Good News for Graphite Is Good News for GrafTech

Aug. 10, 2011
As new high-tech applications are discovered, the company's materials are finding their way into smart phones, laptops and solar panels.

Around the time that UCAR Carbon Co. was picking up the pieces from a devastating price-fixing scandal, the company -- and the rest of the world, for that matter -- started seeing untapped possibilities for graphite materials.

"With hindsight, you can look back and see a clear uptick in patenting, in technical papers and publications [on the subject of graphite] around the late 1990s and early 2000s," says Lionel Batty, vice president of research and development for GrafTech International Ltd.

UCAR Carbon, which changed its named to GrafTech in 2002, derives most of its revenues from manufacturing graphite electrodes and other graphite and carbon materials for steelmaking.

But in recent years, the Union Carbide spin-off has been developing new applications -- and finding new customers -- for its graphite materials.

Batty: Graphite has a play in just about every kind of advanced energy.
For example, because graphite is four or five times more thermally conductive than copper -- and about one-fourth the weight -- thin films of the material are being used to disperse heat in smart phones, laptops, flat-panel TVs and LED lights.

GrafTech's materials also can be found in solar panels and PEM fuel cells used to power fork trucks and other vehicles.

The Parma, Ohio-based company is working with automakers to find ways to use graphite in lithium-ion batteries for electric vehicles as well, Batty says.

"No matter what kind of advanced energy you're talking about -- and the reality is that all of them probably will be needed in the future -- graphite is involved, either in the end product or the manufacturing process," Batty says.

"Graphite has a play in all of them, and that's good news for GrafTech."

Back From the Brink

The news wasn't so good for the company in the late 1990s, when a government investigation of alleged price fixing at UCAR Carbon and other graphite companies nearly drove the company to bankruptcy.

CEO Craig Shular, a former Union Carbide executive, joined the company as CFO in 1999 to help turn things around; Batty, a 28-year veteran of the company, became R&D chief that same year.

The company shuttered plants, sold some of its businesses, and took other steps to cut costs and raise cash, enabling it to pay off its debt in late 2009 and ramp up spending in R&D.

Over the past few years, GrafTech has implemented lean and Six Sigma principles not only in its manufacturing operations but also in back-office functions such as accounts receivable and human resources.

In June 2010, the company opened a 6,000-square-foot multimedia learning center at its Parma office, which is designed to educate its nearly 3,000 employees worldwide on basic lean principles.

GrafTech emphasizes that it aspires to train 100% of its workforce on lean concepts.

Citing lean as one of the foundations of its success, the company reported net sales of $1 billion in 2010. Last year marked its fifth consecutive year of profitability, as the company reported gross profit of $289 million and net income of $146 million.

This past November, GrafTech made one of the largest acquisitions in its history, buying SeaDrift Coke LP and C/G Electrodes LLC. SeaDrift makes needle coke, which is the key raw material used to make graphite electrodes. C/G produces large-diameter UHP graphite electrodes used in the electric-arc steelmaking process.

Focus on R&D

GrafTech now has a business segment called Engineered Solutions, which is devoted to finding applications for advanced graphite materials in high-tech -- and high-growth -- markets.

With sales of $173.1 million, Engineered Solutions comprised 17% of GrafTech's net sales in 2010.

GrafTech sees Engineered Solutions as a catalyst for future growth, and the company has been adding personnel to support it.

Since 2003, employment at the Parma, Ohio, facility -- GrafTech's longtime R&D hub and, since 2006, its corporate headquarters -- has grown from 100 people to 240 people, according to Batty.

As of March, employment at the Parma site and the nearby flexible-graphite manufacturing facility in Lakewood, Ohio, had jumped nearly 30% year-over-year.

Many of the new hires over the past few years have been scientists as well as marketing personnel charged with looking for new applications and markets for the company's graphite materials, Batty says.

In February, GrafTech acquired Micron Research Corp., which makes superfine- and fine-grain graphite for electrical-discharge machines. The acquisition is the first "external growth initiative" for the Engineered Solutions business, Shular said in the company's 2010 annual report.

"We believe that Micron Research's technology and product offering, as well as its people, are an excellent fit for capitalizing on our strategies for a number of high-growth markets," Shular said.

This year, GrafTech celebrates its 125th year in business. The company's arc-carbon materials enabled Cleveland in the late 1800s to become the first city in the world to have electric street lamps.

The push to find new applications for graphite that began in the late 1990s likely will drive the company to be a part of more innovations in the years ahead.

"Whether we were reading the tealeaves at the same time as everybody else or whether we were ahead of the curve, we essentially rode that wave," Batty says. "We took our graphite-material science into new areas, and are taking it into new areas."

About the Author

Josh Cable | Former Senior Editor

Former Senior Editor Josh Cable covered innovation issues -- including trends and best practices in R&D, process improvement and product development. He also reported on the best practices of the most successful companies and executives in the world of transportation manufacturing, which encompasses the aerospace, automotive, rail and shipbuilding sectors. 

Josh also led the IndustryWeek Manufacturing Hall of Fame, IW’s annual tribute to the most influential executives and thought leaders in U.S. manufacturing history.

Before joining IndustryWeek, Josh was the editor-in-chief of Penton Media’s Government Product News and Government Procurement. He also was an award-winning beat reporter for several small newspapers in Northeast Ohio.

Josh received his BFA in creative writing from Bowling Green University, and continued his professional development through course-work at Ohio University and Cuyahoga Community College.

A lifelong resident of the Buckeye State, Josh currently lives in the Tremont neighborhood of Cleveland. When the weather cooperates, you’ll find him riding his bike to work, exercising his green thumb in the backyard or playing ultimate Frisbee.  

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