Brambles Industries Limited

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Brambles Industries Limited

Level 40, Gateway
One Macquarie Place
Sydney 2000
Telephone: ( + 61) 2-9256-5222
Fax: ( + 6D-2-9256-5299
Web site:

Public Company
1877 as Brambles Butchering Establishment
Employees: 14,546
Sales: A$4.92 billion ($2.46 billion) (2000)
Stock Exchanges: Australia
Ticker Symbol: BIL
NAIC: 421840 Industrial Supplies Wholesalers; 532490 Other Commercial and Industrial Machinery and Equipment Rental and Leasing; 483111 Deep Sea Freight Transportation; 562112 Hazardous Waste Collection; 562111 Solid Waste Collection; 562211 Hazardous Waste Treatment and Disposal

Australian conglomerate Brambles Industries Limited has taken its motto of dig, lift, load and haul literally, constructing one of the worlds most successful business-to-business industrial services company. From its roots as a materials handling company, Brambles has established globally operating equipment rentalparticularly its CHEP pallets leasing subsidiary and its CAIB wagon leasing armand waste management services. The company operates through nearly 200 subsidiaries affiliated with CHEP, Cleanaway (waste management), Recall (records management), and various equipment rental service firms, including CAIB. In Australia, Brambles also operates a number of regionally focused companies, offering a wide range of logistics services such as marine services, heavy hauling, and others. Since the mid-1990s, Brambles has oriented its focus to its Northern Hemisphere business, to the extent that two-thirds of its operating profits now come from its United States and European operations. These two markets also account for more than half of Brambles annual sales, which neared A$5 billion in 2000. The company is moving to consolidate its CHEP and other industrial services businesses, particularly the European branches that have historically been operated in joint ventures with the United Kingdoms GKN plc. In 2001, the two companies began negotiating a merger of their industrial services branches. Brambles, which celebrated its 125th anniversary in 2000, continued to be led by CEO John Fletcher, who, while scheduled to retire in March 2001, expected to remain in his post until the GKN merger had been resolved. At that point, GKN chief executive C.K. Chow would likely become Fletchers successor.

Establishing a Global Conglomerate in the 19th Century

Walter Brambles family moved to Australia from England at the middle of the 19th century. Bramble, who grew up in the region north of Sydney, began his professional life in 1875, when he opened a butchers shop near the town of Newcastle. Two years later, the then 20-year-old Bramble incorporated his company as Brambles Butchering Establishment, moving his business to Newcastle itself. Among Brambles customers were the ships docked and anchored in the ports and harbors around the Sydney region, and from the start Bramble began supplying shipstransporting meats and vegetables at first by rowboat.

From these beginnings, Bramble moved into full-fledged distribution operations, now using horse-drawn wagons and the railroad link to Sydney. Starting in 1890, the distribution activity became the companys major focus. At the turn of the century, Bramble had expanded to become one of the Newcastle regions major haulers, dealing in goods ranging from meats and produce to construction materials. The companys reputation for heavy hauling was boosted by a contract to handle the transport and other ancillary services of the new steel mill set up in Newcastle by Australian mining company BHP (Broken Hill Proprietary) in 1915.

The following year, Bramble brought his three sons into the family business, renaming the company W.E. Bramble & Sons. The company continued to modernize its operations, adding motor vehicles and especially modernized mobile and fixed cranes and other heavy lifting equipment. In 1920, Bramble expanded beyond Newcastle for the first time, when it was contracted to transport rabbits to the railroad in Nimmitabel.

Walter Bramble retired in 1925 and died in 1930. Eldest son Walter, Jr., aided by his brothers, took over the companys leadership and began expanding its operations still further, especially toward the region around the fast-growing city of Sydney. The new generation of Brambles was quick to adopt the latest in motor vehicle transport and lifting equipment, enabling the company to gain a strong reputation for its hauling and lifting services. In the mid-1930s, Bramble interests in heavy equipment brought it further afield, when it joined with longtime client BHP on a contract to excavate the Port Kembla mine in the Sydney area.

Postwar Expansion

The firms biggest expansion was to come after World War II. By then the Bramble brothers had left the companyWalter, Jr., and brother Alan had died, while the third brother, Milton, had retiredand the companys leadership was now taken over by Tom Price, Alan Brambles son-in-law. Price was to guide the company through a number of significant expansion moves.

Australias postwar production boom greatly helped Brambles own expansion. In order to fund the investment needed to fuel its growth, Bramble went public in 1954, changing its name to W.E. Brambles & Sons Transport Co. Ltd. Still a relatively small, regional company, Brambles was preparing its drive to become a national and then international company. The company moved its headquarters to Sydney in time to take part in that citys own expansion. Under the motto dig, lift, load and haul, Brambles became one of the areas largest operators of transport and industrial servicessuch as excavation and haulingto the citys building boom.

An important event in Brambles history came in 1958, when the company purchased the Commonwealth Handling Equipment Pool, later to be known as CHEP and to provide the backbone to the Australian Materials Handling Standing Committee, had been set up during World War II as an umbrella organization for the storage, allocation, and maintenance of the large fleet of materials handling equipmentsuch as forklift trucks, pallet equipment, and the likebrought to that country by the United States to support its Pacific war effort. After the war, the CHEP, controlled by the Australian government, grew with the acquisition of much of the materials handling fleet left by the United States in the Pacific region. During the 1950s, however, a growing number of voices were suggesting the governments operation of CHEP placed it in direct competition with private enterprisewith the unfair advantages of being a government agency and thus taxexempt. The Australian government sold off much of CHEPs holding to the relative local institutions, including the countrys state and local port authorities.

In 1958, however, the equipment pool for a number of cities, including the important industrial centers of Brisbane, Sydney, and Townsville, remained unsold. In that year, Brambles, led by director J.H.D. Marks, tendered a bid to take over the remaining CHEP operations. The companys bid was accepted, and Brambles was granted the right to continue operations under the Commonwealth Handling Equipment Pool name until the beginning of the new decade (the new operations would eventually form CHEP Pty Ltd.) .

CHEP was to provide the platform for the companys national and then international platform. The acquisition had brought the company a large fleet of forklifts, cranes, and palletsthe latter an innovation that was still relatively new to the Australian continent. The company quickly focused CHEP on its pallet operations, building up a complete pallet and pallet transport system, and establishing a leasing pool of pallets that was to reach more than 100 million pallets worldwide by the end of the century.

The 1970s were to represent two new important developments for the company. The first was the companys diversification into a new area of operations, the waste management market. Then in its infancy, waste management was to take on a greater importance as the corporate and political worlds were confronted with the growing urgency of a number of environmental concerns. Brambles establishment of its Cleanaway subsidiary operations in 1970 placed the company at the forefront of Australias new waste management industry. Cleanaway was also part of another important development for the company in that decade: starting in 1975, Brambles, which had by then extended its operations to become a nationally operating Australian company, was turning to the international market.

Company Perspectives:

Our goal is to ensure that you, our customers, are satisfied with every aspect of our service. We want you to feel that the services we provide are the best in the market, that our prices represent value, and that it is easy to do business with us. This means we are constantly looking outwards. We want to know about your business. What further services can we supply? How can we grow with you? We have the commitment, and the capacity, to respond positively. Our industrial services are diverse and increasingly international in scale. But no matter how different our services, cultures and geographic locations, our employees all share the same Brambles values. This allows us to provide extensive services that meet your global needs, while understanding and responding to regional and local imperatives .

International Industrial Services Leader for the 21st Century

Still a relatively small company by international standards, Brambles looked for a partner in order to help it establish its first foreign operations. That partnership came with a joint-venture agreement with British company GKN plc and the creation of GKN UK in 1975. The two companies soon agreed to extend CHEPs operations into continental Europe, where CHEP became one of Europes leading pallet leasing concerns. By then CHEP had already begun to play a significant part in Brambles rising revenuesand profits.

The CHEP joint-venture provided the model for the companys extension of its Cleanaway subsidiary to Europe. In 1981, the two companies formed a new joint venture to bring Cleanaway to the United Kingdom and then to the rest of Europe. Cleanaways expertise had by then extended to such activities as recycling and resources management, treatment and disposal, hazardous waste disposal, landfill operations, and emergency environmental response services.

During the 1980s, Brambles continued to expand its materials handling and other operations, now looking to enter new territories. The United States was becoming an increasingly important part of Brambles operations, particularly through CHEP, which led the companys entry into that market during the late 1970s and early 1980s. Brambles was meanwhile targeting new potential markets as it began to take on its future status as a global conglomerate. In 1984, the company extended its expertise in leasing to a new area when it acquired Swedens CAIBand that companys strong wagon leasing business, with operations across western Europe. Back at home, Brambles continued to expand, now launching a shipping service across the Bass Strait. The company also expanded into document handling, establishing the subsidiary Recall.

The 1990s saw the company flesh out its global operations, setting up footholds in the nearby Asia Pacific markets. After a three-year takeover battle, Brambles acquired the United States Environmental Systems Company (ENSCO), forming the core of its new North American waste management effort. The A$360 million ENSCO acquisition proved an unsuccessful one for the company. Losing money, ENSCO would be put up for sale at the beginning of 2001. ENSCO was expected to bring in only about half of what the company had originally paid for it.

Elsewhere, however, the company continued to record steady growth, despite the prevailing economic downturn of the early 1990s. From revenues of A$2.3 billion in 1991, the companys sales were to top A$3 billion by mid-decade. Yet the recession, and losses from ENSCO, had already begun to hurt the companys bottom line, and by 1994, Brambles was recording losses of more than A$233 million.

By then, however, John Fletcher had been appointed as the companys CEO and, together with the companys management, had put into effect a new business strategy to take the company into the next century. Greater emphasis was placed on the companys European waste management operations. In 1994 the company acquired Leto Recycling, of the Netherlands, then, two years later, Germanys Mabeg, deepening its waste management capacity on the European continent. Both companies were acquired through the CHEP joint venture.

The company then turned its attention to its stronger performer, CHEP, bringing that company into such new markets as Hong Kong, Brazil, Switzerland, the Scandinavian countries, and Austria through the end of the decade. At the same time, it began exporting its Recall document handling subsidiarys operations, entering Europe and North America, starting in 1994.

As the largest share of the companys operating profits now shifted from Australia to the companys North American and European operationsrepresenting more than 60 percent in 2000the possibility was raised that Brambles might one day choose to move its headquarters to be closer to these markets. The company meanwhile began to refocus its operations around its higher-margin businesses, targeting new acquisitionssuch as the A$489 million purchase of Short Bros. Europe-based industrial services operations in 2000and a number of divestitures, including its Australian forklift operations, its Italian railcar leasing business, the CAIB Germany subsidiary, and ENSCO, starting in 2000.

Key Dates:

Walter Bramble opens a butcher shop near Newcastle.
Bramble incorporates his business as Brambles Butchering Establishment.
Company begins distribution and transportation operations.
Company becomes transport services provider for BHP Newcastle steelworks.
Business is renamed W.E. Bramble & Sons.
Company undertakes its first expansion beyond Newcastle.
Walter Bramble retires.
Company begins mining excavation activities.
Business goes public on the Australian exchange as W.E. Brambles & Sons Transport Co. Ltd.
Company acquires Commonwealth Handling Equipment Pool (CHEP) .
Brambles moves headquarters to Sydney.
Company acquires Swedish firm CAIB, launches Bass Strait shipping service.
Brambles purchases U.S.-based Environmental Systems Company (ENSCO) for A$360 million; the unsuccessful acquisition is put up for sale in 2001.
CHEP expands into Hong Kong and other international markets.
Company begins disposal of non-core operations.
Brambles acquires Serviceteam Holdings and begins merger talks with GKN plc.

In January 2001 the company announced its acquisition of Serviceteam Holdings, a waste management firm present in some 80 local U.K. markets. The acquisition, which cost Brambles A$350 million, was quickly overshadowed by a new development: the proposed merger of the industrial services operations of GKN and Brambles. The merger, which would group 100 percent control of the CHEP and Cleanaway operations under a single owner, was expected to create a new entity worth some A$17 billion. The merger talks which extended through the first quarter of 2001 spelled a new opportunity for Brambles to take a place as one of the global industrial services leaders. As the two sides waded through the many tax questions and other issues involved in a particularly complicated merger process, CEO John Fletcher, who had announced his retirement for April 2001, agreed to stay on to see the company through this new historic moment in its 125-year record of growth.

Principal Subsidiaries

CHEP Pty Ltd.; Cleanaway; Recall; Brambles Italia Sri (Italy) ; CAIB Benelux SA (Belgium) ; CAIB UK Limited; CITRANS GmbH (Germany) ; ETRA AG (Switzerland) ; OEVA GmbH (Austria) ; Saltra SA (Spain) ; Simotra SA (France) ; EVA GmbH (Germany) .

Principal Competitors

ABB Ltd.; Algeco SA; Allied Waste Industries, Inc.; Anacomp, Inc.; Atlas Copco AB; Bechtel Group, Inc.; Caterpillar Inc.; Iron Mountain Incorporated; Kelda Group plc; Lason, Inc.; NACCO Industries, Inc.; PalEx, Inc.; Pennon Group plc; Suez Lyonnaise des Eaux SA; United Rentals, Inc.; Vivendi SA; Waste Management, Inc.

Further Reading

Crew, Edna,Brambles: Working Its Way Around the World, Sydney: Brambles Industries Limited, 2000.

Huntley, Ian, Brambles: Blue Ribbon Vanilla, Australias Shares Magazine, December 1999.

Knight, Elizabeth, Brambles Deal Loses Its Glow, Sydney Morning Herald, March 9, 2001.

Manuel, D.L., Men and Machines: The Brambles Story, North Sydney: Brambles Industries Limited, 1970.

Marsh, Peter, GKN Chief Facing the Prickly Question of Brambles Move, Financial Times, January 30, 2001.

Tait, Victoria, Brambles Steers Rough Profit Road, Reuters, February 22, 2001.

Todd, Mark, Brambles, GKN Merger Talks Struggle Through Tax Maze, Sydney Morning Herald, March 22, 2001.

M. L. Cohen