New Brunswick Scientific Co., Inc. History

Company Perspectives:

New Brunswick Scientific is committed to the design, development, manufacture and support of the highest quality equipment for life science research and pilot production facilities.

Key Dates:

1946:

New Brunswick Tool & Die is formed.

1951:

Attendance at microbiology assembly introduces company's products to scientists around the country.

1953:

Company's first fermenters are introduced.

1958:

Name is changed to New Brunswick Scientific.

1972:

Company completes its initial public offering of stock.

1995:

Subsidiary DGI BioTechnologies is formed.

2001:

Major share of DGI is sold.

Company History:

New Brunswick Scientific Co., Inc. designs, manufactures, and markets equipment used in the biotechnology industry. It also provides support and contract research services, and offers a used equipment program. In addition to its world headquarters in Edison, New Jersey, the company operates several subsidiaries to sell its products in Western Europe. In addition to the United States and Western Europe, New Brunswick equipment is sold, either directly or through dealers, in Eastern Europe, former republics of the Soviet Union, Canada, South America, Israel, China, Japan, and Australia. Customers include both the private and public sectors. New Brunswick provides only a small amount of equipment to government laboratories, but sales to medical schools, university laboratories, and research institutes are further influenced by the availability of government funding. Private enterprise customers include pharmaceutical, biotechnology, chemical, and agricultural companies. New Brunswick's first product offering, biological shakers, now come in a wide range of sizes, from benchtop models to industrial-size units. Shakers create a precise agitation of flasks containing biological cultures in a liquid media in which nutrients are dissolved, thus allowing the proper growth of microorganisms. New Brunswick offers two lines of shakers. Its "classic" line has been a longtime industry standard, while its INNOVA line offers some of the most sophisticated units on the market. The company also manufactures and sells fermentation equipment and bioreactors, used in the growth of cultures, a business New Brunswick has been involved in since the 1950s. Again, units range in size from one-liter benchtop models to 10,000-liter systems sold under contract. In addition, the company manufactures digital instrumentation to control fermenters and bioreactors. New Brunswick also offers equipment that automatically sterilizes and then maintains nutrients at required temperatures. Another product line, tissue culture apparatus, are used to constantly rotate bottles and test tubes of growing animal and plant cells. Included in this line are carbon dioxide incubators, important in the production of vaccines and other pharmaceuticals, as well as for use in cancer and heart disease research. In addition, the company distributes a line of centrifuges and low temperature freezers. New Brunswick takes great pride in controlling all aspects of manufacturing. Rather than an assembly line process, the company operates on a lot production basis, fabricating parts from raw materials and components to produce most of its subassemblies. Although most manufacturing is done on the company's 17-acre Edison facility, the company also has a manufacturing capability in England for the European market.

Roots Reaching Back to 1946

New Brunswick was founded in the New Jersey town of the same name by brothers Sigmund and David Freedman in 1946. Looking to take advantage of David's training as a toolmaker, they decided to start a machine shop called New Brunswick Tool & Die. Seed money of $6,000 was scraped together from a variety of sources. Sigmund provided $1,000 that he won by gambling on the Florence Nightingale ship when he returned home from the war in Europe. He also had saved up money by sending home his pay during the war. Their mother provided some money, a friend lent $2,000, and they also borrowed on the mortgage of the family house. A friend told the brothers of a tire recapping company that was going out of business, and they were able to procure a lease on the facility.

The first year was especially difficult for the Freedmans, who were only able to attract a few tooling jobs. Unable to pay themselves they relied on their mother for meals. Only after the second year were they in a position to start paying themselves a salary of $10 per week. According to Sigmund it was in 1949 or 1950 that Walter B. Geiger, a microbiology professor from nearby Rutgers University, stopped by the shop to ask if they could repair one of the department's agitators that was malfunctioning. The agitator was used to aerate bacteria contained in a flask that had to be shaken in a rotary motion on a fixed plane. After successfully repairing agitators for the department, the brothers were then asked if they could custom build one of the machines. It would have to be a larger unit capable of agitating a fixed size flask on a fixed plane at a fixed speed. They took on the job and produced a unit that so satisfied the Rutgers' researchers that they quickly ordered another. According to Sigmund, "One thing that impressed me very much was that Rutgers would place the orders, which cost $279.50, and then within a week we received a check. That made an extremely favorable impression upon us because it meant we had cash flow and could run our business."

It became evident that the Freedmans were located in the right place at the right time. Rutgers played an important role in microbiology in the early 1950s, a period highlighted in 1952 when one of its own, Selman Waksman, won a Nobel Prize for the discovery of the first antibiotic, streptomycin. With the labs in high gear, Rutgers was turning out researchers who then took jobs at other universities and institutions around the country. Many contacted New Brunswick Tool & Die in order to purchase the same agitators used in the Rutgers' research laboratories. By now the brothers had made two or three dozen machines for Rutgers, and the prospect of finding even more institutional customers proved so inviting that in the spring of 1951 they leased a booth at a microbiology assembly held in Baltimore to promote their laboratory equipment. Not only were they able to meet microbiologists from around the country, they discovered that their products had no competition from established scientific equipment manufacturers. As a result, they received dozens of orders when they returned home to New Jersey. They registered the title New Brunswick Scientific Co., eased out of the tool and die business, and devoted their efforts to the designing and manufacturing of scientific equipment. In 1953 they produced their first lab-scale fermenters, vats that controlled the growth of microorganisms by varying the amount of nutrients. Although crude by today's standards, they were the best units on the market. In 1958 New Brunswick Scientific Co., Inc. was incorporated in the state of New Jersey.

Competing As a Public Company: 1970s

Although New Brunswick did not retain any of Rutgers' staff as consultants, a mutually beneficial relationship with the school was important to the growth of the company. Lacking scientific expertise in the early years, New Brunswick essentially responded to the needs of the Rutgers researchers, learning what problems required solving and designing machines to meet those needs. The company moved to its present Edison, New Jersey, location where, in addition to office space, it built its own machine shop, sheet metal shop, electronic assembly shop, and laboratories. Because its equipment had to be built to precise specifications for laboratory use, New Brunswick was diligent about controlling every aspect of the manufacturing process. New Brunswick also hired skilled research scientists as well as machinists. To fund this expansion, the company turned to the public market for capital in 1972.

Now an established scientific equipment manufacturer, with dozens of products to offer, New Brunswick appeared well positioned to take advantage of the biotechnology boom of the late 1970s and early 1980s. The origins of biotechnology can be traced to 1953 when Alan Watson and Francis Crick set the stage by revealing the shape of DNA and explaining how genetic information was passed from one generation to the next. Scientists now began to search for ways to manipulate nature at the molecular level through genes, leading to such discoveries as cloning. The biotechnology industry was based on publicly supported research that was then commercially exploited by individual entrepreneurs in small start-up companies. Founded in 1976, Genentech was generally regarded as the company that launched what many considered to be the biotechnology revolution.

In 1982 New Brunswick was a relatively small company, with sales of only $20 million, but because of the prospect of start-up biotechs needing its equipment, the company was now coming to the attention of many investors. It was able to go back to the public market for further capital in 1981 and again in 1983, at which point the Freedmans decided to cash in, reducing their holdings to around 14 percent each. New Brunswick also looked to diversify and become involved in biotechnology, acquiring Biosearch, a California company that made DNA synthesizers. The Freedmans discovered, as did a vast number of investors, that the promised riches of biotechnology were always just out of reach, and that more and more cash would be required before any kind of payoff could be expected. New Brunswick lost $2.1 million on revenues of $35.6 million in 1987, mostly because the Biosearch unit generated only $8.4 million, far short of the $14 million budgeted. In May 1988 the business was sold to Millipore Corp. for $15 million, allowing New Brunswick to return to profitability for the year, as the company earned $136,000 on sales of $37.5 million.

Fending Off a Takeover Bid: 1989

After the enthusiasm of the early 1980s, New Brunswick stock was trading at a low enough level that it became an attractive takeover candidate. Fundamental Management Corp. of Miami began buying up shares in 1989, amounting to more than 7 percent. David Freedman, longtime CEO of New Brunswick, stepped down in favor of Ezra Weisman, who had been with the company since the early 1960s and in the previous five years served as the company's vice-president of sales and vice-president of corporate development. Although Fundamental indicated that it was not interested in a hostile takeover, it did request two seats on the company's board and expressed the need for changes at New Brunswick. Matters grew somewhat testy between the two parties when the New Brunswick board instituted a shareholders' rights plan as a poison-pill takeover defense. Tensions eased by mid-1990 when Weisman instituted some cost-cutting measures, closing some foreign offices and 15 percent of the company's 440-person workforce.

Although New Brunswick was profitable in the early 1990s, sales and earnings were stagnant. In 1991 the company generated $33.1 million in revenues and $393,000 in net income, but by 1993 revenues had only increased to $35.9 million and net income stood at $392,000. The company saw a significant improvement in profits for 1994, $1.1 million on revenues of $38.8 million, and began a new effort to diversify and expand beyond its equipment sales, which, however steady, offered limited potential for growth. Late in 1994 it established a bioprocess equipment division, as well as invested over $1 million to gain a 20 percent stake in Organica, Inc. The company, formed a year earlier, produced naturally friendly grass products used for golf course and playing fields, plus compost accelerators, hydrocarbon remediation products, non-caustic drain openers, and septic system maintenance products. In 1995 New Brunswick then created a drug-discovery subsidiary, DGI BioTechnologies, Inc., to operate out of laboratory space at the Edison facilities.

Similar to its experience with Biosearch in the 1980s, however, New Brunswick's efforts at diversification did not produce quick results and created a significant drag on earnings. Although revenues reached $46.5 million in 1998, the company posted a loss of $156,000, after turning profits of $1 million in 1997 and $882,000 in 1996. In 1999 the company lost an additional $1.15 million, despite the growth of sales to over $54 million. Once again, with the price of its stock depressed, the New Brunswick board adopted a plan to ward off any potential unwanted takeover bids.

In January 2000 Weisman left New Brunswick to pursue other business interests according to the company, but clearly it was a mutually agreed upon severance. David Freedman once again took over as the chief executive and set about refocusing the business. New Brunswick remained weighed down by DGI's poor results, which was a major reason that revenue for New Brunswick fell to $49.9 million. Also contributing to the company's $3.9 million loss in 2000 was the $950,000 write-off of its investment in Organica, which in October of that year filed for chapter 11 reorganization. To rectify the condition of New Brunswick in 2001, Freedman sold a major share of DGI to the Denmark firm of Bank Invest. Because its holdings were now less than 50 percent, New Brunswick would be able to take DGI off its books. In other moves, the company cut jobs and eliminated its customer-engineered bioprocess products, a niche business that represented less than 7 percent of company revenues. Because the company's main line of scientific products remained a solid business, there was every reason to expect that New Brunswick would return to profitability. Whether it would ever transform itself into a company with high growth potential seemed less likely than the possibility that New Brunswick would one day be swallowed by a much larger corporation.

Principal Subsidiaries: New Brunswick Scientific (U.K.) Limited; New Brunswick Scientific B.V. (Netherlands); New Brunswick Scientific N.V. (Belgium); New Brunswick Scientific GmbH (Germany); New Brunswick Scientific S.A.R.L. (France).

Principal Competitors: B. Braun Biotech; LSL-Biolafitte; L.E. Marubishi Co., Ltd.; Applikon, B.V.; LabLine Instruments; Forma Scientific.

Further Reading:

• Bamford, Janet, "Shake Well, Stir Gently," Forbes, May 9, 1983, p. 165.
• "DGI Pursues Financial Backing As NBSC Relinquishes Majority Control," GenomiKa, July 4, 2001, p. 3.
• "The Lucky Gamble at New Brunswick Scientific," NJBIZ.com, June 20, 1988.
• "New Brunswick Scientific Sells Stake in DGI Bio Technologies," NJBIZ.com, June 18, 2001.
• "New Brunswick Scientific Shuts Production Line, Cuts Jobs," NJBIZ.com, June 29, 2001.

Source: International Directory of Company Histories, Vol. 45. St. James Press, 2002.

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