Thomas & Betts Corp. Business Information, Profile, and History

History of Thomas & Betts Corp.

Thomas & Betts Corp. (T&B) is a global manufacturer of electrical and electronic connectors, components, and systems. As the computer age has created an ever-growing need for new electrical and electronic products, and as international markets have opened up, the company has diversified its products worldwide. Its facilities and marketing activities are concentrated in North America, Europe, and the Far East, and its diverse product line includes fittings and accessories for electrical raceways, crimp and mechanical connectors for small wires and power cables, wire fastening devices and markers, insulation products, fiber optic connectors, networking interconnection systems for voice and data communications, ceramic chip capacitors, flat cables, connectors, and accessories for electronic applications. These and other products are used in a wide array of markets, including automobile manufacturing, telecommunications, residential construction, and power utilities. Within these markets, the company serves the maintenance and repair segments, as well as original equipment manufacturers (OEMs).

From its earliest years in business, T&B demonstrated an ability to transform electrically charged business ideas into readily marketable products. In 1898, Robert M. Thomas and Hobart D. Betts, both engineering graduates from Princeton University, established an agency in New York City for selling electrical conduit. Within a year, they were joined by Adnah McMurtrie, another engineer whose in-house designs added to the fledgling agency's list of salable products. As early as 1906, T&B's innovative products changed the electric industry. The Erickson coupling, for example, permitted electricians to join two conduits without having to rotate either, or to separate conduit without disassembling the whole conduit run. These early patents set industry standards and were still widely used in the 1990s. Such products made for healthy sales around the turn of the century.

To push their young firm's growth up to the next level, however, the three colleagues realized that they had to begin manufacturing the goods they designed and sold. To that end, in 1912 they purchased the Standard Electric Fittings Company of Stamford, Connecticut. The following year, they solicited the expertise of Robert Thomas's nephew, George C. Thomas, Jr., who pushed the company's manufacturing capabilities to unprecedented levels. With design, manufacturing, and sales efforts all advancing at a healthy rate by 1917, it was time to centralize resources and consolidate operations. That year, Thomas & Betts sales agency and the Standard Electric Fittings Company were merged to form one, new corporation, Thomas & Betts Co. Central headquarters were established on Butler Street in Elizabeth, New Jersey, a site that remained T&B's largest manufacturing facility into the 1990s.

Following its incorporation, T&B entered a period of diversification and geographic expansion that would last uninterrupted until the outbreak of World War II. In 1928, G. C. Thomas, Jr. rose to the position of chief executive officer, a tribute the importance of the manufacturing initiatives he had managed over the previous decade and would continue to expand into the 1970s. Under Thomas Jr.'s leadership, T&B also pushed into broader markets, founding Thomas & Betts Limited in order to sell products in Canada.

The onset of World War II forced T&B into product development that it may have otherwise neglected. The military's drive to reduce weight in aircraft, for example, spurred the firm's development of the first successful compression lugs for connecting aluminum conductors. This breakthrough led to the development of a complete line of color-coded compression connectors, as well as hand and hydraulic tools and dies. After the war, these and other innovations served numerous civilian applications, adding significantly to the company's product line.

Product changes were accompanied by organizational changes as the company entered the 1960s. T&B became a public company in 1959 and was first listed on the New York Stocks Exchange in 1962. Meanwhile, in 1960, Thomas Jr. Jr. retired as CEO and was replaced by Nestor J. MacDonald, the former vice-president of marketing.

Early in MacDonald's tenure, T&B continued to stride assiduously into new, international markets. Building on its existent Canadian presence, a new international division was established in 1962. By 1963, the company emphasizing closer field contact with licensees in Great Britain, Europe, and Mexico. In order to speed up the development of European markets, the company also established a new European subsidiary, Thomas & Betts of Belgium, S.A. in June of that year. By 1983, a Luxembourg facility had been established to produce electronic connectors for even broader European markets. Moreover, Ouest Electronic Connecteurs, a French maker of electronic connectors and custom components of which T&B had acquired 80 percent in 1982, provided additional R&D and manufacturing capabilities in Europe. Other international points of contact included an Australian location to supply the South Pacific.

While delving into foreign markets in the 1960s and 1970s, T&B also began to push aggressively beyond its traditional expertise in electric supplies and into electronic components. Its initial forays in that direction were bolstered by the purchase of Arthur Ansley Manufacturing Company in 1966 and Digital Sensors, Inc. (DSI) in 1968. After J. David Parkinson--former head of the company's electrical business--succeeded MacDonald as CEO in 1974, electronic product development was stepped up yet again. In 1975, T&B merged its Ansley and DSI divisions into Ansley Electronics Division (subsequently renamed Thomas & Betts electronics division in 1981).

Progress in electronics built on a solid foundation of innovation that had already distinguished T&B as a market leader in the electrical market. Through the 1980s, many of the company's past developments were still considered milestones in the industry at large: conduit fitting with integrally insulated throats in 1954; new cable ties and straps in 1959; use of steel in rigid conduit fittings line in 1968; new designs in floor boxes in 1970; heat shrinkable insulating covers and caps in 1974; and a line of flat conductor cable for under carpet wiring systems in 1980. That list was supplemented by a growing of electronic interconnection products for professionals in electronic engineering, telecommunications, and automotive electronics. Some of T&B's best performers included: the FLEXPAC Termination system, consisting of flexible conductor cables, jumpers, and circuits; connectors for leadless chip carriers, designed for multilayer printed circuit boards in advanced computer systems; and dual in-line package (DIP) sockets for interconnecting integrated circuits (ICs).

Through the late 1980s, T&B continued to aggressively seek out new markets. The firm began a series of strategic acquisition under the guidance of T. Kevin Dunnigan--a seasoned veteran who had progressed from Canadian sales in the 1960s to president and COO in 1980, and finally to CEO in 1985. In 1987, the company acquired Vitramon, Inc., a manufacturer of surface-mount ceramic chip capacitors (an integral part of the power management process in all electronic systems). Vitramon's surface-mount technology permitted direct soldering of the chips onto printed circuit boards, thereby simplifying the manufacturing process and saving space. This acquisition was quickly followed by the 1988 acquisition of Nevada Western Supply Co., specializing in voice and data wiring products that could be easily and cost-effectively installed using ordinary telephone wiring. Both these acquisitions were a step away from T&B's core line of electrical and electronic connectors, and both were intended to capitalize on new demands related to computer and communications networking.

The 1989 acquisition of Holmberg Electronics Corp., a manufacturer of electronic connectors, was more in line with T&B's historical field of specialty. The effect of that acquisition on core business was soon eclipsed, however, by the largest acquisition in the company's history. On January 2, 1992, T&B acquired FL Industries Holdings, Inc., known in the electrical industry as American Electric. The corporation's electrical business and American Electric were merged into a new Thomas & Betts Electrical Division, which, along with the existing corporate headquarters, was relocated to Memphis, Tennessee, on the site of the former American Electric. By the first quarter of 1994, T&B's Electronics Division headquarters also moved to Memphis, thereby joining the newly energized core.

Critical to that core was the competitive edge that American Electric would contribute to T&B. Founded in 1958, American Electric had undergone a series of transformations and buyouts. In 1968, when American Electric still focused on its original business of manufacturing lighting and related products to the utility market, it was acquired by ITT Corp. After becoming the nation's largest street light manufacturer, American Electric was sold to Forstmann-Little, a leveraged buyout firm, in June 1985. Under that management, the company began a rapid chain of acquisitions, including the Electrical Products Division of Midland-Ross Corp., the Lighting Division of North American Phillips, Anchor Metals, and American Pole. With such a dynamic range of constitutive parts, American Electric was better suited to give T&B "a broader market presence, and [to] function more effectively as a single global unit," as chairperson and CEO Dunnigan remarked in the 1993 letter to shareholders.

T&G's acquisition of American Electric triggered a series of other strategic moves and organizational changes designed to consolidate operations and optimize efficiency of the larger company. On January 1, 1994, Clyde R. Moore became president and COO. He brought to the post experience as previous president of Thomas & Betts Electrical Division and president of American Electric before the acquisition. Six months later, T&B sold Vitramon--the manufacturer of ceramic chip capacitors it had acquired in 1987&mdashø Vishay Intertechnology, Inc. The move represented an effort to focus on T&B's core businesses of electrical and electronic connectors, components, and systems. In continuation of that process, on September 16, 1994 the company announced pre-tax charge of approximately $90 million to cover the costs for various initiatives to "optimize operations," according to a T&B press release on that date. According to Dunnigan, "the actions covered by these charges are expected to result in savings of approximately $8 million in 1995 and over $20 million annually in subsequent years."

In the effort to optimize operations, one of the first areas of concentration was quality control. Starting in 1987, the firm launched its Total Quality Excellence (TQE) program, involving all employees in an ongoing effort to improve product quality and reduce costs. T&B began implementing statistical quality control and just-in-time manufacturing techniques in all its plants, as well as computer-aided design and manufacturing. The program's ultimate goal was to provide "each customer with the right product, on time delivery, zero defects, and competitive pricing," according to Jim Dailey, vice-president of marketing for the T&B electrical division, in a July 1990 Industrial Distribution article.

Declaring in its promotional literature that "the era of electronic commerce has arrived," T&B also dedicated significant resources to marketing strategies employing electronic data interchange with its customers. In an effort to optimize customer service for its electrical distributors, T&B's largest single market, the company designed SIGNATURE SERVICES, a marketing package that sped up the order entry process and reduced paperwork for shipping billing. Taking that system a step further in 1993, T&B implemented DISTRIBUTOR/MANUFACTURER INTEGRATION, an interactive system that made inventory management a responsibility--and ideally a simple one&mdash⁄ared by both the distributor and the company. A similar service, Easy Access, was designed for electronics customers. Distributors and buying manufacturers in that market could check T&B's inventory and pricing, the status of their orders, while corresponding instantaneously via electronic mail. These state-of-the-art systems represented important steps toward reducing costs while increasing direct contact with market trends via the company's customers.

The combination of such interactive customer support systems and its diversifying product line set the stage for continued expansion into the twenty-first century. The direction of such expansion would depend in large part on the directions of the electric and electrical component markets. Still, T&B was positioned to gain from a wide array of possible scenarios. With tens of thousands of components, accessories, and sub-assemblies in its inventory, the company offered useful products wherever wires and other electrical conductors were used. In the early 1990s, the firm gained a Fortune 500 listing, and, in April 1994, Fortune magazine ranked T&B 351 in sales and 220 in profits against the largest U.S. industrial corporations.

Principal Subsidiaries: FL Industries Holdings, Inc.; Quelcor, Inc.; Thomas & Betts Caribe, Inc.; Thomas & Betts FSC, Inc. (U.S. Virgin Islands); Thomas & Betts Industries Co., Ltd. (Taiwan, R.O.C.); Thomas & Betts International, Inc.