Memry Corporation

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Memry Corporation

3 Berkshire Boulevard
Bethel, Connecticut 06801
U.S.A.
Telephone: (203) 739-1100
Toll Free: (866) 466-3679
Fax: (203) 798-6363
Web site: http://www.memry.com

Public Company
Incorporated: 1981 as Memory Metals, Inc.
Employees: 231
Sales: $34.49 million (2004)
Stock Exchanges: American
Ticker Symbol: MRY
NAIC: 541710 Research and Development in the Physical Sciences and Engineering Sciences; 332721 Precision Turned Product Manufacturing; 332911 Industrial Valve Manufacturing; 332919 Other Metal Valve and Pipe Fitting Manufacturing; 333319 Other Commercial and Service Industry Machinery Manufacturing; 339993 Fastener, Button, Needle and Pin Manufacturing

Memry Corporation ranks as the largest independent manufacturer of Nitinol components to the medical device industry and the largest producer of Nitinol tubing, wire, strip, and components. Nitinol is a shape memory alloy able to undergo severe changes in form and return to its original shape. The company offers manufacturers a total solution concept that incorporates design, prototype development, production, and the manufacture of shape memory alloy parts. In the medical device market, Memry's Nitinol and polymer-based components are used in interventional devices such as guide wires, catheters, and delivery systems. Memry owns manufacturing facilities in Bethel, Connecticut, and Menlo Park, California.

Origins

Memry went through several meaningful transitions during its first decades in business, shifting its strategy three times before finding the niche it occupied at the beginning of the 21st century. The company was incorporated in 1981 in Stamford, Connecticut, a venture started by a group of scientists intent on developing commercial applications for the emerging shape memory alloy business. Shape memory referred to a material's ability to change its shape and return to its original shape, an ability that promised to have many uses in industrial and commercial applications. Initially, the founding scientists concentrated on a family of copper-based shape memory alloys, deriving much of their financial backing from federal research grants. The company spent much of its first decade experimenting with copper-based alloys, experiencing the trial-and-error ups and downs common in any emerging technological field. By the late 1980s, the scientists realized they were on the wrong track, a discovery that prompted Memry's first significant change in strategy.

Memry's lead scientists abandoned further work on copper-based shape memory alloys when they realized the material was not capable of performing well in the long term. Copper-based alloys could not answer the demanding needs of certain applications, but the company's technical crew knew of an alloy that could stand up to the rigors of commercial and industrial demands. During the early 1960s, a new alloy was discovered, a material that drew its name from its birthplace. Nitinol became the answer to Memry's problems with copper-based alloys, a material that was almost equal parts nickel and titanium. Nitinol's name was created from combining the first two letters of nickel and titanium with the acronym for the U.S. Naval Ordnance Laboratory (NOL), where the alloy was discovered in the early 1960s. Nitinol had special, unique properties that allowed it to alter its shape in response to thermal or mechanical changes, but return to its original form, a crystalline phase change known as "thermoelastic martensitic transformation."

Once Memry's engineers found a shape memory alloy that could perform well, the company's commercial activity picked up pace. Beginning around 1989, when the company changed its name from Memory Metals Inc. to Memry Corporation, it began developing products for customers, distributing its goods through its own sales team and through agreements with other agencies. The company also strengthened its metal machining business with the acquisition of a more than century-old Worcester, Massachusetts-based company. In 1990, the company acquired Wright Machine Corp., which increased its manufacturing capacity, particularly for internally developed valve products. Memry's involvement in developing its own shape memory alloy products lasted only briefly, ending in the early 1990s when the company embarked on its second meaningful change in strategy. The first strategic transition had been triggered by a product, the discovery of Nitinol. The impetus for the second change in focus came from an individual, an executive named James G. Binch.

New Leadership in the Early 1990s

Binch received his undergraduate degree from Princeton University before earning a master's degree in business from the Wharton School at the University of Pennsylvania. His career included a stint at Champion Building Products, where he served as vice-president of planning, and a seven-year stay at Combustion Engineering, where he rose to the posts of president and chief operating officer. Binch's introduction to Memry came after he embarked on a new career as a merchant banker. In 1987, he founded Harbour Investment Corporation, which became a major shareholder of Memry, eventually leading to his appointment as chief executive officer of Memry in 1992.

Once at the helm, Binch had the power to make changes as he saw fit. He believed the company lacked focus because, according to the February 19, 2001 issue of the Fairfield County Business Journal, "It was going in too many directions." Binch implemented a restructuring program that changed the way the company conducted its business, ushering in a period of development that would see the company realize its first significant growth. For more than its first decade of business, Memry never reached the $1 million-in-sales mark, operating as a very small enterprise with fewer than 20 employees. The company began to develop into a more prominent commercial entity after Binch abandoned the company's strategy of developing proprietary end-user products and recast Memry as a supplier to original equipment manufacturers (OEMs). In the years ahead, Binch focused on offering semi-finished materials and engineered components fabricated from Nitinol, selling such goods to manufacturers involved in industrial, commercial, and defense markets.

The switch from manufacturing finished products to fabricating semi-finished products and components took several years to complete. By 1995, the company still employed fewer than 20 people and it continued to generate less than $1 million in annual revenue, but the spark that ignited the company's growth arrived the following year. In June 1996, Binch bought the electronics division of Raychem Corporation, a purchase that capped the restructuring program begun four years earlier. The acquisition involved Raychem's intellectual property and its manufacturing assets related to its shape memory business, giving Memry a production plant in Menlo Park, California. The purchase also included ties to the medical device market, which Raychem had served before Memry acquired its shape memory assets. A focus on the medical device market represented the company's third significant change in strategy, one that would propel the Binchled organization toward unprecedented growth.

Focusing on the Medical Device Market
in the Late 1990s

During the second half of the 1990s, the medical device industry began turning increasingly to shape memory alloy-based components to manufacture its products. Shape memory alloys excelled in certain commercial and industrial applications, proving their worth as the underwire for bras, as components of cellular phone antennas, and to make flexible eyeglass frames. The unique behavior of Nitinol—its ability to undergo severe shape changes and fully recover when triggered—found practical use in the medical device market as well. By using shape memory alloy in a medical instrument, the instrument's shape and size could be contorted and returned to its original form once deployed in the patient's body, which aided in the medical community's drive for minimally invasive procedures and instruments. Binch saw a future for Memry in the medical devices market, one in which the demand was strong and the profits were high. For example, one-quarter inch of Nitinol wire cost $30 per pound, the price Memry paid to bring the alloy into its manufacturing facilities. After using the Nitinol to create a component for a medical device, the price of the shape memory alloy increased exponentially, jumping as high as $3,000 per pound.

As the late 1990s progressed, Binch reshaped the company again, focusing his efforts on the medical device market. In 1997, two deals one month apart reflected the decision to move forward in one direction while retreating from another direction. In April, Memry reached a two-year, exclusive purchase order agreement with United States Surgical Corporation for the supply of medical instrument assemblies. The following month, Memry announced it had reached an agreement to sell all of the machinery and equipment belonging to Wright Machine Corp., deeming the subsidiary outside the scope of the company's new focus on becoming a high-technology materials and assembly concern.

The new version of Memry that was taking shape during the late 1990s was a much larger commercial enterprise, one whose growing stature attracted attention from beyond the borders of its home state of Connecticut. Thanks in large part to the Raychem acquisition, the company's annual sales leaped from $1.1 million in 1996 to $11.5 in 1997. Revenues nearly doubled the following year, as Binch pressed forward with his restructuring program. In October 1998, Memry completed another major acquisition, setting its sights on overseas assets to bolster its Nitinol capabilities. The company acquired Advanced Materials and Technologies, N.V. (AMT), a Belgium-based company that ranked as one of the largest providers of shape memory alloys to customers in Europe. The addition of AMT, which owned a 15,000-square-foot manufacturing facility in Herk-de-Stad, coupled with the Raychem purchase made Memry one of the largest producers of Nitinol components in the world—an impressive standing for a company that several years earlier had been unable to generate more than $1 million in revenue.

Company Perspectives:

Memry's objective is to become the world leader in developing and processing shape memory materials with high quality and significant user value.

Memry in the 21st Century

At the dawn of the 21st century, Memry was at a crossroads of sorts, firmly committed to being a supplier of Nitinol-based components, but serving both the medical device market and markets outside the medical industry. The focus on serving medical device manufacturers had grown sharper as the late 1990s progressed, culminating with a small yet symbolic acquisition completed in 1999. In March, Memry purchased Wrentham, Massachusetts-based Wire Solutions, Inc., a maker of specialized micro-coils and guide wire components for the medical device industry. "This acquisition, although small," Binch explained in a statement released March 24, 1999 by PR Newswire, "continues Memry's drive into the broader application of its design, engineering, and manufacturing skills for the medical device market." The purchase of Wire Solutions represented one more step toward serving the medical device market, and it was followed by a significant step away from serving OEM manufacturers involved in the automotive, telecommunications, defense, and other, nonmedical, industries. In February 2001, Binch decided to sell Memry Europe, the business formerly known as AMT, shifting the balance between a medical and nonmedical focus strongly toward the medical side.

"Over the past four quarters, we have experienced approximately $750,000 in ordinary operating losses directly attributable to the European operation. With this transaction, we will have eliminated the ongoing financial drain." Binch's statement, taken from a February 19, 2001 interview with the Fairfield County Business Journal, explained part of the reason to cut the former AMT free from Memry. "The real reason the European business had not turned the corner in terms of profits," Binch continued, "was with our company-wide emphasis on medical applications. We did not develop the commercial base necessary for other applications." Memry Europe, within three years of its acquisition, had come to represent the company's past. At Memry's headquarters in Brookfield, 85 percent of the components manufactured were designed for medical applications. In Belgium, 90 percent of the Nitinol components were made for commercial and industrial applications not related to medical devices. The focus of the company, sharpened by the divestiture of its European subsidiary, was clearer by this point. In the years ahead, Memry intended to invest nearly all of its efforts in making the laparoscopic surgical assemblies, medical stent materials and components, and catheters and guide wires wanted by medical device manufacturers.

As Binch celebrated his tenth anniversary at Memry, the influence of his reign was easily discernible in both financial and strategic terms. When he joined the company, Memry had discovered the material it would use but not the market for the material. Financially, the gains achieved under his rule were enormous. When Binch joined Memry, the company collected revenues in the hundreds of thousands of dollars. By the mid-2000s, the company was generating roughly $35 million in revenue, earning in profit by a factor of more than ten what it had grossed a decade earlier. Binch made Memry a recognizable player in the business world, and he was committed to further developing the company within the parameters it had taken him nearly a decade to define. The company's acquisition of Putnam Plastics Corporation in 2004 reinforced Binch's strategy for Memry, giving the company a broader platform upon which to build in the future. Putnam, acquired in November, made plastic components for medical devices such as guide wires, catheters, delivery systems, and other interventional devices. Binch, in an interview with the Fairfield County Business Journal conducted on November 29, 2004, explained the reasoning behind the purchase, likely not the last acquisition of its type as Memry prepared for the future. "Both of us supply critical products for many of the same device companies, sometimes for the same application," he noted. "For example, we may make a Nitinol self-expanding stent while Putnam may manufacture the shaft for its delivery catheter. Our new combined company gives us greater leveraging in penetrating the market and expanding the customer base."

Principal Subsidiaries

Putnam Plastics Corporation.

Principal Competitors

Special Metals Corporation; Alleghany Technologies; Minitubes S.A.; G. Rau/EuroFlex.

Key Dates:

1981:: Memry is incorporated.
1992:: James G. Binch is appointed chief executive officer.
1996:: Memry acquires Raychem Corp.'s shape memory alloy business.
1998:: Memry acquires Advanced Materials and Technologies, N.V., a Belgium-based company that becomes Memry Europe.
2001:: Memry sells Memry Europe.
2004:: Memry acquires Putnam Plastics Corporation.