Vosper Thornycroft Holding plc
Vosper Thornycroft Holding plc
Sales: £379 million ($606.0 million)(2001)
Stock Exchanges: London
Ticker Symbol: VSP
NAIC: 3366 Ship and Boat Building; 488390 Other Support Activities for Water Transportation
Vosper Thornycroft Holding plc is one of the world’s major builders of warships and other marine ships, and the second-largest military and paramilitary shipbuilder in the United Kingdom, behind BAE Systems. During the 1990s, however, Vosper Thornycroft took strong steps to counter the highly cyclical and unstable shipbuilding market—particularly given the economic difficulties among many countries in the Asian market—by diversifying into related areas. As such, Vosper Thornycroft is now composed of three primary business divisions: Shipbuilding, Engineering & Composites; Support Services & Integrated Logistics; and Marine Products. Support Services & Integrated Logistics provides the engineering, logistics, and facilities management services to both domestic and foreign naval training programs, as well as its own training and employment services activities. Marine Products has concentrated in such naval and commercial vessel components as electronic control systems, motion control and stabilization systems, navigation and propulsion equipment and gas turbine fuel systems. Vosper Thornycroft’s successful diversification has enabled it to generate more than 64 percent of its annual turnover through its non-shipbuilding operations. Nonetheless, the company continues to compete for and win contracts to design and build new ships for the British and other navies. The company is led by CEO Matin Jay, and shares are traded on the London Stock Exchange.
Two Companies With Late 19th Century Beginnings
Vosper Thornycroft was created in a merger between two prominent British shipbuilders in the mid-1960s. Both Vosper, based in Portsmouth, and Thornycroft, located in Southampton, had been established toward the end of the 19th century. The companies followed different directions, however, with Thornycroft gaining a reputation for its large-scale warships and Vosper developing smaller patrol-type craft. Thus, the eventual 20th century merger meant that the combined Vosper Thornycroft Holding plc featured highly complementary operations.
Thornycroft was established in 1864 by John I Thornycroft, who, at just 19 years of age, built his first steam launch ship. Thornycroft’s original shipyard was at Chis wick, on the River Thames near London. Through the remaining years of that century, Thornycroft was responsible for building a number of the mainstays of the British Royal Navy, including the HM Destroyer Albatross, the HM Gunboat Melik, and the Launch Nautilus. At the beginning of the 20th century, however, Thornycroft transferred its operations to a larger yard at Southampton, which was the site of some of the United Kingdom’s oldest working shipyards. The new quarters allowed Thornycroft to produce more modern warships, including the Tribal Class destroyer HMS Tartar, capable of speeds of 35 knots and more. At the same time, Thornycroft produced commercial class vessels, such as the cruise ships used by the Thomas Cook agency for its Nile River cruises.
Meanwhile, nearby Portsmouth saw the development of Vosper & Co. during this same period. Established in 1871 by Herbert E. Vosper, who was only 21 years old at the time, Vosper & Co. initially built boats for the local fishing and whaling industries. Soon, though, the company was also building commercial shipping vessels, tugboats, and barges. Vosper also developed its own engines, winning a reputation for its paraffin-driven engines at the beginning of the 20th century. The company also adapted its engines to other fuel types, such as steam and crude oil.
The period leading up to and including World War I gave both Vosper and Thornycroft a boost. Thornycroft’s production turned toward destroyers—the company-built HMS Lance was credited with the first naval shot of the war—and submarines, while also helping to develop depth-charge systems. During the war, Thornycroft’s HMS Teazer set a world speed record for destroyer-class ships, topping 40 knots in 1917. During this time Vosper had also turned its production toward support for the British war effort, producing work boats, dingies, and tenders, while also expanding into the production of shells.
The post-war years proved difficult for both companies, though, as the end of hostilities naturally slowed new ship orders. A major project for Vosper during this time was the refitting of the famous Discovery, used by Captain Scott on his explorations of Antarctica. After Herbert Vosper retired in 1919, the company began to shift its direction toward building up its design and engineering operations, and particularly to developing new engine designs.
Meanwhile, Thornycroft had diversified its production in order to compensate for the reduction in orders from the British Navy. The Southampton yard produced a number of vessel types, ranging from tugboats to cattle barges. Yet Thornycroft continued to take orders for military craft, completing a new-generation destroyer, the HMS Amazon, and also building six destroyers for the Chilean navy. John Thornycroft, by then known as Sir John, died in 1928. The company remained in the family, as his son John E. Thornycroft took over the company’s direction upon his death.
Wartime Recovery in the 1940s
The depression years led Vosper to develop a new specialty—that of high-speed boats. The company’s V8 engine quickly became a driving force behind a new growth period for Vosper, and the company became an important supplier to the British Navy, adding such ship designs as seaplane tenders. Vosper also helped develop a new class of motor-torpedo boats (MTB), capable of speeds of up to 48 knots. While the British government remained Vosper’s main MTB customer, the company also began selling to foreign navies. During World War II itself, Vosper produced hundreds of MTBs, gaining international renown while also developing new types of rescue craft.
Thornycroft also benefited from the massive buildup toward World War II. The company launched two new D Class Destroyers—the Daring and the Decoy—both capable of reaching speeds of over 38 knots. The company also designed aircraft carriers to support the growing importance of airplanes in military strategy. Thornycroft became a part of the backbone of the British naval war effort, producing destroyers, mine layers, landing craft, and torpedo boats throughout the duration of the war.
The end of World War II forced both companies to once again turn to commercial construction to fill in the gaps left by the drop in military orders. During the 1950s, Vosper began developing a new class of air-sea rescue ships—the Brave Class series—capable of reaching speeds of more than 50 knots. Thornycroft continued to produce large-scale vessels, ranging from cruise ships to ferries and other passenger ships, while also picking up a number of yacht commissions. Destroyers remained a mainstay of Thornycroft’s activities, though, including the 390-foot-long HMS Duchess. Still larger was the completion of the Sechura oil tanker, which had a displacement of 6,000 tons.
Mid-1960s: Vosper and Thornycroft Merge
The death of John E. Thornycroft in 1960 precipitated the merger between Thornycroft and Vosper at mid-decade. By then, both companies were enjoying strong international sales, each in their own specialized areas. With Thornycroft covering large-scale ships and Vosper supplying world-class patrol boats, the combined Vosper Thornycroft Holding plc—created in 1966—became one of the world’s leading shipbuilders. Throughout the end of the decade and into the next, international orders became particularly strong for the company, arriving from the Middle East and Asia, as well as from Africa.
Vosper Thornycroft was buoyed by a number of important orders throughout the 1970s, including one from the British Royal Navy for Type 21 frigates, and another even larger order for Mark 10 frigates from the Brazilian government. The company also began development of reinforced plastic vessels, including the HMS Wilton, the first glass-reinforced plastic mine-counter-measures ship. The rise of a Socialist government in Great Britain brought the company under government control in 1977. The nationalization of Vosper Thornycroft proved brief, and in 1985 the company was taken private again through a management buyout led by the company’s president, Peter Usher. Vosper Thornycroft listed on the London stock exchange soon thereafter.
A Shipbuilding Leader in the Late 20th Century
Throughout the 1980s, the waning Cold War years continued to provide strong orders for the company. Tensions in the Middle East, particularly in the Persian Gulf region, brought Vosper Thornycroft many orders from that part of the world. The end of the Cold War, however, cut deeply into the company’s military-related orders throughout much of the world. Thus, in the 1990s Vosper Thornycroft put into place a diversification strategy to provide a buffer for its more cyclical shipbuilding operations.
A strategy is firmly in place which will enable Vosper Thornycroft to exploit its market leadership position and grow both organically and through acquisitions. Our mission is to maximize shareholder value. We will deliver this by building competitive advantage through working in partnership with our clients and anticipating market changes.
By the late 1990s, Vosper Thornycroft had successfully reduced its reliance on military and other shipbuilding orders by extending its operations into two related areas—those of Marine Products and Support Services and Integrated Logistics. Marine Products included systems development, such as navigational, stabilization, and other control systems; and Support Services and Integrated Logistics focused especially on providing support services for both the company’s own and other vessels, as well as related services such as training programs and employee placement.
Much of the company’s diversification effort was completed by a series of acquisitions. Among the first of these was its purchase of HSDE in 1994, which added manufacturing facilities for the production of electronic controls. The company boosted its Marine Products division again in 1998 when it acquired Koop Nautic Holland, a small designer and manufacturer of stabilization systems based in the Netherlands. That same year, the company also added Brisco Engineering, which was acquired from Industrial Controls Services Group.
Vosper Thornycroft also developed its support services division during the mid-1990s. It acquired a 37 percent share of Flagship Training; it formed a 50-50 joint venture called FSL with GEC Marine; and it won a £300 million contract to take over the administration, training, and information systems of the Naval Recruiting and Training Agency. Another significant acquisition came in 2000, when the company acquired Bombadier Defence Services UK, adding that company’s aircraft and equipment maintenance operations to its own. By the end of the decade, the company’s diversified activities accounted for more than 60 percent of total sales.
Vosper Thornycroft in the New Millennium
In 1999, Vosper Thornycroft proved it had remained a key player in the worldwide shipbuilding industry when it won a contract to supply three fast-attack vessels to the Greek navy. The poor economic climate among the Asian and other markets at the end of the 1990s, however, caused a number of potential customers to defer the awarding of new shipbuilding contracts. By the end of 2000, Vosper Thornycroft was faced with an 18-month gap in its shipbuilding order book. The company, threatened with the possibility of being forced to close down its Southampton yard (which would have ended some 500 years of shipbuilding activity in that city), was rescued by an order from the Royal Navy for three new offshore patrol vessels.
At the same time, the company was awarded a contract to build three of 12 new Type 45 destroyers for the British Military. Yet that contract was soon embroiled in controversy. The deal was threatened when Vosper Thornycroft’s larger rival, BAE Systems, tendered a bid to build all 12 destroyers. Such a move would effectively have given BAE Systems a domestic monopoly on all future destroyer production, since without the order, Vosper Thornycroft would not have been able to afford necessary upgrades to its production capacity. The dispute, which centered as much around maintaining a competitive domestic market, prompted the British government to hire the Rand Corporation to examine the Royal Navy’s procurement program. The outcome of the investigation remained pending in 2001.
Brisco Engineering Ltd.; Careers Enterprise Ltd (50%); Careers Management Ltd; Flagship Training Ltd. (37%); Halmatic Limited; Jüg-Cal Progressions Ltd.; Koop Nautic Holland BV; Maritime Dynamics Inc. (U.S.); Saudi Vosper Thornycroft Company Ltd (49%)(Saudi Arabia); Surrey Career Services Ltd.; TSS (UK)Ltd; Vosper Thornycroft (UK)Ltd; Vosper Thornycroft Controls Ltd; Vosper Thornycroft Controls Inc. (U.S.); Vosper Thornycroft, Inc. (USA); Vosper Thornycroft International Ltd.; Vosper Thornycroft International Services Ltd.; Vosper Thornycroft (Malaysia)Sdn. Bhd.; Vosper Thornycroft Marine Products Ltd.; VT Services Ltd.; VT Southern Careers Ltd. (75.1%); VT West Sussex Careers Ltd. (80.1%); Van Dusen & Meyer Inc. (U.S.); Vosper-ManTech Ltd. (60%).
Shipbuilding, Engineering & Composites; Support Services & Integrated Logistics; Marine Products.
BAE Systems Ltd.; Conrad Industries, Inc.; Harland and Wolff Holdings pic; Hyundai Corporation; Kvaerner ASA; Litton Industries, Inc.; Mitsubishi Heavy Industries, Ltd.; Mitsui Engineering & Shipbuilding Co., Ltd.; Montedison S.p.A.; National Steel and Shipbuilding Company; Newport News Shipbuilding Inc.; Nügata Engineering Co., Ltd.; ThyssenKrupp AG.
- Thornycroft is founded.
- Vosper & Co. is founded.
- Thornycroft delivers six destroyers to Chile.
- Vosper launches Brave Class boats.
- Vosper and Thornycroft merge.
- Company is nationalized by British government.
- Management buyout occurs and company gains listing on London Stock Exchange.
- Company acquires Brisco Engineering and Koop Nautic Holland.
- Company wins order for three fast-attack vessels for Greek navy.
- Acquisition of Bombadier Defence Services UK is completed.
- Company wins order for three offshore patrol boats for British navy; controversy over order soon ensues.
Harrison, Michael, “Vosper Secures Jobs with Pounds 60mn Order for RN Patrol Vessels,” Independent, March 17, 2001, p. 19.
——, “Vosper Urges MoD to Speed Up Shipbuilding Order,” Independent, November 15, 2000, p. 20.
Jay, Adam, “Vosper Prepares 650 Layoffs at Southampton,” Daily Telegraph, October 4, 2000.
Nicoll, Alexander, “US Consultants Called into Vosper Thornycroft Dispute,” Financial Times, May 3, 2001.
“Vosper Thornycroft Wins British Offshore Patrol Vessel Competition,” Defense Daily, March 24, 2001.