Submission Date: Nov 20, 2009
Lincoln’s Vision Statement
“We are a global manufacturer and the market leader of the highest-quality welding, cutting and joining products. Our enduring passion for the development and application of our technologies allows us to create complete solutions that make our customers more productive and successful. We will distinguish ourselves through an unwavering commitment to our employees and a relentless drive to maximize shareholder’s value.”
Lincoln electric was founded by John C Lincoln in 1895 to manufacture motor generators. James F Lincoln joined the company in 1907 and in 1911 company built its first arc welding machine. James mechanical genius gave company a head start in welding. He developed a portable welding machine which was a significant improvement from stationed machine which gave L.E a lead in this industry. During World War II, Mr. Lincoln responded to Government call and offered to share his proprietary methods and equipment designs with the rest of the manufacturing industry. In 1955 L.E again started manufacturing electric motors and its position in the market has grown steadily since then. [pic]
Lincoln Electric started its first major global expansion in 1986. It went from 5 manufacturing facilities to 22 manufacturing facilities in a short period of 6 years. The new acquisitions in Europe and Latin America suffered huge operating loses and company had to borrow money to pay bonuses to its employees in US facilities. The inexperience of L.E Executive staff with trade unions and labor laws and practices in other countries lead to a stumbling block in the effort to integrate new acquisitions into Lincoln’s distinctive management culture. In 1996 company bounced back and became profitable and renewed its expansion into other countries such as Italy and Indonesia. In 1997 company opened its joint venture plant in Indonesia and in 1998 it expanded to China. In 1999 L.E acquired 35% of equity position in Taiwan based consumables company, Kuang Tai. In 2000 L.E acquire Italian based manufacturer C.I.F.A Spa and strengthen its position in Europe. In 2001 L.E strengthen its position in Latin America by acquiring Venezuela based company in consumable welding products. In 2002 it acquired Bester S.A a Poland based welding manufacturing company and expanded its operations in Eastern Europe. Following exhibit shows the breakdown of L.E sales industry wise.
Valuable lessons learned from 80s expansion proved to be very useful for the company’s second round of global expansion. L.E is more cautious about the local economies, its socio economic and political fabrics, but is has not compromised on its bedrock principles.
1. Should Lincoln Electric expand into India by investing in a major production facility there?
The fact India accounts for 3% of the Global Welding Industry Sales and 17% of the world population makes this market naturally attractive, in addition India’s GDP has been growing at an average of 6% year after year for about 20 years, and Goldman Sachs projects that India will become the world fastest growing economy over the next 50 years, which means that the country will be investing heavily in infrastructure that will boost the welding market including, but not limited to, highways, railroad, oil and gas pipes and airports. In addition, India is located in a geo-economical region that represents 45% of the global welding sales – more that North America and Europe combined that account for 23% and 21% respectively.
Source: “Lincoln Electric” Article, Jordan Siegel, Harvard Business School, August 25, 2008
Specifically to India, although the major competitors are Ador and ESAB, there are over 300 other smaller competitors, but the major companies have been enjoying sustained profit: [pic]
Source: “Lincoln Electric” Article, Jordan Siegel, Harvard Business School, August...