The Clayton Equipment Company Ltd was founded in 1931 by Stanley Reid Devlin. Devlin traded from offices at International Combustion Ltd, Sinfin Lane, Derby as Clayton Equipment, until the outbreak of the Second World War. The company ran a factory producing war materials, and in 1945, Clayton responded to the huge shortage of industrial goods by producing general and structural steelwork, farm buildings, conveyors, elevators and submerged ash conveyors. By 1946 the company had expanded sufficiently to acquire new premises at the Record Works in Hatton, Derbyshire, where the large site allowed the company to continue to develop as a business. New workshops and offices were erected and machinery installed to help build a wide variety of locomotives and industrial equipment that were exported to countries such as Australia, New Zealand, Poland and Korea. A number of diesel electric locomotives were also made for the domestic market, as British Railways began their modernisation program.

International Combustion Holdings Ltd acquired a 100% shareholding of Clayton in 1957, but the company continued to operate autonomously as an entirely self-contained and self-supporting unit. In 1962 the company focused on designing and building a wide range of flameproof locomotives for British coal mines. With the decline of the British coal mining industry, the company diversified to tunnelling and construction for the overseas market.

Ownership of Clayton changed hands several times over the next thirty years, during which time Clayton established itself as a market leader in underground rail haulage solutions. International Combustion was acquired by Clarke Chapman Ltd of Gateshead in 1974 and in 1979 the organisation merged with Reyroll Parsons of Newcastle to form a new company called Northern Engineering Industries.

In March 2005, Clayton Equipment once again became an independent company and immediately entered a highly successful period of independent trading. The company moved from the Hatton site to Centrum 100 business park, Burton upon Trent in 2006. Today, the future for Clayton Equipment remains firmly with mining and tunnelling locomotives.