PROFILES OF LEADERSHIP: Joel Moskowitz

Founder, Chairman of the Board, President and Chief Executive Officer, Ceradyne, Inc., Costa Mesa, Calif.

Background

Joel Moskowitz received his bachelor's of science degree in ceramic engineering from Alfred University in 1961 and spent two years as an officer in the U.S. Army Missile Command, working on ceramic-related problems in missile systems. He then moved to California and, while employed as a ceramic engineer for a manufacturer of traditional ceramic products, went to night school and earned his master's of business administration degree from the University of Southern California in 1966.

Moskowitz soon realized that his employer had no plans to pursue products outside the traditional ceramic arena. Believing that advanced, technical and structural ceramics was an important emerging market, he founded Ceradyne in 1967.

Notable Achievements

Initially a research-oriented company, Ceradyne operated with four people in a 700-square-foot facility. The company installed its first hot press in 1970 and began a development program for lightweight ceramic armor in 1971. Ceradyne brought its ceramic armor into full production in the 1980s.

Since then, the company has grown considerably. Two acquisitions in 1986, Thermo Materials of Atlanta, Ga., and Semicon Associates of Lexington, Ky., expanded the company's reach into fused silica technical ceramic products and cathodes and cathode assemblies, respectively. Also in 1986, the Ford Motor Co. transferred its technology and approximately 80 patents to Ceradyne for sintered reaction bonded silicon nitride (SRBSN), a material used in the production of diesel engine components and ball and roller bearings. The '80s also saw Ceradyne partner with the Unitek Division of 3M to develop and manufacture Clarity^TM ceramic orthodontic brackets, a cosmetically appealing alternative to traditional stainless steel brackets.

In October 2003, Ceradyne significantly expanded its production capacity with the acquisition of a 115,000-square-foot manufacturing plant in Lexington, Ky. The company is equipping the new facility with state-of-the-art ceramic processing equipment for the production of its SRBSN, and it will use the facility to expand its hot pressing capacity to meet anticipated additional military requirements for its lightweight ceramic armor product line. Additionally, earlier this year, Ceradyne acquired Quest Technology LP, San Diego, Calif., which specializes in the injection molding of technical ceramics for medical applications.

The most important purchase in the company's history, according to Moskowitz, occurred in August of this year, as Ceradyne completed its acquisition of ESK Ceramics GmbH & Co., Kempten, Germany, a manufacturer of industrial ceramic powders and advanced technical ceramic products. The relationship between the two companies dates back to 1971, when Ceradyne began purchasing ESK's boron carbide powders, and the acquisition serves two main functions, according to Moskowitz-further diversifying Ceradyne's product line and expanding its international reach.

"It's the single largest acquisition and move that Ceradyne has made in order to diversify our product line. In one fell swoop, we're able to assure ourselves and the United States a supply of raw material (boron carbide), and therefore we become completely vertically integrated from powder to finished product going to our soldiers, as far as armor is concerned," he says. "We also go from a company that had less than 5% of our sales outside of the United States to a company that has an excess of 40% of sales outside the United States. So we become a diversified company, a vertically integrated company and a global company-all based on this acquisition of ESK. We believe that this is a milestone and a company-changing event for Ceradyne."

Since 1999, Ceradyne has seen its sales rise from $30 million to $101 million in 2003. For 2004, Moskowitz anticipates over $150 million in sales, without taking into account ESK's impact. (Last year, ESK achieved sales of approximately $90 million.) "We're growing at over 50% a year, and much of that growth has been focused on the military," says Moskowitz. "This acquisition, though, changes all of that in a positive sense. We will continue to focus on defense products, primarily lightweight ceramic armor for both personnel and vehicles, as well as ceramic nose cones for tactical missiles. Even though we're going to continue to pursue that, as a percentage of the total company, it drops dramatically-giving us the strength to go forward in many other areas."

Keys to Success

Ceradyne has produced lightweight ceramic armor since the early 1970s, historically for protecting military helicopters. As the need for ceramic body armor systems has increased dramatically in the last decade, Moskowitz credits Ceradyne's hot pressing expertise and its high production capabilities with the company's ability to meet the demand. "It was after 1993, with the tragedy of so many of our soldiers being injured or killed in Mogadishu, Somalia, that it became clear to our military that lightweight ceramic body armor was the very best way to protect soldiers against battlefield automatic weapon threats," he says. "Then, of course, with America's fight in Iraq, where the number of soldiers in dangerous situations has escalated dramatically, we had the capacity to meet the requirements. We were in the right place at the right time, primarily because of our ability to make large quantities of theoretically dense, fine-grained boron carbide ceramics and the technology to assemble them into very effective, rugged, ballistically sound body armor systems."

Even through all of the expansions and diversifications that Ceradyne has experienced throughout the years, Moskowitz credits the company's steadfast adherence to its core identity as an advanced, technical and structural ceramic company as the key to its success. "Ceradyne has a very clear idea of its strategy," he says. "As we grew from a research company into a large production organization, there were always temptations to do other things that were not in our field of expertise."

He cites markets such as semiconductor packages, ceramic capacitors and other types of insulators as areas that Ceradyne has decided not to pursue. "If you define the company through advanced technical ceramics, and structural non-oxide materials, suddenly you've defined it as boron carbide, silicon carbide, silicon nitride, titanium diboride, aluminum nitride and other of those materials," he says. "This gives us a real strength, because now we become a leader in those areas-even though, in total, we may be smaller than many of our large competitors."

Future Goals for Ceradyne

The company's most pressing short-term goal is to make sure that the integration of ESK runs as smoothly as possible. "We're going to work very hard on ensuring that this acquisition is accretive right from the beginning, that we integrate our marketing efforts, that we make it a worldwide company, that we integrate our supply chain so the powders coming from Germany fit smoothly into our California and Kentucky operations, and that the executives from both companies lend themselves to producing a significantly larger, high growth, high profitability company," Moskowitz says.

According to Moskowitz, Ceradyne will also strive to continually expand sales, improve the bottom line and increase shareholder value. "As successful as Ceradyne is, our management personnel-including myself-are always concerned about the future, about competition," says Moskowitz. "We will continue to reinvest in R&D rather than rest on our laurels, which is always tempting, particularly with a company that's growing at the rate we are and with the strong financial position that we're in."

Ceradyne, Inc. can be reached at 3169 Redhill Ave., Costa Mesa, CA 92626; (714) 549-0421; fax (714) 549-5787; e-mail sales@ceradyne.com ; or http://www.ceradyne.com .

Perspectives

On Leadership: "One of the qualities that makes a leader in industry in today's economy is to have a clear idea or vision of what the next products or strategy of the company will be, and maybe more important, to communicate that vision to the employees. A leader has to think short term as well as longer term, and has to communicate short term. It's always easier to have goals so far in the future that you're not held accountable. It's a lot harder to say what you're going to do over the next six months and then really do it."

On Industry Trends: "The number one ceramic for industrial applications will continue to be silicon nitride. It is the strongest, toughest ceramic. It will be a very major factor in the next generation of diesel engines, and a little longer vision will have it in almost every type of engine, particularly in the valve train. I think it will be used as roller and ball elements in bearings, where cost becomes critical but sometimes just having something that works becomes even more critical. Those are the areas that we're focusing on-industrial, automotive and diesel engines, and certain environmental considerations such as bearings in hostile environments."

On Operating in a Global Economy: "The implementation of modern management techniques such as Lean Manufacturing initiatives has got to go forward, assuming that you have limited resources, which every company does. The second thing is to always recognize and not be arrogant toward other countries that are coming up the ladder. It's important to respect your competitors' technology and marketing presence, and to remember that Ceradyne not so many years ago was the small innovative company knocking on the doors of prospective customers."