Brush Engineered Materials Inc. History

Address:

17876 St. Clair Avenue
Cleveland, Ohio 44110
U.S.A.

Telephone: (216) 486-4200
Fax: (216) 383-4091

Public Company
Incorporated: 1931 as Brush Beryllium Co.
Employees: 1,833
Sales: $401.04 million (2003)
Stock Exchanges: New York
Ticker Symbol:BW
NAIC: 331419 Primary Smelting and Refining of Nonferrous Metal (Except Copper and Aluminum)

Company Perspectives:

Brush Engineered Materials Inc. is a global leader in high performance engineered materials that enable customers to meet superior levels of product strength, reliability, miniaturization and weight savings, thermal dissipation, electrical conductivity and reflectivity.

Key Dates:

1921:: Brush Laboratories is launched.
1926:: Brush Laboratories begins researching uses for beryllium.
1931:: Brush Beryllium grows out of Brush Laboratories.
1971:: S.K. Wellman is acquired, leading to the name change to Brush Wellman.
1982:: Technical Materials, Inc. is acquired.
1991:: Gordon D. Harnett is named CEO.
2000:: Brush Wellman becomes Brush Engineered Materials Inc.

Company History:

Through its wholly owned subsidiaries, Brush Engineered Materials Inc. is a leading maker of high-performance engineered materials, operating through two major business groups. A part of the Metal Systems Group, the Brush Wellman Inc. subsidiary is the world's only fully integrated producer of beryllium--a stiff metal lighter than aluminum but closer to the strength of steel, possessing thermal properties--beryllium-containing alloys, and beryllium ceramic. Beryllium is used in a number of high-performance applications, mostly in the defense and aerospace industries. Because in addition to strength and hardness copper beryllium offers high electrical and thermal conductivity, it makes an ideal material for many demanding applications in automotive electronics, aerospace, computers, oil exploration, plastic mold tooling, and undersea fiber-optic cables. Another subsidiary, Engineered Materials Systems, combines precious and nonprecious metals into continuous strips for use in automobiles, computers, and telecommunications systems. Brush's Microelectronics Group uses pure metal and specialty metal alloys to produce materials needed for high reliability applications in the aerospace, crystal, electron tube, hybrid microelectronics, magnetic head, optical media, and performance film industries. Brush also combines ceramics, powder metallurgy, thick film metallization, and electronic packages for use in highly demanding electronic applications in the aerospace, automotive, medical, and wireless communication fields. In addition to its headquarters, research center, and manufacturing facility in Cleveland, Ohio, Brush maintains two other plants in Ohio, and manufacturing operations in Arizona, California, Massachusetts, New York, Ohio, Pennsylvania, Rhode Island, Utah, and the Philippines. Brush is a public company, trading on the New York Stock Exchange.

Heritage Linked to 19th-Century Inventor

Brush's history is linked to one of the great American inventors of the 1800s, Charles Francis Brush. The son of a woolen manufacturer and farmer, he was born in 1849 in Ohio near Cleveland. Because he was the youngest of nine children he had more free time than his siblings while growing up on the family farm, providing him ample opportunity to indulge an early passion for science and electricity. He became obsessed with building his own arc light after reading how Sir Humphrey Davy in the early 1800s showed that light could be produced by passing electricity between the gap of two carbon electrodes. To help further his education, Brush's parents sent him to Cleveland's Central High School, where he would succeed in building an arc light and graduate in 1867 with honors. Another young man who stayed at the same boarding house where Brush resided also was destined to make his mark on the world: John D. Rockefeller. With a loan from an uncle, Brush was able to enroll at the University of Michigan. He chose a practical major, mining engineering. and graduated in just two years, eager to find work to repay his uncle.

After a less than stellar attempt to work as an analytical and consulting chemist, he went to work with a boyhood friend marketing Lake Superior pig iron. In his spare time he conducted experiments on arc lighting systems and came to the conclusion that a dynamo would be a necessary part of generating the needed electricity. He related his efforts to another childhood friend, George Stockly, general manager of the Telegraph Supply Company, who agreed to fund Brush's efforts to build a small dynamo. In 1876 Brush succeeded and a year later received a patent for his dynamo. He then developed the first electric arc light that featured a regulating system good enough to make it economically viable. Soon after he lit Cleveland's Public Square in 1879, a number of cities installed his arc lamps to illuminate their streets. In 1880 Telegraph Supply Company of Cleveland was reorganized to form Brush Electric Company, which in 1891 was merged with Edison General Electric Company to form today's General Electric Company.

Brush Laboratories Beginning Beryllium Research in the 1920s

With the creation of General Electric, Brush walked away a rich man, but he continued to conduct experiments in his laboratory leading to other patents, such as the storage battery, and he became involved in other business ventures. He was also a devoted family man with two daughters and a son, Charles Francis Brush, Jr., born in 1893. When the boy was only eight years old, however, Brush's wife, Mary, died. He now spent a great deal of time raising his son, whom he taught chemistry and electricity in his basement laboratory. Charles Brush, Jr., would then study chemistry and physics at Harvard University and go on to postgraduate work at the Massachusetts Institute of Technology. In 1921 the young Brush, with the financial backing of his father and facilities on the family property, founded Brush Laboratories with a college friend, Charles Baldwin Sawyer. One of the areas that Charles Brush, Jr., pursued starting in 1926 was finding industrial uses for beryllium.

Tragedy again struck the Brush family in 1927, when Charles, Jr., agreed to give a blood transfusion to his gravely ill daughter. Not only did she not survive, but he also died from complications caused by the transfusion. Two years later the elder Brush, now 80, contracted bronchitis. His condition worsened until June 15, 1929, when he succumbed to pneumonia. Twenty years later, in April 1949, Charles F. Brush III joined the board of the company his father cofounded. His service as a director would be interrupted, but starting in December 1958 he served on the board continuously until his retirement at the age of 80 in December 2003.

After the death of his partner, Sawyer continued to run Brush Laboratories. In 1931 he and Bengyt Kjellgreen developed a process to extract beryllium from ore, prompting a name change for the company: Brush Beryllium Company. Two years later the first electrically heated Beryl furnace was built, and the company gradually increased the amount of beryllium metal it produced, from 60 grams in 1936 to more than 1,000 grams in 1942. An early use for beryllium was the U.S. military's effort to build the first atom bomb. After the war beryllium continued to be used in the development of nuclear weapons as well as peaceful uses for atomic energy. Business improved steadily, topping the $1 million mark in annual revenues in 1943. In addition to beryllium metal, Brush also sold alloys, oxides, and ceramics. In the second half of the 1950s, the United States ramped up a space program in response to the successes enjoyed by the Soviet Union, beginning with the 1957 launch of the world's first satellite, Sputnik. Brush quadrupled its sales by 1960. The company moved all operations to Elmore, Ohio, where in 1953 Brush had established its alloy division.

Because of its unique properties, beryllium was especially useful in making heat shields for missiles, satellites, and other aerospace applications, but it was with beryllium-copper alloys that Brush enjoyed the most profits in the early 1960s. This material was used in such common applications as automobile parts, welding electrodes, circuit breakers, switches, bearings, gears, valves, casting molds for plastic, dies, and tools that do not spark. From 1964 to 1968 Brush's revenues grew by 58 percent, to $35.3 million. About 90 percent of sales came from beryllium-related products. Also during this period beryl ore was discovered in Utah's Topaz Mountains, leading Brush to form subsidiary Beryllium Resources which then acquired the rights to explore this region and later stake a claim. In 1969 the company took the next step in becoming a more integrated company by building a $10 million mining and milling facility in Utah, located close to a one-pit mine Brush owned and operated. The mill would process ore into beryllium oxide, the raw material for the company's three product lines: beryllium metal, alloys, and ceramics. As a result, Brush became the first beryllium producer in the world to control its own source of ore, thus setting the stage for ongoing growth. The company's mine was also the only beryl mine located in the non-Communist world.

In August 1971 Brush acquired assets of the S.K. Wellman Division of Abex Corp. Wellman manufactured metallic friction material to make robust clutches and brakes required by heavy duty off-road equipment. Brush changed its name to Brush Wellman Inc. When the United States began to withdraw from Vietnam in the early 1970s, Brush's business fell off as military spending declined and government contracts for beryllium metal expired. The company now looked to diversify and develop new markets. It completed several acquisitions in the 1970s, including the 1973 $5.45 million purchase of Sawyer Research Products Inc., the $6.1 million addition of Bucyrus Blades, Inc. a year later, and the 1979 purchase of Crystal Systems, Inc. for $1.14 million. The most important new market to emerge during this time was Silicon Valley, which needed heat-resistant beryllium-copper alloy to make microelectronic chips, which generated more heat as they grew in capability, thus requiring an increase in the need for beryllium-copper. Brush also found more demand for beryllia ceramics, a material with strong insulating properties and an excellent dissipater of heat. Long a money-losing product line, by 1980 it accounted for about 10 percent of the company's pretax profit margin.

Brush Well Positioned for the 1980s

Brush entered the 1980s in a strong position. With the election of Ronald Reagan as President of the United States, military spending grew dramatically, increasing the demand for metallic beryllium. Moreover, Brush's only competitor in this line discontinued production, allowing Brush to raise the price for pure beryllium by 30 percent, a change that did not dissuade the U.S. government from awarding the company a major contract to upgrade the U.S. beryllium metals stockpile. Never- theless, Brush endured some struggles in the early 1980s because of a recession. To become involved in the specialty clad metals field--providing materials to be used in power-shift, clutch and brake systems, and cutting edges--Brush paid nearly $46.7 million to acquire Technical Materials, Inc. in late 1982. As a consequence, revenues increased to $245 million and profits to $25.7 million in 1983. With renewed momentum, Brush launched a $57 million capital improvement program in 1984. Of that amount $30 million was earmarked for new casting furnaces, rolling equipment, and other facilities in the Elmore plant; $15 million to build the company's first finishing mill in Europe; $10 million to upgrade a Pennsylvania finishing mill; and $2 million to improve warehouses.

Brush's growth trajectory reversed course in 1988, leading to four straight years of declining revenues caused by a drop in military sales with the end of the Cold War and the rise in popularity of the personal computer, which eclipsed mainframe computers, a major customer for Brush's beryllium materials. The company was forced to cut employment, and in January 1990 it terminated its chairman, president, and CEO, Raymond A. Foos, and began looking for a new chief executive who would be more aggressive in seeking out new applications and markets for Brush's products. Taking over on an interim basis was Foos's predecessor, Henry G. Piper. He held the post for a full year before Gordon D. Harnett, a former senior vice-president at B.F. Goodrich Co., was hired. Harnett was responsible for building up Goodrich's specialty chemicals segment.

Instrumental in Brush's comeback in the early 1990s was the discovery of new applications for beryllium alloys, such as automobile relays, connectors, surge protectors, fuse terminals, and switches. By 1994 sales grew to about $330 million. Later in the 1990s Brush was hurt by the dumping of beryllium at extremely low prices by a refining operation in the former Soviet republic of Kazakhstan. Another area of concern was the rise of lawsuits from former employees claiming they had been exposed to dangerous levels of beryllium particles, which lead to a lung condition called chronic beryllium disease, or CBD. The health hazards of beryllium were first recognized in the 1940s when workers and their wives, who inhaled particles from their husbands' work clothes while doing the laundry, and even people who simply lived close to plant, developed a deadly lung disease that, if it ran its course, resulted in suffocation. Stringent standards were imposed by the U.S. Environmental Protection Agency and the Occupational Safety and Health Administration, by which Brush abided, but workers continued to claim they were victims of CBD. Years of litigation ensued, but Brush was consistently cleared of wrongdoing. Despite these problems, the company launched a $110 million expansion in 1996 to add new equipment for melting, casting, and finishing copper beryllium strip. By the end of the decade, sales grew to a record $456 million.

In 2000 Brush Wellman reorganized its business under a new holding company named Brush Engineered Materials, Inc. The Wellman operations had been sold off in the 1980s and the new company name also better reflected the current breadth of Brush's product offerings. In the early part of the 21st century, Brush experienced a significant drop in business, exacerbated by poor economic conditions in Asia and the United States. Revenues dipped to $372.8 million in 2002 but rebounded to $401 million in 2003 and continued to improve in 2004. The future also looked promising, as end-use markets showed strong growth trends, and automobiles continued to add electronics that would rely on beryllium-based products.

Principal Subsidiaries: BEM Services, Inc.; Brush Wellman Inc.; Brush International, Inc.; Brush Resources Inc.; Technical Materials, Inc.; Williams Advanced Materials Inc.; Zentrix Technologies Inc.

Principal Competitors: NGK Insulators, Ltd.; Olin Corporation; Sumitomo Metal Industries, Ltd.

Brush Engineered Materials Inc. History

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Key Dates:

Company History:

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