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CVI hits acquisition trail

13 Jul 2005

CVI Laser's extensive optics and coatings catalogue contains 200,000 unique part numbers. Jacqueline Hewett asks the company's chief executive officer Stuart Schoenmann about its current acquisition strategy and aggressive expansion plans.

What is CVI's background? CVI was founded in 1972 in Albuquerque, New Mexico, US, by Yu Hak "Haggie" Hahn, and we launched our first catalogue in 1975. We were selling into the research and industrial optics markets. We opened our first of four manufacturing facilities in Korea in 1982. The company continued growing and in 2000 we purchased our European facility, which was formerly called Technical Optics Ltd, based on the Isle of Man, UK.

In 2003, a company called NorWest Equity Partners purchased CVI and we are still a privately held firm today. And in June this year, CVI completed its acquisition of California-based Optical Components.

Today, we have four facilities in Korea, two in North America (our headquarters are still in Albuquerque) and one on the Isle of Man, UK. We're kind of a micro-multinational giant. We have 400 employees now and most people are surprised to find we are that large.

How wide is your product range? Our catalogue has 400 product lines and approximately 200,000 unique standard part numbers. This includes everything from lenses, mirrors and etalons to filters, waveplates and beamsplitters.

Some of our new developments include a cleanable silver-coated mirror and f-theta lenses that are used to collimate the output of a scanning mirror system. The f-theta lenses have a high damage threshold and are used in marking, welding and cutting applications.

In addition to our standard products, we can build up customized optomechanical sub-assemblies for OEM applications. Another surprise for people is that about 60% of our business is customized.

We have a $1 m (€828,000) contract with the National Ignition Facility in the US to supply mounts for laser-optic assemblies. The contract, which runs until 2007, is for a variety of custom-designed mounts optimized to reduce wavefront distortion for the project's injection laser system.

Our Asian operations produce up to 1 million DVD cubic beamsplitters a month to go into DVD players, while our facility on the Isle of Man has produced a 46 kg mirror for the Laser Megajoule project in Bordeaux, France.

The breadth of our production is eye-opening. We want to be an enabler for the system houses. We don't make laser systems and we have no intention of moving into that business. It is a completely different sales, manufacturing and support model, plus the companies already in that arena do a good job. Our goal is to work out how we can provide optics and optical assemblies to them.

What sets CVI apart from other catalogue companies? The unique thing about CVI is our catalogue. Obviously, there are other catalogue companies out there, but we are able to customize an optic for specific applications. Typically, we can have the optic ready for delivery in one to two weeks.

CVI also prides itself on quality. We can provide laser-grade quality optics, off-the-shelf. We also manufacture what we sell, so in terms of component count, we probably make about 99% of the components we sell.

We can do everything from high volumes of small components, right through to one-off large half-metre-sized optics. We also have a tremendous diversity of optical fabrication, coating and assembly abilities. It ranges from doing standard lenses to state-of-the-art diamond-turned aspheric lenses. We are not targeting or focusing on certain markets in certain geographies. We believe the breadth of our products enables us to sell across different markets. Our model is to be a fully integrated manufacturer.

Why did you acquire Optical Components? CVI sells into a range of markets - industrial, research and semiconductor - but our sales into the aerospace market were relatively small by comparison. Optical Components (OCi) had a terrific reputation for selling into the US aerospace and research markets. They have been a key supplier to customers such as Lockheed Martin, Raytheon and Lawrence Livermore National Laboratories. This acquisition gives us a new customer base.

OCi also brings us some unique capabilities. We believe it has some of the finest optical fabrication techniques for prisms. These are state-of-the-art prisms for which wavefront correction requires hand-polishing. They have really made a good market niche for themselves with that. They also do infrared processing and have high-speed, quick-turn optical fabrication capabilities. The acquisition enables CVI to meet customer demand for rapid prototyping, high-volume production and infrared imaging optics and assemblies.

Are you planning any more acquisitions? We anticipate making more acquisitions. CVI is looking to expand its product line, increase its capabilities and address growing market opportunities. We can offer companies a global presence and help them grow.

We want to see OCi double in size in the next couple of years. They have around 60 employees at the moment, and we think our goal is achievable. We intend to increase manufacturing capacity through intensive capital investment projects at OCi's facility.

With such an extensive catalogue, do you use distributors or sell direct to the customer? Our channel strategy varies by location. We sell direct in North America and we sell direct in Korea. We have distributors in the rest of Asia. In June of this year we signed BFi OPTiLAS as our distributor throughout Europe, apart from Italy and Eastern Europe. The deal was a good portfolio mix for them and it simplified the way we go to market.

Our route to market used to be complicated because we sold into the European market from our Albuquerque operation. We believe our customers in Europe will benefit from a single point-of-contact.

We are trying to develop centres of excellence at each of our manufacturing operations. The plan is to focus on a unique capability at each location. This is a much better strategy than having every facility manufacturing everything. You end up with a lot of redundant capability that way. We can't afford to have facilities operating like this - I don't think many people could!

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