After focusing for most of its 77-year history on being a provider of specialty electrical products for use in industrial applications, Woodhead Industries Inc. is setting its sights on a different segment of the industrial marketplace.
Through a series of strategic acquisitions and internal reorganization, the Deerfield, Ill., company has been quietly positioning itself to become a major player in what it sees as a growing market for electronic interconnects for use on factory floors.
"We've altered our corporate strategy to focus increasingly on the connectivity portion of industrial automation, because we feel that has the greatest growth opportunity for the company over the long haul," said Mark DeWinter, Woodhead's chairman, president, and chief executive.
The company aims to shift its sales mix, so that by 2002, 70% of its revenue will come from connectivity products, and 30% from its traditional electrical products, a reversal of its 1997 sales mix.
Using its Brad Harrison connector line and its Advanced Interconnect/FOCS subsidiary's copper- and fiber-optic custom cable assemblies as a base, Woodhead last year made two key acquisitions.
In February, the company bought Milan, Italy-based mPm S.r.l., a leading supplier of DIN 43650 output devices.
"[This] permits us to go to the world market with both input and output connectors," DeWinter said.
In July, Woodhead rounded out its interconnect business, buying a Canadian company called SST, a division of S-S Technologies Holdings Ltd.
SST, Waterloo, Ontario, produces a range of products for the industrial-automation market, including interface cards, gateway products, universal communications products, and backplane scanner modules for PLCs (programmable logic controllers).
Because SST's core competencies revolve around providing communication interfaces between various devices in a factory's automation network, the acquisition fit nicely with Woodhead's new corporate strategy, according to DeWinter.
"The Brad Harrison and mPm lines are physical-device connections," he explained. "But the world of connectivity, as we've defined it on the factory floor, also involves the connection of devices into a communications network. Given the growth in communications networks on the factory floor, and because it provides a connection point to the devices, [SST] was a sound acquisition. It fit into the connectivity strategy and it's a high-growth product on a global basis."
But the high-growth potential comes with a risk, one analyst noted.
"It's a higher-risk venture than they've had before, but I think it's one which is very worthwhile," said Lowell Bourne, an analyst with Smith Moore & Co., St. Louis.
"I've got a great deal of confidence in the management of the firm and I think they'll be able to execute on that. I think the management of Woodhead is one of the strongest management teams of any company its size in the U.S."