Spirax-Sarco Engineering plc History

Company Perspectives:

MISSION STATEMENT: To profitably supply world class products, services and expertise to ensure our customers optimize energy usage and maximize process efficiency in steam and condensate systems. VISION STATEMENT: To be the USA's leading supplier of steam system solutions by being market driven, providing excellent quality and promoting productivity in a work culture of high performance, involvement, respect and equity.

Key Dates:

1888:

Sanders, Rehders & Co. (Sarco) starts operations in London selling steam traps.

1908:

New York office opens and begins selling "Sarco" steam traps.

1926:

Company establishes Canadian subsidiary, which adds manufacturing capacity in 1941.

1932:

Spirax is created to manufacture Sarco steam traps in United Kingdom under Spirax brand name.

1952:

Spirax acquires U.K. Sarco branches and becomes Spirax-Sarco; Sarco International (Simco) is established by Sarco Co., which operates independently in North America until 1983.

1957:

Spirax-Sarco acquires Simco.

1959:

Spirax-Sarco goes public as Spirax-Sarco Engineering.

1963:

Company acquires Drayton Controls Ltd., doubling in size and diversifying its product line.

1972:

Company enters Australia market as part of internationalization drive.

1973:

Company enters Japan with opening of sales office.

1983:

Spirax-Sarco acquires Sarco Co. from White Consolidated, gaining access to North American markets.

1990:

Watson-Marlow is acquired from Smith & Nephew, adding peristaltic pumps line.

1997:

Company purchases Bredel, becoming world's leading supplier of peristaltic pumps.

1998:

U.S. manufacturing plant is moved to South Carolina.

2003:

South African Watson-Marlow distribution business is acquired. Bredel were formally merged into a single company, Watson-Marlow-Bredel, in 2000.

By then, Spirax-Sarco had been forced to overcome a bump in the late 1990s, after the company shut down its Allentown plant and moved its U.S. manufacturing operations to South Carolina. The company had underestimated the cost of moving, especially training costs after a majority of its former Pennsylvania workers refused to relocate with the rest of the company.

Despite this episode, Spirax-Sarco continued its slow but steady growth, making a series of acquisitions at the turn of the century. In 1998, the company moved into Spain, buying the safety valve operation of Especialidades Hydra, based in Barcelona, for £3.1 million. In 2000, the company added M&M International, based in Italy, paying £6.8 million for its solenoid and piston-activated valve manufacturing operation. The company returned to Italy at the end of 2002 when it acquired Milan-based AMPE, a maker of pneumatic and electronic instrumentation and actuators. By then, the company had expanded its Australian subsidiary as well, acquiring Marford Engineering for £1 million, based in Brisbane.

By 2003, Spirax-Sarco's sales neared £300 million, and the company had established clear leadership in two core product categories. The company remained committed to expansion, both internationally and organically. In 2003, it bought its South African peristaltic pumps distributorship from that country's Walter Becker, for £1.3 million. At the same time, the company announced its plans to spend £250,000 to expand Watson-Marlow-Bredel's production capacity by 2004. Spirax-Sarco seemed far from losing steam as it entered the new century.

Company History:

Spirax-Sarco Engineering plc is the world's leading manufacturer of steam traps, the number one producer of peristaltic pumps (through subsidiary Watson-Marlow Bredel) and a leading manufacturer of flowmeters, temperature and pressure controls, and other apparatus and equipment used for controlling steam. Spirax-Sarco's products are used in virtually every industry, with applications including heating and air-conditioning systems; oil refinery and chemical processing; in the pharmaceutical and foods industries, and for the manufacture of plastics, textiles, and other materials. Spirax-Sarco encompasses seven manufacturing facilities worldwide, although its primary manufacturing operations take place in its Cheltenham, England home. The company is present in 32 countries, through 42 sales offices. Exports have long accounted for the majority of the group's sales, and represented some 80 percent of 2002 revenues of nearly £300 million. Spirax-Sarco has continued to make small acquisitions in the 2000s, such as its 2002 purchases of Australia-based Marford Engineering, a specialist in water treatment systems, and Italy's AMPE, which makes pneumatic and electronic instruments and actuators. The company has also boosted its international sales network. Quoted on the London Stock Exchange since the late 1950s, Spirax-Sarco is led by CEO Marcus Steel.

Building up Steam in the 19th Century

The Industrial Revolution and the adaptation of steam power to a variety of industrial uses opened up vast areas of entrepreneurial development, as steady advances in technology required new engineering solutions and products. The use of steam--a powerful, clean source of heat--introduced a need for a device to drain off water condensation while retaining the steam itself. The resulting device was called the steam trap, and one of the earliest manufacturers was a British firm called Sanders, Rehders & Co. That company was formed to make and sell steam traps and other steam power-related parts, devices, and equipment in London in 1888.

Sarco (from Sanders Rehders & Co.), as the company and its products became known, developed into a leading engineered steam products group. In 1908, the company set up a sales office in New York City, sending Clement Wells there as the company's representative. Sarco quickly developed into a full-fledged company; when imports of steam traps became too expensive during and after World War I, Wells transformed Sarco Inc. into a manufacturing operation, opening a plant in Allentown, Pennsylvania. Wells then extended the company's production to include thermostats and other temperature regulators, all the while sticking to the company's focus on steam.

Before long, Sarco U.S. became a primary manufacturer of Sarco-branded steam traps and apparatus, starting export operations to the European continent--and to the United Kingdom. Sanders, Rehders by this time had reduced its role to that of a selling agent for Sarco products, changing its name to Sarco Thermostats and moving to Cheltenham. At the same time, Sarco opened its first foreign subsidiary, in Toronto, Canada, in 1926. That company was led by Eric Wells, brother of Clement Wells. At first operated as a sales office, the Canadian business set up its own manufacturing facility in Clairmont, Ontario, in 1941.

The Depression once again made foreign shipments too costly--this time, however, its was the U.S.-based business that sought a manufacturing partner overseas. In 1932, HA Smith and others, including later company Chairman Lionel Northcroft, established a new business in London to manufacture the Sarco steam traps, but under a different brand name: Spirax.

The Spirax Manufacturing Co. remained in London for the first half of the 1930s, then, after acquiring Sarco Thermostats, moved to Cheltenham in 1937. That purchase gave the company the right to use the Sarco brand name as well. In the years leading up to World War II, the British company acquired a second branded line of steam traps, Ogden, after purchasing the English company Ogden & Cunliffe. By then, Spirax had been granted the rights to trade in the United Kingdom (excepting Canada), Ireland, Denmark, Holland, Portugal, Sweden, and Norway, while the U.S.-based Sarco reserved the rest of the world's market for itself.

In 1952, Spirax bought Sarco Co.'s remaining U.K. interests (a process completed the following year) and renamed itself Spirax-Sarco Ltd. At that time, a new U.S.-based company was formed, Sarco International Corporation of New York, or Simco, which acquired the Sarco steam trap rights outside of North America. Simco opened two new European businesses, Sarco Appareils pour la Vapeur, in Paris, taking a 49 percent stake, and a sales office in Belgium, established in 1952. Two years later the company launched a manufacturing operation in Konstanz, Germany, Sarco GmbH, a joint venture in which Simco controlled slightly more than 50 percent.

Spirax-Sarco took over Simco in 1957, gaining worldwide rights to the Sarco steam trap brand--other than the United States and Canada. These markets stayed under the control of what remained of Sarco Co., which became a subsidiary of White Consolidated.

Building Steam Internationally in the 1970s

Spirax-Sarco acquired two other Cheltenham-based companies in 1957, John Such & Sons and Heat Transfer Ltd., in a move to diversify its product range. John Such, founded in 1909, manufactured tools, jigs, and other engineering equipment and tools. John Such also manufactured heat exchangers designed and distributed by Heat Transfer Ltd., which had been set up just one year earlier. The two acquisitions enabled Spirax-Sarco to expand its manufacturing base, adding some 20,000 square feet to reach a total of 50,000 square feet of production space.

Spirax-Sarco went public as Spirax-Sarco Engineering Ltd. in 1959. That year, HA Smith retired, and Northcroft took over as chairman. The company took advantage of its worldwide rights to the Sarco brand, establishing manufacturing operations in Argentina, Sweden, Mexico, and Italy, then forming a joint venture to enter India in 1959 and establishing a new subsidiary, Sarco Sul Americana, in Brazil the following year.

Over the next decades, Spirax-Sarco continued its growth, through both acquisitions and international expansion. Acquisitions helped the company diversify its product range, such as its purchase of Bir-Vac Ltd. in 1961, adding a line of industrial and special-purpose vacuum equipment. In other areas, Spirax-Sarco started up its own businesses, such as the launch of Theta Controls Ltd. in 1963, adding electronic thermostats for the residential market.

Among the most significant acquisitions made by the company was that of Drayton Controls Ltd. in 1963. That purchase doubled the company in size and extended its operations into such product ranges as filled thermostatic systems; domestic, commercial and industrial controls; and advanced sterilizing equipment and other hospital equipment. The company in the meantime continued its international expansion, adding subsidiaries in the Netherlands, Austria, and Singapore. In 1972, Spirax-Sarco added an Australian component, soon followed by operations in New Zealand as well. Spirax-Sarco then entered the Japanese market in 1973. Later, Spirax-Sarco's presence in Asia expanded to include China, Taiwan, Malaysia, Thailand, Korea, and other markets.

Spirax-Sarco at last acquired the rights to the United States and Canada when it paid White Consolidated $29.9 million to acquire Sarco Co. With full control of the Sarco brand, Spirax-Sarco continued its expansion through the rest of the decade, establishing itself as the world's preeminent maker of steam traps. By the end of the decade, Spirax-Sarco had become a truly international company, posting more than 75 percent of its sales overseas. Spirax-Sarco was also eminently profitable--in 1990, the company celebrated its 22nd consecutive year of profit growth, a record Spirax-Sarco maintained throughout much of the economic uncertainty of the early 1990s.

Steaming Ahead in the New Century

At the beginning of the 1990s, Spirax-Sarco made a new move to diversify and expand its operations. In 1990, the company paid £15.3 million to pharmaceutical group Smith & Nephew for Watson-Marlow. Founded in Buckinghamshire in 1956, Watson-Marlow had been a pioneer in developing pumps based on the peristaltic system for the hospital market, leading to its acquisition by Smith Nephew in 1977. Over the next decade, Watson-Marlow began expanding beyond the medical applications into a variety of markets--many of which were shared with Spirax-Sarco--although maintaining a specialty of small-scale pumps.

In 1997, Spirax-Sarco stepped up its peristaltic pumps presence when, through Watson-Marlow, it acquired Netherlands-based Bredel Holdings. Where Watson-Marlow specialized in smaller pumps, Bredel's specialty lay in larger pumps. The resulting business gave Spirax-Sarco the world leadership in the manufacture of peristaltic pump systems. Watson-Marlow and

Further Reading:

• Brun-Rovet, Marianne, "Asian Markets Buoy Spirax," Financial Times, March 11, 2003, p. 22.
• Davouid, Salamander, "Spirax-Sarco Boosted by Asian Revival," Financial Times, September 12, 2003, p. 30.
• Ford, Jonathan, "Spirax Makes Headway in 'Demanding' Markets," Financial Times, March 17, 1998, p. 30.
• Harney, Alexandra, "Spirax-Sarco Cautious amid Clouded Outlook," Financial Times, March 12, 2002, p. 29.
• "Steam Power Keeps Spirax Ticking," Independent, March 11, 2003, p. 22.
• Tyler, Richard, "Spirax Keeps Spiralling Upwards," Birmingham Post, March 11, 2003, p. 19.

Source: International Directory of Company Histories, Vol.59. St. James Press, 2004.

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