Furon Company
Address:
29982 Ivy Glenn Drive
Laguna Niguel, California 92677
U.S.A.
Telephone: (949) 831-5350
Fax: (949) 363-6276
http://www.furon.com
Statistics:
Public Company
Incorporated: 1955 as The Fluorocarbon Company
Employees: 3,315
Sales: $485 million (1998)
Stock Exchanges: New York
Ticker Symbol: FCY
NAIC: 339112 Catheters Manufacturing; 326113 Plastics Film & Unlaminated Sheet Manufacturing; 325991 Plastics Resins, Custom Compounding; 326199 All Other Plastics Product Manufacturing
Company Perspectives:
Our goal is nothing short of consistent excellence. Furon has a longstanding reputation for quality, based on our unique experience and a solid commitment to doing everything in our power to serve our customers.
Company History:
Furon Company is the world's leader in the design and manufacture of specialized polymer components and parts for a wide range of applications in many fields, including the process, transportation, electronics, healthcare, and industrial equipment industries. Seals and bearings, fluid handling components, tapes, films, coated fabrics, hose, tubing, and plastic-formed components are among the products manufactured for various industries. Many of Furon's products are custom manufactured for specific needs. Furon's medical products include catheters, fluid and drug delivery parts, patient monitoring, and infusion systems, primarily for critical care and catheter lab use. The company focuses on niche markets and applications that provide its customers value-added product solutions. Brands developed by Furon include CHR, Dekoron, Felsted, Fluorglas, Medex, Meldin, Omniseal, Rulon, Synflex, and Unitherm. Some of the company's largest customers for industrial products include The Boeing Company, Coca-Cola Company, and Navistar International Corporation. In addition to its offices throughout the United States, the company has expanded operations into Belgium, Italy, England, and Germany.
The 1950s: Teflon Processing
Founded by George Angle in 1955, Furon was initially named The Fluorocarbon Company. The company began by producing Dupont's Teflon--or polytetrafluoroethylene--a product used primarily as a nonstick coating for kitchen utensils. Teflon is capable of being molded, machined, and fabricated into many shapes and components, including miniature solenoid valve bodies. The Fluorocarbon Company developed Teflon spring-energized seals in order to handle extreme temperatures and strong forces for commercial aircraft use. The coating could withstand expansion, contraction, flexure, and angular movement. After thorough testing, the material received military approval for its aircraft applications. The Fluorocarbon Company continued to develop and produce a wide variety of resins made of exclusive compounds. The company's production process began with the purchase of standard polymer resins from a variety of chemical companies. At Fluorocarbon, engineers added to or modified the resins to impart the special properties suitable for specific application needs. Sometimes such additives as nylon were added to impart extra strength, or graphite for lubrication.
Following its initial public offering in 1962, Fluorocarbon grew rapidly, soon becoming the world's largest processor of Teflon. The company began then with five small manufacturing plants, 20 employees, and $600,000 in sales, but expanded to over 2,900 employees and more than $300 million in sales under the leadership of Peter Churm, who assumed the Fluorocarbon presidency in 1963. His style allowed a decentralization of management, with decision-making located at individual operating units, complemented by strategic direction provided by a veteran senior management team.
The 1970s-80s: Plant Expansion and Growth
In 1988 Fluorocarbon acquired all of the outstanding common stock of Reynolds & Taylor, Inc., a fabricator of high performance composite materials for the aerospace, aviation, and defense industries. For a space shuttle experiment Fluorocarbon introduced a special flawless, thin-walled gas-permeable membrane. Specifications required that the membrane be translucent and perfected to assure uniform gas and light diffusion. Other thermoplastic developments included fiber optic cables and pressure-formed instrumentation packaging. Also in 1988, Fluorocarbon acquired the fixed assets and inventory of Parker Hannifin's gasket division, located in Sulfur, Louisiana. In addition, it purchased Dixon Industries Corporation from CHR Industries, Inc. and Bunnell Plastics Inc. from the Bundy Corporation, which was a wholly owned subsidiary of the Delaware-based TI United States, LTD.
In 1989 The Fluorocarbon Company responded to negative publicity arising from new information concerning the environmental hazards involved in the release of fluorocarbons into the atmosphere. As a diversionary tactic, it adopted Furon Company as its new name. Furon established its World Class Performance program in order to accomplish an objective of becoming number one or two in the market niches it served. The program emphasized a new formalized cost reduction program and instituted a performance measuring system, called Economic Value Added, or EVA. By 1990, following Management's primary emphasis on increased materials development, Furon's Advanced Polymers Division developed Meldin 2000, a versatile, high-temperature material, first introduced at the National Design Engineering Show. The material offered long wear, low friction, and superior compression strength properties. The resulting components produced ranged from hydraulic hoses to wire and cable products. For the heating, ventilation, air conditioning, and power generation industries, Furon offered Dekoron tubing, wire, and cable, which were mainstays in chemical processing applications. For other markets such as agriculture, trucking, construction equipment, paint equipment, and beverage dispensing, Furon developed the special family of products labeled Synflex.
The company's reputation for problem solving expertise was especially strong in its materials technology and systems design. Its diverse assortment of custom-tailored products necessitated extensive fabrication and manufacturing capabilities, a focus which contributed to further expand company product goals. Components were created to provide seals and o-rings for automobiles that were flexible enough to withstand extreme conditions in low temperatures and meet tight emission standards. Pressure-sensitive tapes and coated fabrics were developed from elastomers including silicone, fluorosilicone, Neoprene, natural rubber, butyl, polyurethane, and others. The special properties of these materials protected critical components from heat, electrical interference, chemicals, conformal coatings, shock, and vibration. Silicon foam, polyisocyanurate and polyimide foams were developed to provide non-toxic fire blocking capabilities. In 1991, Furon's business segments included the areas of Engineered Products, Fluoropolymers, Fluid Sealing, Extrusion Technologies, and Furon Europe (where the company manufactured and sold a variety of products using technologies specifically designed for the requirements of the European market). Furon recognized a strong demand for its products in Europe, and moved the CHR operations, previously housed in the Netherlands, to Gembloux, Belgium, bringing manufacturing facilities closer to markets. New offices were also opened in Germany, France, and the United Kingdom, with further expansion scheduled for Japan and the Pacific Rim. Sales plans were developed for exportation to the Arabian Gulf, Central and South America, Eastern Europe, and Africa. Despite Furon's expansion and technological efforts, 1991 sales had decreased from $327 million to $306 million, due largely to a lagging worldwide economy.
Restructuring in 1992
Furon executives decided to focus attention on those businesses showing higher profit margins and the ability to sustain internal growth rate objectives. Seven of the company's divisions were consolidated into other business units as a means of reducing expenses, and a new materials technology center combining research, development, and production, was established in Aurora, Ohio (the Macromeric Division). Its purpose was to serve internal needs, and to facilitate sales of proprietary polymer materials to businesses outside the company in certain noncompetitive situations. Furon incurred a restructuring charge of $32 million, attributable to the selling of six businesses, management reorganization, consolidation, discontinuance of certain product lines, revision of certain employee benefit plans, and the write-down of a prior discontinued business investment. In 1992 the major markets Furon served, especially the petrochemical, aircraft, aerospace, defense, construction, and pulp and paper markets (comprising about 30 percent of sales), faltered, and the European market suffered even more than the domestic economy. The company responded by implementing rigorous new marketing strategies, continuing to cut costs and accelerating product development efforts by capitalizing on materials and processing technologies. Sales were brighter in the heavy duty truck, electronic, and medical markets, which at that time made up approximately 25 percent of sales.
By 1994 an upturn in the global market was reflected in a 14 percent rise in Furon sales, from $266 million in the previous year to $302 million. Bolstered by the positive outlook, capital projects increased and numerous opportunities in electronics and medical products were targeted. The company purchased Custom Coating and Laminating in Worcester, Massachusetts, a company that manufactured release films and tapes. In March 1995, Furon switched from the NASDAQ to the New York Stock Exchange due to the perception that the company's access to capital markets would be enhanced by the NYSE in the long-term. Price spreads and volatility were additional considerations.
Sales and earnings rose to record highs in fiscal 1997. Anticipating that healthcare industry sales would rise to about a quarter of the company's total, Furon acquired Medex and its subsidiaries--a company with annual sales in the $100 million range--for approximately $160 million. Previously, Furon's medical products had been sold primarily to other device manufacturers, but Medex concentrated on sales of polymer-based medical devices to end users, hospitals, and alternate care sites. Medex offered a full line of products for neonatal and pediatric intensive care and adult critical care uses, including disposable transducer kits for pressure monitoring, IV sets for fluid and drug delivery, and inflation devices of the catheterization lab. It was a leading provider of syringe pumps and related disposable sets for infusion therapy. In 1997 The U.S. Food and Drug Administration approved the marketing clearance for a reusable pressure transducer to monitor blood pressure during surgical procedures, items well received by physicians and nurses who noted the high standards of performance. The company also acquired Scientific Device Manufacturers, Inc. (SDM), which began operating as a part of Medex, adding products to the existing medical products platform. Since nearly 39 percent of Furon's sales in the medical sector were derived outside the U.S. market, the Furon acquisitions, including AS Medical GmbH, enabled the company to expand its healthcare base in Europe and the United States.
Excluding Medex, approximately 27 percent of Furon's sales were generated by new products during this period, reflecting a strong commitment to developing business through the introduction of new product lines. By 1998 Furon's medical devices sector comprised approximately 24 percent of total sales for the year and 32 percent of the company's operating income. Demographics indicated that the aging of the U.S. population, heightened concern over the spread of infectious diseases, and a shift toward less invasive surgical procedures would assure continued global growth in the medical device sector.
The year 1998 was an excellent one for Furon, with sales up 24 percent, and earnings up 25 percent, increases attributed in large part to the Medex acquisition. Furon escaped the direct effects of the economic problems in the Far East where it had not yet gained a foothold, though the company had plans for future expansion into the region. While Furon experienced lower than expected demand for medical devices in the United States in 1998, European acquisitions and sales continued to grow.
Principal Subsidiaries: Fluorocarbon Components, Inc.; Sepco Corp.; Fluorocarbon Foreign Sales Corp.; CHR Industries, Inc.; Dixon Industries Corp.; Bunnell Plastics, Inc.; Ashfield Medical Systems, Ltd.; Medex.
Further Reading:
Bissell, Ron, "Furon Introduces New Blood Pressure Monitoring System," Bacon's, August 15, 1998.
"Furon and GenCorp Report Increased Earnings," Bacon's, June 29, 1998.
"Furon Flying," Forbes, October 24, 1994, p. 312.
"Gridiron Wiring to Counter Lake Erie Winds," WJI Industry News, July 1, 1998, p. 16.
Source: International Directory of Company Histories, Vol. 28. St. James Press, 1999.
