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| Company type | Public (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.
Business segments
Bell
Cessna
Textron Systems
Textron Systems is an aerospace and defense development and manufacturing firm headquartered in Wilmington, Mass., U.S.A. The company is a business unit of Textron Inc., which reported 2009 annual sales in the Textron Systems segment as $1.9 billion.
Textron Systems has several operating units, including AAI Corporation (Hunt Valley, Maryland), Lycoming Engines (Williamsport, Pennsylvania), Overwatch (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 is a provider of integrated intelligence software solutions and 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.
Textron Marine & Land Systems designs and manufactures advanced marine craft, surface-effect ships, armored combat vehicles, turrets, and related subsystems.
- AAI Corporation
- Lycoming Engines
- Overwatch
- Textron Defense Systems
- Textron Marine & Land Systems
- MillenWorks
Industrial
- E-Z-GO (golf cars, trams, hospitality carts, and utility vehicles)
- Greenlee (wire and cable installation tools)
- Jacobsen (professional turf care maintenance equipment)
- Kautex (plastic fuel systems)
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.
The 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.
Campbell takes over as CEO of Textron
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. Lewis Campbell has been a big proponent of Six Sigma and encourages its use throughout the company—even in its legal division.
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.
When Campbell took over the company in 1998, the shares of Textron stock (TXT) were valued over $45 per share (split adjusted price) and the company had a market capitalization of over $12 billion. The price fell to as low as $13/share in March 2003 after the economic downturn following the collapse of Internet companies and the terrorist attacks on the World Trade Center. Diminished demand for helicopters and airplanes led to layoffs at Cessna Aircraft Company and Bell Helicopter.
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.
Donnelly era, 2010 - present
On December 1, 2009, Campbell retired as CEO after a multi-year succession planning process. He was succeeded as CEO by Scott C. Donnelly. 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.
Donnelly was previously president and CEO for General Electric (GE) Aviation, the world's leading 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 and most diversified industrial research organization.
Donnelly joined GE in 1989 as manager of Electronics Design Engineering for GE's Ocean Systems Division in Syracuse, NY. He went on to serve in a variety of leadership roles for the company, including engineering management positions with then-GE division of Martin Marietta in both Australia and the United States. In 1995, he moved to GE's Industrial Control Systems business, where he held various management positions. Donnelly was named a vice president of GE in 1997, responsible for Global Technology Operations at GE Healthcare.
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.
Donnelly was named chairman of the board on September 1, 2010.
Environmental record
Textron was named one of America's Safest Companies in 2008 by Occupational Hazards magazine, a national publication for occupational safety and health professionals. The award is presented annually and recognizes companies for outstanding safety processes, health and training programs as well as a strong commitment from management and employees.
Researchers at the University of Massachusetts Amherst have identified Textron as the 60th-largest corporate producer of air pollution in the United States, with roughly 600,000 pounds of toxic chemicals released annually into the air. Major pollutants included chromium, nickel, and manganese.
Product milestones
Textron Systems has received a U.S. government award to build the first 100 kW solid-state laser.
Jacobsen turf maintenance equipment was used to maintain many of the stadiums that hosted the 2006 World Cup in Germany.
The V-22 Osprey, a revolutionary tiltrotor aircraft, received approval for full-scale production from the U.S. Department of Defense in 2005.
Cessna Aircraft Company in 2006 announced a feasibility study for a new low-cost, light-sport aircraft. As a result of the study the company announced the production of the $109,500 Cessna 162 at the AirVenture air show in Oshkosh, Wisconsin, where they sold over 700 copies of the plane in one week.
References
- ^ "More On Textron; Profile". Yahoo! Finance. December 31, 2011. Retrieved July 20, 2012.
- ^ "10-K Form FY11". Morningstar. February 23, 2012. Retrieved July 19, 2012.
- . Textron. June 26, 2013.
{{cite web}}:|access-date=requires|url=(help); Missing or empty|title=(help); Missing or empty|url=(help); Text "http://www.textron.com/about/company/index.php" ignored (help) - 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.
- "About Textron: Leadership: Biography". Retrieved June 26th, 2013.
{{cite web}}: Check date values in:|accessdate=(help) - Political Economy Research Institute Toxic 100 (Study released 11 May 2006) retrieved 17 August 2007
- Toxics Release Inventory courtesy rtknet.org
- Textron Inc. (2007) Retrieved 9 December 2008
- Textron Inc. homepage
- Textron Inc. history
Further reading
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