Thermo Fibertek, Inc.
Thermo Fibertek, Inc.
81 Wyman Street
P.O. Box 9046
Waltham, Massachusetts 02254-9046
Fax: (617) 622-1102
Public Subsidiary of Thermo Electron Corporation
Sales: $192.2 million (1996)
Stock Exchanges: American
Ticker Symbol: TFT
SICs: 3554 Paper Industries Machinery; 3567 Industrial Process Furnaces & Ovens; 3569 General Industrial Machinery & Equipment, Not Elsewhere Classified; 3823 Industrial Instruments for Measurement, Display, & Control of Process Variables, & Related Products; 8711 Engineering Services; 8731 Commercial, Physical, & Biological Research; 8742 Management Consulting Services
Thermo Fibertek, Inc. is an international developer, manufacturer, and marketer of a wide range of equipment, products, process equipment, and accessories for the domestic and international papermaking and paper recycling industries. Its systems are designed to convert wastepaper into usable fiber, enhance the efficiency of papermaking machinery, and reclaim wastewater for reuse in the recycling process. Some of the products manufactured by the company include de-inking systems, stock preparation equipment, water management systems, and spare parts and accessories.
Spinout Vs. Spinoff
Thermo Fibertek is a “spinout” of Thermo Electron Corporation, as opposed to a “spinoff.” George Hatsopoulos, CEO of Therm Electron, the parent company, differentiates the two, since his subsidiaries are created to stand on their own but are not cast off by the parent. Of the ten or so first-generation spinouts from Thermo Electron, all are still partially owned by the parent company, itself a leading manufacturer of environmental monitoring equipment, biomedical, and health equipment. Other first-generation spinouts include Thermedics, Thermo Instrument, Thermo Power, Thermo TerraTech, and Thermo Trex. Each of the first-generation spinouts has second-generation spinouts orbiting it, and some even have third- and fourth-generation spinouts.
George Hatsopoulos, whose uncles and cousins were successful in technical fields but failures in business, vowed to succeed in both. He received degrees in both engineering and thermodynamics from Massachusetts Institute of Technology, and then founded Thermo Electron in 1956. The company made its initial public offering in October 1967 at 68 cents per share. In March 1996, the stock was valued at $61.25 per share. Thermo Fibertek made its initial public offering in November 1992 at $5.33 per share. Its value in March 1996 was $23.38 per share.
That same year a down cycle in the pulp and paper industry adversely affected Thermo Fibertek. Revenues reached $192.2 million, compared with $206.7 million in 1995 and net income reached $19.9 million, down from $20.2 million the previous year, though the stock share remained the same at $0.33 per share. However, that year the company bolstered its position as the technological leader in white paper de-inking as their facility in Menominee, Michigan, started up operations, recycling approximately 570 tons of mixed office waste into 400 tons of high-grade, de-inked pulp per day.
Second-Generation Spinout—Thermo Fibergen, Inc.
Increasing demand for environmentally safe industrial waste disposal methods has opened new opportunities for the application of Thermo Fibertek’s advanced technologies. In February 1996, Thermo Fibertek incorporated a Delaware corporation spinout company called Thermo Fibergen, Inc.
Located in newly built headquarters in Bedford, Massachusetts, Thermo Fibergen was created to address the problems of papermaking waste, called sludge, from paper mills. Each year, the pulp and paper industry worldwide produces 25 million tons of waste material—enough, according to company literature, “to cover the entire borough of Manhattan with a layer 30 feet deep!”—that must be disposed of in landfills and incinerators, and the industry spent nearly $2.5 billion in 1996 to get rid of its sludge, a figure projected to rise as landfills close and incinerators become more difficult to site. The move toward recycled paper, which saves both trees and energy, actually intensifies the waste problem, since recycling mills produce eight times more sludge than virgin-pulp mills. A typical recycling mill converts 600 tons of wastepaper per day into 450 tons of recycled pulp, leaving 150 tons of sludge solids, made up of long and short fiber, minerals, and “fines” (fiber fragments too small for papermaking). Since disposal of sludge waste is complicated—mills must purchase and use expensive polymers to make the solids clump so the water can be pressed out; the sludge must be transported to disposal facilities, and disposal providers must be paid tipping fees to bury sludge in landfills—costly, and an increasingly larger headache for papermakers, Thermo Fibertek saw an opportunity.
Thermo Fibergen, under the direction of Chief Executive Officer Yiannis A. Monovoukas, was created to develop proprietary technology to recover the long fibers (approximately 15 percent of the sludge solids) and short fibers (approximately 35 percent) and clarify water so that both can be reused in paper-making. Thermo Fibergen plans to finance, build, own, and operate sludge-processing facilities at or near the site of pulp and paper mills, and sign contracts to take responsibility, for a fee, for the sludge generated by these mills. Each of the facilities will be able to process more than 30,000 tons of wastewater per day.
During the summer of 1996, Thermo Fibergen built a portable version of its proprietary fiber-recovery technology and demonstrated its effectiveness at paper mills around the country. Thermo Fibergen offered its initial public offering in September of that year, raising approximately $54 million to fund research and development and the commercialization of its fiber-recovery technology, and becoming one of 12 second-generation “grandchildren” companies spun out by Thermo Electron.
But what to do with the remaining minerals and chemicals created as sludge byproducts? Since approximately 50 percent of the sludge solids are made up of minerals and chemicals such as calcium carbonate, kaolin clay, and titanium dioxide, Thermo Fibergen acquired a subsidiary in July 1996 called GranTek, Inc. to turn the problem into yet another opportunity.
Creating new markets for itself by doing so, GranTek was acquired in order to convert the minerals and chemicals into a product line called Biodac—virtually dust-free, organic-based granules which will be sold commercially for use as carriers of agricultural chemicals in the 160,000 tons-per-year professional turf, home lawn and garden, and mosquito-control markets; for use in the 240,000 tons-per-year agricultural row-crop market (approximately $50 million in the U.S. alone in 1996); for the 575,000 tons-per-year market for absorbents for oil spill and grease clean-up (approximately $35 million in wholesale revenue in 1996), with the added advantage that the used granules can be burned to generate energy since the absorbent product is made from paper waste; and for the 1.5 million tons-per-year kitty litter market (a market worth approximately $400 million per year). Thermo Fibergen expected to begin marketing these products in 1998 and revenues for the spinout company reached $2.2 million in its first year, with a net loss of $367,000.
Black Clawson Acquisition, 1997
In February 1997, Thermo Fibertek signed a letter of intent to acquire the assets of the Middletown, Ohio-based Black Clawson Company, a privately held, multinational company with manufacturing facilities, technical centers, and sales and engineering offices in strategic places throughout the world including Canada, the People’s Republic of China, Singapore, France, England, and the United States, with a network of agents in Latin America, and its world headquarters in New York City. The company is a leading supplier of recycling equipment used in processing fiber for the manufacture of brown paper, such as that used for corrugated boxes.
Black Clawson began as a small machine shop in Hamilton, Ohio, whose work was limited to roll grinding and repair work for paper mills in Ohio’s Miami Valley. To broaden the scope of their business, the company began building paper machinery, and the first Fourdrinier was built in 1881. Based on the success of the paper machinery business, the company expanded rapidly. By 1900, it was exporting Fourdriniers to Great Britain, Europe, and Japan. Other successes included the development of a cylinder machine, seamless dryer, and triple deck dryer arrangement.
Just north of Hamilton, in Middletown, Ohio, another machine shop, Shartle Brothers, was internationally recognized as the major builder of stock pumps, beaters, and refiners. Black Clawson purchased Shartle in 1926. The two product lines complemented each other such that the company offered a wider range of equipment to paper and board mills than any competitor.
The merger of Dilts Machine Works of Fulton, New York, Shartle’s main competitor, into the Shartle organization led to the development of new screens for old mixed stock, the first pressure screen, and the “Hydrapulper” pulping machine that revolutionized the way wastepaper was processed.
We have maintained our position as a leader in the pulp and paper industry because each of our business units works hard to solve today’s problems —while anticipating tomorrow’s.
In 1946, Shartle took on sole responsibility for all stock preparation equipment. Its growth over the years has led to world leadership in pulp mill systems, stock preparation equipment, and recycling equipment. Black Clawson designed and manufactured recycling systems even before it became a critical issue in the 1990s. By 1997, more than 80 percent of America’s recycled paper was produced on Black Clawson equipment.
Black Clawson also manufactures process and equipment capabilities in virgin fiber processing; horizontal belt washers and a complete product line of equipment used exclusively in the production of virgin pulps; all of the major components that follow the digesters, including knotters, cleaners, screens, and non-chlorine bleaching technology; and the “Liqui-Filter,” a specially designed pressure filter for removing fiber from the liquor recovery systems.
Black Clawson’s Fulton, New York-based Black Clawson Converting Machinery Corporation is a leading supplier of web handling machinery, engineering and manufacturing machine lines for converting paper, paperboard, plastic film and sheeting, foil, and non-woven materials, as well as application-engineered complete machine lines including unwind/splicing equipment, universal coating, air flotation and web-supported dryers, continuous winder/roll changing equipment, and slitter/ rewinders.
The acquisition of Black Clawson afforded the company access to the Pacific Rim markets, where the paper recycling industry was expected to grow significantly in the 21st century.
More Second-Generation Spinouts, and a Look to the Future
In addition to Thermo Fibergen, other spinouts of Thermo Fibertek have included Auburn, Massachusetts-based Thermo Web Systems, which designs and develops paper machine doctoring systems and doctor blades for efficient roll cleaning and sheet peeling; Thermo Wisconsin, Inc., based in Kaukauna, Wisconsin, specializing in drying technologies used in both the paper and printing industries; and Lamort, the largest subsidiary of Thermo Fibertek, located in Vitry-le-Francois, France, serving as a center for technological development of recycling products.
Thermo Fibertek, along with its parent company and subsidiaries, shows no sign of slowing down. As the realization of recycled paper and products grows, Thermo Fibertek, which, through its Black Clawson subsidiary was manufacturing products for the industry long before it was “politically correct,” will continue to grow and dominate that marketplace.
AES Engineered Systems; AES Equipos y Sistema (Mexico); Thermo AES Canada; E & M Lamort (France); Thermo Black Clawson, Inc.; Thermo Black Clawson China; Thermo Black Clawson Ltd. (U.K.); Thermo Black Clawson SA (France); Thermo Fibergen, Inc.; GranTek, Inc.; Thermo Fiberprep, Inc.; Thermo Fibertek UK; Thermo Web Systems, Inc.; Thermo Wisconsin, Inc.
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“Thermo Fibertek Acquisition,” Wall Street Journal, February 28, 1997, p. A6(E)/B5(W).
“Thermo Fibertek to Buy Black Clawson for $110 Million,” New York Times, February 28, 1997, p. D3.
—Daryl F. Mallett