After being given up by many for dead, business is heating up at BTU International. In one of the industry’s top feel-good stories, the maker of soldering equipment has posted three straight profitable quarters, with net sales for the first half of 2005 up 12% to $28.6 million.

The stunning turnaround comes on the heels of 14 straight money-losing quarters, dating to March 2001. And it comes with several familiar faces back where they were before the company’s troubles began. In an exclusive interview with Circuits Assembly, company officials laid out the simple yet effective steps behind the resurgence, and pointed to several promising signs for continued success. (The company is exhibiting this week at AT Expo, booth 5139.)

After a string of strong quarters during the late 1990s, BTU peaked at $99.5 million in sales in 2000. Then, like it did for much of the industry, the gas escaped. Revenue dropped 53% to $47.1 million in 2001, and fell another 35% to $30.6 million in 2002. Losses widened. A new president, Mark Rosenzweig, was named. Layoffs commenced. A robotics company was acquired. Sales improved, but profits remained elusive.

In January of 2004, the first seeds of the comeback were sown. Industry veteran Tom Nash joined the firm as vice president of marketing. First quarter sales jumped 65%, then another 27% in the second quarter. Still unprofitable, however, Rosenzweig resigned. Reenter Paul van der Wansem as chief executive officer, returning to a role he had occupied from 1979 to 2002.

The first move, van der Wansem says, was to reassemble the BTU team. Key BTU veterans who had left or been laid off during the downturn were located and convinced to return. Cost reductions were made in the U.S. and China. Purchasing was moved in-house. Some changes were more subtle. Previously, the major geographies reported directly to Rosenzweig. But OEMs run far-flung operations, making it near impossible for one person to manage. So to keep up with this trend, van der Wansem named Jim Griffin global sales director, realigning the reporting chart so that the Asia and Europe units are under him instead. Weekly company-wide meetings were implemented. “I didn’t want to increase the uncertainty in the company,” van der Wansem explains.

His team in place, van der Wansem then worked on improving profits. Sourcing of materials and production were merged into a global operation, also under Nash. Top OEM, EMS and ODM firms in Asia were targeted. Low-cost operations abroad were expanded. Inventories were lowered. Equipment development times were tightened. A new, 45,000 sq. ft. facility is being brought online in Shanghai, with completion scheduled for the first quarter of 2006. When done, BTU will have tripled the size of its operations there, meeting van der Wansem’s edict to “service customers globally.”

Yet although some competitors have essentially relocated to China, van der Wansem insists that’s not in the cards at BTU. The company maintains about 65% of its employees in its 150,000 sq. ft. headquarters north of Boston. “Getting our act together in China helps us achieve a lower cost here in the U.S.,” he says. “Our goal is to maintain manufacturing in the U.S. Management’s goal is to figure out how to do that.”

R&D is now split between Asia and the U.S. The new Pyramax 125 reflow line was developed in just seven months, well under the typical schedule of 18 to 24 months, says Nash, allowing that higher temperature equipment – BTU has a growing fuel cell business – will take longer. Although the company supplies lines to other markets, most notably semiconductors, SMT remains the major segment.

Importantly, BTU’s comeback is beating the broader equipment market. Many seers had predicted a strong upturn for 2005 as manufacturers switched to lead-free processes, but as yet that market has not fully materialized. While the replacement market for tin-lead soldering equipment is growing, Nash says, North America is lagging Japan and Europe. Through June, SMT sales were up 8% industry-wide. In its July 10k filing, BTU attributed the growth in net sales in the second quarter to an increase in orders for SMT products. The company projects compound annual growth in SMT equipment on the order of 12% through 2009, and a CAGR for bump reflow machines of more than 30%. (The company also forecasts 19% CAGR in fuel cells.)

Demand has come from most corners, with Brazil a pleasant surprise. According to van der Wansem, the surge in Brazil is across the board, with demand coming from European and North American manufacturers and local companies. However, demand in Mexico has been erratic, the company said. Asia is the company’s largest market, at 48.4% of sales through June.

BTU even recently looked into a possible acquisition of another, albeit smaller, electronics equipment provider. The deal didn’t go through, but it’s just another sign of how far BTU has come.

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