Investing in Ceramics - CoorsTek: A Strong Player in High-Tech Markets

June 1, 2001
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Examples of wear-resistant ceramic components manufactured by CoorsTek.
CoorsTek, headquartered in Golden, Colo., has a long history in the ceramic industry. The company began in 1910 as Herold China and Pottery, with partial ownership by Adolph Coors, who ultimately assumed full ownership in 1914. But it was destined for more than just making pottery. Adolph Coors knew how to maximize opportunities, so when the chance came to diversify into other types of ceramic products, he was eager to proceed.

“When World War I erupted, the British closed off the gateway from Germany, which at that time was the primary supplier of scientific labware. The U.S. government began looking for another supplier, and Herold China and Pottery stepped in to fill the gap. This move diversified the company’s product line beyond just oven-safe pottery,” says Terry Terens, investor relations director.

The development of isostatic pressing in 1940 enabled the company to expand its product range even further by allowing it to manufacture ceramics in a variety of different shapes and sizes. By 1992, when it was spun off from the Adolph Coors Co. with the rest of ACX Technologies, Coors Ceramics Co. was offering high-tech solutions to a variety of industries.

Then, in December 31, 1999, Coors Ceramics Co. was spun off from ACX, enabling it to become a separate entity with a mission all its own. At that moment, CoorsTek and its “Amazing Solutions” were born.

“We created the name CoorsTek and the tagline ‘Amazing Solutions’ to go along with it because we believe that we are a provider of comprehensive solutions to a wide array of industries. We don’t just manufacture off-the-shelf products—we partner with our customers who come to us with a problem, and then we solve that problem,” says Terens.

The Keys to Success

Within a year of operating as a separate company, CoorsTek had increased its sales by over 50%, achieving a record $539.7 million in revenue in 2000. The company attributes its success to its capabilities as a solutions provider.

“In the nine years since we left the Adolph Coors Co., we’ve developed a wide range of capabilities, the foundation of which is our materials expertise,” says John K. Coors, chairman and CEO. “We have the ability to do design, engineering and prototyping work for our customers, and then take that into the full-scale manufacturing of components—particularly critical components—as well as integrated assembling of those components into complete machines.”

One of the biggest markets CoorsTek serves is the semiconductor capital equipment industry—a market that has proven to be a dynamic springboard for the new company. “We seized an opportunity in the semiconductor capital equipment market in 1999 and succeeded,” says Coors. “This segment represented 57% of our revenue in the fourth quarter of 2000, up from just 6% in 1998.”

It was through this industry that the company branched out into materials other than ceramics. “We’ve actually been doing some metals and some plastics for a number of years. But we’ve greatly expanded these capabilities over the past several years—particularly our metal-machining capabilities—in support of our move to the semiconductor capital equipment industry. We wanted to become a complete outsourcing partner to our customers,” says Coors.

The remaining 43% of the company’s business is in advanced materials—products such as co-fire multilayer ceramic packages, custom engineered ceramics and seal faces for the automotive industry; electron tube components, hybrid microelectronic substrates and semiconductor packages for the electronics industry; armor products, pump components and medical ceramics for industrial applications; and fiberoptics, hybrid microelectronic substrates and semiconductor packages for the telecommunications industry, as well as a whole host of other products and technologies. CoorsTek rarely turns down the opportunity to develop a solution for any of the industries it serves—even if the opportunity appears at first to be a risky venture. “Our main goal is solving our customers’ problems, whether it’s a materials problem or a manufacturing problem, a supply-chain management problem or a speed-to-market problem—we deal in all of those areas,” says Coors. “We do a lot of off-the-wall stuff, and some of it doesn’t lead anywhere. But one of our strengths is the ability to do off-the-wall things. And occasionally those off-the-wall things lead to large markets, so it’s worth the risks.”

Investing in the Future

Recognizing that future growth requires wise upfront investments, CoorsTek expanded its capabilities in several notable arenas in 2000 and early 2001. In November, the company commercialized its state-of-the-art automation technology, acquired through a licensing arrangement with a California-based engineering firm. This technology enabled CoorsTek to begin volume manufacturing automatic door openers—devices that automatically open and close an industry-standard, 300-millimeter wafer pod, enhancing the reliability, accuracy and repeatability of the semiconductor chip manufacturing process.

In December, the company announced that it would expand the capacity of its subsidiary, CoorsTek Korea, to include lasered substrates that are used in the production of electronic circuits for the telecommunications and automotive markets. “It has been exciting to witness firsthand the growth of CoorsTek Korea and the success we are enjoying in the dynamic and growing Asian market,” says Coors. “This subsidiary currently provides ceramic components for semiconductor processing equipment, power generation machinery, and other heavy industry applications. Now, with our expansion into lasered substrates, we are further diversifying our customer base to include leading electronics manufacturers.”

January 2001 brought news that the company would also begin expanding capacity at its Grand Junction, Colo., facility to accommodate growing demand for ceramic ferrules, which are critical components of fiberoptic connectors and cables. As part of this expansion, CoorsTek will also broaden its capabilities to provide value-added cable assembly services. As a result, the company’s range of competencies in this area of the opto-electronics market will expand beyond making ferrules to include offering assembled connectors and terminated fiberoptic cables.

“Our expansion in the telecommunications arena, and in particular, opto-electronics, fits perfectly with our long-term growth strategy,” says Coors. “Telecom is both a high growth market and an industry in which we enjoy strong customer relationships with key players. Moreover, this market offers the opportunity for value-added assembly. In addition to manufacturing critical components, we now have the capacity and competency to assemble these components into finished or near-finished products. As a further synergy, we are planning to add cable assembly capacity to our recently-opened, low-cost manufacturing facility in Mexico.”

Despite the current economic instability in the U.S., CoorsTek believes that it is well positioned for a successful future. “We have an advantage because we supply nearly every industry of the global economy. Just because something’s out of synch right now doesn’t mean it’s always going to be that way,” says Coors. “We will strive to build on the success of the past year and gain market share, particularly in our semiconductor segment. We will remain focused on our core competencies and offer our diverse customer base the industry’s broadest array of materials and services. With our strong balance sheet, we have the financial flexibility to take advantage of new business opportunities and if needed, weather volatile market conditions.”

For More Information

For more information about CoorsTek, contact Terry Terens, investor relations and media director, or John Paxson, corporate marketing manager, at (303) 278-4000 or (800) 821-6110, or visit http://www.coorstek.com.

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