Pacific Dunlop Limited

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Pacific Dunlop Limited

101 Collins Street
Melbourne, Victoria 3000
(03) 270 7270
Fax: (03) 270 7300

Public Company
Incorporated: 1920 as Dunlop Rubber Company of Australia Ltd.
Employees: 48,000
Sales: A$5.8 billion
Stock Exchanges: Sydney Tokyo London
SICs: 2281 Yarn Spinning Mills; 2329 Mens and Boys Clothing, NEC; 3069 Fabricated Rubber Products, NEC; 3089 Plastics Products NEC; 6719 Offices of Holding Companies, NEC

Pacific Dunlop is a multinational company that manufactures, distributes, and markets a wide range of products; its eight divisions market everything from car batteries to pacemakers, and sporting goods to condoms.

The roots of Pacific Dunlop reach back to Belfast, Ireland. It was there that John Boyd Dunlop based his prosperous veterinary practice. In the course of his work, Dunlop traveled throughout the countryside on often bumpy roads. In order to suffer less the unsprung weight of his bicycle and thus ease his travels, Dunlop attached pneumatic tires to his tricycle in 1889. In July of that year he applied for a patent. Dunlop was soon approached by two businessman who expressed an interest in forming a company. They purchased the rights to Dunlops patent and asked William Harvey Du Cros, the president of the Irish Cyclists Association, to serve as president of the new company. He agreed, providing that he could assume complete control, appoint the directors, write the prospectus, and make the issue to the public.

In November 1889, the Pneumatic Tyre Company and Booth Cycle Agency of Dublin was created with £25,000. Dunlop was allotted 3,000 shares and £500 and was named to the board of directors. Uncertain of the ventures future, however, Dunlop soon returned 1,500 shares.

To the surprise of the newly formed company, Dunlops patent application was refusedthe principal of a pneumatic tire had been patented in 1845, although it remained unused. The name of the company was changed to the Dunlop Pneumatic Tyre Company Ltd. of Dublin, but the business soon moved from Dublin to Coventry, England, and eventually to Birmingham, England. By 1892, the company had offices in Europe and North America.

In 1893, a branch office and factory of the Dunlop business was established in Melbourne, Australia. Semi-assembled tires were sent to the factory, where they were completed. The manager of the factory was 18 years old, and Dunlops general manager for Australasia was 19 years old. In 1896, the Melbourne factory gained a contract for making hand-assembled pneumatic tires for the Thomson steam car. The offices in England did not see any future in making tires for automobiles, however.

By 1899, financial speculation by the parent company as well as the decline of bicyclings popularity led the parent company to sell off its interests in North America and Australasia. In August of that year, the Dunlop Pneumatic Tyre Company of Australasia Ltd. went public on capital of £170,000; 80,000 shares priced at £1 each were offered to the general public. Only 23,000 shares were sold, however, and the unsold stock was purchased by one of the companys backers. The company was registered on August 31, 1899, and was listed on the stock exchanges at Melbourne, Sydney, and Adelaide.

The company grew as the popularity of the automobile grew, and Dunlop expanded its production facilities. In 1906 the company changed its name to the Dunlop Rubber Company of Australasia Ltd. With the coming of World War I, there was a new demand for Dunlop products.

On August 20, 1920, the company was incorporated in Victoria, Australia. By 1927, Dunlop U.K. took a 25 percent equity in its Australasian relative when it purchased 500,000 shares and was given a position on the board of directors. (The equity was reduced over time, however, and the relationship was completely severed in 1984.) Dunlop continued to expand. In 1929 it merged with the Perdriau Rubber Company, a manufacturer of general rubber products that was based in Sydney. That company was founded in 1888 after Henry Perdriau was contracted to supply rubber parts to the railroads of New South Wales. Because of an incorrect invoice he was sent five times the airupunt of rubber he had ordered. Perdriau quickly opened a retail store to sell the surplus, and in 1904 he took the business public with £40,000 in capital. By the time it merged with Dunlop, the Perdriau Rubber Company had expanded into a large venture valued at A$3 million. The newly formed company was named Dunlop Perdriau Ltd.

Dunlop Perdriau quickly acquired a controlling interest in Barnet Glass Rubber Company Ltd. Barnet, founded in 1876, originally manufactured waterproof clothing. It expanded to produce other rubber products, and in 1910 it began to make automobile tires. In 1941, Barnet Glass became a wholly owned subsidiary of Dunlop, which again changed its name to Dunlop Rubber Australia Ltd.

After World War II the company expanded its range of consumer goods in an effort to profit from increased postwar demand; for example, in 1948 Dunlop opened a factory to produce footwear. During the 1960s the company initiated a continuing effort to diversify, and in 1967 it was renamed Dunlop Australia Ltd. By the end of the decade it had branched into the manufacture of clothing, textiles, footwear, bedding, and other rubber products. Like many other manufacturers, Dunlop began to move some of its operations offshoreits first such venture was the Dunlop Papua New Guinea Pty. Ltd., which was established in 1969.

Also in 1969 Dunlop made an acquisition that would later prove to be of central importance to its operations when it purchased the Ansell Rubber Company. Ansell had been founded in Richmond, Australia, in 1905 by a former Dunlop employee, and its first products were balloons and condoms. In 1925 Ansell started to make household rubber gloves, and by 1945 Ansell had created an automated process that could turn out 300 dozen pairs of gloves every eight hours. Ansell actively sought clients in North America and Europe. The advent of disposable surgical gloves in 1964 proved to be a boon for Ansell and the companys profits soared; Ansell won an export award in 1967 from the Australian Department of Trade and Industry.

During the 1970s the company consolidated many of its burgeoning operations and streamlined its corporate structure. These moves readied it for another major expansion program that took place throughout the 1980s. In 1980, Dunlop Australia Ltd. renamed itself Dunlop Olympic Ltd. after it acquired Olympic Consolidated Industries Ltd. for A$92.5 million. Olymplc, like-Dunlop, was a major tire manufacturer in Australia with its own chain of tire stores; the company also made other industrial products. Founded in 1922 and incorporated in 1933 (as the Olymplc Tyre and Rubber Company Pty. Ltd.), Olymplc started producing tires in 1934 and had expanded to other industrial products by 1949. By the time of its merger with Dunlop, Olymplc held 169 tire-store outlets and its post-tax profit had reached A$10.2 million. The tire stores would later come together, under the name Beaurepaires for Tyres.

Along with Olymplc Consolidated Industries came a 50 percent interest in Olex Cables Ltd.; Dunlop Olymplc acquired the remaining 50 percent in 1981 for A$56.8 million. Olex had been founded in 1940 in an effort to meet the wartime demand for insulated cable.

Dunlop Olymplc continued to grow when in 1984 it acquired Dunlop New Zealand Ltd. (which manufactured tires, industrial products, and sporting goods) and Olex Canzac Cables, New Zealands second largest cable manufacturer. By the end of the year the company had severed its ties with Dunlop U.K. and the technical agreements that had been in effect since 1899 were halted.

In 1986 Dunlop Olymplc Ltd changed its name to Pacific Dunlop Ltd, thus reflecting the companys region-wide aspirations. The companys stock began trading on the London Stock Exchange on December 31 st of that year. Pacific Dunlop entered into a joint venture with Goodyear Tire and Rubber Company in 1986 that consolidated the two companies tire manufacturing, marketing, and retail operations in Australia, New Zealand, and Papua New Guinea under the name South Pacific Tyres. However, the brand names Dunlop, Olymplc, and Goodyear were still used, and the tire servicesBeaurepaires for Tyres and Goodyear Tyre, Brake, and Clutch Service continued to be operated independently. In February 1987 shares of Pacific Dunlop Ltd began to be traded on the Tokyo Stock Exchange.

Also in 1987 the company acquired clothing and textile manufacturers and marketers Bonds Industries, which brought under the Dunlop wing many brand names well-known in Australia, including Chesty Bond, Grand Slam, and Gotcha. Pacific Dunlop then acquired a 60 percent interest in GNB Batteries, which was to become a division of the company. Dunlop had first manufactured batteries in 1949, and in 1985 it had acquired the Chloride Group PLC, which had operations in the United States, Canada, Mexico, New Zealand, and Australia, as well as its own manufacturing facilities. With the purchase of GNB Batteries Dunlop became one of the worlds largest manufacturers of automotive, traction, and stationary batteries. In 1989 it acquired the U.S. battery manufacturers Standard Batteries and Southern Batteries.

Furthering its diversification program, the company in 1988 purchased Nucleus Ltd. and also Telectronic Holdings Ltd., a manufacturer of such health care products as pacemakers and hearing aids. The company went on to acquire a controlling or complete interest in a vast array of manufacturers, including Repco Automotive Parts, Repco Leisure Cycles, Red Robin Industries, Mates Healthcare Ltd., Derby Bicycles, and Slumbertime Bedding. Also in 1988 the company created a manufacturing facility in Colombo, Sri Lanka to make gloves and condoms, and started construction of a balloon-manufacturing plant in Thailandexamples of the companys efforts to move production offshore.

In 1990 Pacific Dunlop and Goodyear entered into a second joint venture, forming Tecbelt Pacific to manufacture steel-cord conveyor belting. By 1991 Dunlops Ansell division had become the worlds largest producer of medical, industrial, and household gloves. Dunlop diversified further that year by entering the food-manufacturing business when it acquired Petersville Sleigh Ltd., a leading Australian food company, for A$374 million. Petersville Sleigh carried with it many well-known brand names, including Edgell-Birds Eye, Peters Ice Cream, Herbert Adams Bakeries, and Socomin International. Dunlop named its new food division the Pacific Brands Food Group. The following year the company restructured its food division to better position it in the international marketits strategy being to enter growing markets armed with strong brand names on high-profit items. The company also sold a string of Petersville assets (for example, Pacific Dunlop sold off Eastman, the U.S. stationary and furniture concern, for $142 million in December 1992).

Dunlop quickly added to its stable of food products. In July 1992 it purchased a 75 percent interest in Pasta House and took 100 percent ownership of International Se Products. In July 1993, Dunlop purchased the Plumrose food-products business in Australia for A$225 million. The agreement carried with it the rights to market several brand names, including Yoplait and Silhouette. At the same time the food division launched its arrival in the Japanese premium ice cream market when, in a partnership with a Japanese company, it sent a shipment of ice cream to Japan worth A$5 million. Dairy and pasta products were examples of upper-end items with high export value.

The company signaled its intention to become a force in the Pacific region when it created the Pacific Rim Advisory Boardwhich is mandated to seeking ways to take advantage of the burgeoning Pacific Rim economyin 1991. By 1992 Dunlop had investments of more than A$400 million throughout the region, and its total exports were A$144 million.

A major element of Pacific Dunlops strategy was to strengthen and expand its presence in Asia from A$500 million in 1992 to A$1 billion in the year 2000. A significant component of its Asian ambit was China, where in 1992 its investments totaled A$120 million. Olex Cables held two factories in China that produced cable for its own exploding market as well as for export. In May 1992 Olex Cables won a A$22 million contract to supply optical-fiber cable to link the cities of Chengdu, Xian, and Zhengzhou. The next year it won a A$70 million contract to supply 3,150 kilometers of optical-fiber cable between the Chinese cities of Lanzhou and Yining in northwestern China. By 1993 its factory in the Shenzen economic area, which had started production in 1992, was manufacturing near capacity nearly 2,500 kilometers of cable daily.

In May 1993 Pacific Dunlop registered a holding company in ChinaPacific Dunlop Holdings (China). The Shanghai-based entity was at that time only the third foreign company that had earned the approval to do so. The holding company was created to oversee Pacific Dunlops investments in that country, which then comprised nine factories. The company sought at least a controlling 51 percent interest in its Chinese ventures. It looked to its Chinese partners to secure the land to build its factories, staff them, and procure orders for them.

By the mid-1990s, Pacific Dunlop Ltd was one of the twenty largest companies in Australia. Its operations spanned more than twenty countries. In 1993, Pacific Dunlop reported sales of A$6.3 billion for the year ending June 30. The companys profits climbed to A$260.4 million, up from A$185.6 million.

The company was comprised of eight divisions. The Pacific Brands division, which focused on consumer products such as footwear (with names such as Grosby, Candy, Pro-Sport, Dunlop, and Hollandia); sporting goods (Dunlop, Repco, Speedwell, Raleigh, and Slazenger); clothing (Chesty Bond, Red Robin, Baby Gro-Wear, Grand Slam, Berlei); and bicycles (Tuf, Adidas, Jockey, Dunlop, Speedwell, Raleigh, and Holeproof). Pacific Brands Food Group, the food-products division, manufactured and marketed products with brand names such as Edgell-Birds Eye, Plumrose, Big Sister, Fourn Twenty, Leggo, Vitari, and Herbert Adams. Food products were distributed in Australia, New Zealand, and other Pacific Rim nations.

The Distribution division distributed a wide range of electrical products (e.g., cables) and industrial goods (such as transmission and rubber products). The Medical Groupthe health care divisionproduced pacemakers, implantable defillibrators, and ultrasound equipment. Ansell International produced latex products such as condoms, balloons, and household and medical gloves.

South Pacific Tyres, the automotive division, manufactured and marketed tires under the names Dunlop, Goodyear, Kelley, and Olymplc. Tires and other automotive parts were sold through Beaurepaires for Tyres and other outlets. GNB Batteries manufactured and marketed batteries under the brand names Chloride, Dunlop, Masse, Marshall, and Exide in Australia and New Zealand and the Champion, National, Stowaway, and Marshall brands in North America. Industrial Foam and Fibre, the division that manufactured products to be used in building and construction, made industrial rubber products as well as plastics, transmission hoses, foam and fiber products, plastics, and bedding (including the Sleepmaker, Serta, and Slumberland brands).

Principal Subsidiaries:

GNB International Battery Group (Australia); Industrial Foam & Fibre (Australia); Pacific Brands (Australia); South Pacific Tyres (Australia); Telectronics Pacing Systems (United States); GNB U.S.A. (United States); Pacific Dunlop Holdings, Inc. (United States); Ansell Canada Inc. (Canada); Pacific Dunlop Holdings (China)

Further Reading:

Jacques, Bruce, Pacific Dunlop Sells Eastman Stake to U.S., The Financial Times, December 8, 1992, p. 23.

Walker, Tony, Firm Chinese Foothold for Pacific Dunlop, The Financial Times, May 8, 1993, p. 24.

Major Australian Food Groups Map Plans for Stagnant Market, South China Morning Post, June 29, 1993, p. 9.

Pacific Dunlop Pushes up Profit, South China Morning Post, September 11, 1993, p. 2.

C. L. Collins

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Pacific Dunlop Limited

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