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Textron started as a small textile company in 1923, when 22-year-old Royal Little founded the Special Yarns Corporation in Boston, Massachusetts. Revenues that first year were just $75,000. This modest beginning was the seed that ultimately grew to become the world's first conglomerate, today known as the multi-industry company Textron Inc.
Textiles boomed during World War II, ushering in a period of growth and activity for the company, which was now doing business as Atlantic Rayon Corporation. A major line of business during the war was parachutes. In 1943, with World War II government contracts dwindling, Little faced the challenge of declining revenue and underutilized production capacity. He developed a vertically integrated company that controlled every operational aspect from raw goods processing to distribution. He moved quickly from producing parachutes to making lingerie, blouses, bed linens and other consumer goods.
This new operation needed a brand name. Atlantic Rayon's advertising agency suggested "Señorita Creations," but it was rejected in favor of Textron. The "Tex" was derived from textiles and the "tron" came from synthetics such as "Lustron." The theme of the advertising reflected Little's vision: "From yarn to you, it's Textron all the way."
Marking a major milestone for the company, Textron was listed on the New York Stock Exchange on December 22, 1947. By 1949, Textron's sales had reached $67.8 million.
In 1952, facing yet another decline in the demand for textiles, Royal Little approached the Textron Board of Directors for approval to diversify by acquiring businesses in unrelated industries. He planned to maintain textile operations as an earnings base while acquiring non-textile businesses.
In 1953, Textron purchased its first non-textile business, Burkart Manufacturing Co. of St. Louis, Missouri. This company supplied cushioning materials to the automotive market.
Little's success building a diversified company prompted other businesses to follow his model. Textron avoided many of the costly mistakes of other conglomerates by entering new lines of business with small, incremental investments, where other conglomerates tended to make massive, headline-grabbing acquisitions when they moved into new industries.
The pace of acquisitions was great and Little referred
to this activity as "cross-country buying sprees."
Among the more important businesses added in the early
1950's were Homelite, which was retained until 1994; Camcar, which was retained until 2006; and CWC which remains part of Textron today.
1958 was a milestone for Textron. It was the first time diversification was tested in a recession. While sales declined 4 percent, earnings rose 24 percent.
In 1960, Textron purchased Bell Aerospace -which included Bell Helicopter - to balance Textron's earnings base by increasing its government business. At the same time, Little added another company, which, like Bell, remains a part of Textron: golf car manufacturer E-Z-GO.
Textron's founder, Royal Little, retired as chairman at the end of 1960. Sales had grown to $383 million. Little's successor, banker Rupert Thompson, led Textron into the new decade alongside company president G. William Miller. In 1963, Textron sold its last textile operation.
Consumer product businesses defined the Textron of the sixties and seventies. Notable acquisitions during this period included Speidel, maker of watchbands; Sheaffer Pen; staple and nail gun maker Bostich; and Rhode Island silver company Gorham. Throughout this period, Textron was recognized as the pioneer of the conglomerate and one of the most highly diversified corporations in the U.S. In 1967, the Wall Street Journal called Textron "the conglomerate king." During this time, Textron common stock also split twice: once in January of 1966 and again in September of 1967.
William Miller succeeded Thompson as chief executive officer at the end of 1968. Acquisitions under Miller included snowmobile maker Polaris, Australian card maker Valentine Holdings, and the venture capital firm American Research & Development.
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, was president. By the end of 1979, revenues had risen to $3.3 billion.
In October 1984, Textron emerged newly strengthened for growth in a reviving economy. Straetz and Dolan realized that the company could grow most effectively through strategic acquisitions.
In February 1985, Textron acquired Avco Corporation of Connecticut, a conglomerate of almost equal size with pre-acquisition revenue of $2.9 billion. Overnight, with the addition of its Avco subsidiary, Textron nearly doubled in size.
Dolan, who had become chairman in 1986 upon the retirement of Straetz, initiated the second major acquisition of the decade that same year. Ex-Cell-O brought another $1.1 billion in annual sales from the aerospace, defense, automotive and industrial markets. This acquisition made Textron a major player in the automotive industry. Shortly thereafter, Textron common stock split for the third time in its history in June of 1987.
In 1989, 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 COO. Hardymon quickly distinguished himself by his determination to design a more focused operating company that would produce consistent quarter-over-quarter earnings growth. He was named chairman and CEO in 1992.
One of Hardymon's first actions as CEO was to acquire Cessna Aircraft Company, which became a subsidiary of Textron. A leader in light and medium-sized commercial business jets, Cessna balanced Bell's significant defense-related business activity.
In order to increase corporate oversight of operations, Hardymon brought in a top executive from General Motors - Lewis B. Campbell - as executive vice president and COO in 1992. In 1994, Campbell was elected president and COO.
With a dual-focus on operational improvement and portfolio management, Hardymon set out to maintain the record of consistent growth the company had begun to build during his tenure as president. From 1989 to the end of 1997, Textron decreased its holdings in military contracting, insurance and consumer products, divesting "non-core" businesses with $2.8 billion in revenue while bolstering its "core" by acquiring businesses totaling $3.9 billion in revenue. Over this time, the company migrated from deriving 56 percent of revenue from core businesses to obtaining 100 percent from the then-core of Aircraft, Automotive, Industrial and Finance. Meanwhile, Textron focused on increasing international revenue as a source of growth. In 1989, approximately 20 percent of Textron's revenue came from non-US operations. By the end of 1997, this figure had almost doubled.
Hardymon simultaneously focused on evolving Textron from a classic holding company to an operating company, distinguished as much for building and growing businesses as for buying and selling them.
A first-ever operations management process was developed to coordinate strategic, financial, and human resource planning across Textron. Hardymon and Campbell also introduced the notion of leveraging the collective strengths and synergies of Textron's businesses. This was perhaps most evident in their acquisition strategy, which focused on acquiring companies that offered complementary products, markets or manufacturing processes and capabilities.
In 1994, following the acquisition of the plastics operations of Chrysler's Acustar Division, Textron's six automotive businesses were combined into one company, Textron Automotive Company. Similarly, in 1995, Textron Fastening Systems Inc. (TFS) was formed by merging five Textron fastening companies to form a global fastener group, making TFS the largest producer of engineered fastening products and solutions in the world.
Increasing teamwork among Textron's employees also became a priority. Cooperation among engineering, sales, marketing, product development, operations and other functions was fostered through councils, forums and meetings that brought together different businesses and segments. In May of 1997, Textron common stock split for the fourth time in its history. In addition, Hardymon's laser focus on achieving a consistent and strong financial performance resulted in 45 quarters of continuous year-over-year quarterly earnings growth. During Hardymon's tenure as CEO, the stock price increased from $19.81 per share on January 1, 1992 to $71.69 per share on June 3, 1998, reflecting the market's strong correlation between earnings growth and stock price appreciation.
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In a well-defined succession planning process, Lewis B. Campbell was appointed chief executive officer on July 1, 1998. In his first month as CEO, Campbell demonstrated his sharp focus on Textron's core operations and his decisive and disciplined management style by announcing the divestiture of Avco Financial Services. The most significant strategic event of the decade for Textron, the sale was completed in January 1999 for $3.9 billion to Associates First Capital Corporation.
Campbell assumed the additional responsibility of chairman
on February 1, 1999, shortly after Hardymon's retirement.
Soon after his appointment, Campbell began engineering
a new strategic framework for Textron aimed at strengthening
financial performance during the good times and improving
the company's ability to weather unforeseen economic
headwinds and market downturns. This was a fortuitous
move, as earnings growth decoupled from stock price
appreciation, signaling a major shift in how companies
would create value. Campbell knew that radical change
was needed in order to continue to successfully compete
– and continue to build shareholder value – in the evolving
multi-industry marketplace. He also knew that this would
mean fundamentally changing the very DNA of the company
from its 80-year history as a conglomerate to a truly
integrated enterprise, making the whole
of Textron greater than the sum of its parts.
Recognizing that an unprecedented transformation was essential to achieve this ambition, Campbell established Textron's Transformation Leadership Team (TLT) in 2000, composed of the top leaders from Textron and its business units. The charter for this team: to advance Textron's new strategic framework to generate sustainable and compelling growth well into the future. This also spawned a comprehensive operational and cultural "reinvention" of Textron to deliver strong shareholder value and create a solid foundation for long-term growth and profitability. It was at this time that Textron also deemed "Return on Invested Capital" (ROIC) its primary financial compass, in addition to maintaining a continued focus on cash generation and a strong balance sheet.
The TLT determined that to truly transform and prime the company for future success, Textron needed to take difficult - yet critical - steps toward restructuring and reconfiguring the company. These strategic steps led to initial restructuring savings of approximately $154 million in 2001 and the divestiture of several businesses, which contributed $1.6 billion in revenues. Most significantly divested was the Textron Automotive Trim business. By the end of 2005, Textron had achieved significant shareholder returns and, for the first time since undertaking the company's transformation, exceeded the targeted rate of return on invested capital.
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Under Lewis Campbell's stewardship, what initially began as a new strategic framework evolved into a new vision for the corporation: to become the premier multi-industry company, recognized for our network of powerful brands, world-class enterprise processes and talented people. This shared vision, established in 2002, has become both a mantra and a driving force for Textron employees worldwide.
This vision would not be possible without elevating the concept of synergy - leveraging and combining where it makes strategic sense, while enabling our businesses and brands to do what they do best as they serve their unique customers and markets. We call this approach a "networked enterprise," and for the past few years we have literally reinvented ourselves to become just that.
We're implementing common processes and powerful tools to develop talent, encourage innovation and better address customer needs - which includes the creation of Shared Services Organizations in Information Technology (IT), Human Resources and Finance that benefit each and every one of our businesses. These same processes and tools are also enabling us to drive operating performance and efficiencies as well as boost productivity and cost savings. Officially launched in 2002, Textron Six Sigma is perhaps the most compelling process improvement initiative across the enterprise. This critical discipline, designed to drive growth while eliminating waste, has become part of the very fabric of our company.
Our powerful global brands - Bell Helicopter, Cessna Aircraft, E-Z-GO, Jacobsen, Kautex, and Greenlee, among others - deliver innovative, market-leading solutions that focus on the success of our customers. Textron has remained committed to its investments in growth and innovation, even during the toughest economic climate in recent history. In 2005 alone, $2.5 billion - or 25 percent - of our sales were derived from new products and services launched since we began our transformation in 2001.
And, perhaps most critically, driving our strategies is our highly-talented workforce, fueled by dedicated and passionate people with a shared commitment to making Textron's vision of becoming the premier multi-industry company a reality; and who, together, help to make Textron a best-in-class work environment in which to develop and grow careers.
Being a networked enterprise is - and will continue to be - fundamental to Textron's success as a multi-industry company. Our financial performance is but one key indicator of our progress. Our powerful, global brands are helping customers succeed; our world-class processes are driving long-term productivity and profitability; and our talented people are steering this ship fast and forward toward becoming the premier multi-industry company.
2005 also saw the achievement of some major milestones, including critically important customer contracts such as the US Army's Armed Reconnaissance Helicopter. The company also participated in the winning US Presidential Helicopter bid. Perhaps most notably, Textron earned the much-anticipated full production approval for the Bell Boeing V-22 Osprey tiltrotor - a revolutionary advancement in aviation history.
Textron divested its Fastening Systems business in August of 2006, marking the company’s exit from the fastening business. The sale further advanced Textron's portfolio strategy, which since 2001 included the divestiture of several non-core manufacturing businesses representing more than $4.4 billion in annual revenues, and $1.4 billion in finance receivables from its Textron Financial unit.
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