17876 St. Clair Avenue
Cleveland, Ohio 44110
Telephone: (216) 486-4200
Fax: (216) 383-4091
Incorporated: 1931 as Brush Beryllium Co.
Sales: $345.9 million
Stock Exchanges: New York
SICs: 3339 Primary Nonferrous Metals Nec; 3369 Nonferrous Foundries Nec
Brush Wellman Inc. is the world's leading producer of pure beryllium and beryllium products. The vertically integrated company is justifiably proud of its investment of time and money in the development of beryllium. Once characterized as a "mystery metal," this rare material has been adapted for applications ranging from watch springs and golf clubs to spacecraft, and, in large measure as the result of Brush Wellman's efforts, has come to be considered a "miracle metal." The company's perseverance through decades of criticism that it was not performing up to its potential began to pay off in the 1980s, when broader, more stable markets brought long-held expectations of bumper profits to fruition.
Beryllium was discovered by Louis Nicolas Vauquelin in 1798 and isolated by Friedrich Wöhler and Antoine Bussy thirty years later. It was known for many years as "glucinium," a name based on its sugary taste. Although beryllium occurs in many minerals, most of them are rare. Beryl rock, which contains the highest concentrations of beryllium (11 to 15 percent), has long been the primary source of this material. Beryl rock's clear varieties are the gems aquamarine and emerald.
Blue-gray in color, beryllium boasts a unique combination of characteristics. It is 30 percent lighter than aluminum, but is stronger (by weight) than steel. Beryllium maintains integrity of shape and strength over extremes of heat and cold and has a high capacity for heat absorption.
Brush Wellman was founded by Charles Baldwin Sawyer and Bengt Kjellgren in 1931 as the Brush Beryllium Company. Sawyer and Kjellgren had begun their work with beryllium in 1921 at Cleveland's Brush Laboratories. This research facility was founded by and named for Charles F. Brush, inventor of an early electric generator called the Brush arc dynamo. Experiments on the conductivity of metals led to the development of an extraction process that used heat and pressure to separate beryllium from beryl ore. One of several companies spawned by research conducted at the Brush Laboratories, Brush Beryllium was created to develop marketable applications for beryllium.
In its early years, the company concentrated on producing pure beryllium. The metal's strength and reliability made it a prime candidate for military applications. Defense sales gained volume and significance with the advent of World War II. Brush Beryllium played a role in the development of atomic energy, missiles, aircraft, and rockets.
Boosted by defense and later aerospace contracts, Brush Beryllium's annual sales multiplied quickly, from $4.5 million in 1955 to $18 million by 1960. Metals and Minerals Division chief Stephen Zenczak later told Fortune's John Quirt that "in 1960 beryllium was an absolutely magic word and we were up on cloud nine." High demand obliged Brush, then led by Robert W. Biggs, to seek stable sources of beryl ore.
Up to that point, Brush Beryllium had been dependent upon imported beryl ore, which it processed into beryllium. Most of the world's beryl rock can be found in Brazil, but as a 1984 Forbes article noted, procuring the material was "like hunting for four-leaf clovers or panning for gold." In fact, Brush relied on Brazilian "prospectors" to collect the surface-level pieces of rock. The only other known global sources of commercial-grade beryl rock were located in the U.S.S.R. and China, a factor that imbued the drive for a stable (preferably domestic) source of beryl with national security implications.
The discovery of bertrandite, another beryllium-bearing ore, in Utah's Topaz-Spor Mountains in the early 1960s opened the door to vertical integration at Brush Beryllium. Taking a great calculated risk, Brush bought the right to explore and mine 12,500 publicly owned acres in Utah for $3 million. At the time, company executives weren't even sure that beryllium could economically be culled from bertrandite. Due to the highly speculative nature of the venture, they initially retained only a 30 percent stake in the independent company known as Beryllium Resources. Reassured that their bet was well placed, Brush Beryllium bought the remaining shares in 1962 and made the operation into the Geological Exploration & Mining Division.
A $16 million on-site processing unit converted both imported and freshly mined materials into beryllium hydroxide concentrate. From there, the materials were transported to the company's plant in Elmore, Ohio, where they were pulverized into a powder before undergoing a "thermal shock" process that transformed the substance into solid, malleable forms. This lengthy process was further complicated by the fact that beryllium powder is explosive, toxic, and possibly carcinogenic. These factors engendered the regulatory scrutiny of the Occupational Safety and Health Administration and the Environmental Protection Agency. Nevertheless, consistently high demand for the strategic metal driven by the Cold War "space race" more than compensated for these intricate and costly production requirements throughout the 1960s.
The early 1970s brought cutbacks in the space program. Consequently, Brush Beryllium attempted to reduce its reliance on defense and aerospace through diversification, acquiring three businesses in northeast Ohio between 1971 and 1975. The most significant purchase during this period was S. K. Wellman, a manufacturer of industrial brakes and clutches. In honor of its $13.5 million investment, the parent company changed its name to Brush Wellman Corp. in 1971. Two years later, Brush Wellman spent $5.5 million on Sawyer Research Products, Inc., the world's leading producer of specialty cultured quartz crystals. The 1974 acquisition of Bucyrus Blades, Inc., manufacturer of blades for bulldozers and snowplows, added to Brush's stable of niche companies.
This diversification program never lived up to expectations. Altogether, the new businesses contributed less than 20 percent of Brush Wellman's annual revenues, and their profit margins were only about one-third as high as those generated by beryllium. Perhaps most telling, the new businesses failed to safeguard the parent from a post-Vietnam War decline in demand; profits dropped from $8 million in 1973 to $3.8 million by 1975.
Instead of simply seeking new avenues for diversification, Brush Wellman re-evaluated the beryllium market. Under the guidance of Henry G. Piper, who succeeded Robert Biggs as chief executive officer in 1978, the company developed new beryllium-based products and undertook an aggressive marketing campaign. Most of the growth was generated by copper-beryllium alloys. Adding proportionately small amounts of beryllium to copper (often less than three percent) produced a material that conducts electricity and heat well, is resistant to corrosion, wear and fatigue, and is strong yet malleable.
Although copper-beryllium alloys have been used in an astonishing array of products ranging from eyeglasses to submarine cable, Brush Wellman's chief target became the electronics market, where conductivity, reliability, and durability are paramount. By focusing its efforts there, Brush threw its hat into the fast-paced electronic connector market, which generated more than $3.7 billion in total annual sales by 1983. A study by Stephen F. Hager of Unimar Group Ltd. cited in the September 24, 1984, issue of American Metal Market asserted that well over two-thirds of this industry's products were developed after 1960. Brush Wellman's connectors were used primarily in computer, automotive, and telecommunications equipment. Beryllia ceramic, an oxide form of beryllium, quickly created another new product group. This material's capacity to diffuse heat can help extend the life of electronic circuitry in wireless telephones and automotive controls.
Brush Wellman's sales more than doubled to $190.2 million from 1975 to 1981 and its net income quintupled to $19.3 million during that period. By that time, pure beryllium only constituted about five percent of sales. The company divested its quartz and industrial brake businesses in the early 1980s (but kept the Wellman surname) and invested instead in increased beryllium capacity and more closely related acquisitions. In 1982 Brush Wellman paid $46.68 million for Technical Materials, Inc. (TMI), a manufacturer of specialty metal strip that incorporated varying combinations of copper, nickel, stainless steel, and precious metals. The late 1986 acquisition of Williams Gold Refining Co. provided TMI with a source of high-purity precious metals.
Brush Wellman also worked to widen the appeal of beryllium-based products by developing lower-cost materials in the 1980s. Introduced in 1986, the company's patented Brush Alloy 174 used significantly less beryllium (.15 to .5 percent, compared to 2 percent) and cost about half as much as its standard copper-beryllium alloys. This material offered higher conductivity, strength, and durability than the copper and bronze alloys it was created to supplant. During this same period, Brush Wellman began expanding its geographic reach, establishing distribution centers in Germany, Great Britain, and Japan.
The new strategy paid off in the early 1980s. Brush Wellman's sales grew at an average annual rate of 15 percent from 1978 to 1988, a pace that outstripped the overall connector industry. This statistic indicated that the company was both capturing business from more traditional manufacturers and creating new markets for its high-end products. By the mid-1980s, over two-thirds of Brush Wellman's sales were made to the electronics market. David Carey of Financial World estimated that the company held "70 percent of the market for alloys and 80 percent of the one for ceramics" by 1988.
Ever-increasing demand made continued supply a concern. According to John Quirt, the company estimated that its Utah reserves would last until the turn of the twenty-first century. Brush continued to supplement its domestic source with imports and initiated a Resource Recovery program that recycled beryllium and copper from scrap.
Despite its foresight and market savvy, Brush Wellman was pummeled by economic recession in the late 1980s. Even the Defense Department's beryllium stockpiling program could not prevent a four-year slump that began in 1988. Sales declined by nearly 23 percent, from $345.84 million in 1988 to $267.47 million in 1991, and the company went from a net surplus of $32.5 million to a $44 million deficit. The financial results reverberated in the front offices. CEO Raymond A. Foos, who had succeed Henry Piper in 1988, was asked to resign in 1990. Piper resumed his duties as interim CEO until 1991, when Brush Wellman's board brought in Gordon D. Harnett to take the reins. Harnett had advanced to senior vice-president of specialty chemicals at B. F. Goodrich Co. before accepting the leading role at Brush Wellman.
Harnett continued a restructuring plan undertaken in 1989. The strategy's two main goals, increased productivity and market development, were achieved through several methods. Brush Wellman used attrition, early retirement, and layoffs to reduce its payroll by 18 percent from 1988 to 1991. Concurrent inventory reduction programs, capacity increases, and a retooling raised quality and service while reducing costs. These tactics helped Brush Wellman regain its profit margins without raising prices. The company's market development strategy included a shift from the stagnating mainframe computer market to the fast-growing personal computer segment. And although Brush Wellman's overall employment level shrank, the company increased its sales force by 40 percent.
From 1989 to 1994, the company reduced its sales to the aerospace and defense market from 29 percent of the total to 14 percent, with automotive electronics, telecommunications, and consumer products filling the gap. International sales increased to more than one-third of the company's total revenues. Perhaps most importantly, the company's bottom line recovered as a result of the reorganization plan. Sales reached a record $345.9 million in 1994, and net income recovered to a level not seen since 1989. However, the $18.6 million profit did not even approach the record $39.1 million set in 1984. Given the company's commitment to continuous improvement at all levels, there was no reason to believe that this milestone would not be surpassed in the mid-1990s.
Principal Subsidiaries: Brush Wellman GmbH; Brush Wellman (Japan), Ltd.; Brush Wellman Ltd.; Brush Wellman (Singapore) Pte. Ltd.; Technical Materials, Inc.; Williams Advanced Materials Inc.; Williams Advanced Materials Pte. Ltd.
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Koshar, John Leo, "Brush Wellman: A Firm Alone in its Field," Plain Dealer, May 18, 1980, p. E1.
Leibowitz, David S., "Dull, Dull, Dull," Financial World, June 13, 1989, p. 104.
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Source: International Directory of Company Histories, Vol. 14. St. James Press, 1996.