cooper
Content
Cooper Industries
Tools Group Electrical and electronics group
Evolution-Cooper Industries
1833
Charles & Ellas Cooper build an iron foundry in Ohio. Industrial evolution leads to evolution from a steam powered engine to natural gas compressors.
1920-1929
By 1920 Cooper became the recognised leader in pipeline compression equipment . In 1929, a merger initiated between Cooper and Bessemer(manufacturer of engines that extracted gas from underground wells) .
1958-1961
Cooper suffered a cyclical downturn which convinced Miller for the need to diversify through acquisitions. 1961- He recruited Robert Cizik as executive assistant for corporate development- due to his expertise in finance.
EvolutionMiller & Cizik redesigned Cooper s structure. A 10 member policy making management team headed the company followed by operating division managers each reporting to the President. Clear communication within the organisation and a uniform accounting system was put into place. Company changed its name to Cooper Industries and in 1967 moved its hedaquarters to Houston. The strategy was to pursue only companies that exhibited stable earnings or earnings counter cyclical to oil & gas transmission industry. Focus on products that served basic needs and seeking acquisition candidates that possessed its own strongest assets.
1961-1965
1965-1967
1967 onwards
Diversification followed when Cooper acquired the Lufkin Rule Companya manufacturer of measuring rules for lumber industry.
Evolution-Tools Group
1967
Reason for acquisition-Lufkin was a market leader in the hand-tools business. Hand-tools- a source of consistent sales and would help Cooper level its cyclical revenues closely attached to the natural gas industry. Lufkin s president Bill Rector proposed adding a tool-basket group composition of brand leaders joined under modern management. 1967-Cooper signed Rector as Vice-President & provided him with the capital to develop the Tools group.
1968
Acquisition of the unprofitable Crescent Niagara Corporation-manufacturer of the well-known Crescent wrench. Acquisition of the Weller Manufacturing Corporation-manufacturer of soldering tools & operating throughout North & South America.
1968-1970
Lufkin, Crescent & Weller-new Tools Group headed by Rector. Revamped the manufacturing operations of the acquisitions, updating processes & equipment & consolidating plants. In some cases it opened new plants in the South to move into an atmosphere where training started from scratch. Focus on production of most profitable hand tools .
Tools Group
Cunningham joined the tool group as director of finance. He introduced a new computer system to manage inventories, sales, shipping, billing etc. The Tool group centralised sales & marketing of all the hand tools. With expansion a small sales force was developed retaining the best people & training them to promote all products under Cooper.
1970
1970 onwards
1970- 2nd diversification -the aircraft services-( purchased Dallas Airmotives) Complementary Acquisitions - logical extensions of existing products or markets. 1972-Nicholson (file and saw maker)-main asset was expansive distribution system of independent hardware wholesalers & distributors. Others-Xcelite nut runners, Wiss scissors, Plumb hammers.
Energy Division-Evolution
Applied the same strategies to the Energy Division 1976-purchased Superior-(maker of engines & natural gas compressors) that filled the gap between largest & smallest products. 1975-(in midst of the oil embargo ) Cizik was elected CEO. Corresponding to Cizik s vision, Cooper re-routed the flow of capital expenditures to Energy division. Biggest move- purchasing Gardner Denver a company equal in size to Cooper. It manufactured machinery for petroleum exploration, mining & general construction. The merger was a complementary -involving Cooper in petroleum & natural gas exploration for the first time-serving a range of needs for the ONG industry. Denver s management structure was too centralised and stifled effective decision making. Sales & admin expenses were trimmed & working capital reduced. Product lines capable of healthy devt were kept and others eliminated.
1970-1978
1979-1981
Evolution-Electrical Division
Acquisition guidelines included a new dimension-acquisition by necessity. 1981-3rd diversification-hostile take-over of Crouse Hinds (an electrical products company) which had just acquired Belden (well-known manufacturer of electronic wire & cable). It became the core of the company s new electrical & electronic business. All the three together gave the company a foothold in the path of power -transmission, control & distribution of electrical energy. The acquisition was criticised for reducing Cooper s exposure to the booming ONG business. Similarly, Cooper s hostile take-over of Kirsch was questioned for its ability to service its debt-burden. Cooper sold off its Airmotive division by year end due to conflict with company s manufacturing oriented corporate strategy. Electricity became Cooper s next target for complementary business development as energy prices slid. Eventually a wise decision to diversify & reduce exposure in that area. Acquired McGraw Edison- a leading manufacturer of products for the control & transmission of electrical power. The path-of-power continued to a 3rd level -point of consumer use in the home . It retained most McGraw senior managers but began streamlining & consolidating its operations .
1981
1985 -1988
Evolution-Electrical Division
Complemented McGraw s transformer product line with acquisition of RTE (maker of transformers). RTE was fighting a hostile take-over& suffering from capital constraints. Culture clash with Cooper s lean & mean cost structure led to attrition at senior mgmt level. Cooper consolidated McGraw & RTE s R&D leading to a restructuring creating $10 million annual savings. Cooper expanded its existing industrial compressor business with the purchase of Joy s industrial air & turbo compressor business. It eliminated duplicate product lines & consolidated the 2 companies competing distribution channels
1988 onwards
Corporate Role-Overview
Increasing shareholder value-central corporate objective Strong corporate emphasis on cash flow which allowed Cooper to aggressively pursue its acquisition program Guidelines for acquisitions: Seeking companies that had stable earnings & had hi-tech manufacturing operations Seeking companies that served a broad customer base Firms which were market leaders and had high quality products Reviewed about 100 potential acquisitions annually Unlikely to divest the cores of the business-not transaction driven With each acquisition, Cooper tailored its structure to suit the new config of businesses. Every new company was broken up & combined in pieces with other Cooper divisions to minimize both product transfers between divisions & resources shared among business units & allowed closer examination of parts. It continued with its original decentralised operating philosophy-exercising control over operating policy but delegating day-to-day operating decisions to various units. Politics played a negligible role & decisions were made quickly. Corporate mgmt team participated in every policy decision but day-to-day questions were handled at operational level.
Hierarchy
3 senior VPs oversaw administrative, financial & manufacturing consulting functions CEO was removed from daily operating decisions & concentrated on developing the corporate strategy etc.
Senior VP of Finance
Dewain Cross, senior VP of finance & his department had responsibility for implementing & monitoring corporate standard accounting & control functions at all divisions. Following acquisitions,Cooper set up reserves to cover anticipated closing costs involved in rationalization ensuring that division managers incurred no write-offs on their monthly income statements through the process. Within 30 days Cooper began to install its own financial & accounting systems All divisions were required to submit Cooper s standard monthly financial report to corporate headquarters Cooper used direct variable cost accounting rather than a full cost absorption system Austerity of Cooper s financial control systems often collided with systems in place leading to attrition at the manager s level. Cooper tightly controlled working capital charging divisions interest for its use. Cooper s strategic planning approach was bottom up. It occasionally used outside consultants. Annually, 7 of the 21 divisions prepared a plan with new acquisitions formulating their first strategic plan in the year following their acquisition-this comprehensive analysis identified the market & industry in detail. Separate strategies were developed for each product line within a division.
Senior VP of Admin
Alan Riedel was the only director besides Cizik. The team s role was managing the company s legal affairs & administering & establishing personnel policy & benefits programs. Also, handling labor relations , shareholder & public relations & environmental matters It maintained a uniform pay scale & bonuses were discretionary Key managers were granted stock options With each acquisition, it gradually adjusted pay scales at the acquired division till it reached the Cooper level. Also all acquisitions adopted its standard benefits package for medical insurance & pensions It handled labor relations at corporate level & it maintained a strong union avoidance policy. Also , the admin handled Antitrust matters because of Cooper s active acquisition program. The team also oversaw the MDP program-which evaluated organisational effectiveness & individual strengths & weaknesses by focusing on the performance of key managers Under this program each employee prepared a progress review worksheet that compared achieved to targeted objectives & employees were reviewed by their supervisors. Each EVP & Sr.VP fully embraced MD&P even though it was time consuming since it uncovered existing or potential mgmt gaps & people worthy of promotions Also it helped to determine management succession.
Senior VP of finance
Executive VP of operations
Champion
Tools Group Electrical and electronics group
Evolution-Cooper Industries
1833
Charles & Ellas Cooper build an iron foundry in Ohio. Industrial evolution leads to evolution from a steam powered engine to natural gas compressors.
1920-1929
By 1920 Cooper became the recognised leader in pipeline compression equipment . In 1929, a merger initiated between Cooper and Bessemer(manufacturer of engines that extracted gas from underground wells) .
1958-1961
Cooper suffered a cyclical downturn which convinced Miller for the need to diversify through acquisitions. 1961- He recruited Robert Cizik as executive assistant for corporate development- due to his expertise in finance.
EvolutionMiller & Cizik redesigned Cooper s structure. A 10 member policy making management team headed the company followed by operating division managers each reporting to the President. Clear communication within the organisation and a uniform accounting system was put into place. Company changed its name to Cooper Industries and in 1967 moved its hedaquarters to Houston. The strategy was to pursue only companies that exhibited stable earnings or earnings counter cyclical to oil & gas transmission industry. Focus on products that served basic needs and seeking acquisition candidates that possessed its own strongest assets.
1961-1965
1965-1967
1967 onwards
Diversification followed when Cooper acquired the Lufkin Rule Companya manufacturer of measuring rules for lumber industry.
Evolution-Tools Group
1967
Reason for acquisition-Lufkin was a market leader in the hand-tools business. Hand-tools- a source of consistent sales and would help Cooper level its cyclical revenues closely attached to the natural gas industry. Lufkin s president Bill Rector proposed adding a tool-basket group composition of brand leaders joined under modern management. 1967-Cooper signed Rector as Vice-President & provided him with the capital to develop the Tools group.
1968
Acquisition of the unprofitable Crescent Niagara Corporation-manufacturer of the well-known Crescent wrench. Acquisition of the Weller Manufacturing Corporation-manufacturer of soldering tools & operating throughout North & South America.
1968-1970
Lufkin, Crescent & Weller-new Tools Group headed by Rector. Revamped the manufacturing operations of the acquisitions, updating processes & equipment & consolidating plants. In some cases it opened new plants in the South to move into an atmosphere where training started from scratch. Focus on production of most profitable hand tools .
Tools Group
Cunningham joined the tool group as director of finance. He introduced a new computer system to manage inventories, sales, shipping, billing etc. The Tool group centralised sales & marketing of all the hand tools. With expansion a small sales force was developed retaining the best people & training them to promote all products under Cooper.
1970
1970 onwards
1970- 2nd diversification -the aircraft services-( purchased Dallas Airmotives) Complementary Acquisitions - logical extensions of existing products or markets. 1972-Nicholson (file and saw maker)-main asset was expansive distribution system of independent hardware wholesalers & distributors. Others-Xcelite nut runners, Wiss scissors, Plumb hammers.
Energy Division-Evolution
Applied the same strategies to the Energy Division 1976-purchased Superior-(maker of engines & natural gas compressors) that filled the gap between largest & smallest products. 1975-(in midst of the oil embargo ) Cizik was elected CEO. Corresponding to Cizik s vision, Cooper re-routed the flow of capital expenditures to Energy division. Biggest move- purchasing Gardner Denver a company equal in size to Cooper. It manufactured machinery for petroleum exploration, mining & general construction. The merger was a complementary -involving Cooper in petroleum & natural gas exploration for the first time-serving a range of needs for the ONG industry. Denver s management structure was too centralised and stifled effective decision making. Sales & admin expenses were trimmed & working capital reduced. Product lines capable of healthy devt were kept and others eliminated.
1970-1978
1979-1981
Evolution-Electrical Division
Acquisition guidelines included a new dimension-acquisition by necessity. 1981-3rd diversification-hostile take-over of Crouse Hinds (an electrical products company) which had just acquired Belden (well-known manufacturer of electronic wire & cable). It became the core of the company s new electrical & electronic business. All the three together gave the company a foothold in the path of power -transmission, control & distribution of electrical energy. The acquisition was criticised for reducing Cooper s exposure to the booming ONG business. Similarly, Cooper s hostile take-over of Kirsch was questioned for its ability to service its debt-burden. Cooper sold off its Airmotive division by year end due to conflict with company s manufacturing oriented corporate strategy. Electricity became Cooper s next target for complementary business development as energy prices slid. Eventually a wise decision to diversify & reduce exposure in that area. Acquired McGraw Edison- a leading manufacturer of products for the control & transmission of electrical power. The path-of-power continued to a 3rd level -point of consumer use in the home . It retained most McGraw senior managers but began streamlining & consolidating its operations .
1981
1985 -1988
Evolution-Electrical Division
Complemented McGraw s transformer product line with acquisition of RTE (maker of transformers). RTE was fighting a hostile take-over& suffering from capital constraints. Culture clash with Cooper s lean & mean cost structure led to attrition at senior mgmt level. Cooper consolidated McGraw & RTE s R&D leading to a restructuring creating $10 million annual savings. Cooper expanded its existing industrial compressor business with the purchase of Joy s industrial air & turbo compressor business. It eliminated duplicate product lines & consolidated the 2 companies competing distribution channels
1988 onwards
Corporate Role-Overview
Increasing shareholder value-central corporate objective Strong corporate emphasis on cash flow which allowed Cooper to aggressively pursue its acquisition program Guidelines for acquisitions: Seeking companies that had stable earnings & had hi-tech manufacturing operations Seeking companies that served a broad customer base Firms which were market leaders and had high quality products Reviewed about 100 potential acquisitions annually Unlikely to divest the cores of the business-not transaction driven With each acquisition, Cooper tailored its structure to suit the new config of businesses. Every new company was broken up & combined in pieces with other Cooper divisions to minimize both product transfers between divisions & resources shared among business units & allowed closer examination of parts. It continued with its original decentralised operating philosophy-exercising control over operating policy but delegating day-to-day operating decisions to various units. Politics played a negligible role & decisions were made quickly. Corporate mgmt team participated in every policy decision but day-to-day questions were handled at operational level.
Hierarchy
3 senior VPs oversaw administrative, financial & manufacturing consulting functions CEO was removed from daily operating decisions & concentrated on developing the corporate strategy etc.
Senior VP of Finance
Dewain Cross, senior VP of finance & his department had responsibility for implementing & monitoring corporate standard accounting & control functions at all divisions. Following acquisitions,Cooper set up reserves to cover anticipated closing costs involved in rationalization ensuring that division managers incurred no write-offs on their monthly income statements through the process. Within 30 days Cooper began to install its own financial & accounting systems All divisions were required to submit Cooper s standard monthly financial report to corporate headquarters Cooper used direct variable cost accounting rather than a full cost absorption system Austerity of Cooper s financial control systems often collided with systems in place leading to attrition at the manager s level. Cooper tightly controlled working capital charging divisions interest for its use. Cooper s strategic planning approach was bottom up. It occasionally used outside consultants. Annually, 7 of the 21 divisions prepared a plan with new acquisitions formulating their first strategic plan in the year following their acquisition-this comprehensive analysis identified the market & industry in detail. Separate strategies were developed for each product line within a division.
Senior VP of Admin
Alan Riedel was the only director besides Cizik. The team s role was managing the company s legal affairs & administering & establishing personnel policy & benefits programs. Also, handling labor relations , shareholder & public relations & environmental matters It maintained a uniform pay scale & bonuses were discretionary Key managers were granted stock options With each acquisition, it gradually adjusted pay scales at the acquired division till it reached the Cooper level. Also all acquisitions adopted its standard benefits package for medical insurance & pensions It handled labor relations at corporate level & it maintained a strong union avoidance policy. Also , the admin handled Antitrust matters because of Cooper s active acquisition program. The team also oversaw the MDP program-which evaluated organisational effectiveness & individual strengths & weaknesses by focusing on the performance of key managers Under this program each employee prepared a progress review worksheet that compared achieved to targeted objectives & employees were reviewed by their supervisors. Each EVP & Sr.VP fully embraced MD&P even though it was time consuming since it uncovered existing or potential mgmt gaps & people worthy of promotions Also it helped to determine management succession.
Senior VP of finance
Executive VP of operations
Champion
