Strix Ltd. Business Information, Profile, and History

Company Perspectives:

STRIX is well aware that in order to maintain its position as world leader in the supply of control systems to the domestic appliance market and to sustain its committed policy of growth, it is vital to continue to innovate and diversify into related markets. STRIX continues to strive for world class status following a philosophy of continuous improvement. It is now further developing leading edge manufacturing techniques and new generation products to meet the needs of globally recognized brands for the New Millennium.

History of Strix Ltd.

Strix Ltd. is the world's leading designer and manufacturer of temperature controls and cordless interfaces for electric kettles and other fluid-heating and water-boiling appliances. Strix commands a 70 percent share of the worldwide market for controls that turn off an electric kettle once the water has boiled, prevent a kettle from turning on with no water inside, and provide other safeguards to prevent against electrocution and fire hazards. Many of the world's largest manufacturers of kettles, including Rowenta, Tefal, Philips, Morphy Richards, Braun, Bodum, and Russell Hobbs use Strix controls. Strix grew strongly during the 1990s as demand for its products expanded beyond the English-speaking world to include fast-growing Asian markets. As such, sales have leaped from around £5 million at the beginning of the 1990s to more than £70 million ($112 million) in 2001. Strix has followed its international expansion with the development of a strong sales and manufacturing network. The company is based on the Isle of Man, a Dependency of the British Crown but otherwise a politically autonomous state. In addition to its three production facilities on the Isle of Man and a facility in Chester, England, the company operates a manufacturing plant in Guangzhou, China, that accounts for about 60 percent of total production. Strix also operates sales subsidiaries in the United States, Russia, and Belgium, international sales account for some 97 percent of the company's total sales.

At the turn of the century, Strix began extending its technology to include new applications such as under-floor heating and new appliance ranges such as hot pots for the North American market, as well as entering into the coffee maker market. These moves have attracted outside investment interest in the company, and in 2000 Strix sold 40 percent of its shares to HSBC Bank for £50 million. Chairman Edwin Davies and founder and former chairman John Taylor, now retired, retain majority control of the private company. Nonetheless, the HSBC purchase has opened up speculation concerning a possible public offering in the near future.

Thermostat Pioneers in the 1950s

The predecessor to Strix was founded in 1951 by Eric Taylor, a graduate of the Isle of Man's King William's College. Taylor had already proved his inventive skill during World War II when he designed a thermostat based on a bi-metal control design for maintaining the proper temperature of the heated flight suits worn by Royal Air Force bomber pilots. In 1946, Taylor set up Otter Controls Ltd. in Buxton, Derbyshire, in order to exploit his patented control device. The control was quickly adapted as a thermostat for Rover Cars.

In 1951, Taylor and several associates each put up £50 pounds to set up a subsidiary company, Castletown Thermostats. The company originally produced a range of theromostats that were used for a variety of purposes, including Rover Cars and Bendix washing machines.

The company's breakthrough came in 1957 when then managing director Charles Faulkner reached an agreement to supply 500,000 company-designed thermostats to Russell Morphy for use in that company's electric blankets. The large-scale order came as somewhat of a surprise to the company, helping it to establish itself as a major force in the United Kingdom's controls market. Taylor's son, John Taylor, joined Otter Controls in 1959 and soon revealed himself to have inherited his father's inventive genius. By the end of his career, the younger Taylor had been granted some 150 patents in his own name.

Taylor became chairman of Otter Controls in 1971 upon his father's death. In 1973, the Castletown unit, which had been expanding through the 1960s, now built a new extension to its manufacturing plant to produce and test a new "vapourstat" control device for use with a new generation of electric kettles. The Castletown subsidiary continued to produce a variety of thermostat control devices and expanded again in the late 1970s, adding a wing dedicated to production of automotive cooling fan controls.

In 1977, Taylor became a director of Castletown Thermostats. By 1979, he had taken over as chairman the company and separated it from its Otter Controls parent, starting a long feud between the two companies and a long-running legal battle that was not to be resolved until 1995. In 1981, Castleton Thermostats was reincorporated as an independent company, Strix, from the Latin word for "screeching owl." The owl was also incorporated into the new company's logo. With assistance from the Isle of Man government, which helped the company build a new plant in Port Erin, Strix launched a new generation of vapourstats, the C-series, the first integrated control and element system that featured an automatic shutoff switch. The C-series helped the young company get on its feet, and by 1984 Strix was posting sales of £1 million.

New Era of Growth in the 1980s

The year 1984 saw the arrival of Edwin Davies, an Isle of Man native, who was to guide the company to the world leadership of its niche market. Davies quickly identified the C-series kettle thermostat as Strix's core strength. As Davies told the Financial Times: "Taylor was an inventor. The opportunity I saw was this mass market for boiling water. Everybody does it. With the increasing use of electrical energy and a global population of 5 billion, it was a growing area."

As Davies, who became part owner of the company and later its chairman, steered Strix's manufacturing and distribution, Taylor continued to improve on the kettle control design, releasing the R-series, which featured an immersed element, in 1985. The safety features of the Strix controls found a ready market in the United Kingdom and other tea-drinking countries that, unlike their North American counterparts, had long used electric kettles for heating water.

The launch of the P-series in 1987 proved a new milestone. Featuring a patented cordless technology, the P-series was not only easier to use but also provided additional safety features--not the least of which was the absence of a cord, the pulling of which had been the cause of a great number of accidents in the past. Growing numbers of kettle manufacturers began to abandon their own controls technology in favor of the Strix control. By 1988, Strix had sold its ten millionth control and had become the world leader in kettle controls. By 1990, the company's sales had topped £5 million. Supporting this growth was the opening of a new factory, in Ramsey, in 1989, while the company moved to a new headquarters facility to Castletown. In that same year, Strix opened a subsidiary in Hong Kong as an entry into the potentially vast Asian market.

The 1990s, however, were to see the company's strongest growth. One factor behind the company's expansion was the development of new lines of more design-conscious plastic kettles, which incorporated special safety features developed by Strix. Whereas consumers had previously kept the same kettle for many years, the newer designs encouraged consumers to replace their kettles more frequently.

In 1990, Strix acquired Malew Engineering, based on the Isle of Man, adding its production capacity for the development of new products. The company then bought Oak Industries, of South Africa, which was renamed Strix South Africa. In 1992, Strix moved into Australia and New Zealand, creating a new subsidiary, Striz ANZ, based in Melbourne. That year, Strix built itself a new headquarters that doubled as a research and development center, in Ronaldsway. That building was officially opened in 1993; at the same time, Strix celebrated its 50 millionth control.

The continued sales gains made by Strix's kettle controls led the company to expand the Malew plant in 1993. The following year, Strix made its first entry into the North American market, setting up a new subsidiary in Chicago. By then, Strix had succeeded in boosting its share of the worldwide market, capturing some 70 percent of all sales of kettle controls. However, the company was once again straining the limits of its production capacity. Unable to find enough employees on the Isle of Man, Strix opened a new subsidiary and plant in Chester, Derbyshire, in England in 1995, in time to celebrate its 100 millionth control. The company later transferred its head sales office to the Chester site.

International Growth at the Turn of the Century

Strix's sales had been building strongly through the first half of the 1990s, topping £30 million in 1995. A strong factor in the company's growth was its success in reaching Asian markets, where greater numbers of consumers were switching to electric appliances--ranging from tea kettles to rice cookers to cordless irons--all of which required controls technology. In 1997, with its domestic manufacturing facilities straining to meet the rise in demand, Strix opened a new factory in Chuangzhou, China, that was to serve as the base for its growth in the region.

The new facility enabled the company to double its production, and Strix celebrated production of its 200th million control in 1998. Part of the company's success was the launch of a new series of cordless controls, the U-series, released in 1996, which featured under-floor heating technology and an innovative 360-degree connector base. By then, Strix had been officially recognized for its design technology and had received a number of awards, including the Queen's Award for Export Achievement and the Manufacturing Excellence Award.

Strix remained focused on the kettle controls market until the late 1990s, when it began extending its expertise into other potential markets. One of these was the growing market for heated flooring, which seemed a natural extension of the company's existing technology. Also in 1997, Strix launched its first controls designed for use in thick film heating applications, opening a variety of potential new markets such as water heaters and other large and small appliances. This technology also enabled the company to begin producing covered elements for its kettle controls, thereby opening new markets in France and Germany, which had long avoided electric kettles because of the difficulty cleaning the build-up on exposed elements. Strix opened a new subsidiary, Strix Europe, in Brussels, to support its European growth. Another subsidiary opened in 1997, in Moscow, where the company adapted its controls technology for a range of samovars.

Whereas the North American market continued to prefer stove-top kettles, Strix hoped to find a market there with the release of the U30 series in 1999, designed to be adapted to hot pots in North America and to be used for such products as egg boilers, mini jug kettles, and other appliances in the European markets and elsewhere. Other potential product applications for the company's controls included deep-fat fryers, water distilling systems, and rice cookers.

John Taylor retired in 1999, and Edwin Davies took over as the company's chairman. The following year, Strix agreed to sell 40 percent of its shares--previously Davies had held 60 percent and Taylor 40 percent--to investment bank HSBC, for £50 million. The sale, which included the possible sale of more of Strix's shares at a future date, raised speculation that Strix might be preparing a public offering early in the new century. Davies and Taylor nonetheless retained majority control of the company.

The HSBC purchase was also seen as providing crucial capital for Strix's entry into a new important category--that of coffee makers, a market which could potentially double Strix's sales. As Davies told the Financial Times at the time of the HSBC purchase, "We believe we are in a strong position to break into this field because of the holistic approach we take to the business of boiling water."

As Strix celebrated its 50th anniversary in 2001, the company continued to be honored for its growth and product innovation, including winning the Queen's Award for Enterprise: Innovation in 2000. In 2002, Strix was honored yet again, with the Queen's Award for Enterprise: International Trade. By then, too, Strix appeared to be making progress with its plans to enter the market for coffee-maker controls as well. In February 2002, the company joined with Italian manufacturer Bialetti Industries, maker of the famed eight-sided "Moka" coffee pot, to launch an electric Moka pot incorporating a Strix control. Strix hoped to sell as many as three million of the new controls per year by 2005, added some 10 percent to its sales.

Strix had grown into a truly international company--some 97 percent of its sales came from outside of the British Isles, and more than 90 percent from outside of the United Kingdom. The company had successfully implanted itself in the rapidly growing Asian markets and had succeeded in maintaining its worldwide leadership, holding more than 70 percent of the worldwide market for kettle controls. With a firm grip on its patents--and a reputation for fiercely fighting counterfeits--Strix was ready to take on new markets in the new century.

Principal Subsidiaries: Strix Asia (Hong Kong); Strix Russia; Strix Europe (Brussels); Strix South Africa; Strix AZN (Australia); Strix China; Strix (UK) Ltd.

Principal Competitors: Otter Controls Ltd.

Chronology

• Key Dates:
• 1946: Erik Taylor, inventor of a thermostat control, sets up Otter Controls Ltd. in Buxton, Derbyshire, England.
• 1951: Taylor opens a subsidiary, Castletown Thermostats, on the Isle of Man.
• 1957: The company receives its first large-scale order for electric-blanket thermostat controls.
• 1959: Erik Taylor's son John joins the company.
• 1971: John Taylor becomes chairman of Otter Controls after his father's death.
• 1973: Castletown builds a new facility to manufacture and test a new generation of kettle controls, called "vapourstats."
• 1977: John Taylor becomes the director of Castletown.
• 1979: Taylor takes over Castletown as chairman and separates from Otter Controls.
• 1981: The company adopts a new name, Strix Ltd., and launches the first of its C-series electric kettle controls.
• 1984: Edwin Davies joins the company and later become majority owner and chairman.
• 1990: The company acquries Malew Engineering on the Isle of Man and Oak Industries in South Africa and sets up Strix AZN in Melbourne, Australia.
• 1994: Strix sets up a sales office in Chicago.
• 1997: The company opens a manufacturing plant in Chuangzhou, China and sets up sales subsidiaries in Brussels and Moscow.
• 2000: HSBC bank buys a 40 percent interest in Strix, and the company prepares to enter coffee-maker control market.
• 2002: The first electric Moka coffee maker featuring a Strix control system is launched.