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FASTENER HISTORY
1994 FIN – ITW’s Steady Success, Future Featured in Barron’s and Crain’s

July 21, 1994 FIN – Illinois Tool Works, manufacturer of fasteners, plastic six-pack beverage carriers, spray guns, arc welders, electronic devices and industrial strapping was featured in articles in Barron’s and Crain’s Chicago Business recently. Barron’s noted Glenview, IL-based ITW applies for more than 100 patents a year – 139 in 1993 – and has patented more than 4,000 inventions.
“ITW works closely with customers in many industries to meet their demands for more rugged and sophisticated components,” Harlan S. Byrne wrote in Barron’s. “Its roster of clients is long, studded with big names such as General Motors, Ford, Caterpillar, Texas Instruments, and AT&T, not to mention major companies abroad.” Few companies its size are as highly decentralized; the company is broken down into more than 250 separately operated units. For reporting purposes, they’re lumped under two segments: Engineered Components and Industrial Systems and Consumerables. For management purposes, they’re overseen by seven executive vice presidents. The vice presidents report to John D. Nichols, chairman/CEO.
Nichols told Barron’s that ITW tries “to keep our operations simple and our units small and focused.” One acquired company was split into 20 units. The most recent major acquisition, the Miller Group of Appleton, Wis., has been divided into seven operations.
“ITW’s many units ar geared to run as independent companies. They do their own product development, working with customers. But they can call on a central research and development center for help with certain technologies and new materials.” Nichols wants units to run with 150 employees or less. “When operating units get above 150 people, we start thinking whether they should be further divided,” Nichols told Barron’s. The Crain’s article concentrated on the future of ITW.
Nichols “consistently has given Illinois Tool Works Inc. shareholders what they want most: steadily increasing earnings and a stock price that’s grown nearly five fold in the last decade.
Crain’s noted that Nichols, 63, has a major decision ahead of him: naming a successor. “That has to be resolved in the near future,” analyst Robert Bartels of William Blair & Co. told Crain’s. “They reached outside to place him in the organization,” Bartels said. “My sense is they wouldn’t to replace him.” A company spokesperson noted that, “We don’t have a mandatory retirement age for officers.”
Nichols joined ITW in 1980 after jobs at General Tire & Rubber Cp., ITT and Ford. He has been CEO since 1982. ITW has six vice presidents and five are 53 or younger. “He hasn’t put anybody in a position where they would be designated heir apparent,” Bartels said. Sales in 1993 jumped 12% to $3.16 billion and earnings rose 8% to $206.6 million or $1.83 per share. First quarter earnings were up 21%.
Earnings per share in 1992 were $1.72 and $1.62 in 1991. The market value of ITW is estimated t $4.5 billion. ©1994/2009 Fastener Industry News.