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Amphenol History & Success

Amphenol Corporation was founded in 1932 under the name, American Phenolic Corporation. The company went public and was traded on the NYSE (APH) during the 60s and 70s. Bunker Ramo Corporation acquired Amphenol in the 1970s. In 1982, Amphenol came to be owned by Allied-Signal Corporation (now Honeywell) when Bunker-Ramo Corporation was acquired by Allied Signal. (Amphenol had been a wholly-owned subsidiary of Bunker-Ramo.)

Amphenol had been used as a cash-cow by Bunker-Ramo, and had become under-invested and under-performing. In 1982, Arneson was Executive VP of Allied-Signal's electronics sector, and was responsible for six electronics companies. Ed Hennessey, then Chairman and CEO of Allied-Signal, asked Arneson to perform a "revitalize and grow" mission on Amphenol.

Arneson moved from Allied Signal's headquarters in Morristown, New Jersey, to Amphenol's headquarters in Chicago in early 1983, and took the reins as Chief Executive. When Arneson arrived, Amphenol was losing nearly $8 million on sales of $270 million.

Arneson revitalized the management team, aggressively cut expenses, installed process and business disciplines, and made acquisitions--Socapex in France, and Teldix in Germany. He tripled R&D spending from an annual rate of $7 million in 1982 to $22 million in 1986.

By late 1986, the company's sales had grown dramatically to over $540 million, yielding operating income of $53 million. This occurred during one of the worst recessions in the history of the electronics industry. Profits would have been even higher if Arneson had not had the long-range health of the company in mind, and had slowed or capped R&D spending.

Other major accomplishments by Arneson and his team were:

  • Emphasized and refined distribution, consolidated full-line distributors, and made distribution sales and OEM sales very profitable channels.
  • Founded Nippon Interconnect Co. in Japan, and opened a brand new, large manufacturing facility in Hong Kong to make products more cost-competitive.
  • Culled the product line of any product not making decent margins. Arneson revamped the IT and cost accounting systems in order accomplish this.

In order to help effect this turnaround, in early 1983 Arneson got Ed Hennessey to approve an investment of $48 million for a facility consolidation and modernization program which resulted in a $12 million annual operating income improvement. As a result of this effort:

  • Fifteen U.S. manufacturing facilities were consolidated into eight.
  • Profits and sales growth ensued.
  • Over 7,000 Amphenol employees became proud of their company.

Amphenol was nominated for the Chairman's Productivity Award in 1985 at Allied Signal. All of this positioned the now-profitable company for sale in 1987 when Allied Signal, for corporate portfolio and strategic reasons, divested a number of companies, including its electronic businesses.

Amphenol (APH, NYSE) is now a company with around $3 billion in revenue. The company is led by its CEO, Dr. Martin Loeffler, the executive Arneson brought over from Amphenol's operations in Germany in 1983 to be developed as his replacement.

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