Caradon House, 24 Queens Road
Surrey KT13 9UX
Fax: (01932) 823-328
Sales: £2.11 billion (US$3.61 billion) (1996)
Stock Exchanges: London
SICs: 2761 Manifold Business Forms; 3089 Plastic Products, Not Elsewhere Classified; 3354 Aluminum Extruded Products; 3432 Plumbing Fixture Fittings & Trim; 3433 Heating Equipment, Except Electrical & Warm Air Furnaces; 3442 Metal Doors, Sash, Frames, Molding & Trim; 3499 Fabricated Metal Products, Not Elsewhere Classified; 3643 Current-Carrying Wiring Devices; 3699 Electrical Machinery, Equipment & Supplies, Not Elsewhere Classified; 5074 Plumbing & Heating Equipment & Supplies; 6719 Offices of Holding Companies, Not Elsewhere Classified
Caradon plc is a U.K.-based supplier of building products to the construction and home improvement industries, with 80 percent of sales being generated from these operations. Among other company activities, Caradon’s security printing division is one of the leading printers of checks and business forms in the United States. Active primarily in Europe and North America, the company derives more than 60 percent of sales and profits outside the United States.
Although Caradon plc was founded only in 1985, thanks to a confusingly complex series of mergers, acquisitions, and divestments in the 1980s and in the early 1990s, the company actually traces its origins to those of Metal Box PLC, a pioneer in the British tinning industry and eventually a giant in packaging in general. In 1989 MB Group (the former Metal Box) merged with Caradon (which was formed in 1985 as a spinoff from Reed International) to create MB-Caradon PLC. Then in 1993 MB-Caradon divested itself of its packaging roots and soon underwent another name change, becoming Caradon plc.
Early Roots of the Tinning Industry
The canning of foods, or “tinning” as it is often called in Britain, has been a common method for preserving food for about a century. Before that time, all foods had to be purchased fresh, salted, or dried. The industry that developed to produce these cans, or “tins,” in Britain was originally controlled by numerous family firms, each with a small tin can making factory in which workers could turn out 200 cans in an hour. These family concerns were small, profitable, and only mildly competitive in such a large market.
One of the family can makers was initially a printing business established in 1855 by Robert Barclay, a Quaker. His main customer was Barclay’s Bank (owned by distant relatives) for whom he printed checks. Barclay’s brother-in-law, John Fry, joined him as a partner in 1867, and their company, Barclay & Fry, became Britain’s largest check printer. With the help of some technical information sold to him by an early industrial spy in France, Barclay developed the process of offset lithography and tried to sell it to many other firms. He died of a stroke in 1876 before any sale could be finalized.
The new printing process ended up being leased to Huntley, Boorne & Stevens, tin box makers for the biscuit company Huntley & Palmer (the two Huntleys were also related). Huntley & Palmer was the first manufacturer to use the offset process to print designs on their own tins; prior to that their tins had been hand-painted. Soon, Carr’s Biscuits were also using printed tins; these were manufactured by their Quaker relatives, Hudson Scott & Sons. Sometime during the 1890s, Barclay & Fry decided to use their offset process themselves, but they remained primarily stationery printers.
Decorated biscuit tins were very popular throughout Great Britain and many homes had quite large collections of them. There were Alice in Wonderland designs, tins to commemorate every grand occasion, and tins resembling miniature cottages or featuring birds, books, or beauty spots. The tin making industry grew and since labor costs were low, profits were high. Soon, the Trade Boards Act required tin manufacturers to improve worker conditions and wages, and this caused some of the employers to form the British Tin Box Manufacturers Federation in order to protect their interests.
Metal Box Founded in 1921
World War I brought more business to the industry; a new product had to be manufactured—the ration tin used by British troops. Due to government restrictions on tin, many of the companies in the Federation cooperated closely, and after the war, in 1921, four of these tin box makers, Hudson Scott, F. Atkins & Co., Henry Grant & Co., and Barclay & Fry, formed the Allied Tin Box Makers, Ltd. A year later they changed their name to Metal Box & Printing Industries. From the beginning it was understood that each of the member companies would remain private, but that all would cooperate in controlling the market and making acquisitions.
Before long, however, the group’s comfortable control of their market was threatened by the importation of an American method of semiautomatic can making that could produce 200 cans every minute. G. E. Williamson’s family firm, which had refused to join the manufacturers’ group, purchased the new American machinery in 1927 and began to produce cans for the government’s Fruit & Vegetable Research Station in Gloucestershire. The research organization was interested in advanced canning methods in order to increase the markets for British farm produce.
Inevitably, with its superior technology, the U.S. canning industry quickly became interested in the British market. American Can moved in first by purchasing a small independent company and renaming it the British Can Company, Ltd. It then attempted to acquire Metal Box & Printing Industries. In its determination to resist a takeover, however, Metal Box arranged a partnership that not only kept it independent, but defined and nurtured its growth. The company signed an agreement with American Can’s U.S. rival, Continental Can. The two firms exchanged stock shares and Metal Box was given the exclusive right in Great Britain to purchase canning machinery, technical advice, training, and patent licenses from Continental Can. This effectively eliminated the competition as no other British company was able to purchase the technology. In little more than a year, British Can was in disarray. Metal Box agreed to buy it out on the condition that American Can stayed out of Great Britain and Ireland for the next 21 years.
These deals, illegal under the business laws of later decades, had been arranged by Metal Box’s Robert Barlow. Still under 40, Barlow was now the head of Britain’s canning monopoly and determined to make it even larger. But his aggressive managerial style alienated most of the old family leaders of the group’s companies, and many resigned from the board of directors. Barlow wanted to bring all member companies under one authority and ignored those on the board who opposed him. He set up an executive committee with two others, Hepworth and Crabtree, to make policy decisions and, essentially, to circumvent the board.
In 1931 Barlow’s committee instituted a single accounting system for all member companies in an attempt to force some kind of uniformity on them under a newly created head office. The managing director of Barclay & Fry tried to have Barlow fired, but Barlow called a meeting of the entire board and convinced them that his plan would make the company stronger still. As Barlow consolidated his position he banished some of his detractors to plants in South Africa and demanded the resignations of others. By 1935 he was in complete control of Metal Box and had largely succeeded in centralizing sales and supplies, and rationalizing production functions, for all the company’s plants.
Succeeded in Spite of the Great Depression
Metal Box experienced nothing but success during the Great Depression. As smaller canmakers collapsed, the company purchased them, and by 1937, Metal Box was selling 335 million cans a year. Following the American example, Metal Box had begun to manufacture the equipment needed to seal the cans on-site and sold this machinery to its customers. Metal Box was not interested in expanding into the field of food production, but it did open a publicity department to increase interest in canned foods. Whenever there were difficulties, either with suppliers or customers, Metal Box considered a takeover. For example, inefficient management at a tin plate supplier in South Wales led Metal Box, with the help of Continental Can, to purchase the company.
Surprisingly, Metal Box’s income from security check printing combined with turnover from machine manufacturing and interests in mining, etc. was double that of its income from the cans themselves. Profits rose dramatically for Metal Box in the 1930s—from £103,480 in 1931 to £316,368 in 1939.
Caradon plc is a major international group of some 30 companies organized into five product divisions, operating across Europe and North America. The Group employs 21,500 people.
The Group’s main activity is the supply of building products to the construction and home improvement industries. In the UK and Continental Europe, Caradon brands include Catnic, Twyfords, Terrain, Everest, Friedland, Stelrad, Henrad, Weru, Ideal, Mira and MK Electric; in North America, Better-Bilt, Peachtree, Thermal-Gard, and Indalex.
Caradon’s portfolio also includes companies such as Clarke American serving the financial services industry.
Throughout the decade Barlow had maintained a strong interest in foreign markets. Partnerships or subsidiaries had been formed in France, the Netherlands, Belgium, India, and South Africa. Continental Can was still Metal Box’s mentor and main partner and the two essentially divided up the world markets between themselves. Metal Box was to expand within Europe and the British colonies, while Continental Can would develop interests in the rest of the world.
In the late 1930s, the innovative company planned to produce new forms of packaging such as card containers with metal ends and cans with wax lining for beer. The onslaught of World War II, however, curtailed new production in favor of equipment for the troops. Containers for gas masks were easy to make in tin box factories, and Metal Box produced 140 million of them for the government. The paint tin production lines were adapted to produce casings for antitank mines. Shell casings and ration tins were also produced by the millions. Even so, due to strict government controls, company profits fell to £242,428 in 1945.
Expanded into Other Forms of Packaging Following World War II
In 1943, as the war turned in the Allies’ favor, Barlow established a committee to plan new forms of packaging that could be exploited as soon as the war was over. Consequently, Metal Box was an innovator in the field, quickly moving toward paper, foil, and plastic container products as the postwar economy began to improve. But Metal Box still dominated the British can and carton market. Between 1941 and 1961, eight new factories were built or purchased, and by the 1960s, Metal Box was the leading packaging supplier to some of the largest companies in the world, including Unilever, Nestle, Heinz, Imperial Tobacco, BAT, ICI, Hoechst, and Shell.
After the war, Metal Box was more than ready for further organizational changes. The accounting department was restructured and a financial comptroller was appointed. Additionally, administrative functions were more clearly defined and brought under central control, and subsidiaries were also made more accountable to central management. Barlow retained his position as executive chairman, but in 1946, he brought in D. W. Brough as his managing director. Brough had been in charge of operations in South Africa; nevertheless, he lasted less than two years. Barlow replaced him with two executives, G. S. Samways and D. Ducat, and these two men served as joint managing directors until Samways’s resignation in 1954; Ducat then served alone, but Barlow still maintained overall control until his retirement in 1961.
In the late 1940s, the U.S. Department of Justice had filed an antitrust suit against Continental Can and began to investigate its arrangements with Metal Box. The two companies hastily modified their agreement in 1950 and cooperation between them was restricted to machinery and technical information; all mutual ventures and attempts at market controls were dropped. The modified agreement was renewed and slightly expanded in 1970 and was slated to continue until 1990.
Up to 1970, Metal Box had continued to expand both at home and abroad. In Britain, Wallis Tin Stamping Co., Brown Bibby & Gregory, and Flexible Packaging were all acquired, widening Metal Box’s product line to include plastic film, aerosols, central heating, and engineering. The company established facilities or subsidiaries in Italy, Malaysia, Tanzania, Japan, and Iran, and upgraded the older plants in India, France, and South Africa. Even so, Metal Box still conducted three-quarters of its business in the United Kingdom.
In 1967 the Board of Trade referred the British can industry to the Monopolies Commission which ruled that Metal Box was operating a monopoly—supplying 77 percent of all metal containers, 63 percent of aerosols, and 80 percent of open-top cans. Nevertheless, the Commission concluded that the company’s monopoly did not harm the public interest and did not find Metal Box lacking in efficiency, innovations, or service. Its report even praised Metal Box for passing on savings to its customers. But the company was instructed to terminate all of its exclusive arrangements, both with customers and with suppliers. Thus, in one stroke, Barlow’s market control procedures were ended.
Diversified Beyond Packaging in the 1970s
The 1970s were a decade of significant changes for Metal Box. Under the direction of chairman and chief executive Alex Page, the company began to make serious moves to diversify outside of packaging, a mature industry unable to support long-term growth. The company’s diversification was a measured one, however, and the areas targeted—although seemingly far removed from packaging—were nonetheless considered similar in terms of the manufacturing technology involved. Thus the company had by the mid-1970s begun to build—primarily through acquisitions—significant operations in the manufacturing of radiators used in central heating systems as well as a machinery building group. In late 1975 a company reorganization highlighted the importance of these new ventures when they were placed into a new diversified products group, alongside a packaging group that included Metal Box’s traditional businesses. Also in 1975 the company moved its headquarters from central London to Reading. And sales reached the US$1 billion mark in 1976.
As the 1970s progressed, Metal Box’s packaging unit faced a climate of increasing competition at home and abroad. The company opened itself to further competition in 1978 when it abandoned its licensing deal with Continental Can, which immediately began to build a plant in Wales to make two-piece aluminum cans. By this time, two-piece cans were considered state of the art because they used 40 percent fewer raw materials in their manufacture. Metal Box had moved to set up its factories to make two-piece cans, but was initially thwarted by its workforce which balked at the continuous production process needed for the manufacturing to be most efficient. Eventually, in 1982, Metal Box had to abandon two-piece manufacturing at one of its plants and decided to close another one, but did manage to initiate two-piece production at other plants.
While dealing with these troubles at home, the company increasingly looked overseas for opportunities for growth. In 1979 Metal Box opened a two-piece can plant in Carson, California, that would eventually supply Pepsi-Cola with 625 million cans a year. The company also acquired Risdon Manufacturing, a maker of cosmetics packaging based in Connecticut. In Europe Metal Box sought to build on its existing operations in southern Europe (which were primarily in Italy, Greece, and Portugal), by entering into a licensing agreement with France’s Carnaud, whereby Metal Box provided equipment and expertise for a two-piece can plant near Brussels to be built by Carnaud. Cans from the plant were to be sold in the Benelux countries and parts of France and West Germany. As a result of these overseas moves, the portion of Metal Box profits derived outside the United Kingdom increased from 41.4 percent in 1977 to 55.5 percent in 1980. By the end of the 1970s revenues had reached US$2.7 billion.
Blockbuster Deals Marked 1980s
Metal Box barely survived through a very difficult period in the early 1980s, ravaged by a recession and hampered by a management team that lacked the kind of forward thinkers needed in an environment marked by ever more increasing competition. By the mid-1980s Dr. Brian Smith had been brought in as chairman; he had previously helped to turn around ICI. In January 1988 Murray Stuart became chief executive of the newly named MB Group, after having joined the company as finance director in 1981. Smith and Stuart would by the end of the decade engineer deals that completely transformed the company.
The name change reflected a desire to deemphasize the company’s tinning roots. By the late 1980s MB Group had steadily built up its nonpackaging operations to the point where it was Europe’s largest manufacturer of central heating radiators, through its Stelrad unit; it had developed a bathroom products business with the Stelrad Doulton brand; and its Clarke Checks subsidiary—built through a series of small acquisitions—had become the fourth-largest printer of checks in the United States. Stelrad was boosted further in 1988 with the acquisition of the leading producer of radiators in continental Europe, Henrad Beheer of Belgium.
Smith and Stuart next surprised many observers when they agreed in October 1988 to merge MB’s packaging operations with those of Carnaud to form CMB Packaging SA, based in Brussels. CMB, of which MB initially held a 25.5 percent stake, immediately became the third-largest packaging company in the world and was better able to compete on the global stage than MB packaging could on its own. Carnaud gained management control of the new company but more important to MB was the £240 million in cash it received from the merger, money it could use to further bolster its nonpackaging units. MB did just that in September 1989 when it acquired American Bank Stationery Co. for £193.7 million, beefing up its U.S. security printing operations.
Another blockbuster deal for Smith and Stuart came only one month later. After a year of negotiations, MB acquired Caradon plc in a £337.6 million reverse takeover, with half the amount in cash and half in Caradon shares converted to those of MB. Caradon had been founded in 1985 through a £61 million management buyout of the U.K. building products division of Reed International, the U.K. publishing giant. Caradon, which had gone public in 1987, was a perfect fit with MB’s central heating and bathroom products since its top brands were Twyfords bathroom and sanitary products, Mira showers, Terrain plastic pipes, and Celuform plastic timber. Following the acquisition, Smith retired and the newly named MB-Caradon PLC was headed by Stuart as chairman and Peter Jansen, Caradon’s chief, as chief executive and in charge of day-to-day operations.
1990s and Beyond
Not surprisingly, MB-Caradon next sold its stake in CMB (at the time known as Carnaud-Metalbox), and thus divested itself of its Metal Box roots. The £467.5 million (US$700 million) generated by the April 1993 sale was used almost immediately when MB-Caradon paid £800 million (US$1.2 billion) for RTZ Corp.’s RTZ Pillar industrial products group in August of that same year. Pillar brought with it construction, general engineering, automotive, and aviation operations. Yet another name change followed on the heels of this acquisition when MB-Caradon became Caradon plc.
By 1994, through these and other deals, Caradon had established itself as a leader in doors and windows, with its other operations being plumbing products, electrical products, structural and engineering operations, and security printing. That year, sales nearly doubled, having reached £1.61 billion, while operating profits were a record £205.4 million.
The following year Caradon acquired a 43 percent stake in Weru A.G., a German leader in doors and windows. Later in the year, however, profits suffered as sales of doors and windows in the United States fell sharply, the cost of raw materials used to make plastic products rose, and the U.K. building industry suffered a general depression. Operating profits fell as a result, to £127.1 million and sales increased only 6.4 percent.
In response Jansen launched a restructuring late in 1995: 1,600 jobs were eliminated, a layer of management was jettisoned so that the directors of the five divisions reported directly to Jansen, and noncore businesses began to be divested. In December 1996 Caradon sold off 18 businesses for a total of £220 million (US$360 million), including most of its European engineering and distribution operations. Meanwhile the company spent £48.2 million (US$75 million) for another 30 percent of Weru, bringing its total stake to almost 80 percent.
The 1996 divestments were in many cases long overdue (some dated back to the merger of MB Group and the original Caradon; others came with RTZ Pillar) and were a key to a possible company turnaround. More divestments were certainly possible, and the North American engineering and security printing units were the leading candidates. Caradon was also likely to make further acquisitions in the late 1990s to beef up its already considerable building products operations, which accounted for 80 percent of overall company sales in 1996.
Caradon Inc. (U.S.A.); Caradon America Inc. (U.S.A.); Caradon Limited (Canada); Caradon Bathrooms Limited; Caradon Ideal Limited; Caradon Mira Limited; Caradon Stelrad Limited; Caradon Terrain Limited; Hendrickx Radiotoren NV (Belgium); Caradon Stelrad BV (Netherlands); Caradon Stelrad GmbH (Germany); Stelrad Radiatorenwerke GmbH (Austria); Caradon Doors and Windows Inc. (U.S.A.); Caradon Doors & Windows Limited; Caradon Everest Limited; Weru AG (Germany; 79.87%); Caradon Gent Limited; Esser Sicherheitstechnik GmbH (Germany); Caradon Friedland Limited; Caradon MK Electric Limited; Caradon Trend Limited; Novar Electronics Corporation (U.S.A.); Brampton Foundries Limited (Canada); Caradon Catnic Limited; Fabricated Steel Products Inc. (Canada); Indal Technologies Inc. (Canada); Checks in the Mail, Inc. (U.S.A.); Clarke American Checks, Inc. (U.S.A.).
Plumbing; Doors & Windows; Electrical; Structural & Engineering; Security Printing.
Bowditch, Gillian, “Caradon Agrees £337m Deal with MB Group,” Times (London), October 4, 1989, p. 31.
Campbell, Colin, “MB Ties Up Packaging Interests with Carnaud,”Times (London), October 27, 1988, p. 25.
Foster, Geoffrey, “The Remaking of Metal Box,” Management Today, January 1985, pp. 43-51.
“Metal Box Aims to Kick Continental Can,” World Business Weekly, September 1, 1980, pp. 10-11.
Oates, David, “Metal Box Re-Packages Its Operations,” International Management, May 1976, pp. 10-13.
Reader, W. J., Metal Box: A History, London: Heinemann, 1976.
Urry, Maggie, “Bold Deal Soothes Anxious Onlookers,” Financial Times, August 26, 1993, p. 19.
—updated by David E. Salamie