a decade. Over the next 50 years, the works were expanded and were regularly modernized with the introduction of new processes, the major instance being the first successful British introduction of an alternative to the centuries-old stack process for the manufacture of white lead. In the late 1890s Norman Cookson, like his father an amateur scientist of some distinction with several patents to his name, introduced a German-developed chamber process at Hayhole, which doubled Cooksons output of white lead to some 10,000 tons per annum in the early 1900s, around 20% of U.K. output. Cooksons growth brought considerable profitability and, increasingly, leadership of the industry.

By the turn of the 19th century lead manufacturing, like many British industries, was experiencing severe competition, not only from the development of new firms at home but also from imports from continental producers. Most British firms were small family-run companies which were ill-prepared to cope with the competition, although the example of Walkers Parker suggests that the adoption of limited-liability status alone was not a satisfactory solution. For most of the companies, salvation was seen in cooperation, common pricing policies, and the formation of cartels. By 1914 there were British conventions of the red, white, and blue lead manufacturers; each of these conventions in its turn negotiating market shares within international, largely European, conventions.

While the formation of cartels remained important internationally in the years between World War I and World War II, British manufacturers saw amalgamation as the best way to maintain profitability in the face of increasing competition. The earliest proposals date from World War I but in 1924, under the leadership of Cookson and with Clive Cookson as the first chairman, Associated Lead Manufacturers (ALM) was formed. Two years before Imperial Chemical Industries Ltd. was to perform the same function for the British chemical industry, lead manufacturing had a central focus. The initial merger, with a capital of just under £2 million, was of Cookson, and the firm of Locke, Lancaster and W.W.&R. Johnson & Sons, the latter being an earlier amalgamation of several London producers which was now by far the dominant London firm.

ALM thus began its existence with the two major firms in two of the three most significant production areas in the United Kingdom. However, it lacked a presence in the remaining geographical area of significance, the Northwest, and still faced the regionally diversified competition of Walkers Parker. The first of these deficiencies was overcome rather surprisingly by the purchase, in January 1925, of Rowe Bros. & Company, traditionally a builders merchant and thereby involved in the supply of lead products. Although this purchase would have given ALM an outlet for some of its sheet and pipe production, its true function was to nullify the potential threat of Rowes growing involvement in lead manufacture. Before World War II, Rowe, in conjunction with Cookson, had purchased the patent rights to a newly invented process for the manufacture of red lead and, perhaps more importantly, had acquired the Runcorn White Lead Company, which brought with it the plant required for a new quick process. Even using Cooksons new chamber process the corrosion period for the production of white lead was almost two months, which involved considerable additional costs as compared with the potential, of the as yet little-used quick process, where corrosion took only a few days.

ALM continued to act in the predatory way in which it had begun its existence. Within five years of its inception, the company had purchased all the major lead manufacturers in the country with the exception of the Mersey White Lead Company, which was eventually taken over by ALM in 1972. While there were significant numbers of small, regional producers of lead pipeand to a lesser extent of lead sheetin which scale economies were not essential to the producers survival, ALM dominated the production of lead chemicals. In 1925, ALM took over the Brimsdown Lead Company, another company with a new white lead process, which had been financed by Ludwig Mond and supported by a research laboratory with a number of impressive young scientists, including Stephen Miall, who was to write what was for a long time the standard history of the chemical industry. This acquisition was followed in the years 1926-1928 by the mopping up of several of the smaller Tyneside and London manufacturers and, in 1929, after negotiation had failed, by the aggressive purchase of Walkers Parker shares which eventually led to an agreed merger.

Achieving a dominant position in lead manufacturing was not to be the end of ALMs aims. Not only was there no growth in market sizeas a result of the Depression during the interwar years together with increased foreign competitionthere were also new substitutes for lead products. Copper was beginning to make inroads into the market for lead pipe but, more significantly, white lead no longer had the virtual monopoly of the paint market. Titanium-based paints and the entry into the market of Imperial Chemical Industries (ICI) with its Dulux brand were to cause ALM increasing problems, although, largely as a result of the former Brims-down chemists work on titanium, the group had a small share in a company set up in the 1930s to produce titanium dioxide. That company, now Tioxide Group PLC, was jointly owned by Cookson Group and ICI until December 1990 up until which time, as the worlds second-largest titanium dioxide producer, it made a significant contribution to the Group. In 1930, before the impact of these new paints had become serious, however, ALM purchased Goodlass, Wall & Company (GW) of Liverpool, a large paint manufacturer with retail outlets. Although this might have been a useful diversification, particularly since GW owned the Valspar patents with considerable potential for expansion in the market for varnishes, the merger caused problems. The price paid for GW proved too high in the light of subsequent profits, ALMs capital had to be written down, and GW was never integrated, being run as a separate organization until its sale in 1984.

One long-lasting advantage accrued from this merger. The ALM board had become distinctly unwieldly in the late 1920s as a result of the appointment of additional directors following the takeover of various family-owned firms. In 1930 Clive Cookson set up Goodlass Wall & Lead Industries (GWLI) as a holding company, and the power of the ALM board withered. The original GW directors were soon pruned from the board of GWLI, and the power of Clive Cookson and his supporters was complete. It is surprising that rationalization was not taken further in the 1930s. A number of lead works were closed in London and on Tyneside and production geographically concentrated in order to obtain scale economies. The constituent companies essentially remained independent, however, certainly in nameeven in the late 1940s at Elswick the switchboard operator had to answer different lines with different company namesand to a considerable extent competing with each other in the market.

World War II enforced further rationalization. Imports of lead were reduced and controlled by the government, while demand fell, largely as a result of the almost complete cessation of private building work. The group had to expand several existing businesses, one being the production of solder, as it gradually became clear that diversification away from lead was necessary. After the war, for a number of lead products, there was only limited recovery of demand. White lead was the major casualty, as it was replaced by other bases for paints, and although a new market was found in stabilizers for the plastics industry, the tonnage needed was small. Most of the white lead plant had to be closed. Owing to the motor industrys growing demand for lead in petrol and batteries, total U.K. demand for lead products continued to expand, reaching a peak in the mid 1960s. In this area and in the supply of lead for cables, GWLI faced competition and found the basic lead-products business less profitable than its traditional business.

As early as 1943, GWLI had begun to diversify into what Clive Cookson called some allied field of industry. Frys Metal Foundries of Merton, Surrey, was purchased for £500,000, overlapping with Cooksons existing business in the production of solder but otherwise concentrating on printers metals and non-ferrous alloys. In 1954 another acquisition in this field, Frys Diecastings, was made. As with the lead side, where a number of plants had been set up overseas during the interwar years in order to avoid import duties, the purchase of the Frys companies brought an expansion in foreign holdings. A further area of expansion was at Howdon, where Roland Cooksonnephew of Clive, later to become chairman of the group from 1963 to 1972added zircon in 1950 to the production of antimony, in which the Cooksons had been involved since the mid-19th century. As with stabilizers for plastics, where GWLI had negotiated for existing U.S. technology through its links with the National Lead Company of the United States, Cookson negotiated a U.K. license to produce zirconium products with TAM Ceramics. These highly refractory materials were beginning to make inroads into the groups existing markets in the ceramics industry and therefore offered a sensible diversification, which was to be considerably reinforced in the 1960s with the purchase of two Staffordshire companiesHarrison & Sons (Hanley) Ltd. and E.W.T. Mayer Ltd.involved in the production of ceramic glazes.

Although diversification had not taken the group far outside its original activities it had resulted in a lack of focus. In 1949 the lead business, which included antimony and subsequently zircon, had been reorganized into a single company, ALM, with regionally structured management, but this offered little opportunity to concentrate its resources on those products which were most profitable. This problem was exacerbated by the accretion of additional companies and the growing tendency towards inter-company trading below market prices. Gradually, beginning in 1977 with the creation of the antimony and zircon operation Anzon Limited, the groupwhich had changed its name in 1966 to Lead Industries Group Ltd. (LIG)began to adopt a divisional structure. Two years later, ALM was divided into three product divisions: chemicals, metals, and paints.

By this time, it was clear that the lead business was in permanent decline. U.K. consumption had declined by more than 25% in the previous ten years, and this had necessitated the closure of several works. Although to some extent offset by the development of new products such as lead-clad steel for buildings, and by overseas expansion in Europe and in the United States, where the lead interests of NL Industries were purchased for $40 million in 1979, making LIG the worlds leading producer of lead products, the future of the group clearly lay elsewhere. Already, by the early 1970s ALM accounted for only one-third of group turnover and its contribution to total profits was declining. Further diversification was required.

Fortunately for the group, leadership had moved in the 1970s toward a new set of directors who had only limited links, if any, with the companys traditional lead business and who increasingly recognized the need to reduce those links, not only because of the declining financial returns from lead but also because of its unattractive public image. Leading the new developments were I.G. Butler, group chairman from 1976, and M.J.G. Henderson, his successor in 1990. They recognized that the group was actually less than the sum of its parts, because many of the 100 or so operating subsidiaries, in various parts of the world, did not associate themselves with the name of the group and were directing resources for individual rather than corporate benefit. Since 1983, the change of name from Lead Industries Group to Cookson has provided the focus for a new and much more high-profile corporate image for all the subsidiaries worldwide. A second step was the creation of a clearer divisional structure and the appointment of a chief executive for each division who is responsible for isolating and developing those of its products with major growth potential. The third step was to make further major overseas acquisitions, in recognition of the fact that the U.K. market was not large enough to offer significant opportunity for expansion and profit growth. Among the acquisitions, all by agreed takeover, were A.J. Oster Company in 1978, an American producer of non-ferrous metals, whose chairman is now chief executive of Cookson America Division and, in 1987, Vesuvius Crucible Company of Pittsburgh, a U.S. supplier of ceramics to the steel industry, which was subsequently set up as the Vesuvius Group, with headquarters in Brussels. As a result, the 1980s have seen growth in group turnover from £400 million to £2 billion and in pre-tax profit from £16 million to £183 million. Over the decade, earnings per ordinary share have risen from 6.7 to 31.2 pence.

Cookson proved one of the fastest growing British industrial groups during the 1980s. It has established a reputation as supplier of a wide range of specialist products to industry, including non-ferrous and precious metals, ceramics and refractories, chemicals, and plastics. The group sees itself as the name behind many big names of industry. Claiming that its products are almost ubiquitous in daily lifethey are incorporated in most things from washing machines to motor cars, flame retardants in childrens toys to filaments in light bulbs, and printing on drinks cans to household paintthe group has become almost worldwide in its diffusion, with manufacturing plants in more than 40 countries, and 70% of its turnover plus 80% of profit coming from abroad.

Principal Subsidiaries

Cookson Industrial Materials Ltd.; Cookson Ceramics Ltd.; Cookson Metals Ltd.; Cookson Minerals Ltd.; Cookson Plibrico International Ltd.; Cookson Precision Castings Ltd.; Frys Metals Ltd.; Vesuvius International Corporation (Belgium); Alpha Metals Inc. (U.S.A.); CaMac Corporation (U.S.A.); Cookson America, Inc. (U.S.A.); Polyclad Laminates Inc. (U.S.A.); Stern Metals Inc. (U.S.A.).

Further Reading

Minutes Relating to the Proceedings of the Foundry Co. begun by S. and A. Walker, 1741, and of the Lead Company, begun by Samuel Walker, 1778, Chester, [n.p.], 1879; John, A.H., ed., The Walker Family: Iron Founders and Lead Manufacturers 1741-1893, London, Council for the Preservation of Business Archives, 1951; Hedley, W.P., and C.R. Hudleston, Cookson of Penrith, Cumberland and Newcastle upon Tyne, Kendal, Cookson, [1966]; Rowe, D.J., Lead Manufacturing in Britain: a History, London, Croom Helm, 1983.

D.J. Rowe

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