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Company Profile of Rockwell Automation
Company Profile of Rockwell Automation - May 13th, 2011
Rockwell Automation is a global provider of industrial automation, power, control and information solutions. Brands in industrial automation include Allen-Bradley and Rockwell Software.
Headquartered in Milwaukee, Wisconsin, Rockwell Automation is one of the largest industrial automation companies in the world, employing about 19,000 people in more than 80 countries. It is a Fortune 500 company, ranked number 476 on the list. The company has been named One of World's Most Ethical Companies for 3rd Consecutive Year.
One of five companies in the United States supplying the federal government with military aircraft fighters and bombers during the 1990s, Rockwell International emerged from the end of the Cold War as an increasingly commercially-oriented company. In addition to its aerospace and military hardware business, Rockwell was a major manufacturer of high-speed modems and factory automation products, business lines that predicated the company's growth during the 1990s. These businesses were complemented by Rockwell's involvement in manufacturing newspaper printing presses, other graphic arts equipment, and automotive vehicles. In a changing economic climate for military aerospace manufacturers, Rockwell represented a company headed toward genuine diversification, away from government-funded contracts, and one of the most successful companies of its kind.
Charles Lindbergh's flight across the Atlantic in 1927 generated such interest in aviation that suddenly even small aviation companies were deluged with money from investors. So much capital was made available by investors (almost one billion dollars by 1929) that holding companies created hundreds of airlines and airplane manufacturers. Three companies in particular emerged in the late 1920s as the largest aeronautic concerns: the Aviation Corporation of the Americas (Avco), run by Averell Harriman and the Lehman Brothers investment firm; the Boeing/Rentschler consortium known as United Aircraft and Transportation; and North American Aviation, the predecessor of Rockwell International, organized by a New York financier named Clement Keys.
Once the engine manufacturer Pratt & Whitney had secured two airplane manufacturers and a major airline, the United Aircraft consortium, as exclusive customers, Clement Keys recognized that his company needed a similar affiliation if it was to survive. He finalized an arrangement wherein the Wright Engine Company became the exclusive supplier of engines for North American Aviation.
North American's major airline, National Air Transport, was one of 45 aviation companies operated by Keys; the list also included the Curtiss Aeroplane & Motor Company and Wright Engine. Curtiss was a successful manufacturer of such airplanes as the Condor, and Wright manufactured some of the highest quality aircraft engines of the day. North American also owned Eastern Air Lines, the pioneer of air service along the eastern coast of the United States, and Transcontinental Air Transport. These subsidiaries made the parent company's stock even more attractive. Money continued to flow into North American from investor groups, making the original stockholders (Keys among them) extremely wealthy.
The bright future of the aviation companies came to an abrupt end on October 24, 1929 when a financial disaster hit Wall Street. Virtually all stocks were inflated in value and backed only with borrowed funds. When investors realized that the market could no longer support the inflated values of their stock, they flooded brokerage houses with orders to sell. The large number of claims led people, banks, and companies into bankruptcy. The resulting stock market crash brought about a ten-year world depression.
Rockwell Automation, Inc. (Rockwell Automation), incorporated in 1996, is a global provider of industrial automation power, control and information solutions. The Company has two segments: Architecture & Software, and Control Products & Solutions. Products for both segments are marketed primarily under the Allen-Bradley, A-B, Rockwell Software, ICS Triplex and FactoryTalk brand names. Major markets served by both segments include food and beverage, transportation, oil and gas, metals, mining, home and personal care, pulp and paper and life sciences.
Architecture & Software
The Company’s Architecture & Software operating segment contains all of the hardware, software and communication components of its integrated control and information architecture capable of controlling the customer’s industrial processes and connecting with their manufacturing enterprise. Architecture & Software has a portfolio of products, including control platforms, software products and other products. Its control platforms perform multiple control disciplines and monitoring of applications, including discrete, batch and continuous process, drives control, motion control and machine safety control. Products include controllers, electronic operator interface devices, electronic input/output devices, communication and networking products and industrial computers. The information-enabled Logix controllers provide integrated multi-discipline control that is modular and scalable.
The Company’s software products that include configuration and visualization software used to operate and supervise control platforms, advanced process control software and manufacturing execution software (MES) that enables customers to improve manufacturing productivity and meet regulatory requirements. MES applications are production scheduling, asset management, tracking, genealogy and manufacturing business intelligence. Its other products include rotary and linear motion control products, sensors and machine safety components.
The Company competes with Siemens AG, Mitsubishi Corp., ABB Ltd, Honeywell International Inc., Schneider Electric SA and Emerson Electric Co.
Control Products & Solutions
The Company’s Control Products & Solutions operating segment combines a portfolio of motor control and industrial control products, application knowledge and project management necessary to implement an automation or information solution on the plant floor and total life-cycle customer support and maintenance. This portfolio includes low and medium voltage electro-mechanical and electronic motor starters, motor and circuit protection devices, alternate current/direct current (AC/DC) variable frequency drives, contactors, push buttons, signaling devices, termination and protection devices, relays, timers and condition sensors.
The portfolio includes solutions ranging from value-added packaged solutions, such as configured drives and motor control centers to automation and information solutions where it provides design and integration for custom-engineered hardware and software systems primarily for manufacturing applications. It also includes services designed to help maximize a customer’s automation investment and provide total life-cycle support, including multi-vendor customer technical support and repair, asset management, training and predictive and preventative maintenance.
The Company competes with ABB Ltd, Schneider Electric SA, Honeywell International Inc. and Emerson Electric Co.
In 1985, Anderson oversaw the first major acquisition of his career at Rockwell with the $1.7 billion purchase of the Allen-Bradley Company of Milwaukee. Rockwell was suffering from a decrease in business after the cancellation of the B-1 bomber and the completion of the space shuttles. Allen-Bradley, a successful manufacturer of industrial automation systems, provided Rockwell with a steady profit from its operations and helped to reduce the company's dependence on government contracts.
Robert Anderson retired in 1988, relinquishing control of the company to its president, Donald R. Beall, who had been priming himself for Rockwell's leadership position for a decade. Ten years earlier, in 1978, when Beall was president of Rockwell's electronic division in Dallas, he reportedly spent one evening composing notes delineating what he would do if given control of Rockwell. Ten years and 14 pages later, he was given that opportunity and immediately set himself to the task of redefining the company's future.
A principal component of Beall's strategy was to reduce Rockwell's dependence on federal defense contracts and increase its presence in the electronics market. Specifically, this meant an expansion of Rockwell's telecommunications operations and a more significant role for the company's Allen-Bradley subsidiary, which Beall had encouraged Anderson to acquire. To make the company more responsive to customers, Beall granted company managers nearly autonomous control of their operations and then sharply reduced the bureaucratic layers of management that had accumulated over the years. Seven management levels were compressed into three, the company's headquarter staff was cut by more than half, and Rockwell's various businesses were reorganized into four major categories: electronics products, automotive products, a graphics unit (which manufactured high-speed newspaper presses), and aerospace.
Before Beall could complete his transformation of Rockwell, however, economic conditions soured, sending the national economy in a tailspin and shrouding Beall's efforts to create a more diversified, commercially-oriented company. Despite the economic downturn, Beall funnelled more than $250 million into Allen-Bradley to create a new generation of factory automation products, which, coupled with the company's commanding presence in the market for high-speed modems (a product of Rockwell's 1973 acquisition of Collins Radio Co.), provided two stable, commercially-oriented legs for the company to stand on once economic conditions improved.
When conditions did improve, the fruits of Beall's strategy were unveiled. Government-funded business, which as recently as 1988 had accounted for 50 percent of Rockwell's sales, contributed only 23 percent to the company's sales total in 1993, a span during which 40,000 government-funded jobs within the company had been eliminated. Conversely, Rockwell's commercial business had grown substantially, fueled by Beall's efforts to expand the company's telecommunication business and bolster Allen-Bradley's market position. By 1994, Rockwell's telecommunications unit was manufacturing 80 percent of all modems in computers and fax machines sold throughout the world, while the company's investment in Allen-Bradley began paying dividends, buoyed by a more favorable economic picture. In early 1994, Allen-Bradley was recording $8.1 million in sales per day, the greatest amount in the company's history and cause for much optimism for Rockwell's future as a more dynamic player in the commercial electronics market.
With the changes effected by Beall driving Rockwell's growth, the aerospace and electronics manufacturer entered the mid-1990s pursuing additional changes. Rockwell's aerospace and defense businesses were expected to plateau in the wake of the Cold War, while its commercial businesses were expected to continue their expansion and profitability. As Rockwell charted its future, its products and corporate priorities reflected the demand of a marketplace gearing for the twenty-first century.
Principal Subsidiaries: Allen-Bradley Company, Inc.; Rockwell-Collins International Inc.; Rockwell Graphic Systems, Inc.; Rockwell International Finance Corp.; Rockwell International of Canada (Ontario), Ltd., Rockwell International Holdings, Ltd.; Rockwell International, Ltd. (England); Rockwell International Sales Corp.
Market Cap (Mil.): $12,118.96
Shares Outstanding (Mil.): 144.31
Annual Dividend: 1.40
Yield (%): 1.67
ROK Industry Sector
P/E (TTM): 21.48 14.92 18.80
EPS (TTM): 124.10 -- --
ROI: 15.41 7.98 4.19
ROE: 34.55 10.41 7.33
Incorporated: 1928 as North American Aviation
Sales: $10.84 billion
Stock Exchanges: New York
SICs: 3823 Process Control Instruments; 3812 Search and Navigation Equipment; 3764 Space Propulsion Units and Parts; 3724 Aircraft Engines and Engine Parts; 3714 Motor Vehicle Parts and Accessories; 3861 Photographic Equipment and Supplies; 3661 Telephone and Telegraph Apparatus
Name Age Since Current Position
Keith Nosbusch 60 2005 Chairman of the Board, President, Chief Executive Officer
Theodore Crandall 55 2007 Chief Financial Officer, Senior Vice President
Sujeet Chand 52 2005 Senior Vice President, Chief Technology Officer
Douglas Hagerman 49 2004 Senior Vice President, General Counsel, Secretary
Susan Schmitt 47 2007 Senior Vice President - Human Resources
Steven Eisenbrown 57 2011 Senior Vice President - Strategic Development
John McDermott 52 2005 Senior Vice President
Martin Thomas 52 2007 Senior Vice President - Operations and Engineering Services
Blake Moret 2011 Senior Vice President - Control Products and Solutions (CP&S)
Frank Kulaszewicz 2011 Senior Vice President - Architecture and Software (A&S)
Steven Etzel 50 2007 Vice President, Treasurer
David Dorgan 46 2001 Vice President, Controller
Kent Coppins 57 2001 Vice President, General Tax Counsel
Rondi Rohr-Dralle 54 2009 Vice President - Investor Relations and Corporate Development
A. Lawrence Stuever 58 2003 Vice President, General Auditor
John Miller 43 2004 Vice President, Chief Intellectual Property Counsel
William McCormick 66 1989 Independent Director
Betty Alewine 62 2000 Independent Director
Verne Istock 70 2003 Independent Director
David Speer 59 2003 Independent Director
Barry Johnson 67 2005 Independent Director
Donald Parfet 59 2008 Independent Director
2201 Seal Beach Boulevard
Seal Beach, California 90740-8250
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