Amp, Inc

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Amp, Inc

Harrisburg, Pennsylvania 17105-3608
(717) 564-0100

Public Company
Incorporated: 1956
Employees: 24,100
Sales: $2.67 billion
Stock Index: New York

AMP is the leading manufacturer of an essential and often overlooked line of electrical components: connections. AMP has developed highly versatile and durable smart connections that perform many functions more economically than other alternatives.

The founder of AMP was Uncas A. Whitaker, a former employee of Westinghouse Electric and the Hoover Company who held degrees in mechanical and electrical engineering and law. In 1941, after two years as a senior engineer for American Machine & Foundry in New York, Whitaker decided to start his own company. Aircraft Marine Products, as the company was called, specialized in solderless, uninsulated electrical connections for aircraft and boat manufacturers: a short metal tube with a ring on the end and a crimping tool. The device allowed electricians to make quick, removable wire connections without a heating element or flux. It was simple, unique, and very popular.

From a small office in New Jersey, Aircraft Marine established supply contracts with some of the largest industrial manufacturers in the world. Less than three months after the company was created, the United States entered World War II. Companies such as Boeing, Consolidated Vultee, Ford, and Electric Boat redirected their production toward the war effort, developing new products and accelerating output. More than ever before, warplanes, battleships and field equipment incorporated electrical devices, and increasingly these were assembled with solderless connections.

With its business thriving from war production, Aircraft Marine soon moved to a larger facility in Glen Rock, Pennsylvania. It then moved its headquarters to Harrisburg in 1943, after winning over the citys chamber of commerce, which didnt want new business in the city, complaining about inadequate housing. A fire at the Glen Rock plant and the trauma of relocation overshadowed the introduction of the pre-insulated terminal, an improved version of AMPs existing product that left all but the terminal ring exposedan improvement which reduced the incidence of shorted circuits.

The end of the war brought a termination of contracts across a broad spectrum of American industry. Many of Aircraft Marines customers went bankrupt, were acquired, or were forced into mergersin general they were compelled to reduce the scale of their operations drastically. Aircraft Marine, however, required little product conversion in order to adapt to the postwar economy since its connections were versatile components rather than more specialized finished products.

Still, the transition was stressful for Aircraft Marine. It was able to survive the sudden drop in orders through drastic austerity measures and additional underwriting from Midland Investment Company, its primary benefactor. Whitaker became bitter about the companys experience with military contracts and procurement controls.

Aircraft Marine re-entered the commercial market with another new product, the strip-formed terminal. During 1952, the company created a marketing unit called AMP Special Industries, and established sales of existing products and the introduction of connectors for pin and sockets, coaxial cables, and printed circuits resulted in unprecedented growth. Expanding through sales-led growth rather than by acquisition, in the 1950s Aircraft Marine added subsidiaries in Australia, Britain, the Netherlands, Italy, Japan, Mexico, and West Germany.

Aircraft Marine changed its name to AMP upon incorporation as a public company in 1956. The company thereafter raised additional capital through share offerings. AMP improved and expanded its plant space and began a more ambitious research and development effort. Having demonstrated brisk and stable growth, AMP was listed on the New York Stock Exchange in October 1959.

Whitaker relinquished the company presidency to George A. Ingalls in 1961. Although he remained chairman, Whitaker wished to emphasize a more democratic form of leadership. He assigned many of his own managerial responsibilities to other managers and slowly removed himself from the companys daily operations.

AMP made a conscious decision during the 1960s against diversification into a wider range of products. Instead, management elected to concentrate on the passive components market it had come to dominate. AMP had experienced 15% annual growth in the ten years since the mid-1950s and anticipated an increasingly difficult active component market in the ensuing decades. Indeed, while Japanese electronics manufacturers were developing new capabilities in active componentsparticularly transistorsthey neglected to take advantage of trade regulations which would have allowed them to establish an enduring position in passive components. As a result, AMP became the largest passive component manufacturer in Japan, a position it holds to this day.

AMP continued to make frequent management changes; presidents and chief executives served only for about five years before changing jobs. Whitaker, however, served as chairman until his death in 1975. His death neither interrupted the companys business nor caused a management battle for power. Under the leadership of Joseph D. Brenner, AMP maintained its stable course, but devoted increasing sums of money toward research into new semipassive systems.

Among the products to materialize from this intensified effort were more advanced coaxial connections for the growing cable TV market, fiber-optic terminals for improved telecommunications systems, and more durable membrane switches. To some extent, however, AMP did not take full advantage of military sales. Like Whitaker, Brenner refused to seek Pentagon sales because the government negotiated special prices on the basis of margin. This necessitated inspection of AMPs bookssomething Whitaker viewed as interference in the companys business. Instead, AMP was, in effect, a secondary supplier; it sold to companies that did hold Pentagon contracts. Insulated from the vagaries of defense procurement, AMP was better able to maintain stable growth, which continued at an annual rate of about 16%.

Walter Raab, a CPA with nearly 30 years of service to AMP, was named chairman and CEO upon Brenners retirement in 1982. A cautious planner, in the mold of his predecessors, Raab presided over AMP during a delicate period. Major customers, such as IBM, Ford, and Digital, sought to cut supply costs by reducing stocks and numbers of suppliers. AMP, and its principal competitors Molex and Thomas & Betts, were expected to benefit most. Already the largest suppliers to the industry, they were most likely to survive. In fact, they stood to gain market share as smaller suppliers were eliminated.

AMP invested heavily in the development of integrated sub-assemblies and new automated application methods. The system was originally conceived for use in automotive manufacture. The installation of automotive wiring harnesses, or electrical systems, was complex and labor-intensive. Sub-assemblies, however, were simple and cut down on man-hours. AMP had to wait more than ten years, however, before auto manufacturers were willing to incorporate the system.

Suddenly, in 1985 components customers initiated a drastic reorganization. They switched to automated subassemblies in a very short period of time. AMP, the least affected, suffered an 18% drop in sales, but recovered quickly as new products were brought on line.

Recognizing the potential sales which came with the Reagan Administrations military expansion, AMP created a special group, open to Pentagon scrutinization, whose specific purpose is to engage in government sales. But less than 5% of its sales come from the military. In late 1987, both AMP and Molex purchased shares in Matrix, a defense-oriented connection manufacturer. Neither competitor has yet moved to absorb Matrix, but their interest in the company demonstrates the importance each attaches to future military sales.

AMPs new president, James Marley, was trained in manufacturing rather than finance. He believes AMPs future lies in the development of smarter connectionsones that perform as switches or regulators. In addition, he told Financial World, If we focus on being good vendors to our customers, we wont ever have to worry about competition.

Principal Subsidiaries:

AMP Products Corp.; AMP Keyboard Technologies, Inc.; Carroll Touch Inc.; Mark Eyelet Inc.; Matrix Science Corp.; AMP Packaging Sys., Inc.; AMP of Canada Ltd.; AMP de Mexico, S.A.; AMP S.A. Argentina; AMP do Brasil Ltda.; AMP de France S.A.; AMP-Holland B.V.; AMP of Great Britain Ltd.; AMP Italia S.p.A.; AMP Deutschland G.m.b.H.; AMP Espanola, S.A.; AMP Osterrich Handelsges M.b.H.; AMP Schweiz A.G.; AMP (Japan) Ltd.; Australian AMP Pty. Ltd.; AMP Finland OY; AMP Norge A/S; AMP Portugal, LDA; AMP Svenska A.B.; AMP Belgium; AMP Danmark; AMP Singapore Pte. Ltd.; AMP Products Pacific Ltd., Hong Kong; AMP Korea; New Zealand AMP Ltd.; AMP Ireland Limited; AMP Taiwan.

Further Reading:

Cohn, W. H. The End is Just Beginning, Carnegie-Mellon Press, 1980; Barton, Michael. Life by the Moving Road: A History of the Harrisburg Area, Woodland Hills, California, Windsor Publications, 1983.