Category Archives: Industrial

On the skids: Dunlop Rubber

Dunlop Rubber was once a leading British multinational. Its presence at Fort Dunlop, Birmingham ended in 2014 after almost 100 years.

John Boyd Dunlop (1840 – 1921) was a “big, shambling” Scotsman who developed the pneumatic tyre. In 1889 a company, led by Harvey du Cros, was established in Dublin to manufacture bicycle tyres based on Dunlop’s discovery. Dunlop himself was sceptical of the commercial potential of the product, and took a 20 percent stake in the venture.

The product was tested by the greatest cyclist of the era, Willie Hume (1862 – 1941), who won seven races out of eight in a trial of the new tyre.

Manufacture was relocated from Dublin and Belfast to Coventry, the heart of the British cycle industry, from 1893. Factories were also established in the United States, France and Japan.

John Boyd Dunlop divested his shareholding in 1895, and the company was sold to the financier Ernest Terah Hooley (1859 – 1947) for £3 million in 1896. Within a matter of months, by bringing on aristocratic directors and garnering press attention, Hooley was able to publicly float the company for £5 million.

Dunlop produced its first tyre for a motor car in 1906. The first rubber estates in Malaysia were acquired, in order to ensure a supply of raw material, in 1910. Construction began on the 400 acre Fort Dunlop headquarters and production site in Birmingham in 1916. Dunlop was the fourteenth largest manufacturing company in Britain by 1918, and its only large-scale tyre manufacturer. It had a market value of £8.9 million in 1919.

Dunlop began to diversify from tyres from 1924. It entered the sports market in earnest when it acquired the tennis racket manufacturer F A Davis. Charles Macintosh, the raincoat manufacturer, was acquired in 1926. The Malaysian estates were expanded over time, and Dunlop was the largest single landowner in the British Empire by 1926.

By 1930, Dunlop was the eighth largest public company in Britain, with a market value of £28.2 million. The company was a major industrial supplier for Britain during the Second World War, producing the bulk of rubber tyres and boots for the war effort.

By 1946, Dunlop had 70,000 employees, and sales outlets in nearly every country in the world. By 1948 Dunlop  was the tenth largest British company, with a market value of £55.9 million.

Dunlop’s fortunes were closely interlinked with the British car industry. In 1950 Britain was the world’s second largest car manufacturer, and the world’s largest exporter of cars. Many of these cars were fitted with Dunlop tyres. In the 1950s Dunlop accounted for almost half of all tyre sales by value in Britain.

By 1955 Dunlop employed 100,000 people, and was the second largest private employer in Britain after ICI. In 1959 Dunlop was the twelfth largest company in the world outside the US.

Dunlop began to decline from the early 1960s as it was slow to adapt to the new market for steel-belted radial tyres. Performance was also undermined by the decline of the British car industry.

In 1970, a long strike at Fort Dunlop resulted in a loss of £3 million at the group’s British operations: the first in its history. As a result, the largest British car manufacturer, British Leyland, which had previously acquired all of its tyres from Dunlop, adopted a policy of dual sourcing to ensure supply.

In the late 1960s, Dunlop was the 35th largest company outside of the United States. In 1973, Dunlop was the eleventh largest British industrial company, with a turnover of £495 million and capital of £290 million.

In 1971, the company merged with Pirelli of Italy, to create the world’s third largest tyre manufacturer. The combined group had a turnover of almost £900 million.

The merger was a disaster: the Pirelli branch lost money every year until 1980. The merger was undone in 1981, but it was too late: Dunlop had amassed massive debts and was almost bankrupt. Dunlop shed over 19,000 employees between 1978 and 1982.

By 1978 Dunlop’s tyre manufacturing operations ran at an increasing loss. By the late 1970s, the Washington plant near Newcastle upon Tyne was the only profitable factory among Dunlop’s eight European sites. Tyre operations lost £22 million in 1980.

In 1981 Dunlop sold its 51 percent stake in its Malaysian rubber estates for £60 million to Multi-Purpose Holdings, a Chinese-Malaysian group. The Dunlop estates were Malaysia’s sixth largest plantation group, covering over 55,000 acres.

In 1983, Dunlop’s European tyre business was sold to its former Japanese subsidiary, Sumitomo, for £82 million.

Between 1970 and 1983, Dunlop had shed over half of its employees, from 107,000 people to 53,000.

The remnant of Dunlop was acquired by the industrial conglomerate BTR plc for £101 million in 1985. BTR sold the US tyre business to its management for £142 million.

In 1996, BTR began to sell its remaining Dunlop businesses to various interests around the world. The sporting arm, Dunlop Slazenger, was sold to private equity firm Cinven for £372 million (who sold it to Sports Direct in 2004 for £40 million). Dunlop Standard, the aerospace group, was sold to private equity firm Doughty Hanson for £510 million.

A once great British brand limps on into the 21st century, due to a mistimed merger and poor managerial decisions.