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The Bausch& Lomb history

Bausch & Lomb, an American company based in Rochester, New York, is one of the world's leading suppliers of eye health products, such as contact lenses and lens care products today. In addition to this main activity, in recent years the area of medical technology (medicines, implants for eye diseases) has been developed. Bausch & Lomb became well known because of its popular Ray-Ban brand of sunglasses, which was sold in 1999 to the Italian Luxottica Group. Today, the company employs about 13,000 people in 36 countries.

Early History

Bausch & Lomb Optical Co., an eyeglass store and manufacturer of eyeglass frames, was founded in 1853 by two German immigrants, John Jacob Bausch and Henry Lomb, in Rochester, New York. Bausch's son Edward learned to make microscopes, and the company prospered after it began to manufacture them. In 1890 Edward Bausch contacted Carl Zeiss, a German optics firm, and soon arranged for Bausch & Lomb to license Zeiss's patents, with the exclusive rights to the U.S. market. The most important patents were to Zeiss's new photographic lens and its first prism binoculars. Bausch & Lomb expanded, opening offices in Chicago, Boston, New York City, and Frankfurt, Germany. Bausch & Lomb gradually became a leading name in optics in the United States, supplying microscopes to schools and laboratories and manufacturing the U.S. Navy's first telescopic gun sights.

In the early 1900s, Zeiss perfected the military range finder. Impressed by U.S. manufacturing expertise, Zeiss eventually decided that, rather than build its own factory, it would allow Bausch & Lomb to manufacture range finders in the United States. In 1907 Zeiss bought 20 percent of Bausch & Lomb, granting the company free use of Zeiss patents in the United States. Zeiss, on the other hand, sold to the rest of the world and was paid in dividends rather than royalty payments. Bausch & Lomb also sent technicians to Germany for training at Zeiss laboratories. Military products accounted for only a small amount of Bausch & Lomb's production, but as the only U.S. manufacturer of many optical products, production was nevertheless vital to the U.S. military. As a result, the U.S. Navy stationed technical experts in the company's plant in 1912.

Bausch & Lomb's arrangement with Zeiss unraveled after the outbreak of World War I. The company had sold the Allies equipment without Zeiss's approval in Europe, which was not one of Bausch & Lomb's markets. In 1915 Zeiss sold its 20 percent share back to Bausch & Lomb, and until 1921, the two companies had no dealings with one another (although Bausch & Lomb continued to use Zeiss patents). Because of the war, Bausch & Lomb became the major U.S. supplier of scientific precision glass, from which the lenses used by the military were ground. After the war, the other U.S. companies that had learned to make the glass stopped production, making Bausch & Lomb the only producer of scientific precision glass in the Western Hemisphere. In 1921 Zeiss made all of its military patents exclusively available to Bausch & Lomb for use in the United States.

In 1926 John Jacob Bausch died, and Edward Bausch became chairman of the board. In the 1937 Bausch & Lomb went public, selling $3.6 million worth of stock to raise working capital. At the time the company made 17,000 products, from eyeglasses to spectroscopes. Bausch & Lomb made 28 percent of U.S. eyeglass lenses and a large percentage of the country's microscopes and binoculars. Even after the offering, the company was still closely held, with family members owning significant percentages of Bausch & Lomb stock and holding most top management positions.

Preparing for World War II

During the late 1930s, as Europe once again headed toward war, Bausch & Lomb focused on becoming self-sufficient by searching for U.S. sources of most materials to make optical glass and by stockpiling two year's worth of foreign supplies. During this time, the firm emerged as a leading provider of professional photographic lenses, particularly for the film industry. Bausch & Lomb's Cinephor coated projection lenses were used by almost all U.S. movie houses, while its high-speed lenses were used for projecting background scenes. Bausch & Lomb was awarded an honorary Oscar for these contributions. With help from these new products, company sales increased from $16.2 million in 1938 to about $21 million in 1940.

Despite these accomplishments, Bausch & Lomb's image was tarnished somewhat by a 1940 federal suit regarding its relationship with Zeiss. The U.S. Justice department charged both companies with antitrust violations because of their agreed-upon division of world markets. The government alleged that this resulted in inflated prices and also questioned the propriety of a German company dictating the sales of optical products by a U.S. company. While denying any wrongdoing, Bausch & Lomb paid a fine and again severed its relationship with Zeiss. The company was expanding for a new rearmament program and bidding on navy contracts, and industry analysts assumed that Bausch & Lomb wanted the incident put behind it as quickly as possible.

During World War II Bausch & Lomb produced optical instruments, including range finders and field scopes. As one of the earliest manufacturers of high-quality sunglasses, the company also benefited from the use of Ray-Ban sunglasses by U.S. Army Air Corps pilots and General Douglas MacArthur.

During the war, the percentage of company output relating to the military soared, but by the early 1950s, military sales had fallen to 15 percent of the total. Sales had increased to about $48.5 million, and the firm had more than 150 prescription labs for grinding and polishing glass lenses throughout the United States. Bausch & Lomb spent less than 2 percent of sales on research and development. Meanwhile, as Japanese firms recovered from the war, they became competitive. In 1951 Bausch & Lomb realized it was slowly losing its competitive edge and began allocating more money--some of it borrowed--into research and development. As a result, the company moved into the growing electronic optics field in 1954. By the early 1960s the firm was spending approximately 6.5 percent of sales on research and development. Bausch & Lomb also upgraded its marketing department to determine customer demand prior to developing new product lines.

In 1959 William McQuilken became the first president not related to the families of Bausch & Lomb's founders. The firm dropped Optical from its title in 1961, reflecting its move into other technologies and measurements. Sales reached $70 million in 1962. The company moved into the school market, which was growing quickly and required inexpensive, rugged instruments. In 1963 the firm released a $12 microscope targeted at the elementary and secondary school market. The instrument, with features usually reserved for expensive models, was made of tough plastics. Bausch & Lomb released two additional school microscopes priced under $50. Company earnings were static for much of the 1960s, however, because low-margin ophthalmic products such as eyeglass lenses and frames still accounted for a sizable portion of its sales.

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