Hope in New York

Today I am sharing a story of success and hope for American manufacturers. I believe it is important.

Anyone driving east on I-86 from I-90 will come to the city of Elmira, New York. When I was in college, way back in 1973, I had the opportunity to spend a little time in the area. Elmira is the gliding and soaring capital of America. Something to do with the hills and the air currents (or thermals) make the area particularly well suited for motor less flight. These gliders are towed into the sky and stay there for hours making no noise whatsoever; really awesome. This is Finger Lakes country with beautiful forests, lakes, and countless wineries. The Watkins Glen raceway is nearby and did I mention the wineries?

This area is also home to Corning Inc. located in the town by the same name. Even though I visited there more than 30 years ago I have vivid memories of the town and the “factory”. They have an outstanding museum which I can only imagine is now far superior today to when I visited. As you enter the museum you see a huge piece of glass cast into sort of semi-spherical shape. If you go to the Corning website (http://www.corning.com/) it is the odd geodesic looking thing on their homepage. Evidently this is the largest piece of glass ever cast for a 200” telescope, and a miracle of manufacturing at the time. You can see artisans producing glass objects by hand that make their way into the Steuben collections of fine glassware.

But the real magic is something you won’t see in the museum. The Wall Street Journal published an article (3/7/08) written by Sara Silver (write to sara.silver@wsj.com). In this piece she tells the story of a company with a history of innovation and corporate courage that is rare in this country and becoming rarer. It is a story of “betting the ranch” on technology that is unproven; of making huge investments that won’t give shareholders a return for decades or longer.

This company bakes its own innovation “bread” inside its own factories as opposed to buying packaged technologies from startups or seed companies. This in-house only culture explains why most senior managers and engineers have spent their entire career at the company. They, literally, believe they are all in this together and will share in the rewards or sacrifices together. Let me summarize the accomplishments Ms. Silver outlines.

1. This company is 157 years old, but didn’t go public until 1945. This explains a great deal about the corporate culture. The company is home grown; a true tribute to the way America used to create corporate wealth.

2. Even though they have 50 manufacturing facilities all over the world, they shy away from outsourcing or joint ventures preferring to own and operate their facilities.

3. An investment made over 25 years ago bloomed and made Corning the world leader in the manufacture of liquid-crystal-display glass for flat panel display TV’s. Last year 92% of the $2.2 billion net income was generated by this single product line. This is courage!

4. Most of you will remember when Corning became the largest supplier in the world of fiber optic cable. They literally “wired” the planet, until the tech bubble burst late in the 1990’s leaving massive amounts of dark cable. The company flirted with bankruptcy and laid off half of its workers. The company survived and today, less than ten years later still retains a market capitalization of $36 billion and 25,000 employees.

5. Today the company is making a huge bet risking $500 million on the development of automotive and truck diesel emission filters. Their new $370 million manufacturing plant in Erwin N.Y. is running at capacity. Management will consider this project a success when they are the world market leader with $2 billion in sales by 2011.

6. Also in Erwin a $300 million research and development center is under construction to house 1700 engineers and scientists. This facility is not for application engineering, rather for basic research on hundreds of speculative projects.

I promised you an American hero in development and product manufacturing. Corning, in my opinion is a shining example. They understand that confronting risk head on in many cases is an exercise in faith in their people. They understand that real wealth comes from developing and making something no one else can provide, but the market demands. I believe this is a company that will endure because they are familiar with failure and have conquered their fear of it.

Ms. Silver quotes Mr. Nikos Theodosopoulos an analyst for UBS; “Culturally, they’re not afraid to invest and lose money for many years. That style is not American any more.”

I will strongly disagree with Mr. Nikos’ statement. This style is precisely American. It is simply that management weakness, fear, greed, and short-term thinking has become the norm for a great number of American companies.

Tomorrow we will go back in time.