Like many other "premium conglomerates," Teleflex has a leading market position in the majority of its market niches. "While we don't have a stated policy of being number one in our markets, we understand the attractiveness [of being so]," Zuber notes.

Over the 10 years ended December 31, 1997, Teleflex outperformed the S&P 500 on a total shareholder return basis by 12 percent, according to Larry Shulman, a senior partner with Boston Consulting Group. Zuber says it's hard to know whether the company's stock would have performed better or worse if the company had been more focused on one particular line of business. --R.M.

DIVERSIFICATION THROUGH EVOLUTION

Most diversified companies get that way through acquisitions. Few have the patience, the breadth of management, or the manufacturing skills to allow them to branch out into businesses where they have no track record. Yet given enough time, companies can diversify organically, as illustrated by the experience of Teleflex Inc., a $1.7 billion conglomerate based in Plymouth Meeting, Pennsylvania.

Teleflex provides goods and services in three distinct business segments. Its commercial group makes marine, auto, and industrial products, including Humminbird fish finders, control systems for cars and boats, electrical instrumentation products, and fluid transfer hose. Its aerospace group makes turbine engine parts, as well as control and cargo systems for airplanes. And its medical-products group makes surgical devices and disposable hospital supplies.

Most of those product lines trace their origins to the company's launch more than 50 years ago as a manufacturer of helical cable for use in the British Royal Air Force's legendary Spitfire aircraft. "Our diversification has been a result of migrating that cable or its concept first to the automotive and then to the marine and other industrial markets," says Teleflex CFO Harold Zuber. "We also migrated up the technology scale from cable, which is mechanical, to electromechanical products, such as onboard cargo systems, to electronic technology. As a result, many of our product lines that seem unrelated really aren't.

"Our coatings line, for example, which gave rise to our turbo-engine business, came from a search for noncorrosive coatings for cable," says Zuber. "And our medical business came through the migration of our technology for producing the inner liner of cable to invasive disposables, such as catheters. It's been a natural evolution, and one of the results is that in 2000 we completed our 26th consecutive year of increased sales."

As the company grew increasingly diversified, Zuber says, management always kept the focus on customers, resulting in a unifying business strategy that centers on solving customer problems with proprietary and often innovative products not easily duplicated by larger competitors.

Despite the "cross-pollination" that takes place across industries and manufacturing skills at Teleflex, Zuber says the company operates on a decentralized basis that allows managers to be nimble, and encourages entrepreneurial thinking. The corporate staff is lean, he says, and covers such activities as finance, human resources, and legal. Within finance, reporting and taxes are corporate functions, but accounting is pushed down into the business units, where it can best support the operating staff.

Like many other "premium conglomerates," Teleflex has a leading market position in the majority of its market niches. "While we don't have a stated policy of being number one in our markets, we understand the attractiveness [of being so]," Zuber notes.

Over the 10 years ended December 31, 1997, Teleflex outperformed the S&P 500 on a total shareholder return basis by 12 percent, according to Larry Shulman, a senior partner with Boston Consulting Group. Zuber says it's hard to know whether the company's stock would have performed better or worse if the company had been more focused on one particular line of business. --R.M.

U.S. Premium Conglomerates, 1988-1997   

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