IMI plc

1918–1992

IMI plc--formed in 1962 under the name Imperial Metal Industries Ltd., a wholly owned subsidiary of British conglomerate Imperial Chemical Industries plc (ICI)--is a major international manufacturer of advanced and high technology products in four areas: Building Products, Drinks Dispense, Fluid Power, and Engineering. The company has more than 100 subsidiaries with major plants in Great Britain, North and South America, continental Europe, and Australia. IMI sales rebounded to cross the £1 billion pound mark in 1992, but the company's profits declined 7 percent from 1991 to 1992, to £68 million.

IMI's Building Products Group produces copper tubes and fittings, castings, hot-water cylinders, electronic controls, and heat exchangers. The Drinks Dispense Division manufactures food and beverage dispensing and cooling systems and food service equipment, as well as material handling machinery for the dairy and bakery industries. IMI's Fluid Power operations encompass the production of pneumatic systems and components, cylinders, miniature valves, vacuum equipment, and specialized computer software. The Special Engineering group, finally, is something of a catch-all for IMI; it includes such prospective ventures as nuclear safety and aerospace equipment, minting, nickel plating, and sporting ammunition and equipment. In the early 1990s, IMI was also involved in computing and land development.

The largest company in the IMI group is Kynoch Metals, a copper processor that had been acquired by ICI in 1926. George Kynoch & Co. was founded during the mid-nineteenth century by George Kynoch as an ammunitions manufacturer. After World War I, the company merged with Nobel Industries, and from 1918 to 1926 this new entity diversified into a range of metals businesses. ICI acquired Kynoch as an afterthought; the chemicals giant was primarily interested in Nobel. Regardless of the "historical accident," as The Economist phrased it in 1966, the parent company allowed and encouraged its Metals Division to expand.

By the time IMI was transformed into a subsidiary in 1962, its primary business activities were non-ferrous metals, zip fasteners, sporting ammunition, heat exchangers, and other engineering products--a general area comprised of ICI's peripheral business activities. IMI was the only part of ICI to be set up as a separate financial entity, perhaps foreshadowing its eventual divestment.

The largest company in the IMI group is Kynoch Metals, a copper processor that had been acquired by ICI in 1926.

1965–1977

After its formation, IMI embarked on a strategy of vertical integration and horizontal diversification through the acquisition of companies that were either buyers of the group's products or whose activities were closely related to those of IMI. Significant acquisitions in the early 1960s included Yorkshire Imperial Metals and Wolverhampton Metal (Holdings) Ltd., a refiner and smelter of metal and a supplier to the group. Several subsidiaries were established by the group to develop new lines of business. IMI diversified into hot water cylinders with the 1965 purchase of Range Boilers Limited. That same year, IMI buttressed its zip fastener interests against intensifying competition from Japanese companies by merging its Lightning Zip Fasteners operations in the United Kingdom, France, West Germany, and Austria with those of the Opti Group of companies in West Germany, the Netherlands, and Great Britain to form the LF/Opti Group. IMI held 50 percent of the new company, which soon began to expand geographically.

In 1966 ICI elected to offer ten percent of IMI's shares on the open market. The move acknowledged two factors: first, that IMI's business had little to do with ICI's main focus, and second, that if IMI was to continue to expand, it would have to generate the necessary funds itself.

When Rolls-Royce, a primary customer of IMI, collapsed in 1970, IMI diversified into fluid power with the acquisition of Enots Limited in 1971 and Norgren Shipston International Limited and the United States' C.A. Norgren Co. in 1972. The purchase of two French companies, Mecafrance S.A. and Mapegaz-Remati S.A., brought IMI into production of special valves and formed the origins of IMI's Special Engineering group.

ICI sold its remaining 62 percent interest in IMI in 1977. By that time, IMI had more than 100 operating subsidiaries and employed over 32,000 people throughout the world. The company's sales topped £404 million, over one-third of which came from overseas trade.

1982–1991

During the 1980s, IMI shifted away from commodities production in favor of added value finished products. The Building Products Group evolved from IMI's Kynoch Metals core business. But instead of marketing "midstream" metals in strip, sheet, rod, or wire form, IMI moved its production "downstream" to sell finished products like tube, pipe, and fittings. IMI exited the rolled metals industry in 1990 and acquired A.W. Cash Valve, an American producer of heating and plumbing controls, in 1991.

IMI got into the business of drinks dispense through the 1982 acquisition of The Cornelius Co., a U.S. business that had participated in joint ventures with IMI in Europe. This division was promoted into a full-fledged part of IMI with several acquisitions, including MK Refrigeration Group and Cannon Conveyor Systems Inc. in 1990 and Remcor Products in 1991.

The Fluid Power division of IMI was diversified in the 1980s to include pneumatic products. The 1986 purchase of Webber Electro Components plc and the acquisition of AB Westin & Backlund's pneumatic division bolstered this segment of IMI's business.

IMI also divested several businesses over the course of this rather low-key refinement of its operations into four key groups. In 1987 the company disposed of its 60 percent interest in Anderson Greenwood (Australia) Pty., Ltd., its 50 percent share in Silverton Engineering Holdings (Pty.) Ltd., and its share of Mapegaz-Remati S.A. The company received £13.5 million cash for its sale of IMI Yorkshire Imperial Plastics Ltd. the following year and disposed of IMI Hayes Metals Ltd. as well.

1989–1992

IMI's sales peaked in 1989 at £1.08 billion. At that time, 47 percent of the company's sales were concentrated in the United Kingdom, and 27 percent came from the rest of Europe. A global recession has enforced a steady decline in the company's sales and profits since that year. The Building Products group was hit especially hard; in 1992, its sales declined for the third consecutive year, from £404 million in 1989 to £305 million. The division's profit margin dropped two points to seven percent. IMI's Special Engineering profits also declined dramatically, from 10.7 percent in 1989 to 5.1 percent in 1992.

IMI's Drinks Dispense division, however, had a record year in 1992, with profits increasing by 25 percent to £28.6 million on sales of £230 million. Much of the profits growth resulted from increased market share, productivity improvements, and a full year of operations for the division's newest addition, Remcor. Fluid Power recovered slightly from a 1991 dip in sales, but its profits were cut in half from 16.8 percent in 1989 to 8.1 percent in 1992. IMI anticipated and prepared for a recovery from the early 1990s recession by increasing its research and development budget and capital expenditures. The company also worked to increase its overseas operations, especially in the United States, where a slow but steady recovery was underway.