Battelle Memorial Institute, Inc. History

Company History:

Battelle Memorial Institute, Inc. ranks among the world's oldest and largest independent research and development organizations. With 48 locations worldwide, the firm identifies, evaluates, refines, and applies new and existing technologies for government and private clients in a wide variety of disciplines, including: manufacturing, health sciences, computer technology, space travel, and environmental research. Battelle Memorial Institute has been instrumental in the development of such diverse products and processes as: xerography, no-melt chocolate, plastic six-pack straps, liquid correction fluid, cruise control for automobiles, and the universal product code (UPC) system. Battelle's Scientific Advances, Inc. subsidiary capitalizes venture businesses, including the institute's other subsidiaries: Geosafe Corporation, Information Dimensions, Inc., and Survey Research Associates. During 1992, Battelle had 5,688 projects for over 1,650 clients in progress. Due to an increasingly competitive research and development environment, the company began marketing its processes and products more aggressively in the early 1990s.

Battelle Memorial Institute was created through the beneficence of Gordon Battelle, the only son of a steel magnate in Columbus, Ohio. After attending Yale University, Battelle returned to Columbus to work in the steel mills run by his father, Colonel John Gordon Battelle. Seeking to cultivate his own business interests, however, the younger Battelle traveled to Joplin, Missouri, in the 1910s, where he invested in mining and smelting operations.

During the course of his investment research, he became interested in the work of former university professor W. George Waring, who was then developing a process for recovering usable chemicals from mining waste. Battelle financed a small laboratory for Professor Waring's research that facilitated the formulation of a commercially viable process. The experience piqued Battelle's interest in applied science, and he spent a year visiting laboratories across the United States and developing an innovative plan to make research facilities more accessible to industry by promoting cooperation between science and industry.

In 1920, Gordon Battelle drew up a will mandating the creation of the Battelle Memorial Institute. Three years later, he died unexpectedly at the age of 40 after complications from a routine appendectomy. Battelle had willed almost half of his estate to the creation of the Institute, and when his mother, Annie Norton Battelle, died two years later, she left the balance of the family fortune to the Institute, bringing the total endowment to $3.5 million.

Battelle's will stipulated that the Institute would focus on 'education in connection with and the encouragement of creative and research work and the making of discoveries and inventions in connection with the metallurgy of coal, iron, steel, zinc and their allied industries.' The Battelle Memorial Institute was incorporated as a nonprofit corporation in 1925, and construction of its headquarters commenced on a ten-acre site on King Avenue adjacent to The Ohio State University. As a nonprofit organization, the Institute generated revenues designated for reinvestment in research and donation to charitable pursuits. The Institute's first laboratory opened in October 1929 with a staff of about 30. Despite economic constraints necessitated by the onset of the Great Depression, research expenditures during the first year amounted to $71,000.

The Institute's first director was Dr. Horace W. Gillett, known to his peers as 'The Dean of American Metallurgy.' In accordance with the will and Dr. Gillett's expertise, the Institute's early focus was on metallurgy, the science of extracting metals from their ores, purifying them, and creating useful products from them. Although the Institute would eventually diversify into a wide variety of disciplines, metallurgy and materials technology would remain a strong suit throughout its existence. The first sponsored project was the preparation of The Alloys of Iron Research Monograph Series, a multi-volume reference work on metallurgy. This classic publication marked the beginning of the Institute's ongoing contribution to technical literature; by the late 1980s, the Institute was credited with over 9,000 professional publications.

Research in the 1930s investigated the properties of cast iron, the uses of pulverized coal, and the durability of nickel, copper, and steel. A particularly interesting study that commenced in 1933 sought an antimagnetic, rustproof alloy for watch springs. The material that resulted from this research was later patented and called 'the most outstanding development in watch manufacture in 200 years.' Like many of Battelle's products and processes, the alloy proved useful in a variety of applications, including the development of a mechanical valve for the human heart.

More interested in research than administrative duties, Dr. Gillett resigned his directorship in 1934 and was replaced by Clyde E. Williams. Williams took a proactive approach to Battelle's work: since industrialists of the period were reluctant to elicit the Institute's services, he resolved to make them more readily available. Throughout the decade, Williams also began to broaden Battelle's scope beyond materials technology to include chemistry, physics, engineering, and economics.

The onset of World War II prompted research on both the composition and propulsion of rockets and missiles. Moreover, in 1943, Battelle technologists began studying the fabrication of the virtually unknown metal uranium in conjunction with the Manhattan Project. The Institute eventually became one of the country's leading nuclear research centers. Its research on nuclear propulsion led to the development of the nuclear submarine Nautilus in 1948. In the early 1950s, Battelle purchased a large tract of land near Columbus and erected the world's first privately owned nuclear research center, which included a research reactor, critical assembly facility, and hot cells.

During this time, Battelle also became involved in perhaps its best known technological achievement, xerography. After submitting his idea for 'electrophotographic dry copying' to at least 20 companies, inventor Chester Carson approached the Institute in 1944. Through a subsidiary, Battelle Development Corporation, the Institute penned an agreement to help Carson refine the invention. Battelle and Carson invested over five years and hundreds of thousands of dollars in the development of this technology, which was based on static electricity.

During this time, Battelle initiated a long-term relationship with the struggling Haloid Company. Haloid agreed to assume sponsorship of Battelle's ongoing xerography research in exchange for the opportunity to commercialize the process. In the early 1960s, Battelle traded its hundreds of xerography patents to the cash-poor Haloid Company--which subsequently became the Xerox Corporation--for equity in the corporation. Xerox's success was phenomenal, and the company's increasingly valuable stock dramatically boosted Battelle's financial assets. By the early 1970s, the market value of the Institute's investment portfolio exceeded $225 million.

The financial windfall enabled Battelle--under the direction of Dr. B. D. Thomas from the late 1950s through the 1960s--to expand the scope of its research into such diverse areas as oceanography, health care, ecology, pollution control, and urban planning, as well as to establish laboratories in Germany and Switzerland. The Battelle Institute Program was launched during this time to fund fellowships for staff members and academicians interested in conducting private research. The program began with a 1966 budget of about $1.5 million, which grew into a $5 million annual endowment by the early 1970s.

The Institute also achieved many breakthroughs that affected food preparation, fashion, and currency. In 1963, Battelle research developed the Stabilized Acid Process, which reduced production time for such dairy products as sour cream and buttermilk from hours to minutes. The following year, the Institute's researchers automated the manufacture of shoulder pads for jackets, thereby shortening production time from two minutes to 18 seconds. In 1965, Battelle conducted a study for the U.S. Treasury Department that resulted in the development of coins made of a copper/nickel 'sandwich,' a money-saving solution that remained in use through the 1990s.

Battelle's profitability and diversification was challenged by the Internal Revenue Service and the Ohio Attorney General in the 1960s and early 1970s. The IRS called into question the taxability of Battelle's activities in 1961, eventually settling for payment of $47 million in taxes and the relinquishment of the Institute's tax-free status. In March 1969, the Ohio Attorney General called for a reexamination of Gordon Battelle's will, advocating reforms in the scope of the Institute's activities and the distribution of revenue to other philanthropic institutions. The series of lawsuits that ensued were settled in 1975 with the formulation of a modern interpretation of Gordon Battelle's will and the Institute's distribution of $80 million to other charitable enterprises. The Institute donated at least $1 million annually to charities thereafter. These two decisions mandated the divestiture of most of Battelle's investment portfolio, which resulted in the rapid and severe cutback in Battelle's research, development, and educational programs.

In 1981, governmental and corporate cutbacks resulting from a national economic recession raised the level of competition among research and development firms. Battelle found itself contending not only with such traditional rivals as Arthur D. Little and SRI International, but also universities--where overhead was often only about half as high. A concurrent rise in research and development costs due to the quickening pace of technological obsolescence increased financial pressures.

During this time, the Institute brought on Ron Paul, a former physicist for General Electric, as chief executive. Paul put his experience in industry to work, focusing first on making the company more profitable by garnering lucrative government contracts. Battelle had already been selected by the U.S. Department of Energy (DOE) to manage a major program on commercial nuclear waste isolation in 1978. Paul helped solidify this relationship by erecting a fully equipped hazardous materials laboratory near its Columbus headquarters.

Battelle also operated the DOE's Pacific Northwest Laboratories (PNL), which specialized in applied physics; earth, environmental, molecular, materials, chemical, and life sciences; and waste, engineering, and reactor technology. Scientists at PNL realized many major accomplishments, including a robotic mannequin with human physiological traits (perspiration, for example), which was used to test space suits, fire fighting gear, and other garments designed for hostile environments. Another PNL breakthrough, a thermochemical environmental energy system, designed for food processing plants, converted waste materials like potato peelings into methane gas, which could be recycled to fuel boilers. Battelle Memorial Institute's $1.9 billion contract with the DOE to run the PNL was renewed in 1992.

The Seattle Research Center, an advanced study facility for Battelle-sponsored workshops and conferences, was also operated out of Battelle's Northwest operations. The Human Affairs Research Center (HARC) there analyzed social problems relating to technology. Work in these fields greatly expanded Battelle's client base. For example, Cosmopolitan magazine hired Battelle to undertake an in-depth study of demographic shifts from the 1940s through the 1990s, noting in particular the way such changes have affected the lifestyles, attitudes, and consumer habits of American women.

HARC made headlines in 1993, when it released the findings of its controversial survey of sexual behavior in the United States. The study refuted previous estimates that ten percent of American men were homosexual, instead reporting that gays comprised between two and four percent of the population. These findings were contested by activists in the homosexual community, who brought the accuracy of the survey into question, fearing it would lead to further political and social marginalization of gay people.

Under CEO Paul, Battelle formed a venture-investing operation, Scientific Advances, Inc., to commercialize its own inventions through subsidiaries. Information Dimensions, Inc. (IDI), formed in 1986, developed a computer-integrated design system for small manufacturers that was named one of Business Week magazine's '24 Outstanding Achievements' for that year. Another software package created by IDI brought computer-aided design capabilities to genetic engineering.

Paul retired in 1987 and was replaced by Douglas Olesen, who guided Battelle through a restructuring that resulted in the creation of specific business groups targeted at such growth markets as health, transportation, manufacturing systems, environment, and national security. The reorganization was aimed at streamlining management and more effectively marketing and advertising Battelle's services.

Battelle's Geosafe Corporation subsidiary was formed in 1988 to commercialize a hazardous waste disposal process perfected at PNL. The vitrification process used high temperatures to melt radioactive and hazardous chemical wastes into a glass-like solid said to immobilize the dangerous materials for a million years.

Battelle also became an authority on forming strategic alliances with a variety of partners. Joint ventures helped reduce lead time to get new products to market, cut development costs, diversified its technological resources, and opened new markets to the Institute. In the 1990s, joint ventures with the Gas Research Institute, Vorwerk, and the Alternative Fuels Coalition resulted in the development of high-efficiency gas appliances and the creation of fleets of electric, propane, methane, and methanol powered vehicles. Cooperative efforts with the DOE, auto and airplane manufacturers, universities, and aluminum manufacturers underway in the early 1990s focused on creating 'superplastic metals' that would dramatically reduce vehicle weight, and, in turn, reduce fuel consumption and emissions.

Battelle has originated over 2,000 U.S. patents and has received several awards and citations for its innovations. In 1992, Battelle staff members patented 63 inventions, and the firm garnered R&D Magazine's R&D 100 Awards for a new type of radiation detector, an oil spill outline monitor, a chemical process to clean up PCBs, and a process for producing advanced ceramic powders. Battelle focused not only on developing innovative products and processes, but also on producing tangible value from those advances. Its success in that arena was indicated by an 11 percent revenue increase to $854 million between 1991 and 1992.

Principal Subsidiaries: Geosafe Corporation; Information Dimensions, Inc.; Scientific Advances, Inc.; Survey Research Associates.

Further Reading:

• Gibson, W. David, 'Holy Alliances!' Sales & Marketing Management, July 1993, pp. 84-7.
• Hick, Virginia Baldwin, 'Gays Assail Study, but Rue Political Implications,' St. Louis Post-Dispatch, April 16, 1993, p. C1.
• Louis, J. C., 'R & D's Big Three: Tales from the Leading Edge,' Management Review, August 1986, pp. 35-40.
  Science Serving Human Needs: A History of Battelle Memorial Institute, Columbus, Ohio: Battelle Memorial Institute, 1978.
• Siwolop, Sana, 'Physician, Heal Thyself,' Financial World, June 13, 1989, pp. 77-80.

Source: International Directory of Company Histories, Vol. 10. St. James Press, 1995.

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