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Textron Inc.

Company type	Public
Traded as	NYSE: TXT S&P 500 Component
Industry	Conglomerate
Founded	1923
Headquarters	Providence, Rhode Island, USA
Key people	Scott C. Donnelly (Chairman, CEO, President and Member of Management Committee)
Revenue	US$ 12.237 billion (2012)
Operating income	US$ 581 million (2012)
Net income	US$ 242 million (2011)
Total assets	US$ 10.711 billion (2012)
Total equity	US$ 2.991 billion (2012)
Number of employees	33,000 (2013)
Website	www.textron.com

Textron (NYSE: TXT) is an American industrial conglomerate that includes Bell Helicopter, Cessna Aircraft, Greenlee, E-Z-GO, Jacobsen, Kautex and Textron Systems. It was founded by Royal Little in 1923 as the Special Yarns Company, and is headquartered at the Textron Tower in Providence, Rhode Island.

With total revenues of $12.237 billion, and approximately 33,000 employees in 25 countries, Textron is currently ranked 225th in the 2013 issue of the Fortune 500, a list that ranks the largest companies in the United States.

History

Early history

Royal Little, a Harvard graduate and veteran of World War I, founded the Special Yarns Company in 1923 with $10,000. With over 19 million spindles, Special Yarns Company saw early success in the niche market of synthetic yarns.

In 1928 Special Yarns acquired Franklin Process Company, a cotton yarn processing company in Rhode Island. This was the first merger of what would ultimately become Textron, the first multi-industry company. By 1930, Special Yarns sold about 4% of all rayon used in the United States, and the company changed its name to Atlantic Rayon. In 1939, the Lawrence Manufacturing Company was merged.

The Board of Directors authorized the investment of $100,000 to form the Atlantic Parachute Corp in 1942, which manufactured parachutes for the U.S. Government. This marked a significant change for the company—from a small yarn dyeing and throwing business to a major manufacturer of finished products. Sales tripled in the first two years, as did its employees, which increased from 900 to 3,000.

By this time, silk was no longer available in enough supply to keep women in hosiery. Now markets turned to the same synthetics used to produce parachutes for the war fighting men abroad. Unfortunately, rayon made for a baggy stocking, and a bare-legged fashion began. Little remained undaunted, however, and used these machines to produce blouses, men's underwear, bedspreads, and draperies. But with these new products came the need for a new name. After considering "Senorita Creations," "Textron" (“Tex" for "textiles," and "tron" for "synthetics") became the official name. To support the growing business, Little purchased several additional textile mills. In 1947 Textron was listed on the New York Stock Exchange for the first time under the ticker symbol TXT.

Diversification

Little began to realize in 1952 the inevitable highs and lows of a company focused on one market. He realized that by diversifying the product offerings of Textron, he could balance the fluctuation of any single market. By purchasing relatively small companies in a variety of industries, he reasoned, he could also avoid any concerns by the Federal Trade Commission that he was forming a monopoly.

Textron’s first purchase outside the textile industry was Burkhart Manufacturing, which produced cushion materials for the automotive industry. Next came Dalmo Victor Company, which produced radar antennas. Today this group is part of the Bell business segment, and produces electromagnetic defense systems for aircraft.

From these early days, acquired companies were taken on as divisions, not subsidiaries. This eliminated the boards of directors for these companies, and allowed revenue generated by the divisions to flow directly to Textron. In 1955 Textron acquired American Woolen, significantly increasing its net worth and stock price, and, in just a few months, Ryan Industries (maker of mechanical and electromechanical devices such as a pistol that fired triangular bullets), Homelite (chain saws, power generators, blowers, and pumps), Camcar Screw and Manufacturing Company, Coquille Plywood, and Kordite Company (plastic clotheslines, garment bags, and shower curtains).

A rather unusual acquisition for Textron came in 1956 when it purchased the SS LaGuardia, an 18,500-ton troop ship that they refitted as a cruise ship (and rechristened it the "Leilani"). The maiden voyage of the new ship was a disaster, however, because of inadequate plumbing and food poisoning. In 1958 Textron abandoned the ship to the Maritime Commission.

In 1956 Rupert C. Thompson, Jr., who had been director and chairman of the executive committee and head of Textron’s non-textile operations, was named to succeed Royal Little as president. Little remained CEO and chairman of the board.

Textron continued to acquire small companies. In 1960, however, Little purchased Bell Aircraft Company for $32 million in cash. The purchase brought all of Bell’s real estate and three divisions: Bell Helicopter of Fort Worth, Texas (manufacturer of military and commercial helicopters), Bell Aerosystems of Buffalo, New York (designer and producer of rocket engines, inertial navigation systems, space components, automatic landing systems, and avionics devices), and Hydraulic Research and Manufacturing of Burbank, California (producer of electro-hydraulic valves and servo control systems). This division came to be known as Bell Aerospace.

Already a well-known name in the aviation industry, Bell became a household name with the success of the Bell 47 helicopter, which featured in popular films such as MASH. During the Vietnam War, Bell produced more than 10,000 UH-1 Hueys. Meanwhile, Bell Aerospace helped power the Gemini spacecraft, and produced the post boost propulsion system for the Minuteman III intercontinental ballistic missile.

The end of Little's tenure

Throughout the 1960s and 1970s, Textron branched into a wide variety of industries: photocopy paper, pharmaceuticals, fiberglass boats, men’s dress shoes, crystal, and even golf carts. Textron purchased E-Z-GO Car Corporation, the oldest golf car manufacturer in the business, in part because of Little’s devotion to the game.

In 1961 Royal Little retired and severed his official ties to Textron. Little remained active in the business world, setting up a small investment company called Narragansett Capital, and writing articles for Fortune. Little died in 1990.

Leadership under Thompson

Textron’s 1960 annual report described “new patterns for growth” for the company. To this end, Thompson divided all of Textron’s holdings into specific divisions: Automotive, Consumer, Defense, Industrial, and Textile. Over time, these divisions were rearranged as the Automotive Group took the name Industrial, and the Industrial Group became the Metal Product Group. The Textile Group soon disappeared entirely, and Defense became Aerospace. In the 1970s, the first non-manufacturing group was added: the Creative Capital Group. In 1963 Textron sold its last textile group.

A further significant change came in the 1960s with the addition of the Employee Stock Savings Plan. Now employees could contribute up to 10% of their base salary to the Savings Plan, and Textron would contribute an amount equal to one-half of these payments. By 1978, employee-owned stock represented 17% of Textron’s common stock.

Bill Miller

Following Little’s example, Thompson retired at age 63 and turned leadership of the company over to company president Bill Miller. Acquisitions under Miller included snowmobile maker Polaris, Australian card maker Valentine Holdings, and the venture capital firm American Research and Development Corporation. Miller's tenure at Textron ended in 1977, when President Jimmy Carter nominated him to be Chairman of the Federal Reserve. He later served as Secretary of the Treasury for President Carter. Joseph Collinson succeeded Miller as Textron's chairman and CEO.

From the 1960s through the 1980s, Textron's management philosophy remained relatively constant. The corporate office, for the most part, maintained oversight of operational issues. During this time business units operated autonomously and corporate staff was small. Oversight by the corporate center was handled by a rotating group of corporate officers called Group Vice Presidents. In 1979, Collinson retired, and he was succeeded by Robert P. Straetz as chairman and CEO. Beverly F. Dolan, founder and former president of E-Z-GO, served as president. By the end of 1979, revenues had risen to $3.3 billion.

Avco acquisition

Textron acquired Avco Corporation of Connecticut, a conglomerate of almost equal size with pre-acquisition revenue of $2.9 billion in December 1985. Created by the Embry-Riddle Company as a holding company to acquire airlines, Avco held interests in more than 90 companies, including American Airways, predecessor of American Airlines. Four years later, Dolan recruited James F. Hardymon as Textron's new president after a 28-year career at Emerson Electric, where he had most recently served as president and chief operating officer. One of Hardymon’s first moves was the acquisition of the Cessna Aircraft Company, a leader in light and medium-sized commercial business jets.

Now Hardymon needed to increase corporate oversight of operations. He brought in Lewis B. Campbell, an executive from General Motors, as executive vice president and chief operating officer in 1992. In 1994, Campbell was elected president.

From 1989 to 1997, Hardymon continued his goal to maintain consistent growth for the company, decreasing military contracts, insurance, and consumer products, and divesting “non-core” businesses. Meanwhile, he strengthened the Aircraft, Automotive, Industrial, and Finance divisions.

Lewis B. Campbell, Former CEO of Textron (1992–2010)

In 1998 Campbell was appointed chief executive officer. Campbell divested Avco Financial Services. Beginning in 2000, Campbell led a company-wide restructuring program to increase efficiency of operations; the consolidation of several manufacturing facilities; outsourcing of non-core production; and divestiture of non-core units.

Under Campbell's direction Textron today functions as what it calls a networked enterprise. Departing from the old model of a holding company that simply acquires businesses and leaves their operations unchanged, the networked enterprise helps facilitate the operation of strong, unique brands. This means that while Bell Helicopter and E-Z-GO serve very different markets with distinct brands and customer bases, they share many of the same business infrastructure resources such as information technology infrastructure and employee benefits.

While the company lost 75% of its value in the first ten years of Campbell's leadership, he managed to take home over $120 million in compensation. His salary in 2008 was $25 million, making him the highest paid executive of a conglomerate. Campbell managed to sell over $40 million in TXT stock in April and May 2008, at prices over $60 per share. Some shareholders have questioned whether it is a good use of shareholder dollars to pay for the personal lifestyle choice of the CEO to live in one state and work in another.

Scott C. Donnelly, CEO, 2010–present

Scott C. Donnelly is chairman, president and chief executive officer of Textron Inc. Donnelly joined Textron in July 2008 as executive vice president and chief operating officer and was promoted to president and chief operating officer in January 2009. He became CEO in December 2009 and was elected chairman of the board effective September 1, 2010. In addition, Donnelly recently became a Director of Medtronic, Inc. on July 1, 2013.

Donnelly has made a positive impact not only on the revenues of Textron but also the stock price. In 2008, a single share of textron was priced at $15.37. After four years of Donnelly's leadership, the business saw its stock price rise up to $24.12 at the end of 2012. This marked an increase in stock price of over 50%, directly reflecting on the growing value of the business with Donnelly as CEO. The total revenues for Textron in 2009 amounted to about $10.5 billion but three years later rose to $12.237 billion, a solid increase under Donnelly's leadership. Donnelly also increased the ROIC (return on invested capital) from, 5.5% in 2009 to 17.5% at the end of 2012.

Donnelly was previously president and CEO for General Electric (GE) Aviation, a producer of large and small jet engines for commercial and military aircraft and a major provider of flight management, actuation and power management systems. Prior to that, he served as senior vice president and director of GE Global Research, the world's largest industrial research organization.

Donnelly received a B.S. degree in electrical and computer engineering from the University of Colorado at Boulder, where he serves on its Engineering Advisory Committee.

Aviation and defense

Bell Helicopter

Founded in July, 1935 by Larry Bell as Bell Aircraft Corporation, Bell was the first to obtain certification for a commercial helicopter. Over its history, Bell has delivered more than 35,000 aircraft to customers around the world. Headquartered in Fort Worth, Texas, Bell Helicopter has additional plants in Amarillo, Texas and Mirabel, Canada. Bell maintain's key logistics supply and service centers in Europe, Canada, and Singapore as well as in the United States. The company initially specialized in the design and production of fighter aircraft, first the XFM-1 Airacuda, a twin-engine fighter to oppose attacking bombers, and the P-39 Airacobra. The company also designed and built the first P-59 Airacomet, the first American jet fighter, and the P-63 Kingcobra, the successor to the P-39.

Cessna Aircraft Company

Cessna is the world's leading general aviation company. Today, Cessna has two principal lines of business: aircraft sales and aftermarket services. Aircraft sales include Citation business jets, Caravan single-engine utility turboprops, single-engine piston aircraft and lift solutions by CitationAir. Aftermarket services include parts, maintenance, inspection and repair services. In 2012, Cessna delivered 571 aircraft, including 181 Citation business jets, and reported revenues of $3.111 billion. Cessna currently produces business jets,caravan turboprops, and single engine aircraft.

Textron Systems

Textron Systems is an aerospace and defense development and manufacturing firm headquartered in Wilmington, Massachusetts, U.S.A. The company is a business unit of Textron Inc., which reported 2012 annual sales in the Textron Systems segment as $1.7 billion.

Textron Systems has several operating units, including AAI Corporation (Hunt Valley, Maryland), Lycoming Engines (Williamsport, Pennsylvania), Overwatch Geospatial Solutions (Sterling, Virginia), Overwatch Information Solutions (Austin, Texas), Textron Defense Systems (Wilmington, Massachusetts) and Textron Marine  & Land Systems (Slidell, Louisiana). Altogether, Textron Systems employs 5,600 people.

AAI Corporation's products and services include unmanned aircraft and ground control technologies; training and simulation systems; automated aerospace test and maintenance equipment; armament systems; and logistical, engineering, supply chain and operational support services. Lycoming Engines specializes in the engineering, manufacture, service and support of piston aircraft engines. Overwatch Geospatial Solutions (OGS) is the geospatial-intelligence solution of choice within 26 countries around the globe, it's flagship products of RemoteView and ELT5500Pro are used across a broad spectrum of industries including: military and defense, border security, disaster relief, civil engineering, ecosystem monitoring, city planning, environmental engineering, oil and gas exploration, real estate, utility companies and more. Overwatch Information Solutions (OIS) is a provider of integrated intelligence software services, as well as satellite communications systems for the U.S. and international defense and intelligence communities. The company's products are utilized by counter-terrorism analysts, warfighters and first responders for intelligence integration, analysis and exploitation. Textron Defense Systems is a provider of "smart" weapons; airborne and ground-based sensors and surveillance systems; and protection systems for the defense, aerospace, and homeland security communities. The company also makes the CBU-97 Sensor Fuzed Weapon, a type of cluster bomb, which it sells the U.S. Air Force and the Saudi Air Force.

Other industries

E-Z-GO

E-Z-Go is a designer and manufacturer of light transportation vehicles for golf courses, consumers and government, as well as commercial and industrial users. Products include electric and internal combustion golf cars and multipurpose utility vehicles under the E-Z-GO, Cushman, and Bad Boy Buggy brands.

E-Z-GO creates new products, particularly in growth areas such as electrically powered 4x4 vehicles and commercial work/utility vehicles. E-Z-Go introduced the new PowerFilm Solar Panel that attaches to golf cart canopies and can reduce energy costs by up to 20%.

Greenlee

Greenlee Textron is an industrial and electrical tool company headquartered in Rockford, Illinois, USA. It was founded in 1862 by brothers Robert and Ralph Greenlee to manufacture their invention, a drill surrounded by four chisel blades, used in making the pockets for a mortise and tenon joint, for the furniture industry in Rockford. This device is still used in cabinetmaking. The brothers later diversified into a variety of hand woodworking tools as well as machinery for making wooden barrels. The company was acquired by Textron in 1986.

Today as a part of textron, Greenlee produces a wide variety of wire and cable installation tools that are used in the electrical, telecom, industrial, plumbing and voice/data/industry fields. Greenlee is the most respected and trusted source of professional grade tools for wire and cable installation.

Jacobsen

Textron purchased Jacobsen Manufacturing around 1975, and continued to produce Jacobsen garden tractors into the 1990s. Today Jacobsen offers turf-care products for golf courses, sporting venues, airports and municipalities, as well as commercial and industrial users. Products include professional turf-care maintenance equipment and specialized turf-care vehicles. Like E-Z-GO, Jacobsen is also working to expand its global presence in Asia and Latin America.

Jacobson's newest products include the Eclipse 322 three-wheel-drive riding greens mower, the Fairway range products and Trueset cutting unit. With the help of these new products Jacobson's sales were rose nearly 13% in 2012.

Kautex

Kautex is a leading global system supplier to the automotive industry. The company develops and produces plastic fuel systems, selective catalytic reduction systems (SCR), automotive vision systems(windshield and headlamp washser systems), engine camshafts and blow-molded industrial packaging products. Kautex is most involved in the US and Europe which combine for 75% of total revenues.

Kautex has contracts with many with many prominent brands in the auto-industry, including Audi, BMW, and Jaguar. Kautex operates in Asia, Europe, and North America.

References

1. ^ "More On Textron; Profile". Yahoo! Finance. December 31, 2011. Retrieved July 20, 2012.
2. ^ "10-K Form FY11". Morningstar. February 23, 2012. Retrieved July 19, 2012.
3. Michael Brush, “The Sky’s No Limit for CEO Perks,” MSN Money (moneycentral.msn.com), October 17, 2007, citing Paul Hodgson, Up, Up, and Away: Personal Use of the Corporate Jet, The Corporate Library, September 4, 2007.
4. http://www.textron.com/about/leadership/corp-management/bios/donnelly-scott.php
5. http://www.bellhelicopter.com/Company/AboutBell/History/History.html
6. http://eric2.textron.com/Pages/Article.aspx?asset_id=1192310154038
7. http://news.cision.com/textron-systems/r/remoteview-4-geospatial-intelligence-software-improves-analysts--productivity,c9482321
8. http://www.fool.com/investing/general/2013/08/21/textrons-cluster-bombs-are-anything-but-ordinary.aspx
9. Will, Oscar H. (2009). Garden Tractors: Deere, Cub Cadet, Wheel Horse, and All the Rest, 1930s to Current. Voyageur Press. p. 55. ISBN 978-1-61673-161-8. Retrieved 2013-10-27. {{cite book}}: Invalid |ref=harv (help)

• Textron Inc. (2012) Retrieved 8 July 2013
• Textron Inc. homepage
• Textron Inc. history

Further reading

• 2008 USA Today Q&A with CEO Lewis Campbell about Textron's devotion to Six Sigma

External links

• Textron Official site

• Companies listed on the New York Stock Exchange
• Companies established in 1923
• Textron
• Textile mills in the United States
• Companies based in Providence, Rhode Island