Carborundum Company

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Carborundum Company

P.O. Box 156
Niagara Falls, New York 14302-0156
U.S.A.
(716) 278-2000
Fax: (716) 278-2900

Wholly Owned Subsidiary of Compagnie de Saint-Gobain S.A.
Incorporated: 1891
Employees: 3,200
Sales: $340.0 million (1994)
SICs: 3299 Nonmetallic Mineral Products, Not Elsewhere Classified

The Carborundum Company manufactures a diverse line of products focused on ceramic and composite technology. Throughout its history, Carborundum has been a worldwide leader in the development and application of materials such as silicon carbide, boron nitride, aluminum nitride, and other ceramics, with a special emphasis on abrasives and refractory and insulation compounds. Carborundum products have been put to use in virtually every industry, from steel to automotive to space exploration, and, beginning in the late 1980s, the semiconductor industry as well. Long based in Niagara Falls, New York, Carborundum operates divisions in more than 30 countries and employs over 3,000 people. In 1995 Carborundum was bought by Compagnie de Saint-Gobain S.A. of France.

Early in 1891, Edward Goodrich Acheson, a young scientist and inventor in Monongahela City, Pennsylvania, was attempting to create artificial diamonds using electricity. As a byproduct, his experiments produced small crystals that could cut glass, and even diamonds. On the assumption that the new crystals were formed from a combination of carbon and corundum (that is, natural aluminum oxide), Acheson called his product Carborundum; it was not until a year later that chemical analysis of the crystals showed them to be in fact silicon carbide—the world’s first artificially produced mineral. Acheson’s first sale of his new product, to a New York diamond cutter, brought him $60, at about 40 cents per carat, or $880 per pound.

The Carborundum Company—Acheson kept the name because he liked the sound of it—was formed in September 1891 with $150,000 raised by Acheson and a group of Monongahela investors, who paid $100 for each of 1,500 shares. Two years later Carborundum secured a $7,000 contract with George Westinghouse, who had been hired to light the Columbian Exposition Building in Chicago, for 60,000 of Carborundum’s new grinding wheels. Acheson used this money to buy the company’s first dynamo; however, he soon sought a cheaper and more plentiful source of electric power, and when a hydroelectric dam was constructed at Niagara Falls, Acheson proposed to move the company closer to this power source. When his board of directors objected, Acheson formed a new board and contracted with the Niagara Power Company for 1,000 horsepower. Acheson turned to Andrew Mellon for backing to finance the move, and the Mellon family retained 20 percent ownership in the company throughout the next century.

The new Carborundum plant opened in Niagara Falls in October 1895. With an abundant source of electrical power, Carborundum’s next task was to develop a way to produce large quantities of the silicon carbide product. To this end the company built its first 1.000-horsepower furnaces. Using intense heat over a 24-hour cycle, chunks of silicon carbide could be formed from a mixture of sand, salt, sawdust, and coke. The resulting crystal chunks were crushed and applied to grinding wheels and other abrasive tools. The bricks used to build the furnaces, however, could not stand the intense heat. Recognizing the heat-resistant qualities of silicon carbide, Carborundum patented the mineral for use as a refractory material in 1898. The following year, the company’s first international subsidiary opened, across Niagara Falls in Canada.

With the advent of industrialization, new manufacturing techniques created a demand for the new abrasives produced by Carborundum. Indeed, silicon carbide’s abrasive and refractory qualities played a vital role in the growth of modern industry. Carborundum expanded rapidly. In 1905 it introduced a new abrasive, fused aluminum oxide, under the name Aloxite. At the same time, the company developed a process for producing fused silicon metal. In 1906 it opened the Deutsche Carborundum Werke near Dusseldorf, Germany, followed in 1910 by the opening of the Compagnie Franchise Aloxite in France. Sales in that year topped $2 million. By 1913, Carborundum was producing 15 million pounds of silicon carbide each year, and its Niagara Falls plant had grown to 13 acres using 13,000 horsepower. Its products were important to the development of many industries, including bicycle makers, the railroads, and the growing automobile and aviation industries. In 1913 a new subsidiary, The Carborundum Company Ltd., was formed in Manchester, England.

The outbreak of World War I provided a major boost to the company’s growth, with Carborundum’s silicon carbide output fueling the war effort. With the war’s end, Carborundum formed a Refractories Division to develop this part of its business. A facility for the division was purchased in Perth Amboy, New Jersey; its products were given trademarks using the suffix “frax.” The first refractories—Carbofrax and Refrax—were soon joined by such trademarks as Silfrax, Mull-frax, Firefrax, and others. By the end of the war, Carborundum had quadrupled its staff, to 2,000, and its annual sales had reached $11 million.

Sales dropped somewhat immediately following World War I, but the postwar industrial boom soon renewed the demand for Carborundum products. Silicon carbide not only possessed heat resistance capabilities, but also could be used to conduct electricity at high and low temperatures. During the 1920s, the Wireless Resistor Company of America, based in Milwaukee, pioneered this use of silicon carbide in an electric heating element called “Globar.” In 1927 Carborundum purchased that company, by then called the Globar Corporation, and moved its production to Niagara Falls. The new Globar division soon branched out from producing heating elements for the metal, chemical, and ceramic industries to manufacturing resistors for the burgeoning electronics market. By the end of the decade, Carborundum had also acquired A/S Smetleverk of Norway and the Hutto Engineering Company of Detroit, and the company’s annual sales had risen to $17.5 million.

Although growth slowed again during the Depression, Carborundum continued to expand its product line. Among its new products were the first grinding wheels to use crushed diamonds as an abrasive. Carborundum’s foreign expansion continued with the acquisition in 1938 of the Australian Abrasive Pty., Ltd., in New South Wales. By 1940, annual sales topped $20 million, and the company employed more than 4,000 people.

Business boomed during the Second World War as Carborundum’s production grew to support the war effort. By 1943, Carborundum’s 6,000 employees produced $52 million in annual revenue. The slogan “Tllegitimi Non Carborundum”—often translated as “Don’t Let the Bastards Grind You Down”—helped make the Carborundum Company a household name during this time. By the end of the war, Carborundum employed roughly 20 percent of the Niagara Falls-area workforce.

After the war, Carborundum once again embarked on an ambitious expansion plan. The company announced a $20 million program to upgrade and expand facilities in order to make the company more competitive in the postwar era. The Niagara Falls facilities were modernized, and new facilities were built or purchased in Wheatfield, New York; Vancouver, Washington; and Falconer, New York. At this time, the company was decentralized into four primary operating divisions: Bonded Abrasives and Grains; Refractories; Coated Abrasives; and Globar.

Carborundum continued to develop new materials and products. During the war years, Carborundum had begun development of its Fiberfrax ceramic fiber, and in 1952 the company began to market the first commercial applications of the new material. Composed of aluminum oxide and silica, the cottonlike fiber’s properties of high heat resistance, light weight, and low heat transmission made it extremely versatile. Fiberfrax was soon used not only as refractory insulation, but also in the aviation, chemical, papermaking, and electrical industries, and would one day be found in such products as papers, felts, ropes, and woven textiles, including blankets. To further its research capacity, in 1953 Carborundum built a 60,000-square-foot facility for its Research and Development Division, which by then had a budget of more than $1 million per year. Also in 1953, in response to a five-year contract with the Atomic Energy Commission, Carborundum began production of zirconium sponge metal. Within a year, its new Carborundum Metals Company plant in Akron, New York, produced 150,000 tons of the zirconium and hafnium sponge metals vital to the construction of nuclear power facilities. This marked Carborundum’s first diversification beyond its traditional abrasives and refractories markets.

Diversification became essential for the company’s further growth. Because Carborundum had long depended directly on the capital goods market for its revenues, when that market cycled through a decline, Carborundum’s fortunes went with them. During the 1950s the company stepped up the pace of its acquisitions, while moving to diversify internally. The company spent some $15 million developing its zirconium and hafnium capacity. In 1954 it acquired Stupakoff Ceramic and Manufacturing Company of Latrobe, Pennsylvania, and the American Tripoli Corporation of Seneca, Missouri, followed in the next year by the acquisition of the Curtis Machine Corporation of Jamestown, New York. Between 1953 and 1959, new Carborundum plants opened in Brazil, Puerto Rico, Switzerland, New Zealand, India, and Belgium, bringing the company to a total of 30 plants in 10 countries. New materials developed during this time included boron nitride, KT silicon carbide, and synthetic diamonds. By 1956, annual sales reached $104 million.

Not all of the company’s diversification efforts were successful, however. The zirconium and hafnium markets quickly became glutted, resulting in significant losses for the company. The newly acquired Stupakoff Ceramics, which manufactured ceramic seals for electrical components, had been riding high at the time of Carborundum’s purchase due to business generated by the Korean War. When that war ended, so too did Stupa-koff’s growth. In 1957 the Stupakoff division was combined with the Refractories and Globar divisions into a single Refractories division. Over the next decade, despite the growth of revenues to $150 million per year, Carborundum’s per-share earnings stagnated. By 1965, Carborundum had lost its leadership in the domestic abrasives market—which still accounted for some two-thirds of its sales—to the Norton Company of Massachusetts.

More acquisitions followed in the early 1960s, including the Tysaman Machine Company in Tennessee, Carborundum-Ne-derland N.V. in the Netherlands, Falls Industries in Ohio, Basic Carbon Corp. in New York, Lockport Felt Company in New York, W. T. Copeland & Sons in England, and Industrias Abrasives S.A. in Spain. By the mid-1960s Carborundum was under the direction of William Wendel, who remained company president until 1978. Under WendeFs leadership Carborundum acquisition policy followed a stricter adherence to the company’s core ceramics technology while nonetheless moving beyond the capital goods market into the steel, paper, plastics, pollution control, and china industries. New plants, Toshiba Monofrax in Tokyo and a graphite electrode manufacturing plant in Kentucky, both built in 1966, exemplify Carborundum’s new efforts to manufacture not only abrasives but also the machines and systems that use them. From 1963 to 1974, Carborundum’s sales rose from $162 million to $557 million, while its earnings per share more than doubled. In 1974 there were nearly 18,000 Carborundum employees. Through the 1970s sales grew an average of 16 percent and net earnings at an average of 17 percent, reaching $32.8 million in 1976.

By the mid-1970s, Carborundum’s success began to attract attention: after fighting off a hostile takeover attempt by Eaton Corp., Carborundum was purchased by Kennecott Copper Corporation for $571 million, which was the second-largest cash tender offer in U.S. history. Carborundum, with $713 million in sales and 19,000 employees, became a wholly owned subsidiary. William Wendel became president of Kennecott, which dropped the Copper from its name in 1980. Between 1978 and 1981 Carborundum went through three presidents.

Then, in 1981, Standard Oil of Ohio, popularly known as Sohio, purchased Kennecott and its Carborundum subsidiary for $1.77 billion. Through the 1980s, Carborundum’s name was changed twice to Sohio Engineered Materials Company and Standard Oil Engineered Materials Company before returning the Carborundum name in 1988. Deeper changes were also made during this time. The company was once again reorganized, this time into three operating companies: Abrasives; Electro Minerals; and Resistant Materials. Silicon carbide continued to be one of the company’s core minerals, now with the development of Hexoloy alpha silicon carbide products. The company also moved into development of materials for the growing semiconductor industry. An even more significant change occurred in 1983, when Carborundum’s Niagara Falls bonded abrasives plant was closed and its coated abrasives plant sold to an independent investor, which later sold the plant to the Norton Company, although parts of Carborundum’s abrasives business continued to operate under its own name. The following year, the Electro Minerals division was sold to Washington Mills Abrasive company, and all but Carborundum’s Brazilian abrasives activities were sold off to Carborundum management and other partners. Carborundum had all but left its original market.

In 1987 British Petroleum acquired Standard Oil and its Carborundum subsidiary. Carborundum was organized under British Petroleum’s BP Chemicals division. That year also marked the first large-volume use of Carborundum’s Hexoloy material, with a shipment of automotive water pump seals to Germany. In 1989 a new structural ceramics manufacturing facility was opened in Mochengladbach, Germany, to supply the European automotive market. The company’s development of aluminum nitride substrates and ceramic packages for the semiconductor industry led to the organization of a Substrates Division in 1989. The company also opened a microelectronics development center in Phoenix, Arizona, and acquired Cera-dyne Specialty Products; meanwhile, it continued developing new uses for its Fiberfrax technology, while maintaining global leadership in sales of its Globar heating elements. 1990 sales of $350 million and a payroll of 4,500 employees reflected the changes the past decade had brought to Carborundum.

The recession of the early 1990s cut into Carborundum’s sales. By 1993 BP Chemicals reported an operating loss of over $100 million. British Petroleum then announced plans to divest its non-hydrocarbon-related businesses. Plans to sell off Carborundum were formulated by 1994 and early in 1995 BP announced its intention to sell most of Carborundum—with the exception of its ceramic fibers unit—to St. Gobain S.A., the huge French glass and ceramics manufacturer. In 1990 St. Gobain had already purchased the Norton Company and its Carborundum abrasives unit; after nearly fifty years of intense competition between the Norton and Carborundum, they were to be joined into the same company. Despite a last-minute attempt by Carborundum’s management to purchase the company, the sale to St. Gobain went through late in 1995. At that time, BP was also preparing to sell Carborundum’s ceramics fibers unit, possibly to Carborundum management.

The acquisition of Carborundum by St. Gobain, subject to approval by the Federal Trade Commission and the governments of Great Britain, France, and Germany, was expected to be completed in 1996. Because the overlap of the two companies was minimal, St. Gobain expected to keep most of Carborundum’s manufacturing facilities open, while pursuing the expansion of Carborundum’s Asian and Pacific presence. Nevertheless, the future of Carborundum’s management, and its Niagara Falls headquarters, was uncertain.