BOC Group Plc

Chertsey Road
Windlesham, Surrey GU20 6HJ
England
(0276) 77222

Public Company
Incorporated: 1886 as Brin’s Oxygen Co., Ltd.
Employees: 39,936
Sales: £1.942 billion (US$ 2.856 billion)
Market Value: £1.374 billion (US$ 2.020 billion)
Stock Index: London

Although oxygen had been used in an extremely limited capacity since the late 18th century as a respiratory agent, the development of chemically produced oxygen was hampered by costly methods, yielding only small amounts of relatively impure gases. Commercially produced oxygen was largely confined to “limelight,” used to illuminate the stages of theatres and music halls, and that popular means of entertainment and enlightenment, the lantern lecture.

In 1885 two French brothers and chemists, Arthur and Leon Quentin Brin, traveled to the Inventions Exhibition in South Kensington, London, and erected a demonstration of their recently patented method of making oxygen by heating barium oxide, with a view to attracting financial support. They found it in Henry Sharp, an English stoneware manufacturer. In January of 1886 the brothers established Brin’s Oxygen Company Limited.

In the spring of 1886 the fledgling company hired its first foreman, a young Scotsman by the name of Kenneth Sutherland Murray. A man of remarkable mechanical ingenuity, Murray redesigned the plant in his first year on the job. In 1888 the new plant went into operation and production increased from nearly 145.000 to 690,000 cubic feet of oxygen. One year later the plant installed an automatic gear, invented by Murray, and improved Brin’s production to nearly a million cubic feet of oxygen a year.

From the beginning, however, limelight was a limited market and so the company board members searched for new ideas to develop oxygen sales. They promoted the use of oxygen in preserving milk, bleaching sugar, manufacturing saccharine, vinegar and linoleum, maturing whisky, and in the production of iron and steel. They hired a horse and carriage for the express purpose of “pushing business.”

As a result, sales of oxygenated water in any form, flavored or not, increased dramatically. Moreover, the beverage found favor among temperance groups. The company published signed physicians’ testimonials extolling the virtues of this new “health” drink, prescribing it as a sort of universal remedy.

The company then turned its attention to the means of gas containment and distribution. The early method of storing and distributing gas, the gas bag, was an inefficient method which resulted in a significant loss of both gas and profit, and was soon replaced by the sturdier iron cylinder. However, even with this vast improvement over the gas bag, the new method of containment was cumbersome and costly. The cylinder itself weighed and cost more than the gas it held, making the product economically impractical to distribute over a large geographical area.

Consequently, in 1887, under the guiding hand of Henry Sharp, Brin’s began granting licenses to a handful of independent companies throughout Great Britain to produce oxygen under the patented Brin process. In 1890 Brin’s introduced another improvement in containment, a steel cylinder, which soon became the standard of gas containment worldwide, and expanded its production to related products, such as valves and fittings.

At the same time, in a move that marked the beginning of the company’s international growth, Brin’s began exporting oxygen in cylinders to Australia for medical use, and developed plants in France, Germany and the United States, granting them sole rights to operate under the Brin process.

In the decade that followed, Brin’s did little more than consolidate its operations and improve its market share. The company took over two of the British companies which had been granted licenses earlier to produce its product. The company also elected its second chairman, Edward Badouin Ellice-Clark. After several years into his chairmanship, Ellice-Clark expressed some regret that the industry had produced no advances in the application of industrial oxygen.

By 1900, however, a new method of producing oxygen by converting air to liquid had been devised independently in Britain, the United States and Germany. The German scientist reached a patent office first, and the patent went to Dr. Carl von Linde. Brin’s almost immediately negotiated an agreement to use the Linde patents and within several years abandoned both its now dated barium oxide method of oxygen production and the company name. In 1906 Brin’s Oxygen Company Limited became the British Oxygen Company Limited, or BOC.

There followed steady expansion spurred by development of new technologies using oxygen in metal cutting and welding. In 1914 Britain declared war on Germany, and business increased significantly. No previous war had equaled the output of munitions, and the essential element of oxygen was apparent in almost every aspect of munitions production. Every means of transport, including ships, tanks and trucks, involved either metal cutting or welding, usually both.

BOC continued to grow in the immediate post-World War I years through acquisitions and through development in the commercial use of products such as acetylene and the rare gases. These various gases, with their exotic sounding names of argon, krypton, helium, neon and xenon, were developed and marketed for use in such products as the neon light, fog lamps, miner’s lamps, respiratory gas in obstetric analgesia, and as protection for divers against the “bends.”

In 1920 BOC acquired a London company called Sparklets Ltd. A major producer of small arms munitions during World War I, Sparklets had originally formed for the purpose of manufacturing small bulbs of carbon dioxide for carbonated drinks. Ten years later, BOC merged with Allen-Liversidge Ltd., a South African company with whom BOC had collaborated throughout the 1920’s in further developing the acetylene welding process. In 1925 Kenneth Sutherland Murray, the company’s first foreman, was appointed chairman.

As an adjunct to its admittedly limited production of medical oxygen, and in response to a request by the National Birthday Trust Fund, BOC designed a machine for use by midwives in 1935 called the “Queen Charlotte’s Gas-Air Analgesia Apparatus.” Soon afterwards, BOC introduced an improved anaesthetic gas, called “Ento-nox,” used extensively to ease pain in childbirth and which was available in ambulances for use during emergencies.

That same year, in a pioneering accomplishment, the company set up a separate medical division equipped to install oxygen which would be available “on tap” by means of an extensive circuit of copper pipes connecting hospital wards and operating theatres to a battery of cylinders usually located in the basement of a hospital. Four years later, the company developed a machine which was the forerunner of surgical anaesthetic equipment in use today. In an effort to further increase its welding interests, during 1936 BOC acquired The Quasi-Arc Company, a British company which had a refined welding electrode instrument that improved the process of arc welding.

With the onset of World War II, BOC produced gases for munitions and for medical needs. The Air Ministry enlisted the assistance of the company to produce oxygen and equipment designed to withstand high pressures for the Royal and allied Air Forces. Sparklets again began producing a variety of its unique bulbs, including bulbs used to inflate lifejackets; bulbs filled with insecticide, used to protect soldiers against malaria; bulbs used to lower landing gear in emergencies; and larger bulbs, filled with ether, enabling engines to quick-start in the below freezing Russian temperatures.

By 1950 BOC had formed subsidiary companies in over 20 countries. It was a decade that brought with it a revolution in the manufacture of steel when an increased demand for automobiles also led to increased productivity in both the steel and the gases industries. The common method of tanking liquid oxygen to various industries to be evaporated, pressurized and then fed to furnaces proved inadequate to the new demands of steel-making. The search for a new method gave rise to the production of “tonnage” oxygen.

A variation of medical oxygen on tap, tonnage oxygen is, as the name suggests, the production of oxygen by the ton. Rather than tank in the oxygen, and then have it converted, tonnage plants were built on or near the customer site to pump in the already converted oxygen by pipeline. Toward the end of the 1950’s BOC was supplying tonnage oxygen to Wimpey for use in rocket motor testing and liquid oxygen for the launching sites of the Thor and Blue Streak missiles. For use in manufacturing semiconductor devices, BOC began supplying argon to Texas Instruments.

In 1957 the British Monopolies and Restrictive Practices Commission published a report stating that the company’s prices for oxygen and dissolved acetylene were “unjustifiably high” and operated “against the public interest.” According to the report, BOC had deliberately set out to build a monopoly. Successfully so, it would seem, as by this time the company had managed to secure 98% of the British market. The commission disclosed BOC’s practice of providing plant equipment under highly restrictive conditions, and stated that BOC had concealed ownership of several of its subsidiaries while at the same time pretending to be in competition with them in a deliberate effort to drive up prices.

The report was the most scathing ever produced by the commission, according to one reporter. However, at the same time, the commission admitted there was nothing to suggest that BOC was operating under substandard levels of efficiency in any area, as might otherwise be expected in a company of similar standing and resources. The commission also noted that not one of the company’s customers had actually complained about the high prices.

BOC drew criticism again in 1962 when The Board of Trade released the company from some of its obligations to the Monopolies and Restrictive Practices Commission. In response to the board’s action, and immediately following a recent 6% price raise, the British division of Air Products of America noted that BOC still controlled 95% of the British market and argued that the action would restore the company to a monopoly.

New applications for liquid nitrogen prompted the company to develop new markets in refrigeration, food preservation and packaging, preserving medical tissues, and storing and transporting bull semen for artificial insemination. Along these lines, BOC set up BOC-Linde Refrigeration Ltd, with Linde AG of Germany in 1968, acquired Ace Refrigeration Ltd., and J. Muirhead Ltd., quick frozen food suppliers, in 1969, and held Batchelors Ltd., Ireland, a food processor, from 1969 to 1973.

The 1960’s and 1970’s were marked by an accelerated program of diversification at BOC. Under Chairman Leslie Smith, the company began planning for the 1980’s, particularly with an eye to expansion in the Far East, by setting up British Oxygen (Far East) Ltd., in Tokyo. Diversification took BOC even farther afield into such areas as fatty acids, resins and additives produced for paints, inks, and adhesives. In 1970 the company began producing cutting and welding machines which incorporated sophisticated techniques using lasers and electron beams.

The company also began developmental work on underwater welding techniques, producing DriWeld, a system that made structural welds possible at depths of 600 feet. Factories, joint ventures and new holdings were established in Jamaica, Holland, South Africa, Sweden and Spain for a variety of products, including transformers, magnetizing equipment, frozen foods, stable isotopes and radioactively-labeled compounds and cryogenic systems. Furthermore, in 1971 the company installed the largest mainframe computer in Britain, linking a network of computers throughout the country. In a move characteristic of BOC, the company sold computer time to outside customers and, as a result, BOC found itself suddenly in the computer business.

In the wake of the 1973–74 oil crisis, BOC reassessed its portfolio and decided to divest itself of its more peripheral interests in order to concentrate on its primary business, especially the gases and health-care markets. This was done with the intention of expanding production in these areas, particularly in Europe, the Americas and the Far East.

Perhaps the most important and far-reaching move in the history of BOC involved the acquisition of one of America’s major industrial corporations called Airco, a company whose history, in terms of products and growth, nearly mirrored that of BOC. It was an acquisition that came after 11 years of litigation in which the U.S. Federal Trade Commission instigated antitrust proceedings against BOC in order to force the company to divest itself of all Airco stock. The decision was appealed and then delayed, but in 1978 Airco became a 100% owned subsidiary of BOC. This doubled the size of the company, and consequently the British Oxygen Company changed its name to the BOC Group.

Today the BOC Group is one of the world’s five largest producers of industrial gases essential to almost every manufacturing process, supplying a variety of gases to the petroleum, electronic, steel manufacturing, metal producing and fabricating, construction, ceramic, food and beverage industries. Its principal related companies reside everywhere on the globe, including Australia, India, Hong Kong, Japan, Malaysia, Singapore and Taiwan.

Although its health care division is secondary to its gas production, BOC continues to be a world leader in researching and manufacturing completely integrated anaesthesia systems, including the Modulus II Anaesthesia System, one of the most technologically sophisticated anaesthesia devices ever produced. Indeed, it is here that the bulk of the group’s health care effort is concentrated, in its anaesthetic pharmaceuticals and equipment, and with critical care and patient monitoring.

The group’s health care market is largely concentrated in the United States. Encouraged by the U.S. government’s determination to contain hospital costs, the company is aggressively promoting home health care services. It is ironic that while the U.S. government is promoting the same policy, it is at the same time reducing reimbursement for home health care services.

In 1982 BOC acquired a U.S. company called Glasrock Home Health Care, which provides oxygen therapy and medical equipment to chronically ill and, for the most part, elderly patients at home. In 1986 Glasrock became the exclusive national distributor of the first portable defibrillator designed for home use and of the Alexis computer-controlled, omnidirectional wheelchair. An immediate and urgent need the company expects to meet in the near future is providing AIDS patients with the long-range, in-home care that hospitals are not equipped to handle.

BOC’s current chairman and chief executive officer, Richard Giordano, who came to the Group along with the acquisition of Aireo, noted in 1987 that the likely future markets for further development in health care services will be in wealthier countries such as the United States and Germany, followed by Sweden and Switzerland. In the United Kingdom, he stated, home health care is “in the hands of the politicians,” and he complained that, “The health service is absolutely neanderthal.” Japan is an additional possibility for the expansion in health care services, according to Giordano, since it is a country burdened with an aging population.

The group’s third important area of business, the graphite division, which principally makes graphite electrodes for arc furnaces, has been described as a “slow leak in BOC’s earnings performance.” This was a business which, like Giordano, came to BOC along with the Airco acquisition. During 1980, in an act that has been described as a fit of misguided loyalty, Giordano invested in two new U.S. graphite plants; in 1985 the group experienced a loss of six million British pounds.

Under the leadership of Giordano, the BOC Group continues to streamline its portfolio through divestments and liquidations, concentrating on its two strongest businesses of gases and health care. Thirty of the companies acquired during the 1960’s and 1970’s diversification program have been sold, and the work force trimmed by about 20,000. Says Giordano, “We have to walk a narrow line between watching short-term profitability and making sure we don’t cheat the business.”

Principal Subsidiaries

Anaquest Ltd; BOC Cryoplants Ltd.; BOC Health Care; BOC Investments Ltd.; BOC Ltd.; BOC-Overseas Finance Ltd.; BOC Technologies Ltd.; BOC Transhield Ltd.; GL Baker (Transport) Ltd.; Thermit Welding (GB) Ltd. (50%); The BOC Group Inc.; BOC Inc.; Edwards High Vacuum Inc.; Fraser Harlake Inc.; Glasrock Home Health Care Inc.; US Viggo, Inc. The company also list subsidiaries and affiliates in the following countries: Aruba, Australia, Bangladesh, Belgium Brazil, Brunei, Canada, Colombia, Denmark, Fiji, Finland, France, India, Indonesia, Italy, Japan, Kenya, Malawi, Malaysia, Mauritius, Namibia, The Netherlands, New Zealand, Nigeria, Norway, Pakistan, Papua New Guinea, Philippines, Puerto Rico, Singapore, Solomon Islands, South Africa, Spain, Sweden, Switzerland, Taiwan, Tanzania, Thailand, Uganda, United States, Venezeula, Western Samoa, Zambia, and Zimbabwe.