Cannons and muskets
The Dowlais Iron Company was formed in the Welsh valleys in 1759. A dammed stream was directed into a waterwheel, which powered the bellows for a blast furnace to smelt pig iron. The works were soon producing 18 tonnes of iron a week. As the century came to a close, the British armed forces were hungry for cannon and musket balls for overseas conflicts, and by the end of the Napoleonic wars in 1815, Dowlais had four blast furnaces and could produce 15,600 tonnes of pig iron a year. Within 20 years the railway boom at home and in the US provided a heyday for iron manufacturing.
Diversification, 1850s style
The company later began started mining coal in advance of what was needed at the works: for sale, and as a buffer against industrial action from the colliers. Under engineer William Menelaus, the company improved its refining of pig iron into higher-margin wrought iron, with capital expenditure of £50,000 (more than £5m today) constructing a large mill that could produce rails more cheaply than competitors. But the big change was to producing steel, being the first company to acquire a steelmaking licence in 1856, and later exporting steel railway sleepers as far afield as India.
Reverse takeovers, 1900s style
In 1900, Arthur Keen made his pitch to create what would become Guest, Keen & Nettlefolds, a reverse takeover of the steelmaker by his smaller nuts and bolts company. Dowlais’ steelmaking prowess was targeted, and it was bought for £1.5m (around £170m today). His next acquisition was Nettlefolds, which made screws, nuts and bolts. This flurry of M&A activity set the tone for the 20th century GKN.
Wars and the end of steelmaking
On Mr Lorenz's analysis, GKN's profits during the first world war, when its sites were controlled by the Munitions Ministry, sagged below previous levels. In 1930, after a sustained period of under-investment, the historic Dowlais steel works were closed. But with the country's rearmament, and following another bout of M&A, GKN's fortunes improved, with an army hungry for shells, bullets and ships: it made its first steps into aerospace, eventually producing Spitfires and parts for jet engines. In peacetime another battle ensued, against nationalisation of its steel operations. Over the next few decades, the company would rebuy them, only to face nationalisation again, before moving away from steel production for good.
Buying and building
GKN's driveline business was built up on the back of two acquisitions. In 1966, it bought Birfield, a maker of propshafts and the constant velocity joints that would allow front-wheel drive cars such as the iconic Mini. German business Uni-Cardan, a maker of joints and propshafts, became a subsidiary of the group in 1971. The latter acquisition bolstered the company's technical skill, spread it geographically in Europe and the US, and provided much-needed trading profits during the UK recession of the early 1980s.
The sky's the limit
GKN took a stake in helicopter builder Westland in 1988, selling its interest in the subsequent AgustaWestland 16 years later, teaching the group a lot about the aerospace industry. As a new millennium dawned, major components contracts were secured and, hitting a trend of outsourcing, the company purchased a Boeing plant. This expansion helped the company deal with the loss of its support services business in the demerger of Brambles in 2001, which left the group as a pure-play engineer.
What next? As concerns grow about industrial output, last month's interim results found GKN again cutting costs, improving its productivity and finding solace in its global reach. And yet another acquisition, aerospace supplier Fokker, is keeping it at the cutting edge. And so it rolls on.
