AMP Incorporated History

Address:
P.O. Box 3608
Harrisburg, Pennsylvania 17105-3608
U.S.A.

Telephone: (717) 564-0100
Fax: (717) 780-6130

Public Company
Incorporated: 1956
Employees: 30,400
Sales: $4.03 billion
Stock Exchanges: New York Boston Cincinnati Midwest Pacific Philadelphia
SICs: 3678 Electronic Connectors; 3643 Current-Carrying Wiring Devices

Company History:

AMP Incorporated is the world leader in electrical and electronic connection devices and interconnection systems, claiming 19 percent of the $19 billion worldwide interconnections market. Boasting more than 100,000 types and sizes of products in its line and a reputation for dependable customer service and high quality, AMP has long enjoyed steady growth through heavy research and development spending and aggressive global expansion. More recently AMP has turned to acquisitions as an additional growth generator, starting with small moves but eventually embarking on the major 1995 acquisition of M/A Com Inc., a deal that also moved AMP into the area of wireless interconnection components--one of several industries related to AMP's core products that AMP expanded into during the 1980s and 1990s.

The founder of AMP was Uncas A. Whitaker, a former employee of Westinghouse Electric and the Hoover Company who held degrees in mechanical and electrical engineering and law. In 1941, after two years as a senior engineer for American Machine & Foundry in New York, Whitaker decided to start his own company. Aircraft Marine Products, as the company was called, specialized in solderless, uninsulated electrical connections for aircraft and boat manufacturers: a short metal tube with a ring on the end and a crimping tool. The device allowed electricians to make quick, removable wire connections without a heating element or flux. It was simple, unique, and very popular.

From a small office in New Jersey, Aircraft Marine established supply contracts with some of the largest industrial manufacturers in the world. Less than three months after the company was created, the United States entered World War II. Companies such as Boeing, Consolidated Vultee, Ford, and Electric Boat redirected their production toward the war effort, developing new products and accelerating output. More than ever before, warplanes, battleships, and field equipment incorporated electrical devices, and increasingly these were assembled with solderless connections.

With its business thriving from war production, Aircraft Marine soon moved to a larger facility in Glen Rock, Pennsylvania. It then moved its headquarters to Harrisburg in 1943, after winning over the city's chamber of commerce, which did not want new business in the city, complaining about inadequate housing. A fire at the Glen Rock plant and the trauma of relocation overshadowed the introduction of the preinsulated terminal, an improved version of AMP's existing product that left all but the terminal ring exposed--an improvement that reduced the incidence of shorted circuits.

Much of U.S. industry saw lucrative contracts terminate with the end of the war. Many of Aircraft Marine's customers went bankrupt, were acquired, or were forced into mergers; in general they were compelled to reduce the scale of their operations drastically. Aircraft Marine, however, needed little product conversion in order to adapt to the postwar economy, because its connections were versatile components rather than more specialized finished products. Still, the transition was stressful for Aircraft Marine. It was able to survive the sudden drop in orders through drastic austerity measures and additional underwriting from Midland Investment Company, its primary benefactor. Whitaker was bitter after the company's experience with military contracts and procurement controls.

Aircraft Marine reentered the commercial market with another new product, the strip-formed terminal. During 1952 the company created a marketing unit called AMP Special Industries and established sales of existing products, and the introduction of connectors for pin and sockets, coaxial cables, and printed circuits resulted in unprecedented growth. Expanding through sales-led growth rather than by acquisition, Aircraft Marine added subsidiaries in Australia, Britain, the Netherlands, Italy, Japan, Mexico, and West Germany during the 1950s.

Aircraft Marine changed its name to AMP Incorporated upon incorporation as a public company in 1956. The company thereafter raised additional capital through share offerings. AMP improved and expanded its plant space and began a more ambitious research and development effort. Having demonstrated brisk and stable growth, AMP was listed on the New York Stock Exchange in October 1959.

Whitaker relinquished the company presidency to George A. Ingalls in 1961. Although he remained chairman, Whitaker wished to emphasize a more democratic form of leadership. He assigned many of his own managerial responsibilities to other managers and slowly removed himself from the company's daily operations.

AMP made a conscious decision during the 1960s against diversification into a wider range of products. Instead, management elected to concentrate on the "passive components" market it had come to dominate. AMP had experienced 15 percent annual growth for a decade beginning in the mid-1950s and anticipated an increasingly difficult "active component" market in the ensuing decades. Indeed, though Japanese electronics manufacturers were developing new capabilities in active components--particularly transistors--they neglected to take advantage of trade regulations that would have allowed them to establish an enduring position in passive components. As a result, AMP became the largest passive component manufacturer in Japan.

AMP continued to make frequent management changes; presidents and chief executives served only for about five years before changing jobs. Whitaker, however, served as chairman until his death in 1975. His death neither interrupted the company's business nor caused a management battle for power. Under the leadership of Joseph D. Brenner, AMP maintained its stable course but devoted increasing sums of money toward research into new "semipassive" systems.

Products that materialized from this intensified effort included more advanced coaxial connections for the growing cable-TV market, fiber-optic terminals for improved telecommunications systems, and more durable membrane switches. To some extent, however, AMP did not take full advantage of military sales. Much like Whitaker, Brenner refused to seek Pentagon sales because the government negotiated special prices on the basis of margin. This necessitated inspection of AMP's books--something Whitaker viewed as interference in the company's business. Instead, AMP was, in effect, a secondary supplier; it sold to companies that did hold Pentagon contracts. Insulated from the vagaries of defense procurement, AMP was better able to maintain stable growth, which continued at an annual rate of about 16 percent.

Walter Raab, a CPA with nearly 30 years of service to AMP, was named chairman and CEO upon Brenner's retirement in 1982. A cautious planner in the mold of his predecessors, Raab presided over AMP during a delicate period. Major customers, such as IBM, Ford, and Digital, sought to cut supply costs by reducing stocks and numbers of suppliers. AMP and its principal competitors, Molex and Thomas & Betts, were expected to benefit most. Already the largest suppliers to the industry, they were most likely to survive. In fact, they stood to gain market share as smaller suppliers were eliminated.

AMP invested heavily in the development of integrated subassemblies and new automated application methods. The system was originally conceived for use in automotive manufacturing. The installation of automotive wiring harnesses, or electrical systems, was complex and labor-intensive. Subassemblies, however, were simple and cut down on person-hours. AMP had to wait more than ten years, however, before auto manufacturers were willing to incorporate the system into production. In 1985 components customers suddenly initiated a drastic reorganization--they switched to automated subassemblies in a very short period. AMP, the least affected, suffered an 18 percent drop in sales, but it recovered quickly as new products were brought on line.

Recognizing the potential sales that came with U.S. military expansion under the Ronald Reagan administration, AMP created a special group that was open to Pentagon scrutiny and designed to engage in government sales. Still, less than five percent of its sales came from the military. In late 1987 both AMP and Molex purchased shares in Matrix Science Corp., a defense-oriented connection manufacturer. In early 1988 AMP then acquired Matrix outright for $120 million. Even with this move, however, military sales would lessen in importance in the coming years. By 1994 less than three percent of AMP's sales came from the military.

In the late 1980s and early 1990s AMP continued to expand internationally. The company opened plants and/or set up subsidiaries in Singapore, South Korea, and Taiwan in 1987; in Brazil, France, Germany, India, Italy, Japan, and Taiwan in 1992; and in China, the Czech Republic, Hungary, Poland, and Turkey in 1994. All AMP foreign subsidiaries were staffed only with locals and had their own engineering and production facilities in order to quickly respond to the needs of the local customers.

During this period, AMP also expanded overseas through acquisitions and partnerships. The firm acquired the Swiss-based Decolletage S.A. St.-Maurice in 1989 and SIMEL S.A., a leading supplier of connections for the European power utility market based in France, in 1994. AMP also entered into a joint venture, the AMP-AKZO Company, with Akzo N.V. of the Netherlands in 1990.

By 1994 AMP could boast of 185 facilities operating in 36 countries, with plans for further expansion in the mid- and late 1990s (including Indonesia and Vietnam). Through its global strategy, AMP continued to decrease its dependence on sales in the United States and achieved a remarkably diverse geographic distribution: only 42 percent of 1994 sales came from the United States (down from 63 percent in 1984), with 31 percent from Europe (up from 20 percent in 1984) and 22 percent from the Asia/Pacific region (up from 13 percent in 1984).

Thus solidifying its position in electrical and electronic connectors through international channels, AMP began to expand more aggressively into related industries. Much of this growth would come (at least initially) through acquisitions rather than through the company's traditional reliance on internal growth through large R&D expenditures. Among the areas into which AMP expanded were cables and cabling systems (1991 acquisition of Precision Interconnect Corporation), fiber-optic connectors (1992 acquisition of Optical Fiber Technologies), piezoelectric plastic film sensors (1993 acquisition of Elf Atochem Sensors), and wireless communications equipment (1995 acquisition of M/A-Com Inc.).

The acquisition of M/A-Com was perhaps the most significant and was certainly the largest of the many AMP acquisitions in the 1990s, resulting from a stock swap that cost AMP about $270 million plus the assumption of $75 million in M/A-Com debt. Based in Lowell, Massachusetts, M/A-Com had posted 1994 sales of $342 million and brought AMP immediate entry into the wireless communications components market--but at a cost some analysts thought too high. M/A-Com became a wholly owned subsidiary of AMP, and M/A-Com management felt it would now have access to capital desperately needed to stay competitive in the fast growing wireless market.

Two other strategies AMP adopted during this period were subsystems development and the use of independent distributors. With the former, AMP reacted to demands of customers who increasingly wished to acquire complete subsystems rather than components that required assembly. Increasing its use of independent distributors and cooperative affiliates, AMP found more marketing channels and potential for greater sales. By 1994 AMP already generated 14 percent of its sales through nondirect channels, double the seven percent figure of 1984.

Guided by James E. Marley, chairman, and William J. Hudson, chief executive officer and president, AMP's aggressive international expansion and moves into related industries and subsystems development came at a time when its traditionally healthy sales growth had slowed. From 1989 to 1993 the company averaged only 5.3 percent in annual growth in net sales. The results for 1994 were much improved, however, as AMP increased its sales 16.7 percent and topped $4 billion for the first time. In addition to increasing expenditures on acquisitions, AMP continued to spend heavily on R&D--with $456 million in total research, development, and engineering expense for 1994, 11.3 percent of net sales. With such sizable investments in the future, AMP seemed well positioned to meet two of its main goals: consistent sales growth in the nine to 14 percent range and $10 billion in annual sales by early in the 21st century.

Principal Subsidiaries:ACSYS Incorporated; AMP-AKZO Company (50%); AMP Packaging Systems, Inc.; Carroll Touch, Inc.; Connectware, Inc.; Kaptron, Inc.; M/A-Com Inc.; Microwave Signal, Inc.; Precision Interconnect Corporation; Raylan Corporation; The Whitaker Corporation; AMP S.A. Argentina C.I.Y.F.; AMP do Brasil Ltda.; AMP of Canada, Ltd.; AMP de Mexico, S.A.; AMP Österreich Handelsges M.b.H. (Austria); AMP Belgium; AMP Czech s.r.o. (Czech Republic); AMP Danmark; AMP Finland OY; AMP de France S.A.; AMP Export Ltd. S.a.r.l. (France); SIMEL S.A. (France); AMP Deutschland G.m.b.H.; AMP of Great Britain Ltd.; AMP-Holland B.V.; AMP Ireland Limited; AMP Italia S.p.A.; AMP Norge A/S (Norway); AMP Polska Sp. z.o.o.; AMP Portugal, Lda.; AMP Española, S.A.; AMP Svenska AB (Sweden); AMP (Schweiz) A.G. (Switzerland); Decolletage S.A. St.-Maurice (Switzerland); AMP Turkey; Australian AMP Pty. Ltd.; AMP Shanghai Ltd. (People's Republic of China); AMP Products Pacific Ltd. (Hong Kong); AMP India Private Limited; AMP (Tools) India; AMP (Japan), Ltd.; Businessland Japan Company, Ltd.; Carroll Touch International, Ltd. (Japan); AMP Products (Malaysia) Sdn. Bhd.; New Zealand AMP Ltd.; AMP Philippines, Inc.; AMP Singapore Pte. Ltd.; AMP Korea Limited (South Korea); AMP Taiwan B.V.; AMP (Thailand) Limited.

Further Reading:

  • Cohn, W. H., The End Is Just Beginning, Carnegie-Mellon Press, 1980.
  • Barton, Michael, Life by the Moving Road: A History of the Harrisburg Area, Woodland Hills, Calif.: Windsor Publications, 1983.
  • Erdman, Andrew, "Staying Ahead of 800 Competitors," Fortune, June 1, 1992, pp. 111--12.
  • Hinchberger, Sharon, "Fortune 500 Manufacturer Develops Global Strategy," Central Penn Business Journal, January 7, 1994.
  • Hwang, Suein L., "AMP Inc. Agrees to Buy M/A-Com in Stock Deal," Wall Street Journal, March 13, 1995, pp. B6(W)/B7(E).
  • Lappen, Alyssa A., "Worldwide Connections," Forbes, June 27, 1988, pp. 78, 80, 82.
  • Poist, Patricia, "AMP Quietly Masters an $18 Billion Market," York Daily Record, April 18, 1993.
  • Zinter, Aaron, "Pa. Firm Agrees to Acquire M/A-Com," Boston Globe, March 11, 1995, p. 61.

Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.