VOL. 128 | NO. 93 | Monday, May 13, 2013
Thomas & Betts CEO Sees Growth Post-Acquisition
By Bill Dries
Dominic Pileggi, the retired CEO of Thomas & Betts Corp., remembers being concerned more than a year ago when the Memphis-based maker of low voltage electrical and utility hardware was in talks with ABB Group of Zurich to buy Thomas & Betts.
Pileggi told a group of about 100 gathered at Southwind Tournament Players Club last week that he and his team had concerns about job losses on their end.
“We were very concerned about the city of Memphis,” he added, as well as the possibility of another acquisition and merger becoming what he termed “acquisitions and executions.”
A year ago this month, the $3.9 billion deal was finalized with Thomas & Betts retaining its name and its Memphis location. A year later, Pileggi judges the integration a success with growth for ABB overall and growth continuing for Thomas & Betts in Memphis.
Charles L. Treadway, president and CEO of the Thomas & Betts Business Unit, said there has been “virtually no overlap whether it was products or geographical coverage.”
“They are helping us with leadership outside of North America in terms of the sales organization and the distribution channels,” he said. “And we’re leading the low voltage business in North America for them.”
That includes in the next year getting Thomas & Betts back-office software and systems in low voltage ready to be used by ABB teams in other parts of the world.
“Which is unique in an acquisition,” Treadway said. “Usually when you get bought you go on their system. In this case, they are going on Thomas and Betts’ system.”
With a global reach comes differing electrical and manufacturing standards for Thomas & Betts’ products that are also a priority and will likely spur more research and development as well as access to ABB research and development, and engineering. But that also works the other way.
“It takes a long time to get our products all specified in and certified and tested. We also have to modify some of our designs to be able to work outside North America,” Treadway said.
“You take an ‘imperial’ product and get a ‘metric’ version. You take an ‘NEC’ and ‘UL- NIMA’ product and get an ‘IEC’ version,” he said, referring to the different standards. “We’re going to be developing the products that we’ll be able to sell outside North America through the ABB channels once we identify the differences.”
Thomas & Betts is part of a global company that spends $1.5 billion annually on research and development, which Thomas & Betts has access to and vice versa.
“It’s the chicken or the egg. We would have never made the investments in R&D and in tooling and in capital equipment if we didn’t have the market access,” Treadway said of growth from the merger. “Now we have the market access. So, now we can make the investment and ABB is doing the same thing for the U.S. market.”
The same development of abilities is likely to happen with the engineering required for the conversions.
ABB has a much larger engineering division than Thomas & Betts.
“I think it would be helpful. But I would say as the products get a little bit more sophisticated, either from their side or our side, we need our own engineers inside our business working on those,” he said. “The idea would be to accelerate and to be able to do everything that we need to do.”
The development involves prioritizing and an enhanced Thomas & Betts engineering presence handing off designs to ABB in other countries.
“We have to do the product marketing, the product management to be able to develop the product roadmap to say what the needs are and then the mechanical drawings and things like that,” Treadway said. “We will be able to leverage ABB’s engineering and tooling organizations and operations throughout the world. And they’ll use ours here.”
Thomas & Betts has a UL and NEMA testing lab in Southaven that ABB has access to for testing. The plant is also assembling circuit breakers.
The Southaven facility is also an example of the back and forth between ABB and Thomas & Betts with ABB employees from Italy in Southaven training workers on assembly, techniques and testing.
Thomas & Betts also made a $7 million investment in its Byhalia plant that now distributes ABB products in the U.S. as well to 6,000 electrical distribution branches with two trucks a week out of the Byhalia location.
Electrical contractors as a whole who bought more from ABB than from Thomas & Betts have more exposure to Thomas & Betts. Treadway calls it “relevance.”
“Our products probably make up about 15 percent of what an electrical contractor would buy in material. Whereas ABB’s probably closer to 40 or 50 percent,” he said. “Now, we’re relevant in a majority of projects around the world and have access to them through ABB.”