Wolseley plc History

Company Perspectives:

The strategic direction of Wolseley is key to its future success. Here are the five main drivers in that overall strategy: Grow through acquisition and organic expansion; develop a European strategy; leverage our international position; enhance business diversity; and develop our people.

Key Dates:

1887:

Frederick York Wolseley invents a mechanical sheep shear and founds Wolseley Sheep Shearing Machine Company.

1889:

Wolseley moves to Birmingham, England and reforms the company as Wolseley Engineering with foreman Herbert Austin.

1895:

After Wolseley retires to Australia, Austin begins secret development of an automobile, which debuts the following year.

1896:

The Wolseley automobile business is sold to Vickers; Wolseley cars remain in production until 1975.

1907:

Wolseley sells its 20,000th sheep shearing machine, as it focuses on manufacturing these and other agricultural equipment.

1958:

Wolseley merges with Geo H. Hughes, also in Birmingham, and the company becomes Wolseley-Hughes.

1960:

The company goes public; it acquires Nu-way Benson, which leads the company into distribution for the first time.

1965:

The company acquires Granville Controls and Yorkshire Heating Suppliers.

1973:

Distribution operations are combined into a single business, Wolseley-Hughes Merchants.

1979:

The company acquires John James, adding manufacturing and pipeline distribution operations.

1982:

Ferguson Enterprises in the United States is acquired.

1986:

The company changes its name to Wolseley plc; Ferguson acquires Carolina Builders.

1987:

Ferguson acquires Familian Corporation and Familian Northwest.

1992:

Wolseley expands to France, acquiring the Brossette group; ÖAG in Austria is acquired.

1993:

The company acquires Enertech, including HRPC, in Sweden.

1998:

The company begins integration of U.S. operations into Ferguson and Stock Builders.

2004:

The company enters Switzerland through the acquisition of Tobler.

Company History:

Wolseley plc has quietly built itself an empire as the world's leading distributor of building materials to professional and governmental building and construction contractors and services. The Reading, England-based company operates 3,500 distribution centers, including nearly 200 showrooms, in 13 countries throughout Europe and in North America. The latter market has become the company's largest, accounting for as much as 65 percent of total sales. In the United States, Wolseley operates through subsidiary Ferguson Enterprises, the leading supplier of plumbing, heating and piping, valves and fittings, and other construction and building materials and supplies in the market, with nearly 750 distribution centers, as well as bathroom and kitchen showrooms, in 49 states. Wolseley Canada is that market's number two building supplies distributor, operating more than 220 branches throughout the country. In the United Kingdom, the company's Lightside Division operates 634 distribution sites under the branch names Plumb Center, Drainage Center, Bathstore.com, and Broughton Crangrove; the Heavyside Division adds 372 Builder Center, Hire Center, and Timber Center sites; the Commercial and Industrial Division operates 207 Pipeline Center, Controls Center, and NRS air-conditioning and refrigeration branches; while the Spares Division supplies HVAC and related parts and supplies through 159 HRPC and Wash-Vac Services centers throughout the United Kingdom. Wolseley also has been steadily expanding into the continental European market. In France, the company owns the 418-branch Brossette plumbing and heating group and the PBM heavyside distribution network; the company also is present in Austria (ÖAG); Ireland (Heatmerchants and Tub and Tile); Switzerland (Tobler); The Netherlands (Wasco); and in Italy, Luxembourg, the Czech Republic, Hungary, and Denmark. Wolseley has long played a motor for the consolidation of the highly fragmented building supplies industry, spending as much as £300 million ($450 million) per year on acquisitions. The company is listed on the New York and London Stock Exchanges. In 2003, the company's sales totaled £8.2 billion ($13.1 billion).

19th Century Innovator

Frederick York Wolseley founded the later Wolseley plc in 1887 at the age of 50 years. Wolseley, a native of Ireland, had emigrated to Australia in his youth, where he began working as a "jackeroo" on a sheep ranch near Melbourne. Wolseley later acquired his own sheep ranch, where he formulated the idea for a mechanical sheep shearing machine. By 1886, Wolseley had perfected the design, for which he received a number of patents. In 1887 he set up his own business, the Wolseley Sheep Shearing Machine Company, in Sydney.

Wolseley's invention proved a timely one for the Australian wool industry, meeting with rapid success. Yet Wolseley had lost financial control of the business, having taken on a number of partners and other financial backers. The success of Wolseley's sheep shearer encouraged the company to transfer its operations to England, where Wolseley became managing director of the new Wolseley Engineering Ltd. in Birmingham in 1889. There, Wolseley began developing a variety of other agricultural equipment, such as a stationary engine and tillers. Wolseley was joined by Herbert Austin, who served as the company's foreman and who would lend his name to automotive history.

Wolseley remained in England for just a short while, before returning to Australia and retiring from the company in 1894. Wolseley died just five years later, in Surrey, England. In the meantime, Herbert Austin had been pursuing another of Wolseley's experiments--an automobile. The company's directors and owners, however, refused to provide financing for the development of an invention they believed useless. Instead, Austin worked in secret, and by 1895 had succeeded in producing the company's--and one of the country's--first successful motor cars.

Wolseley now began manufacturing automobiles in addition to its agricultural equipment, and by the dawn of the 20th century had sold more than 100 Wolseley cars. In 1901, however, the company decided to devote itself to its sheep shearing and other agricultural equipment, and sold the automotive business to Vickers Son and Maxim Ltd. The Wolseley name remained highly popular in the British automobile market until production finally ended in 1975. Austin himself left Wolseley in 1905, founding the famed Austin Motor Company and producing the Austin Seven.

Wolseley's sales of its sheep shearing machinery continued to build for some time into the new century--by 1907, the company had sold more than 20,000 in all. Yet over the next several decades, the company's growth remained modest. In the years following World War II, Wolseley clung on as a small-scale manufacturer. In the 1950s, the company began to branch out again, adding a number of new products, such as electric fencing, motorized tillers (such as the Merry Tiller cultivators), clippers, and the like. Over the decade, the company added another operation, HC Webb & Co., adding lawn mowers and hedge trimmers.

Wolseley's product expansion sent it searching for expanded production facilities; the company, with sales of slightly more than £1 million in the late 1950s, also required a larger capital base for expansion. Wolseley's chairman and managing director, Rodney Drake, turned to friend Cyril Hughes, head of Geo H. Hughes Ltd., with the idea of combining the two companies. Hughes was another modest-sized Birmingham company, specialized in the manufacture of wheels, tires, axles, and casters for baby carriages and strollers, with sales of slightly less than £1 million per year. The companies completed the merger, forming Wolseley-Hughes plc. The company went public in 1960.

That year saw a significant development for the company. Eager for growth, Wolseley-Hughes had begun seeking acquisition targets, and in 1960 the company bought up Nu-way Benson Ltd., a manufacturer of agricultural equipment, with products including air heaters and dries, and mechanical handling equipment. Nu-way also operated a spare parts business, Oil Burner Components (OBC), which provided the company with an entry into the building supplies distribution market.

In the early 1960s, Wolseley-Hughes continued to build up its range of businesses, boosting its engineering side with the purchases of Rapid Magnetic Ltd., a maker of magnetic extracting, separating, detecting, lifting, and conveyancing equipment; and Accles and Shelvoke Ltd., which provided precision engineer services and produced humane slaughtering equipment. Geo H. Hughes Ltd., in the meantime, expanded its own engineering and production businesses to include wheels and tires for the industrial market.

A major moment for the company came in 1965, with the acquisition of two new distribution businesses, Granville Controls and Yorkshire Heating Supplies. Together with OBC, these new businesses were to form the core of one of the company's fastest-growing operations into the early 1970s. By the beginning of the 1970s, the company's revenues had topped £20 million, driven in large part by its distribution business. Yet the company's diversified nature had already led to an under-valuation of the company's stock. This in turn led the company to defend itself against a takeover attempt from Tarmac plc in 1972.

The following year the company made another important step in its evolution, when it merged its distribution businesses into a single company, Wolseley-Hughes Merchants. Originally focused on supplying spare parts for heaters and burners, the Merchants division quickly expanded into other plumbing and heating supplies, such as radiators and boilers. Throughout the 1970s, the company continued to expand its range of products, targeting the larger building contractors community. By the mid-1970s, the company's shift toward distribution was already well under way, as sales topped £76 million in 1976. Distribution by then provided the largest part of the company's sales, reaching 65 percent that year.

U.S. Expansion in the 1980s

The late 1970s marked a new era for the company as it stepped up its focus on distribution, launching an aggressive acquisition campaign that was to mark the company's growth into the next century. In 1979, the company acquired the John James Group of Companies, adding not only manufacturing capacity but especially a distribution network focused on the plumbing market, including sales of industrial pipe, valves, and fittings. That purchase formed the basis for a new distribution brand within Wolseley-Hughes, Pipeline Center. In another area of diversification, Wolseley-Hughes also began producing footwear.

Wolseley-Hughes's conversion into a distribution giant began in earnest in the 1980s. In 1984, the company sold off its original Wolseley and Hughes engineering businesses. Motivating this decision was the company's acquisition of Ferguson Enterprises in the United States, marking the company's first expansion beyond the United Kingdom.

Ferguson had been founded in 1953 by Charles Ferguson, Ralph Lenz, and Johnny Smither, with the idea of building a network of independent building supply companies. Each member company would retain the name of its owner-manager, yet take advantage of the benefits of being part of a larger group of companies. Ferguson himself acted as more of an investor in the company (he died in 1955) while the group opened it first two companies, Lenz Supply, in Washington, D.C., and Smither Supply Co., in Birmingham, Alabama, in 1953. The following year, Lenz opened a second business, Crossroads Supply, based in Alexandria, Virginia, which acted as the central hub for all three businesses, with Lenz acting as the company's first president.

In 1959, the company signed on a new partner, David Peebles, who opened Peebles Supply in Newport News, Virginia. Over the next decade, the company continued to attract new owner-manager members and made a number of acquisitions as well. In 1969, Peebles took over as president of the company, which had become a prominent East Coast building supply group. Peebles led the group into its next phase, that of becoming a unified building supply. The group changed its name to Ferguson Enterprises, which became the name for its existing distribution centers.

The 1970s marked a period of strong growth for Ferguson, which saw its sales grow from just $10 million to more than $140 million. By the early 1980s, the Ferguson network covered more than 76 locations in 11 states. The company now found itself faced with the need for fresh capital to fund its future expansion. At the same time, Ferguson found itself faced with succession issues. The company began making plans to go public.

Instead, in 1982, Wolseley approached Ferguson with a proposal to buy the company--and a promise to leave Ferguson's direction entirely in the hands of its U.S. managers. Peebles, Lenz, and Smithers quickly agreed, and Ferguson, backed by Wolseley's own strong financial position--by then, Wolseley's sales had risen past £100 million--began a rapid expansion, boosting its own sales to more than $600 million by the end of the decade.

In the mid-1980s, Wolseley continued to shift its emphasis toward distribution. In 1985, the company established a new subsidiary, Wolseley Centers, which became its building supply distribution wing, overseeing its U.K. network of Pipeline Center, Controls Center, and Plumb Center branches. The following year, the company changed its name to Wolseley plc.

Yet the group's fastest growth came from its U.S. wing. In 1986, Ferguson made a significant purchase with the acquisition of Carolina Builders. Based in Raleigh, North Carolina, Carolina Builders formed the basis of Wolseley's largest single operation, Stock Building Supply, which grew to more than 200 branches in 24 states and sales of $2.7 per year by the end of the century.

Ferguson continued its national expansion the following year, buying Familian Corp., based in California, and Familian Northwest, which enabled the company to extend its building supply network to the West Coast as well. In the meantime, David Peebles had been grooming his successor, in the form of Charles Banks, who became Ferguson president in 1989. Under Banks, Ferguson saw even stronger growth, boosting its revenues to more than $3.3 billion, and its branch network to more than 500 sites in 49 states, as well as Puerto Rico and Mexico by the end of the 1990s.

Distribution Specialist for the New Century

Wolseley now targeted expansion onto the European continent, acquiring the Brossette group, the leading supplier of plumbing supplies in France, in 1992. The company then moved to Austria, where it purchased that country's ÖAG Gruppe. In 1993, Wolseley added Sweden, buying Enertech from Trelleborg, which included the HRPC distribution subsidiary.

The success of Wolseley's distribution business convinced the company to transform itself into a specialist in the mid-1990s. The company began selling off its manufacturing businesses, a process completed in 2000. In the meantime, the company began restructuring its U.S. distribution arm, integrating Familian into Ferguson, while transforming Carolina into Stock Building Supply. Wolseley, through Ferguson, also began an aggressive new acquisition program. Over the next several years, the company spent up to $300 million per year making a long series of primarily smaller, bolt-on acquisitions, but also a number of larger-scale purchases, such as 1998's Hall and Co., and the lumber supply specialist Stock Lumber.

In Europe, Wolseley continued to expand its network as well, acquiring CFM in Luxembourg, Heatmerchants in Ireland, and Manzardo in Italy in 1999. Into the 2000s, the company added operations in The Netherlands (Wasco), the Czech Republic (Cesaro), and Denmark (Electro Oil). A major advance in the company's European position came in 2003, when it acquired France's Pinault Bois & Materiaux, part of the Pinault-Printemps-Redoute group. In 2004, the company added another new European market, Switzerland, when it acquired that country's Tobler. Yet European expansion proved more difficult than in the United States, as the company found itself faced with sorting out differing building standards among the many European countries.

By 2004, Wolseley had emerged as the world's leading distributor of building supplies, boasting sales of more than £8.2 billion ($13 billion). The company planned to play a prominent role in driving the consolidation of the heavily fragmented industry, which promised years of growth ahead. At the same time, Wolseley began considering an entry into new markets, including South America and Asia, in the near future.

Principal Subsidiaries: Brossette (France); Cesaro Kft (Czech Republic); Comptoir des Fers et Metaux S.A. (Luxembourg); Electro Oil (Denmark); Ferguson Enterprises (United States); Heatmerchants (Ireland); Manzardo Spa (Italy); Mart Spol SRO (Hungary); ÖAG Gruppe (Austria); PBM (France); Stock Building Supply (United States); Tobler (Switzerland); Tubs and Tiles (Ireland); Wasco (Netherlands); Wolseley Canada.

Principal Competitors: Sears, Roebuck and Company; Lowe's Companies Inc.; Castorama Dubois Investissements S.C.A.; ThyssenKrupp Schulte GmbH; Kesko Oyj; Saud Bahwan Group; BayWa AG; Menard Inc.; Nagase and Company Ltd.; Diethelm Keller Holding Ltd.

Further Reading:

• "Bumper Growth at Wolseley," TTJ--The Timber Industry Magazine, January 24, 2004, p. 4.
• Faloon, Kelly, "Ferguson's History: The Ferguson Chronicles; Celebrating 50 Years of Success in the PHCP Wholesale Industry," Plumbing & Mechanical, April 2003.
• Gow, David, "Building Pounds 1bn Sales But Wolseley Stays Wary," Guardian, March 23, 2004, p. 18.
• Halstead, Richard, "Wolseley Is Built to Last," Independent Sunday, August 18, 1996, p. 6.
• Harney, Alexandra, "Wolseley May Spend Pounds 300m to Fuel Growth," Financial Times, March 20, 2002, p. 32.
• Lenius, Pat, "A Profitable Purchase: Wolseley's Acquisition of Ferguson in 1982 Has Resulted in Growth for Both Sides," Plumbing & Mechanical, April 2003.
• Morais, Richard C., "I Want It Yesterday," Forbes, November 24, 2003, p. 134.
• Smith, Peter, "Banks Brings a Sailor's Touch to Wolseley Helm," Financial Times, May 10, 2001, p. 26.
• "Wolseley Acquires Four Distributors," Supply House Times, March 2003, p. 6.
• "Wolseley Acquires Swiss HVAC Wholesaler," Supply House Times, January 2004, p. 14.

Source: International Directory of Company Histories, Vol.64. St. James Press, 2004.