GKN plc

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GKN plc

Post Office Box 55
Redditch, Worcestershire B98 OTL
United Kingdom
(0527) 517715
Fax: (0527) 517715

Public Company
Incorporated: 1902 as Guest, Keen & Nettlefolds Ltd.
Employees: 36,000
Sales: £2.68 billion (US$4.33 billion)
Stock Exchanges: London Tokyo Frankfurt Düsseldorf Amsterdam Antwerp Brussels

GKN was born out of the mergers of three companies. Since the mergers in 1900 and 1902, it has evolved into an industrial giant centered on three main businesses, automotive, industrial services, and defense.

Although the mergers took place at the beginning of the 20th century, the companies out of which GKN evolved were very much older. The group, however, has changed so much in the intervening years that there is little left of its original elements. They were essentially family companies and typical of the entrepreneurial spirit responsible for the United Kingdom’s leading position in the iron and steel industry during much of the 19th century.

One segment of the story begins with John Guest, who in 1767 ran an iron-smelting works at Dowlais in southern Wales. When Guest died his son Thomas succeeded him and he was followed in turn by his son Sir Josiah “John” Guest, an able entrepreneur, who raised Dowlais Iron Company to prominence. Sir John Guest’s wife, Lady Charlotte Guest, was one of the most striking characters to emerge in the company’s formative years. After her husband’s death in 1852 she ran the company for three years. In 1889 the company built a new integrated steel works on the coast at Cardiff, at which iron was produced from 1891 and steel from 1895.

The second strand of the tripartite merger is centered on Arthur Keen, who was responsible for the two mergers which created GKN. Keen went into business with a U.S. businessman who had acquired the British patent rights for an automatic bolt-making machine. In 1864, the business went public as the Patent Nut & Bolt Company. Keen’s requirement for steelmaking technology led to the amalgamation with the Dowlais Iron Company and the creation of Guest, Keen & Company in 1900.

The third element in the merger, Nettlefolds, was centered on the manufacture of custom woodscrews, and stemmed from a partnership comprising John Sutton Nettlefold and his brother-in-law Joseph Chamberlain, who in 1854 set up a woodscrew factory at Smethwick. The company flourished to become the leading screwmaker in the United Kingdom. In 1880 it took over the Birmingham Screw Company, and also registered as a public company, Nettlefolds Ltd. Further diversification took place in 1887 when a wire-rods, steel-hoops, bars, and wires plant was set up in Rogerstone, Newport.

In 1902, Guest, Keen & Company and Nettlefolds Ltd. came together, linking companies with diverse activities in a bid to exploit the benefits of horizontal integration. The first chairman of the newly created company was Arthur Keen, under whom the business was consolidated. This consolidation, based upon steel, continued throughout the first half of the 20th century, with Guest, Keen & Nettlefolds moving into areas such as rolling, forging, pressing, stamping, and machining.

Arthur Keen died in 1915, to be succeeded by his son, Arthur T. Keen, who died in 1918. The company emerged from World War I still centered on steelmaking, fasteners, and coal mining, primarily aimed at the railway and construction markets.

In 1919 the Earl of Bessborough took over as chairman, and the company took the lead in the nut and bolt industry with the acquisition of F. W. Cotterill. The group continued on the acquisition trail with the takeover in 1920 of John Lysaght, which had subsidiaries involved in steelmaking and re-rolling in the United Kingdom and Australia. This acquisition was particularly significant. With the Lysaght purchase came Joseph Sankey, which produced steel press work, including wheels, chassis, and motor body parts, marking the group’s entrance into the motor industry.

In 1920 Edward Steer, a member of the Nettlefolds family, became chairman, a position he was to hold until 1927 when H. Seymour Berry took over. After Berry’s death following a riding accident in 1928, Sir John Field Beale headed the company. He was to preside over GKN during the Depression and the economic recovery of the 1930s.

In 1929 the steel industry was hit by the Depression, which resulted in a new wave of mergers. Three years later, the government introduced duties on imported steel to make domestic steel more attractive, and these moves, combined with rearmament in the latter part of the decade, provided the impetus for a further round of new investment in the industry.

Against this background, GKN continued to expand. In 1930 the group took over Exors. of James Mills, one of the world’s largest manufacturers of bright steel bars, and entered the Swedish market with the acquisition of Aug. Stenman A.B., a Swedish manufacturer of hinges and fasteners. Four years later, it acquired 46.8% of Guest, Keen, Williams Ltd., the steel and engineering group, which is an associate company and one of the largest steel fabricating and engineering companies in India.

Also in 1934, the iron and steel operations of the Dowlais works, which had once stood at the forefront of the iron and steel industry, were transferred within the group to the Cardiff, Margam, and Port Talbot works of Guest Keen Baldwins Iron and Steel Company. This was a newly formed company created to acquire the heavy iron and steel operations of GKN Ltd. and Baldwins Ltd.

The company was expanding steadily under the chairmanship of Sir Samuel Beale, the younger brother of Sir John Field Beale. Sir Samuel Beale led GKN through World War II, and was to remain a director until 1957.

After the war, the Labour government set about economic reconstruction. The industry was asked to draw up a five-year plan for reorganization and modernization, to reverse the deterioration in its competitive position.

GKN expanded its iron-using and steel-using businesses, such as castings and pressings, to support the fast-expanding United Kingdom motor industry. J.H. Jolly took over as chairman in 1947, and in 1948, just three years before the nationalization of the steel industry, the group acquired Brymbo Steel Works in North Wales. In the same year it transferred its trading activities to two new companies. GKN (Midlands) took over the bolt and nut works at Darlaston and the screw works at Smethwick, while GKN (South Wales) Ltd. took over the re-rolling works and wire and nail plants at Cardiff.

Then in 1951 came the much heralded and controversial Iron and Steel Act under which the three steelmaking companies, Brymbo, G.K. Baldwin, and John Lysaght, together with GKN (South Wales), were nationalized. Two years later Sir Kenneth Peacock took over as chairman.

Steel nationalization proved to be relatively short-lived, and with the return of the Conservative government the industry was denationalized in 1955. GKN bought back its four companies and at the same time Guest, Keen, Baldwins, which had been jointly owned with Baldwins and had been the group’s largest source of steel supply, became a wholly owned subsidiary, Guest, Keen Iron and Steel Company.

The group was still largely dependent on its original core businesses, but the 1960s were to see a transformation which gathered speed in the ensuing decades. During the 1960s, when the United Kingdom economy proved far less buoyant, it undertook major restructuring and reinforced its links with the growing motor industry, primarily through the acquisition of Birfield Ltd., which supplied components for the Austin-Morris mini. The group entered the defense-equipment market, winning an order for the FV432 armored personnel carrier for the British Army in 1962.

In 1967 the Labour government renationalized the steel businesses. Restructuring, which began in 1961 and was aimed at streamlining the businesses to make them more competitive, resulted in a series of subdivisions. The steel operations were the first to be restructured, with the creation of GKN Steel Company, which was nationalized in 1967.

The shake-up continued with the regrouping of its fastener, forgings, and castings, rolled and bright steel, building supplies and services, and engineering operations. GKN International Trading was created to deal with exports, and the group’s overseas interests in Australia, New Zealand, South Africa, and Sweden were also reorganized. The group continued to expand in its traditional areas and to diversify, for example into gas-fired central-heating systems.

In 1963 GKN bought three suppliers of forgings to the motor industry: Ambrose Shardlow, in partnership with United Steel, Smethwick Drop Forgings, and Smith’s Stampings. Three years later it took over the diversified Birfield Ltd., which brought with it a 39.5% stake in Uni-Cardan AG, a European automotive-components maker based in West Germany. GKN has since raised its stake in Uni-Cardan to nearly 97%. The Uni-Cardan acquisition proved to be of primary significance to the group’s strategy. Among Uni-Cardan’s products were constant-velocity joints, which permit the full transmission of torque from a car’s engine to the wheels. These joints, originally designed for front-wheel-drive vehicles, were to play a crucial role in the growth of GKN’s automotive business both at home and abroad.

In 1969 GKN unveiled a joint venture with Broken Hill Proprietary (BHP) of Australia to build a new steel complex at Westernpoint, Australia. The complex was constructed in two phases, the second of which was completed in 1978. The following year GKN sold its half interest to BHP.

In the 1970s GKN continued to increase its involvement in the automotive business and to build up its presence in distribution at home and abroad and its investment in service businesses. The decade also posed major problems. In the latter part of the 1970s the group’s chairman Sir Barrie Heath, who took over from Sir Raymond Brookes in 1975, had to contend with hyperinflation, the oil crisis, and a collapse in demand for steel and automotive parts.

During the chairmanship of Sir Barrie, a management committed under Trevor Holdsworth undertook strategic restructuring to pull the company through moving out of Australia and broadening the manufacturing base in the United States.

During the 1970s, GKN acquired a large number of small distribution companies, largely in the fastener and steel sectors. It later extended this strategy to automotive components, signaling a move into vehicle-parts and accessories distribution on a worldwide scale. The acquisitions continued on the steel and automotive sides, including Kirkstall Forge Engineering, the largest independent manufacturer of heavy-duty axles in the United Kingdom.

In 1974 the Brymbo Steel Works were returned to GKN by the then-government-owned British Steel Corporation (BSC) in exchange for GKN Dowlais, in a deal which, while ending the group’s long historical association with the Dowlais plant, gave it an internal source of supply. In the same year GKN took another significant step on the steel side with the purchase of Miles Druce & Company, making GKN the largest steel stockholder in the U.K. private sector. In 1974 GKN invested in the services sector with the formation of the United Kingdom’s first national cargo-pallet hire pool, GKN Chep, with Brambles Industries of Australia.

In 1976, GKN stepped up its attack on the United States market with the formation of GKN Automotive Components Inc. to supply constant-velocity—universal—joints for the new generation of front-wheel-drive cars. Within a year the group announced a further United States move, unveiling plans to set up a production plant, costing $50 million, in Sanford, North Carolina. Three years later, GKN announced that a second constant-velocity joint factory was to be built in North Carolina, in Alamance County, costing some $80 million. The two plants were commissioned in 1980 and 1981.

In 1977, the group was still stepping up investment in steelmaking and rerolling with the opening of a new rod mill and steel works in Cardiff, costing £52 million. It announced a £48 million rolling mill for Brymbo Steelworks.

The group’s United States involvement was enhanced in 1979 with the acquisition of Parts Industries Corporation of Memphis, Tennessee, the fourth-largest vehicle parts and accessories distributor in the United States. It raised its European profile in this area with the purchase from Unilever of Unigep Group of France and in the United Kingdom with the purchase of Armstrong Autoparts and Sheepbridge Engineering, both possessing large distribution chains.

The company sold off operations which did not fit into its strategy, which in 1979 included its 50% stake in John Lysaght (Australia) and the divestment of GKN Bolts and Nuts Ltd., one of the pillars of the company when it was formed in 1902. This sector had been suffering heavy financial losses.

1979 also brought its frustrations. GKN had bid for Fitchell and Sachs, the largest supplier of car parts in West Germany, after taking a minority stake in 1976. However, after three years of patient negotiations, the bid was blocked by the West German courts.

At the end of the decade, GKN set about further restructuring which reflected the increasing importance of automotive components and the non-manufacturing businesses. It was preparing for the 1980s, which were to prove another period of rapid change, under the initial chairmanship of Sir Trevor Holds worth, who retired in 1988, and then of David Lees.

The cold wind of recession hit the group in the early 1980s, and the decade started with a shock. GKN announced a loss of £1 million for 1980, the first since it was incorporated in 1902. Sir Trevor Holdsworth, who was responsible for fundamental changes to group strategy, set about slimming down and reshaping the group. Its work force, for instance, had shrunk from 93,000 in 1980 to 38,000 when he retired. As the new structure evolved, the group moved out of steel, further internationalized through local investments and joint ventures, built up the automotive side, and developed industrial-service businesses from its involvement in distribution.

The decade brought a series of sales and acquisitions, reflecting deep-rooted changes. In 1981 GKN and Brambles of Australia took an 50/50 interest in Redland Purle, the largest private-sector waste-disposal operator in the United Kingdom. The business is now known as Cleanaway Ltd. In the same year there was another major change when GKN and BSC merged their steel re-rolling and associated businesses to create Allied Steel and Wire Ltd. In the following year, when the group became Guest, Keen and Nettlefolds pic, it won a large contract from the British Army for its Saxon armored personnel carrier.

In 1983, another strand of the business took shape with GKN and Costain of the United Kingdom merging their scaffolding and building-services operations to create GKN Kwikform, now a market leader in the United Kingdom. That year the group expanded further in the United States with the acquisition of Meineke Discount Muffler Shops, one of the largest franchized exhaust-system fitters, while in the United Kingdom it set up a facility to produce fiber-glass reinforced road springs for commercial vehicles. Another success in the defense area came in 1984 when the group was awarded a contract for its Warrior tracked armored personnel carrier.

During 1984 and 1985, the group expanded its vehicle-parts-distribution businesses in the United States, and in Australia with the acquisition of Quinton Hazell Automotive. Viscodrive GmbH was created in West Germany to develop viscous drive-control units and a year later, in 1985, Viscodrive Japan and Translite were set up to market the units and composite leaf springs to the Japanese motor industry.

Another name change came in 1986 when the group became GKN pic, reflecting the move away from its original businesses. This change was underlined when in the same year the group sold its steel-stockholding operations and merged its engineering steels and forgings activities with BSC to form United Engineering Steels, with operating assets of about £600 million.

The group’s international expansion continued apace. In 1986 and 1987, GKN made further European acquisitions in Spain and Italy, in the driveshaft and powder-metallurgy areas, respectively. During 1987 it became a market leader in vending services following several acquisitions, and sold Allied Steel and Wire, which did not fit in with its strategy.

In 1988, the group hit the headlines by taking a 22.02% stake in Westland, the troubled U.K. helicopter and aerospace group. The deal roughly doubled the group’s defense sales which then accounted for about 5% of its £2 billion turnover.

It also forged an alliance with Jaguar cars. The two companies created a joint venture to supply all the major body pressings for the Jaguar/Daimler range of saloon and high-performance sports cars. In the United States GKN made some important changes, selling its imported-vehicle-parts distribution business and expanding the distribution of domestic-vehicle parts through the acquisition of Mid-America Industries.

In 1989 the group reported record pre-tax profits of £214.8 million, a far cry from the beginning of the decade. During that decade the group’s emphasis has shifted overseas. Sales of the United Kingdom subsidiaries in 1989 accounted for less than 37% of total sales of £2.7 billion against 68% a decade before.

The automotive side has attained international prominence by developing local supplies. It now accounts for 61% of sales and numbers Ford, Toyota, and Honda among its customers. In 1988 the group sold off the underperforming GKN Autoparts distribution business.

The automotive division has rapidly increased sales to Japanese vehicle manufacturers on a worldwide basis. This link was enhanced in 1989 when GKN was granted a listing on the Tokyo Stock Exchange.

The industrial services sector has become increasingly significant and represents 35% of group sales. It covers an array of businesses including the highly successful Chep pallet and container hire operations, waste management, scaffolding, and vending.

The defense side, which makes Warrior and Saxon military personnel carriers, is the smallest division, responsible for 4% of 1989 sales. It will have to contend with the repercussions of changes in Eastern Europe, but these could provide GKN with a wealth of opportunities in other areas. In 1990 the group also began looking at possible ventures in East European countries.

Principal Subsidiaries

Ayra Durex, SA (Spain, 64.8%); Bir-field Extrusions Ltd.; Birfield Trasmissioni SpA (Italy, 96.7%); GKN Automotive, Inc. (U.S.A.); Glaenzer Spicer SA (France, 96.5%); Hardy Spicer Ltd.; Industrias Mecanicas de Galicia, SA (Spain, 66%); Lohr & Bromkamp GmbH (Germany, 91.4%); Uni-Cardan AG (Germany, 96.7%); Viscodrive GmbH (Germany, 96.7); Walterscheid Schmiede und Presswerk GmbH (Germany, 96.7%); GKN Cardantec International GmbH (Germany, 96.7%); Ayra Cardan, SA (Spain, 64.8%); BRD Company Ltd; Birfield Trasmissioni SpA Cardantec Operations (Italy, 96.7%); Gelenkwellenbau GmbH (Germany, 96.7%); Glaenzer Spicer SA Cardantec Operations (France, 96.5%); Nordiska Kardan AB (Sweden, 96.7%); Jean Walterscheid GmbH (Germany, 96.7%); Walterscheid Agmaster, Inc. (Canada, 96.7%); Walterscheid, Inc. (U.S.A., 96.7%); GKN Axles Ltd; GKN Comaxle SpA (Italy); Laycock Engineering Ltd; GKN Bound Brook Ltd; GKN Bound Brook Italia SpA (Italy); GKN Firth Cleveland Ltd.; GKN Saini SpA (Italy); GKN Sheepbridge Ltd.; GKN Composites Ltd.; GKN Tadchurch Ltd.; Translite KK (Japan, 60%); GKN Technology Ltd.; GKN Sheepbridge Stokes Ltd.; GKN Sankey Ltd.; GKN Defence; GKN Kwikform Ltd. (60%); GKN Kwikform BV (Netherlands, 60%); GKN Kwikform Industries Ltd. (Australia); GKN Rentals (Australia); GKN Chep Ltd. (70%); Sankey Vending Ltd.; GKN Vending Services Ltd.; Automatic Catering Supplies Ltd.; ACS Coffee Service Ltd.; GKN Sankey Finance Ltd.; GKN Property Maintenance Ltd.; GKN Occupational Health Ltd.; BKL Extrusions Ltd.; Econopack Ltd; Stenman Holland BV (Netherlands); GKN Chep SA (Pty) Ltd. (South Africa); GKN Parts Industries Corporation (U.S.A.); Meineke Discount Muffler Shops, Inc. (U.S.A.); Sparks Tune-up Centers, Inc. (U.S.A.); GKN Group Management Services Ltd.; GKN Group Services Ltd.