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Esterline Technologies Corporation
International Directory of Company Histories
Company Perspectives
Esterline is trusted for high-quality products for aerospace and defense customers and is increasingly a
“go-to supplier” for tough problems.
Esterline Technologies Corporation is a leading niche supplier of materials, sensors, instrument systems,
and other equipment for customers in the aerospace and defense industries. Defense and space
applications account for approximately 40 percent of Esterline's total revenues, and commercial
aerospace applications account for another 40 percent of sales. Even though the company's products are
primarily designed with these markets in mind, they also frequently offer possibilities for industrial
application; such applications account for approximately 20 percent of revenues. Esterline's business,
while tightly focused in terms of its targeted industries, is spread across a wide range of individual
products, none of which accounts for more than 5 percent of revenues. This product diversity has been
facilitated by an ambitious approach to acquisition, Based in Bellevue, Washington, Esterline consists of
more than 30 product lines and/or companies, with manufacturing facilities in 12 states and in Canada,
China, France, Germany, Mexico, and the United Kingdom
Founding and Early Acquisitions: 1967-69
In August 1967 Boyar-Schultz Inc. was incorporated to acquire the assets of Boyar-Schultz Corp., a
manufacturer of surface grinding machines. Two months later Esterline Angus Instrument Company was
merged into Boyar-Schultz inc., with the resulting corporate entity changing its name to Esterline
Technologies Corporation. The company moved quickly to acquire additional assets that would deepen
and broaden its interests.
During the summer of 1968 Esterline acquired Babcock Electronics Corp., a manufacturer of
sophisticated electronic devices that were used for defense-related applications. Babcock Electronics was
later sold, but the extension of Esterline’s focus to the aerospace and missile markets would prove a
turning point in the company's evolution.
Beginning in 1969 Esterline acquired a handful of hospital equipment and medical supply distributors to
develop a presence in the U.S. medical market. By the beginning of the 1970s it had created a medical
products distribution network that encompassed 19 eastern and midwestem states. The company's foray
into the health care market was intensified further with the acquisition of several optical manufacturers
and a hearing aid company, including the 1969 purchases of Titmus Optical Company, the fifth-largest
manufacturer of ophthalmic goods in the United States, and Radioear Corporation, a company with 40
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years of experience manufacturing hearing aids.
Shifting Focus: 1970-79
Combined, Esterline's medical products distribution system and its ophthalmic goods and hearing aid
manufacturing businesses made up the company's medical group, part of which remained an aspect of
Esterline’s business throughout the first half of the 1970s. By the late 1970s, however, Esterline's attempt
to build a lasting presence in the U.S. health care market was abandoned, and the entire medical group
had been sold, beginning with the divestiture of the company’s ophthalmic goods business in 1971. Next
to go was Esterline's medical supply distribution business, which was completely divested by 1977,
followed by the sale of the company's hearing aid business in 1978. The core of what remained after the
divestiture of the medical group formed the basis of Esterline's business for the next three decades:
production facilities geared toward the development of measurement sciences products and factory
automation machinery.
‘Two acquisitions in particular bolstered Esterline's business early on, both of which were purchased in
1969. During the summer of 1969, as plans were being formulated to carve a presence in the medical
products distribution market, Esterline acquired Federal Products Corporation, a manufacturer of
precision instruments, then later in the fall the company purchased W.A. Whitney Corporation, a producer
of automatic stee!-fabrication equipment. Both companies, once organized as subsidiaries, represented
integral contributors to Esterline’s business for the ensuing three decades.
Esterline’s automation segment served as the company's chief engine for growth, generating most of the
company's annual sales through the manufacture of metal fabrication machinery, numerically controlled
production equipment, and custom automation equipment that was used to produce a wide array of
products, ranging from beer cans to hypodermic needles. With the manufacture of highly engineered,
precision measurement instruments and factory automation equipment propelling the company forward,
Esterline grew intemally and externally during the 1970s, as it used company-funded research to spur
technological developments that spawned new products. By the mid-1970s Esterline was generating
roughly $125 million in annual sales and was fast on its way toward becoming a leading manufacturer in
the factory automation industry.
Stagnation: 1980-87
Largely dependent on the expansion of production capacity in the electronics industry, Esterline grew as
the industry it served grew, more than doubling its annual sales volume between the mid-1970s and the
beginning of the 1980s. In 1980 the company's annual sales hovered around $250 million, representing a
prodigious increase from five years earlier, but the financial health of the company quickly tumed anemic
during the first half of the decade.
From 1980 forward Esterline's financial growth stagnated, with its annual sales volume remaining checked
at approximately $250 million. Nearly half of Esterline’s annual volume of business during this period was
derived from its printed-circuit automation group, which produced equipment for everything from printing
to the automated drilling of printed-circuit boards. This equipment was in high demand when electronics
companies were increasing their production capacity, but during the sluggish early and mid-1980s such
facility expansion was slow. After six years of hobbled growth, Esterline recorded a $29.3 million loss in
1987 on $260 million in sales. Other financial statistics reflected the company's poor performance: in
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1980, Esterline's peak year, earnings stood at $2.51 per share; by 1987 earings per share had
plummeted to a $3.47 deficit, while the company's stock price had plunged from a high of $40 in 1980 to.
$8 in 1987.
A cost-cutting program had been in place for several years by the time financial figures were announced
in 1987, but after this announcement more drastic and pervasive changes were implemented. In
November 1987, following the dismissal of the company's executive staff by Esterline's board of directors,
the company relocated its corporate headquarters from Darien, Connecticut, to Bellevue, Washington, a
suburb of Seattle. For a new management team Esterline’s directors selected Carroll Martenson and his
executive team, which had orchestrated a revival of Criton Technologies, a company that had flourished
during the 1960s as a manufacturer of airplane parts, electronic equipment, and building exteriors then fell
on hard times during the 1970s.
Martenson had come to the attention of Esterline’s directors through a New York investment group named
Dyson-Kissner-Moran (DKM), Esterline's largest shareholder and Criton Technologies’ parent company,
In fact, Charles Dyson, who was a former chairman of Esterline and one of the company's founders, was
a DKM principal, so news of Martenson's success at Criton Technologies did not have to travel far to
reach Esterline's directors, who looked to Martenson to resuscitate Esterline.
Liquidations and Acquisitions: 1987-90
Martenson and six Criton Technologies officers took charge of Esterline under a management-services
contract just after the disastrous financial figures of 1987 were reported. The management team assessed
Esterline’s condition by visiting each of its 11 principal manufacturing sites, which were spread across
seven states and included a facility in France. Sweeping cost-containment measures were then
implemented, followed by the liquidation of underperforming assets. The properties that were deemed to
be performing well and capable of generating strong sales and profits in the future were revitalized with an
infusion of cash to strengthen marketing efforts and to accelerate research and development.
By the end of 1988 the efforts of Martenson and the Criton Technologies officials had realized great gains.
In fiscal year 1988 the company generated a profit of $8.4 million on $284.4 million in sales. The
relationship between Criton Technologies and Esterline soon grew beyond their identical executive
management teams. In September 1989 Esterline finalized the buyout of DKM and acquired six of eight
subsidiaries from Criton Technologies, creating a conglomerate the was worth more than $400 million.
With the Criton Technologies acquisitions, the number of Esterline's operating divisions increased from 11
to 17 and the company realized instant sales and profit growth, gaining $110 million in annual sales and
$15 milion in annual profits. Most important, however, the merger broadened Esterline’s operations
beyond the depressed capital goods manufacturing market and into specialized niches of the defense and
aerospace industries. Bolstered by the addition of Criton Technologies subsidiaries such as Korry
Electronics Co., which manufactured lighted panels for airplane cockpits, and Hytek Finishes Co., an
aerospace concer involved in finishing metal, Esterline entered the 1990s confident that the newly
constituted company could look forward to considerably more robust growth than had been achieved
during the previous decade.
Consolidation and More Acquisitions: 1993-2007
For several years such confidence was validated by Esterline's steady annual profit totals. However, by
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1993, when sales amounted to $285 million, its earnings had slipped to $1.6 million after averaging $7
million per year between 1988 and 1991. That year the company undertook a major restructuring by
selling a number of smaller subsidiaries and reorganizing its operations to create management
efficiencies.
Esterline again expanded rapidly through acquisitions in the years that followed, increasing its footprint in
the aerospace market with the purchase of more than 10 companies between 1995 and 2000. These
included the 1997 purchase of Fluid Regulators, a maker of hydraulic systems for aircraft; the 1998
purchase of Kirkhill Rubber, a maker of aerospace components from synthetic rubbers; and the 1999
purchases of two aerospace companies in the United Kingdom, Muirhead Vactric and Norcroft Dynamics,
that allowed it to expand its product offerings in Europe.
Esterline continued to consolidate its position in the aerospace and defense industries during the first half
of the first decade of the 21st century, by which time it had become a top supplier to the Boeing
Company, one of the world’s leading makers of military and commercial aircraft. In 2002 Esterline
acquired the North American division of the UK-based defense contractor BAE Systems, which consisted
of product lines to defend against radar- and infrared-guided missiles. The following year Esterline
increased its sensors business by approximately 50 percent and positioned itself for further European
expansion with the purchase of the aerospace-sensors business Roxboro Group in the United Kingdom.
Esterline's 2003 revenues stood at $562.5 million, approximately double its sales at the time of the 1993
restructuring, and its period of rapid growth continued through the decade. By continuing to acquire
smaller manufacturers of aerospace and defense components while investing heavily in research and
development, Esterline strengthened its position, year after year, with Boeing and other top aerospace
and defense contractors, including Airbus S.A.S., the Lockheed Martin Corporation, and the Rolls-Royce
Group PLC.
The middle years of the decade saw Esterline acquire, among other new units, Leach Holding Company,
a producer of electromechanical relays and solid-state switching devices; Palomar Products, a maker of
secure communications equipment for military uses; Darchem Holdings, a maker of thermally engineered
products; and Wallop Defence Systems, a maker of countermeasure flares (which defend against infrared
missiles). In 2007 the company substantially increased its range of product offerings with the purchase of
Canada's CMC Electronics, a maker of global positioning and flight management systems for aircraft. By
2007 Esterline's revenues stood at $1.2 billion, roughly double its 2003 sales numbers, with net earnings
of $92.3 million.
Recession and Adaptation: 2008-11
Having secured its position as a top supplier to the world’s leading aerospace and defense contractors
through aggressive acquisitions and heavy investment in research and development, Esterline was in an
enviable position as the world economy began to falter in 2008. The company responded to the market
conditions by scaling back its research and development expenses without affecting its market-leading
Position, It also continued to balance its commitment to acquisitions with targeted cost-cutting and
divestment of underperforming subsidiaries, positioning itself to meet its customers’ evolving needs. Even
though sales and profits did not grow at the same rapid pace as in the foregoing years, the company
performed well under exceedingly difficult economic conditions. Revenues were essentially flat between
2008 and 2010 (at $1.5 billion in 2008, $1.4 billion in 2009, and $1.5 billion in 2010), as were net earnings
in 2008 ($120.5 million) and 2009 ($119.8 million) before rebounding somewhat in 2010 ($141.9 million).
itp gale chor scold nesses GALE 7C1250131577 4a SDASEOACdASEEDMSEOATEZASNEESPURrys_ ce. onehmavs snes sigs: Essertals
Important acquisitions during this time included the 2009 purchase of Racal Acoustics, a maker of military
communications equipment.
In late 2010 Esterline acquired Eclipse Electronic Systems, a maker of communications hardware for use
in military surveillance and reconnaissance, and in 2011 it purchased the French company Souriau
Group, a maker of sensors for aerospace and defense, power generation, and rail transportation
applications. As of 2011, Esterline supplied components for all of Boeing's commercially available aircraft,
for the Airbus A350, and for a number of military aircraft including Lockheed Martin's F-35 Joint Strike
Fighter, the Hawker Beechcraft T-6B Texan, and the Sikorsky UH-60 Black Hawk helicopter. Esterline
appeared well positioned for future growth given the long-anticipated recovery of the world economy.
Principal Subsidiaries
Advanced Input Devices, Inc.; Armtec Countermeasures Co.; Armtec Countermeasures TNO Co.; Armtec
Defense Products Co.; Auxitrol S.A.; AVISTA Incorporated; BVR Technologies Co.; CMC Electronics
Aurora Incorporated; CMC Electronics Incorporated; Darchem Engineering Ltd.; Esterline Input Devices
(Shanghai) Ltd.; Esterline Sensors Services Americas, Inc.; Hytek Finishes Co.; Kirkhill-TA Co.; Korry
Electronics Co.; Leach International Corporation; Leach International Europe S.A.; LRE Medical GmbH;
Mason Electric Co.; Memtron Technologies Co.; NMC Group, Inc.; Norwich Aero Products Ltd.; Palomar
Products, Inc.; Racal Acoustics Inc.; Racal Acoustics Ltd.; Wallop Defence Systems; Weston Aerospace
Ltd
Principal Competitors
AMETEK, Inc,; Ducommun Incorporated; Eaton Corp.; GE Aviation; Goodrich Corporation; Honeywell
Aerospace; Meggitt PLC; Rockwell Collins Inc.; Universal Avionics Systems Corp.
Further Readings
Acohido, Byron. "... And the Two Became One." Seattle Times, October 2, 1989, E1
“Esterline Buys 4 Firms in Medical-Supply Field." Wall Street Journal, December 11, 1969, 4.
“Esterline Technologies Has Sharply Improved Results.” Seattle Post-intelligencer, February 25, 2005.
Jones, Steven D. "Heard in the Northwest: Two Northwest Aerospace Suppliers Could Be Ready to Rally,
Bulls Say." Wall Street Journal, March 22, 2000.
"Regional News: Airplane Parts Maker Esterline Sees Profits Soar." Seattle Post-intelligencer, March 6,
2007
Unnikrishnan, Madhu. "Esterline to Acquire Souriau Group for $715M." Aerospace Daily & Defense
Report, May 6, 2011.
Wilhelm, Steve. "Esterline's Prospects Improve after 2-Year Slump.” Puget Sound Business Journal,
October 28, 1994, 19.
“Life with Burgeoning Esterline Anything but Simple.” Puget Sound Business Journal, March 5.
1990, 10.
Source Citation:
"Esterline Technologies Corporation.” International Directory of Company Histories, Ed. Derek Jacques
and Paula Kepos. Vol. 132. Detroit: St. James Press, 2012. Business Insights: Essentials. Web. 1 Mar.
2015,
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