Baltek Corporation History

Company Perspectives:

For more than four decades, Baltek has been the world's leading producer of balsa for industry. The company name is an acronym for 'Balsa technology.' Problem-solving through imaginative hi-tech engineering solutions to industry's requirements is the keystone of Baltek's business. Long noted for research, product development to meet changing needs, and the innovative application of sandwich composites, Baltek's staff includes engineers, core technologists, and field representatives, all with a wealth of experience in composite structures. Key Dates:

Key Dates:

1940:

Baltek is founded.

1941:

Kohn family makes their escape from the south of France in advance of the Nazi invasion.

1945:

World War II concludes and the demand for balsa abruptly halts.

1955:

Balsa industry takes off.

1980s:Company's products are being sold around the globe.

1983:

Baltek enters the shrimp farming business.

2000:

Members of the Kohn family control approximately one-third of the company.

Company History:

A multinational manufacturing and marketing company, Baltek Corporation operates in two lines of business. The first is supplying core materials, primarily balsa wood and balsa wood products, linear and cross-linked PVC foam products, and non-woven polyester mat. Indeed, the name Baltek derives from the words 'Balsa technology,' a niche industry in which the company has long been a leader. The second is aquaculture, specifically the farming and processing of shrimp, a business the company entered in 1983 and remains equally committed to. The founders sons, brothers Jacques and Jean Kohn, own 32 percent of the company.

From Balsa to Wooden Airplanes and Boats: 1927-69

During the 1920s in France, the father of Baltek President and CEO Jacques Kohn was operating a successful lumber company near Paris and had begun to experiment with balsa. The Frenchman had inherited the business from his own father, who since the mid-1880s had been importing tropical hardwoods to be processed for the furniture industry. By the early 1930s, however, just as balsa had found a niche with the model airplane market, he saw dark changes on the horizon and decided to set up operations in the United States. The rest of the Kohn family remained in France until the father's return in 1941, at which time all the Kohns, who were Jewish, fled the Nazi onslaught.

By this time, Baltek Corporation was underway as a primary supplier of balsa wood. Established in 1940, Baltek was the point guard of sandwich composite technology. The company supplied the balsa core used to build the nearly 8,000 legendary World War II plywood-skinned British Mosquito attack bombers, versatile aircraft used extensively from 1940 until after the war, and very effective against the heavier German planes, such as the He219. The 'wooden wonders' could exceed 400 miles per hour in flight, an incredible feat for 1941 combat planes. Later in the 1940s, balsa core metal-faced laminates were developed for the aircraft and transportation industries. Baltek branched out as well, introducing balsa core to the marine industry in 1951 for use in building the Crosby Hydrodyne fiberglass runabouts.

During the war years, Jean, after attending school in Cuba, lied about his age in order to join the Allied effort. He spent much of the war participating in covert operations in French Indochina before parachuting into France and joining the resistance fighters there. Jacques, the older of the two, stayed at the family's main balsa plant in Guayaquil, Ecuador, serving as assistant manger in charge of production.

Following the war, demand for balsa came to a standstill. It fell to Jacques to find new markets for the family's core product. Ultimately he hit upon the use of Balsa composites by the boating industry, which Jacques felt was about to take off. Despite his father's refusal to finance the necessary expenditures for research and testing, the younger Kohn went ahead. He and his wife, Margot, emptied their savings account of $14,000 and pursued the dream. With a patent in hand and their first order from Hatteras Yachts in North Carolina, the business that would save the family firm was launched.

Eventually the company embraced an even wider field of activities, supplying non-woven reinforcements and PVC foam cores to the composites industry. By the early 1980s, the company's products were being sold throughout the United States, Canada, Europe, Japan, Australia, and Latin America to some 1,600 ultimate users. The company made approximately 30 percent of its domestic core material product sales directly, through the use of a huge sales force in position; the remainder of the sales were handled through regional distributors in the United States, Europe, Canada, and the Pacific Rim. Sales of the company's Contourkore product to customers outside the United States by this time were being handled through a wholly owned foreign sales corporation.

Jumping on the Aquaculture Bandwagon: 1983

In 1983, the company branched out still further and entered the growing world of aquaculture, specifically shrimp farming in Ecuador. Since the company was already doing business in Ecuador with its balsa wood operations and, since the Latin American country, which began shrimp farming in 1968 had quickly grown to become the fourth largest exporter of shrimp in the world, it seemed like a logical connection to the Kohns.

In a 1986 article by Jill Barnes in Nation's Business, Henri-Armand Kohn explained: 'I had a friend who wanted us to get into the business [of shrimp farming]. I looked it over but forgot about it. Then, [in 1983], we were looking for a chance to invest in something new, so we began to study the shrimp farming idea again.' Knowing nothing more about shrimp than 'that it was good to eat,' Barnes reported, 'Kohn called the Commerce Department, which referred him to Cornelius Mock, of the National Marine Fisheries Service, in Galveston, Texas.' Mock, who had created a technique for growing shrimp in a hatchery, called The Galveston Method, was helpful to Kohn, who later adopted Mock's technique in the Baltek shrimp yards.

Baltek Corporation bought a small island off of Ecuador's coast, about an hour's trip by boat from the city of Guayaquil. 'The island was mostly salt flats and marshes with brackish water, and covered with mangrove trees, which are important to the survival of young shrimp,' said Barnes. Baltek spent some $4 million to create the shrimp farm. '[We] had to build everything on the island, from the hatchery, to ponds to grow the shrimp, to houses for the workers,' said Henri-Armand, complete with biologists who monitored the shrimp, as well as the filtering, saline, algae, and pH systems for the ponds. Barnes reported, 'Baltek's first harvest in April 1984 produced some 200,000 pounds of shrimp. As a result, Baltek's net earnings went from $1.5 million in 1984 to $1.8 million in 1985.'

In February 1986, the company opened its own $300,000 hatchery, 'so we can produce our own larvae ... breed our own shrimp and look to producing the best possible. It's done with chickens and cattle, so why not shrimp?' Kohn said in the Nation's Business article. Following that, Baltek's acquisitions in the aquaculture industry began, as the company expanded wholeheartedly into its new venture. The company acquired a shrimp packing plant in 1987; all of the outstanding capital stock of an existing shrimp farming operation adjacent to the company's already existing shrimp farm in Ecuador, for approximately $1.415 million, in July 1990; a 444-acre Ecuadorian shrimp farm in October 1997 for $965,000; and certain assets and inventory of the seafood importing U.S. subsidiary, located in Fort Lee, New Jersey, of Japanese conglomerate Nissho Iwai Corporation for an undisclosed sum, in April 1999. In 1998, approximately 42 percent of all the company's shrimp production was sold to the U.S. market through food brokers; the balance was sold to the European market. Baltek raised both penaeus vannamei (white shrimp) and penaeus stylirostris (blue shrimp) species at its farms.

Operations in the 1990s

Meanwhile, a joint venture with Sins, Switzerland-based Alusuisse Airex S.A., a $52.8 million company founded in 1956, brought together two of the oldest core material producers for structural sandwich composites in the world, and made Baltek the sole North American source for Airex and AirLite structural PVC foams. The alliance gave Baltek access to PVC foams with densities of 2.5 lbs. per cubic foot and up, in addition to its already-extensive line of engineered and end-grain balsa structural materials. Additionally, the two companies pooled their technical expertise to create a product called AirLite, making it the most advanced structural foam sandwich core in the world, expanding Baltek's capability to serve marine, industrial, transportation, aerospace, and other related markets.

Foam and mat products, together with the company's balsa products, positioned the company as a complete supplier to the composite structural core market. The core materials were typically used by the company's customers to manufacture a variety of products by laminating metal or fiberglass reinforced plastic skins to both sides of the core material, thereby creating a sandwich structure. The products manufactured by the company's customers included fiberglass boats of all types manufactured by some 1,000 builders throughout the world.

In the transportation industry, the company provided materials to manufacture aircraft flooring, aircraft cargo pallets, overhead compartments, galleys, storage units, and cabin partitions; highway container bodies; intermodal container and bulk cargo; hopper rail cars; buses; rapid transit car flooring and bulkheads; recreational vehicles; cryogenic insulation; and NASA lunar vehicles. In the industrial industry, the company's products were used to manufacture wind turbine blades; stacks; scrubbers; ducting; chemical process and storage tanks; fiberglass storage and processing tanks; and fiberglass tub and shower bottoms. For architectural uses, the company helped provide material for fascias, concrete forms, decorative panels, portable shelters, columns, partitions; and, in the military, air cargo and air drop pallets, air transportable containers, U.S. Navy and Coast Guard vessels, landing craft, and in the hull bottoms of the famed World War II PBY Catalina patrol bombers.

Baltek's balsa lumber was used mostly by the hobby industry to manufacture model airplanes. The company milled and sold graded and finished balsa lumber in standard sizes and balsa wood strips and blocks.

The company also manufactured and sold custom-made bonded panels, bonded blocks of balsa wood, and flexible balsa wood block mats called 'Contourkore,' 'Coremat,' and 'Baltekmat.' The company's mat products were imported from Holland and Japan and resold without further manufacturing. One of the principal outlets for mat products was the pleasure boat industry. The company, additionally, was the sole North American source and non-exclusive distributor in Central and South America of Airex and AirLite, structural PVC foam products. The foam was purchased from Airex for further processing in the United States and was sold to customers as rigid or flexible panels in various thicknesses.

New products and products made from Baltek materials abounded in 1999. In April, at the JEC Trade Show in Paris, the company released SuperLite, its new and most advanced core product to be used in high-end, high-tech applications. In the fall of 1999, Alden Yachts released the Alden 72 performance cruiser, the largest fiberglass Alden sailboat, designed by J.G. Alden Naval Architects, with three densities of Baltek core. The company by this time also had more than 16,000 acres of balsa farmlands under cultivation in Ecuador.

Thus, with the unlikely combination of balsa wood, composite construction materials, and shrimp, the company continued to grow in the late 1990s. Total revenue for 1997 reached $56.1 million and, the following year, jumped 20.7 percent, to $67.7 million, and net income climbed 83 percent, to reach $3.3 million. At the end of 1999, several generations and branches of the Kohn family still worked for the company, with Jacques as president, Jean as executive vice-president, Margot as secretary, and Henri-Armand as a vice-president. Baltek looked forward to the future with great hope and anticipation. As Jacques Kohn remarked to Andrew Rusnak in 1997, 'The potential is enormous. The composites industry fascinates like nothing else.'

Principal Subsidiaries: Balmanta S.A.; Balsa Development Corporation; Balsa Ecuador Lumber Corporation; Baltek Foreign Sales Corporation; Baltek GmbH; Baltek, Ltd.; Baltek, S.A.; Baltek Scandinavia Aps; Compania Ecuatoriana de Balsa, S.A.; Crustacea Corporation; Cryogenic Structures Corporation; Ecuatoriana de Crustaceos, S.A.; Maderas Secas C.A. (Maseca); Marines C.A.; Pacific Timber Ltd.; Plantaciones de Balsa, S.A.; Productos del Pacifico, S.A.; Recorcholis, S.A.; Sanlam Corporation; Servicios Contables, S.A.; Vanalarva, S.A.

Principal Competitors: British Vita PLC; Glassmaster Company; Seaboard Corporation.

Further Reading:

• 'Baltek Buys Nissho Iwai Assets,' Wall Street Journal, April 26, 1999, p. A11(W)/C14(E).
• 'Baltek Corporation Announces Higher Second Quarter and Six Months Sales,' Business Wire, August 16, 1999, p. NA.
• Barnes, Jill, 'Big on Shrimp Farming,' Nation's Business, July 1986, p. 62.
• Birtles, Philip, Mosquito: A Pictorial History of the DH98. London, New York: Jane's, 1980.
• Miller, Clark, 'Baltek's New Coated Balsa Core Keeps Weight Down, Strength Up,' National Fisherman, September 1986, p. 34.
• 'Net Income Increase 45% with a 22% Revenue Gain,' Wall Street Journal, March 9, 1999, p. C11.
• 'Net Income Jumps by 84% on a 16% Increase in Sales,' Wall Street Journal, November 12, 1998, p. A15.
• Rusnak, Andrew, 'The Application of Jacques Kohn,' Composites Fabrication, November/December 1997, pp. 2-7.

Source: International Directory of Company Histories, Vol. 34. St. James Press, 2000.

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