701 Daniel Webster Highway
Chemfab will be a world-class company (the best at everything we do) that creates and delivers high performance polymer-based products of superior value. We believe that by providing our customers with superior value in product innovation, performance, quality, delivery, and customer service at competitive prices, we can deliver value to our shareholders and employees. We will be a value-driven company in everything that we do. Business activities which fail to add value will be fixed, disposed of or eliminated, and new activities will have clearly defined value benefits.
Chemfab Corporation is an international leader in the design, manufacture, fabrication, and marketing of flexible polymeric composite materials. The company manufactures a broad range of polymer-based, reinforced and unreinforced fluoroplastics, fluoroelastomers, silicone elastomers, and adhesives. Chemfab's products include laminates, films, coated fabrics, tapes, molded polymer products, and finished articles fabricated from roll goods. The company's products usually fit within three major product groups: engineered industrial products, architectural products, and elastomere products. Engineered industrial products are made of woven fiberglass or other high-strength fibrous reinforcement-coated resins. Chemfab's trademarked architectural products include Sheerfill architectural membrane, Ultralux architectural membrane, Fabrasorb acoustical membrane, and Chemglas roof membrane. Chemglas also is used as a protective layer in the space shuttle cargo bay and in covers for critical components on the new international space station. Chemfab elastomer products include a comprehensive product line of elastomeric closures for use in gas and liquid chromatography, environmental testing, and the packaging and storage of sterile biomedical-culture media. The company also markets specialty fluoropolymer films, silicone elastomers, and other silicone-based products. Chemfab has operations in nine countries around the world and operates within three major business segments. The Americas Business Group is responsible for all manufacturing and sales of engineered industrial products made in, and sold to, the Americas as well as for architectural product sales worldwide. The European Business Group is responsible for all manufacturing and sales of engineered industrial products made in, and sold to, Europe, the Middle East, and Africa. The High Performance Elastomer Group manufactures and sells silicone-elastomer products worldwide. Global markets for Chemfab's products are in the electrical, food processing, biomedical, protective clothing, electronics, communications, aerospace, architectural, and other industrial markets and applications. The company also sells to the medical electronics, personal care, health care, and specialty apparel industries. 'During the last five years,' wrote Chemfab President/CEO John Verbicky in his 1999 Letter to Shareholders, 'the company has nearly tripled its revenue and has tripled its earnings per share.'
1968-84: Origins and Early Development
Entrepreneur John Ransom Cook and four business associates, on September 30, 1968, founded Chemical Fabrics Corporation and set up shop in a former Volkswagen dealership building in Bennington, Vermont. Previously, in 1947, Cook had established Warren Wire Company--named after his eldest son, Warren--and manufactured electrical wire insulated with a polymer named polytetrafluoroethylene (PTFE). The E.I. du Pont de Nemours and Company (DuPont) had developed PTFE, trademarked the product and taught the world to call it 'Teflon.' Three years after the sale of Warren Wire to General Cable Corporation, Cook re-entered the Teflon-coated products business; this time, however, he focused on Teflon-coated glass fabrics for diverse industrial applications. Since there were already established markets for standard 60-inch-wide Teflon-coated glass fabrics, the company (which adopted the trade name Chemfab) pioneered the development of equipment that could coat woven fiberglass webs up to 180 inches wide.
At about this time, an event halfway across the world--namely, the 1970 World's Fair held in Osaka, Japan--was about to influence Chemfab's direction and growth as a company. The U.S. Pavilion and pavilions of many other nations, were constructed of lightweight, membranelike materials, so much so that the fair was billed a 'fabric-structure extravaganza.' The roof of the U.S. Pavilion, which was fabricated and installed by the Japanese company Taiyo Kogyo Corporation (Taiyo), was made of vinyl-coated woven fiberglass, air-supported, and held in place by steel cables, according to Our First 25 Years--a booklet commemorating Chemfab's founding and progress. Cook recognized both the limitations and the weaknesses of the vinyl-based roofing fabric, which would not pass muster for U.S. buildings: the vinyl was not fire-resistant enough to meet building codes. Furthermore, vinyl-based materials discolored rather quickly after outdoor exposure.
Cook worked intensely with DuPont and Owens-Corning Fiberglas Corporation to develop a Teflon-based roofing material that could meet the requirements of U.S. building and fire codes. Roofing material was an ideal product for Chemfab, 'the only company in the world that possessed wide-width PTFE-coating capability,' wrote the author of Our First 25 Years. The result of the cooperative effort was Chemfab's trademarked Sheerfill, a material that could be modified to varying weight, strength, translucency, and reflectivity to fit the design and location of a structure. Sheerfill reflected heat while allowing light to pass through and did not discolor when exposed to extreme temperatures; the strong, durable product's solar and thermal/optical properties were similar to those of reflective glass, but Sheerfill was translucent rather than transparent.
Chemfab developed architectural membrane products to support Sheerfill roofing but still needed specialized engineering, fabrication, and installation techniques, which it obtained from Buffalo, New York-based Birdair Structures, Inc., a firm that specialized in the installation of membrane structures. In 1973 Birdair completed the first project using Sheerfill: a cone-shaped membrane structure spanning 68,000 square feet covering the student and drama center at The University of La Verne, in California. Then, in 1975, came the completion of an air-supported Sheerfill roof on the Pontiac Silverdome in Michigan. During the 1970s, Chemfab also began to use Teflon-coated fiberglass composites to make radomes, globe-shaped structures for housing radar antenna equipment and, eventually, on a worldwide basis, to shelter satellite and microwave communications equipment.
Disaster struck in 1976: John Cook died when his private plane crashed in an ice storm. Expansion had stretched Chemfab's financial resources to the limit and negotiations for a new lease on building space for a weaving operation in Manchester, New Hampshire were a great burden on the company. John's brother, Paul Cook, gave much needed management and financial assistance to the young company and ensured its continuing viability. He became a Chemfab director and brought in Warren Cook, John's son, to serve as president/CEO.
In 1978 Chemfab won a contract to supply coated material for an enormous canopy over the Hajj Terminal at King Abdul Aziz International Airport in Jeddah, South Arabia. This canopy covered 100 acres (the area of 110 football fields) and was designed to shelter nearly one million pilgrims on their annual pilgrimage to Mecca. Then, in 1979, Chemfab acquired Birdair and increased its participation in the building of a growing number of diversified outdoor membrane structures. Chemfab marketed its high-performance fabric composites worldwide. These composites were produced by encapsulating woven glass fiber within a fluoropolymer-resin matrix; the end product, called 'engineered material,' surpassed the properties of its separate components. Woven fiberglass coated with thermoplastics and elastomers allowed for the fabrication of products having strong thermal, electrical, and chemical resistance. [Elastomer--elas(tic) + (poly)mer is a rubberlike synthetic polymer, such as synthetic rubber.] The end-users of these products were the defense and communications markets as well as builders of permanent fabric structures.
To serve its expanding overseas markets, in 1980 Chemfab established a Teflon-coating plant in Kilrush, Ireland. This plant manufactured a broad range of Teflon-based composite products and fabricated end-use products for sale in Europe, Africa, the Middle East, India, and Japan. Gradually, sales subsidiaries were established in England, Denmark, and Spain. Chemfab relocated its headquarters to Merrimack, New Hampshire to gain greater accessibility to the Boston metropolitan area and secure additional space for long-term expansion. Chemfab's advances in fabric-composite technology triggered strong growth for the company. To obtain a larger capital base for further expansion, Chemfab went public in the fall of 1983 and was traded on NASDAQ under the symbol CMFB.
Sales of products for fabric structures increased 70 percent in 1984, representing 49 percent of total sales. During the year, nine fabric structures were completed; Chemfab was the major supplier for the International Stadium project in Riyadh, Saudi Arabia. The company's capability to integrate design and installation gave it a strong marketing edge. Chemfab's international business, excluding the International Stadium project, doubled in 1984. An office was opened in West Germany to assist the marketing group in the United Kingdom and the company's manufacturing facilities in Ireland. Through the acquisition of Florida-based Toralon Products Corporation, a PTFE film manufacturer and owner of a technology for a multilayer cast-film process, Chemfab added film production and lamination to its processes. Furthermore, the acquisition of Environmental Structures Pty, Ltd. opened up opportunities for sales, marketing, and installation services for permanent fabric structures in Australia. For fiscal 1984, sales reached $37.12 million, compared with $27.02 million in 1983; working capital for 1994 rose to $4.26 million, compared with $1.7 million in 1993.
1985-90: Fall and Rise
Substantial increases in costs for a rapid expansion program, strong competition, a sudden collapse in demand for architectural membranes, and an uneven economy in 1985-86 caused revenues and profits to fall below expectations. Costs rose faster than revenues. Chemfab implemented cost controls, reduced the work force, and moved forward by orienting itself toward more stable, recurring, and proprietary businesses. Chemfab partnered with Owens-Corning Fiberglas Corporation (OCF) to form a joint venture, dubbed OC Birdair, Inc. By combining its engineering expertise with OCF's construction experience and applications technology, Chemfab gained a more efficient delivery system.
Furthermore, to cultivate Japanese and Far East markets and acquire a location for manufacturing and distribution in the Pacific Basin, Chemfab partnered with two Osaka, Japan-based companies: Nitto Electric Industrial Company and Taiyo. The Tokyo-based venture, named Nitto Chemfab Company, Ltd. (later merged in Chemfab Japan, Ltd.), was one of the main customers of Chemfab's Sheerfill permanent architectural products. Chemfab also developed a trademarked acoustical liner fabric, Fabrasorb, which absorbed sound typically encountered in large open areas. For fiscal 1986, Chemfab reported net sales of $23.04 million, compared with record net sales of $37.12 million in 1984; fiscal 1986 net income loss amounted to $5.06 million for 1986, compared with a net income profit of $2.01 million in 1984. In June 1986, Warren Cook retired as president/CEO; he was succeeded by Duane C. Montopoli, who had joined Chemfab as chief financial officer in February 1986 and had served as interim president after Warren's retirement.
According to Andrew Wood's 'Chemfab' article in the 1997 issue of Chemical Week, 'In 1986 Chemfab was on the brink of bankruptcy. ... Montopoli, a financial whiz rather than an expert in composites, set about diversifying Chemfab into other sectors to reduce its dependence on the architectural market.' To repair the company's balance sheet, he sold Chemfab's headquarters building and the surrounding 175 acres of land for $10.3 million but retained full use of the facility and the right, over time, to repurchase the building and 21 acres of land. Proceeds of the sale went to pay down bank debt; financial health was restored and Chemfab began a slow, but steady, growth in both domestic and international markets, especially for its trademarked engineered products--for example, Raydel, radomes, coated release sheets and conveyor belts, insulated cables, and Challenge clothing. Raydel, a microwave-transmissive fabric, was used in the manufacture of radomes and electromagnetic windows; this fabric had an exceptionally low signal loss and outstanding hydrophobicity, characteristics that allowed transmission of signals with minimum distortion, even in adverse weather. Chemfab developed commercial cooking-release sheets and conveyor belts coated with Chemfab's trademarked Fiberglass Teflon. Other products were used in high-speed packaging machines and in the molding of the reinforced epoxy components used in the aerospace industry. Challenge chemical-protective clothing (fluoropolymer-laminated textiles) was used by emergency response teams in the cleanup of hazardous materials; protective hoods were used as an emergency breathing device during escape from smoke and fire.
In 1988 Birdair, Inc., Chemfab's joint venture with Japan's Taiyo, completed the manufacture and installation of a fabric roof over Rome's Olympic Stadium for the 1990 World Cup soccer games. During the same year, Birdair fabricated and installed a cable-supported permanent fabric roof on the new Georgia Dome in Atlanta, Georgia. The multipurpose facility was the home of the Atlanta Falcons and the site of the 1994 Super Bowl. Chemfab completed the construction of high-speed, high-capacity, proprietary fluoropolymer-film equipment, the output of which was sold as film products and used in the manufacture of improved-performance laminated composites. Sales for fiscal 1990 grew 23 percent to $48.73 million; net income was $3.7 million, or $.73 per share. International sales--especially in Western Europe and the Far East--comprised 34 percent of all sales.
1991-95: Economic Recession, Expansion into New Markets
During fiscal 1991 domestic sales of certain Chemfab standard products--especially architectural fabrics--slowed down because of a recession-related soft economy. Nevertheless, solid gains were posted in various other product areas, including spherical radomes and electromagnetic windows, food-processing release sheets, fabricated products for the aerospace industry, and industrial products for markets in the Far East. Chemfab bought two of its English distributors and merged them into one facility, named Inert Materials and Components Ltd., thereby establishing direct distribution of Chemfab products in the United Kingdom. In November, Chemfab adopted Chemfab Corporation as its legal name to emphasize its broadened technological base and the diversification of its product lines. In March 1992 Chemfab sold its voting stock interest in Birdair to Japanese Taiyo and entered into a ten-year supply agreement by which Chemfab continued to be Taiyo's and Birdair's principal supplier of architectural membrane products. This sale marked Chemfab's gradual move to a stronger focus on development and distribution of materials rather than on the structures business.
Chemfab, however, remained committed to maintaining its leadership position in the development, manufacture, and sale of permanent architectural membrane products. The company's modest two percent growth in fiscal 1992 was offset by cutbacks in military spending and a decline in government contracts, but 'Chemfab exited fiscal 1992 financially stronger than ever and much improved in many key areas,' wrote President/CEO Montopoli in the company's 1992 Annual Report. Zeroing in on the fact that commercial aircraft require smaller diameter and lighter weight wire constructions with outstanding performance properties, Chemfab worked with major aerospace wire manufacturers and Boeing to develop a composite material for commercial aircraft; the resulting product, made into thin, lightweight tapes, was applied to wire and became a key component in the airframe wire used by Boeing for its commercial jets. The Chemfilm DF-29X9 product line became an industry standard. Sales to Boeing and a substantial increase of sales in industrial products made for net sales of $50.93 million in fiscal 1993. If the British pound--the currency in which Chemfab's European sales were recorded--had not weakened relative to the U.S. dollar, fiscal 1993 worldwide sales would have increased four percent over those of the previous year. In December 1992, Chemfab purchased its Merrimack headquarters, which had been occupied under lease since 1986, and 21 acres of land.
During the last quarter of 1994 Chemfab entered the biomedical market by acquiring the Canton Bio-Medical Division of Loctite VSI, Inc.; the acquisition became a wholly owned subsidiary under the name Canton Bio-Medical, Inc. and continued its leadership role as a manufacturer and supplier of high-performance elastomeric closures and stoppers used in the packaging and delivery of laboratory test samples. Canton's products protected container contents from contamination. Chemfab supplied 376,000 square feet of Sheerfill architectural membrane to cover the main terminal at the new Denver International Airport, which opened in February 1995. The roof's outer waterproof shell was made of Teflon-coated woven fiberglass and was about as thick as a credit card. The inner membrane was made of uncoated woven fiberglass. Inner and outer roof membranes comprised 15 acres of material. Ten percent of visible light passed through the roof fabric.
In February 1995, Chemfab purchased Courtaulds Aerospace Ltd.'s Tygaflor business (based in Littleborough, Lancashire, England), a leading manufacturer and marketer of fluoropolymer-based composite materials. The addition of the new subsidiary, Tygaflor Ltd., to Chemfab's pre-existing United Kingdom company made Chemfab the world's leading manufacturer and supplier of fluoropolymer-based flexible composites for high-temperature-release and chemical-resistant applications. Worldwide sales for fiscal 1995 rose 30 percent to a record $67.98 million from the $52.2 million sales for fiscal 1994; net income for fiscal 1995 was $5.31 million, compared with $3.5 million for the prior year. The net income for 1995 shares was $.66 per share.
1996-2000: Peak Performances, Global Presence, Diversification
Chemfab's growth continued to accelerate. Sales for fiscal 1996 peaked at $83.88 million and net income rose to $7.71 million. All the business units reported to John W. Verbicky, who had joined the company in 1993 as vice-president for research and development; in 1996 he was promoted to the newly created position of executive vice-president/COO.
In January 1997 the U.S. army awarded Chemfab a $2.4 million contract for chemical warfare shelters made from a fluoropolymer-Kevlar composite developed by the company. In March Chemfab moved its stock listing from NASDAQ to the New York Stock Exchange and chose CFA as its symbol. During the fourth quarter of 1997, Chemfab established Chemfab (Suzhou) Co., Ltd. about 60 miles inland from Shanghai, in the People's Republic of China. There was a rapidly increasing demand in China for fluoropolymer-composite conveyor belts and pressure-sensitive tapes used in the textile, screen printing, garment manufacturing, food processing, and packaging industries. Later, in Sao Paulo, Brazil, the company founded Chemfab do Brasil Indústria e Comércio Ltda. With the repurchase of shares owned by Nitto Denko and Taiyo, Nitto Chemfab became a wholly owned subsidiary (thereafter known as Chemfab Japan) and the distributor of industrial products in that country. Chemfab also won a contract to build the world's largest continuous membrane roof (one million square feet) to cover the Millennium Dome in Greenwich London for the turn-of-the-century celebration. President and CEO Montopoli announced his intention to retire at year-end 1997; the Board of Directors named COO John W. Verbicky to succeed him.
In fiscal 1998 Chemfab passed the $100-million-sales mark to reach $104.46 million, thereby recording the fifth consecutive year of double-digit growth in net income of $10.93 million. Diluted earnings per share increased 20 percent to $1.33, compared with $1.10 in 1997. The company reviewed and redefined its vision, goals, strategies, and values for a future in which it planned to become a world-class company. Chemfab designed Chemglas as a roof membrane to meet the specific demands of the Tent City project in Mina, Kingdom of Saudi Arabia. This project, to be constructed in three phases, utilized Chemglas as the roof membrane for thousands of tent-styled shelters for use during the hajj (annual pilgrimage) to Mecca. During 1999-2000, Chemfab acquired three fabricating distributors in Germany, a company in France, and another in Italy. Chemfab also purchased Gary, Indiana-based UroQuest Medical Corporation and its wholly owned subsidiary, Bivona Medical Technologies. Bivona designed, manufactured, and marketed proprietary disposable products for the health care and personal care industries; it was also a market leader in the design and manufacture of silicone elastomer products for airway management applications. Thus Chemfab enhanced its position in the medical and health care markets.
Chemfab created the High Performance Elastomers Division to launch its Engineered Elastomer Products business. In the fall of 1999, Chemfab streamlined its operation by consolidating its coating operations in Europe into a single plant and by uniting the operation of the three German acquisitions in one location. In April 2000 the company opened the industrial products platform of its e-commerce business over the Internet at www.polymerstreet.com. This web site was linked to the company's other e-store sites; namely, www.fabflow.com, which offered Chemfab's Fabflow, a unique air diffuser product used in air conditioning systems to reduce noise and eliminate drafts in offices; www.pantastic.com, which sold proprietary bakeware liners making all cookware nonstick and microwave-safe; and www.bivona.com, which sold disposable silicone elastomer products and components to health care providers and medical device manufacturers.
During its slightly more than 30 years of existence, Chemfab 'converted itself from what used to be primarily an architectural membrane business into an industrial products enterprise' and became 'a world leader in polymer-based engineered products and material systems used in specialized and severe-service environments,' President/CEO Verbicky told an interviewer for the Wall Street Transcript in December 1999. 'During the last five years, the company has nearly tripled its revenue and has tripled its earnings per share. ... The growth came primarily from the industrial products business,' Verbicky explained. Net sales for 1999 peaked at $126.48 million and net income at $8.94 million. Diluted net income per share was $1.11.
Judging from Chemfab's strong balance sheet, low debt, and aggressive and dynamic performance during the last five years of the 20th century--annual growth rates of 19 percent in revenues, 25 percent in net income, and tripled earnings per share--the company could look forward to continuous prosperity in the 21st century. In addition, it might be only a few years before football fans could attend a game played on natural turf grown under an Ultralux roof lined with Fabrasorb acoustical membrane to dampen the cheering of the crowd.
Principal Subsidiaries: Bivona, Inc.; Canton Bio-Medical, Inc.; Chemfab do Brasil Indústria e Comércio Ltda (Brazil); Chemfab Europe (Republic of Ireland); Chemfab Germany GmbH; Chemfab Japan, Ltd.; Chemfab (Suzhou) Co., Ltd. (People's Republic of China); Tygaflor, Ltd. (England).
Principal Competitors: Accusil, Inc.; The Kendall Co.; Mallinckrodt Group, Inc.; Medtronic Xomed Surgical Products, Inc.; Mox-Med, Inc.; MRI Devices Corp.; Point Medical Corp.; Saint-Gobain Performance Plastics Corp.; Specialty Silicone Fabricators, Inc.; Specialty Silicone Products, Inc.; Taconic; Vesta, Inc.; West Pharmaceutical Services, Inc.