Machine maker

It sometimes takes a kind of person who likes to build machines.

Kevin Brady likes to build machines. Very big machines, complex machines often containing thousands of parts worth millions of dollars. Machines that can make very small things, handling incredibly complex materials in almost impossibly intricate ways. Machines that require skills and competencies of which not many machine-builders can boast.

“We know how to build things,” said Brady.

Brady’s company, Ceres Technologies, is deeply immersed in the nanotechnology segment of the innovation network that governor Andrew Cuomo outlined last Wednesday in his third state-of-the-state message. Back in September, it was announced that the state had designated Ceres, which describes itself as “a global provider state-of-the-art process equipment for the world’s leading semiconductor and photovoltaic equipment suppliers,” as one of the first official suppliers of manufacturing equipment to the Photovoltaic Manufacturing Consortium (PVMC), headquartered at the College of Nanoscale Science and Engineering’s (CNSE) in the Albany area.

Since then, two giant machines created and assembled at the Ceres plant on Kings Highway is Saugerties have been shipped up to Clifton Park and are undergoing startup tests. The two systems were sold to CNSE at a price favorable to the consortium with the intention that the Ceres engineering team will be engaged with the Clifton Park team to advance the process efficiencies of the tools over the next two to five years, which could lead to future orders and industry relationships for the company.

The PVMC is a collaborative effort by semiconductor companies to overcome common hurdles they face in developing the technology to produce ever-smaller and more sophisticated circuitry. It is a proving ground for advanced manufacturing and innovative technologies and Ceres does contract manufacturing in this industry sector. It designs and engineers molecular delivery systems, like ultra-high-purity specialty gas and chemical-handling products, and it also has particular competences in advanced systems development such as thin-film solar photovoltaic and metrology and measurement systems. In October 2011, Ceres Technologies was awarded via the inaugural Consolidated Funding Application (CFA) process a million-dollar tax credit via the Excelsior Job Creation program managed by Empire State Development Corporation. Brady commented, “The tax credit is attainable and specific to job-creation targets that must be met, and in this uncertain market we appreciate the help, but like anything it’s unpredictable.”

Brady projects that Ceres, which now has about 80 employees at its Saugerties plant plus those in two subsidiaries elsewhere (Solar Metrology on Long Island and Mega Fluid Systems in Oregon), can create 125 direct or indirect jobs, those defined as supply-chain-oriented, over the next fivers in New York State. As a businessman in a complex and rapidly changing technological field, however, he’s uncomfortable with employment projections. One can never guarantee what will happen.

For Ceres to succeed, Brady knows, it must attract bright, well-educated technical specialists to work for it. But such people are offered other, often more attractive job choices. “The governor doesn’t talk about how we can’t get people to move here, that could all change with the recent activities in the Capital Region,” he said.

Despite the state’s government’s recent efforts at creating a more business-friendly environment, he says, New York’s cost structure is in many cases not competitive with other places. Its regulatory structure is notoriously difficult and slow-moving. Making the optimistic rhetoric about the transformation of New York State into a can-do innovation economy come true, Brady says bluntly, is a daunting task that will not be accomplished easily.

 New York’s nanotechnology strategy

”This new public-private partnership shows how government is working with the private sector to invest in our state and grow our economy,” said Cuomo back in September. “We look forward to continuing to partner with the private sector to expand nanotechnology in every region of the state.”

The state is having some success.

Key to the state’s strategy has been Global Foundries, a major manufacturer of semiconductors which has invested in a widely touted plant in Saratoga County. Global Foundries announced last week it will add a two-billion-dollar research and development facility near that plant, which will be staffed by at least 500 new jobs, and will create 500 more jobs at its nearby fabrication facility.

“As the industry shifts from the PC era to a market focused on mobile devices, we have seen increasingly strong interest from customers in migrating to advanced nodes on an accelerated schedule,” Global Foundries CEO Ajit Manocha explained. “To help facilitate this migration, we are making significant investments in strengthening our technology leadership, including growing our workforce and adding new capabilities to make [our fabrication plant] the hub of our global technology operations.”

The new R&D facility and a $4.4-billion consortium of five major international corporations will create opportunities for jobs at the College of Nanoscale Science and Engineering and perhaps also for the whole sophisticated supply chain of research and manufacturing connected to it, including Ceres Technologies. “One of these guys will say, We need a machine to do x, we’ve made a computer model, and now we want to bring in these people who know how to execute things,” said Brady hopefully. “Those guys up in Saugerties know how to build a machine like that.”

The ebb and flow at PFT

Like Precision Flow Technologies (PFT), a predecessor company started by Brady, Ceres Technologies has an expertise in developing systems that can produce solar cells that are more efficient and at lower cost. Ceres thinks of itself as on the interstices of the nanotechnology and solar-energy industries. There are still a lot of unknowns in solar technology, and many unknowables about the marketplace for it. Its proponents hope that in the long term solar cells made of new materials, manufactured with new tools and equipment and utilizing new techniques of storing energy more efficiently, can make the cost of solar power more competitive.

At present only 14 per cent of energy in solar panels is converted to usable energy. If new process technology under development will bring that ratio up to 18 to 24 per cent, solar panels will become competitive.

The rise of PFT remains a cautionary tale in the annals of local economic development. According to Brady, there were two primary companies, one in the United States and the other in Germany, were competing in equipment for making light-emitting diodes (LEDs, widely used, especially in electronic devices, to emit light when a voltage is applied to it). The state energy authority, NYSERDA, in July 2010 announced a $1.5 million grant to PFT to expand its capacity to build thin-film and LED equipment and improve its materials handling at Tech City in Ulster. Funding was subject to successful agreement on a final contract. Both job creation and NYS based content sourcing were the incentives that PFT had to meet in order to attain the funding, which they did in early 2011.

“This support from NYSERDA will enable Precision Flow to accelerate our growth,” Brady was quoted as saying in a press release at that time. “The markets for our products are growing at breakneck speed, and New York State’s investment in our growth will help ensure that we can grow fast enough to meet the demand.”

According to Brady, the American assembly, which PFT was handling, was being done locally at that time in a competent and cost-efficient way. But serious trouble was brewing.

Most LEDs production systems were being sold to Asia, and some customers there were asking for a greater manufacturing presence in Asia. Taxes and flexibility were issues, Brady said, but not labor costs, technology or shipping.

“There was nothing I could do to change that,” said Brady. He negotiated an offshore presence for PFT in Singapore as their American customers, who were shipping their systems into Asia, were now being required to source systems built in Asia, not the United States. With this requirement came a change in ownership structure and Brady and the Ceres team had an opportunity to split away from PFT and form a company focused on the other products that PFT no longer wanted to manage. Those were essentially the legacy molecular delivery systems that PFT, now Ceres, started manufacturing in 1997. As far as the ebb and flow at PFT, at its peak, PFT employed 425 workers in Ulster County. It’s now down to between 80 and 100.

The story of technology is never over, as every tested entrepreneur like Kevin Brady knows. Sure winning investments turn into losers, and some losers turn into winners again. Some sure-fire strategies fail, and some long shots succeed. As the twentieth-century economist Joseph Schumpeter realized when he coined the term “creative destruction,” risk is an inevitable part of the nature of business. But the alternative, always avoiding risk for fear of failure, is a recipe for stagnation.