News

That was quick.

In little more than the blink of an eye, Cookson Electronics has reworked itself, selling off a pair of divisions to fulfill a previously announced attempt to concentrate on its higher growth businesses.

The chemicals conglomerate said Jan. 3 that it would sell its conformal coating business unit, Specialty Coating Systems, to an investment group (see News, page 16). The news came just two weeks after Cookson announced the long-anticipated sale of Polyclad Technologies, to Isola Group. Cookson will garner an estimated $147 million from the sales, once they go through.

So the remaking of Cookson continues. Under chief executive Steve Corbett, Cookson Electronics has further splintered the all-in-one strategy it followed under his predecessor. Beginning with the sale of Speedline Technologies, finalized in November 2003, the company that once boasted of near end-to-end solutions in semiconductor and printed circuit board materials plus electronics assembly equipment now has a center of gravity rooted firmly in chemistries and joining materials.

Under former CEO Ray Sharpe, Cookson Electronics spent 10 years gathering a slew of businesses under its umbrella, and Sharpe looked prescient when the tech markets took off in the late 1990s. The bursting of the bubble in 2001 was followed by the sale of then-hemorrhaging Speedline, which was jettisoned (given away, some jest) to an investor group after losing $69.2 million on $197.6 million in sales (converted from pounds at today's values) through the previous 21 months. That business has since recovered and is looking very strong as 2006 opens.

In hindsight, 2000 marked a turning point in several ways. Within parent company Cookson PLC, the Electronics Group's percentage of sales has been dwindling over the past five years. Electronics made up 54% of the company's sales and 56% of its profits in 2000. By fiscal 2004, the unit's contribution to the company's revenue and profits had fallen to 39% and 45.9%, respectively.

The falloff has had ramifications to Cookson's public persona as well. In public statements, the company has downplayed its once-hyped technology holdings, instead choosing to position itself as an industrial materials science concern. Less sexy, sure, but also less cyclical, which plays better with today's analysts.

Is the selloff complete? I would think so. If not, given the staunch competition and contracting margins of the solder world, it would seem that Alpha Metals would be next on the block. Two factors argue against that. First, Assembly Materials is the largest single unit within Cookson Electronics, and its return on sales is consistently north of 8%. Second, Alpha's sales and distribution channels are tightly intertwined with those of other Cookson Electronics units; undoing that would be no simple task. And last, as Assembly Materials president David Zerfoss says, "Cookson is 150% committed" to the business.

Marketing aside, are these the right moves? They certainly weren't unexpected. Upon assuming the top job, Corbett alluded to Circuits Assembly the possibility that changes were coming. The one-stop shopping approach was "not a common thread" among Cookson's customers, he said. Of his predecessor's strategy, he said, "I'm not going to push it where it doesn't fit … That's probably the difference in our philosophies."

But the reason for shedding various units is likely more monetary than philosophical. Polyclad's return on sales, a meager 0.6% in 2004, swung to a loss of 3.4% through the first six months of 2005. Globally, laminates are hampered by massive overcapacity and painful pricing pressure. Polyclad's new owner, Isola (which is run by Sharpe), will likely have to take a buzzsaw to its workforce and footprint. By selling, Cookson avoided the chaos and public relations hit inherent in a shutdown.

As for SCS, it is smaller but by my guess more profitable than Polyclad. However, its focus is diverging rapidly: the unit's growth is coming in medical devices, not electronics.

Cookson these days is looking more and more like 3M and DuPont - diverse materials companies with legs in several industries. Insiders would insist they've always been that way, public perception notwithstanding. Whatever the case, the once long shadow it cast over the electronics manufacturing world is shrinking, and it's unlikely that we'll see another company quite like it anytime soon.

EAB changes. It works behind the scenes, but the Circuits Assembly editorial advisory board performs a central role in shaping the content of the magazine. A warm welcome to this year's members: Rich Breault, Sue Mucha, Chrys Shea and holdover John Borneman. Also, a hearty "thank you" to outgoing members Bill Coker, Glenn Robertson, Mark Schwartz and Dick Vaughn for their contributions.

Finally, Circuits Assembly is exhibiting at Apex this month. Please stop by booth 485 and say hello.

UP Media Group will relocate next month; visit circuitsassembly.com for the new address.