Monday, November 7, 2005

Manufacturing

Oxford firm carves space in high-end fiber laser market

By Brian Cook

A couple of key decisions made as the region's telecommunications market was running out of steam has brought a central Massachusetts communications equipment company into prominence in the laser industry.

At one time, IPG Photonics Corp. of Oxford had been a leading purveyor of lasers, amplifiers and transmitters used in fiber-optic transmission systems. When the market tanked back in 2001, its owner, Valentin Gapontsev decided to put his money into making, rather than buying, the diodes that power lasers, so the company could sell into other markets.

The privately held company raised $100 million in private equity financing in 2000, but only hit a profit in 2004. Strong sales in its industrial and telecom product lines led to strong revenue and profit growth for the first half of 2005, it reports. Sales increased by 58 percent and net income by more than 200 percent from the first-half of 2004. Sales have jumped from a reported $20 million in 2002 to more $90 million this year.

Today, the company sells lasers to a variety of industries that, said Bill Shiner, director of new market development, appears to grow by the week. "We keep getting calls from different users who have either heard about what our lasers can do (in the automotive market) or from organizations that we have lent a unit to (medical, pharmaceuticals, electronics)." The latter group doesn't want to return them but buys them, instead, he said.

"Fiber lasers can be viewed currently as a disruptive force in the market because their adoption will freeze out traditional lasers as manufacturers and others find out how economical and less bulky they are," said Paul Denney, technology leader in lasers and materials at the nonprofit Edison Welding Institute in Columbus, Ohio.

Denney said the market for fiber lasers is about to take off.

"This week, I am at the International Congress on Applications of Lasers and Electro-Optics (ICALEO) in Florida and most of the papers are on fiber lasers," he said.

Denney said many companies in the field are now getting involved in the low-power end of the fiber-laser market, but IPG is so far the only major entrant at the higher end.

"That will no doubt change as more and more companies take a hard look at the potential," Denney said.

The lasers are used for cutting, welding and other industrial applications. Fiber lasers concentrate power more efficiently than other types of lasers, which helps keep energy costs down but still boosts the product's precision.

Another major factor is floor space. "We recently installed one of our lasers in a major auto manufacturing plant and it sits beside earlier technology that takes up a lot of space. Ours doesn't and the management is amazed at how efficient it is and also how small it is, compared to the others."

IPG started operations in 1990 in Sturbridge under the direction of current chairman and chief executive officer Valentin Gapontsev, a Russian-born engineer. The company moved to Oxford into a 100,000-square-foot facility just recently and is in the process of adding another 100,000 square feet of manufacturing space to keep up with demand for its products.

It employs 700 people total, with 230 of those employees in Oxford.

There were once a number of optical companies in the Sturbridge/Southbridge area, but Shiner reports that most of them are no longer focused in the same areas. Shiner himself has a long history of working in the laser market, having founded Convergent in Sturbridge, which is now part of Prima and has moved to the Springfield area.

At about the time the telecommunications industry discovered it was awash in fiber-optic cable, Gapontsev was the one who saw the potential to move the company into different markets, Shiner said. "First, he found out that the best way to control costs was to own the diodes used in building lasers," Shiner said.

The company has spent the past few years targeting such markets as automotive and shipbuilding, while still maintaining an edge in the telecom field.

Part of that latter effort involved the hiring of George BuAbbud as vice president of telecommunications products in 2002. He had formerly been a vice president of the access network division of Marconi Communications.

BuAbbud indicated that IPG's focus these days is on erbium-doped fiber amplifiers (EDFA) that "are more powerful than other types on the market. And our move has resulted in higher and higher sales for these units."

Brian Cook is a freelance writer based in Sharon.