BUSINESS
C&EN TALKS WITH BY MARC REISCH
KENNETT BURNES Cabot Corp. C E O appreciates 19th-century amenities but has a 21st-century sensibility
K
ENNETT F. BURNES, CHAIRMAN,
president, and chief executive officer of Cabot Corp., grew up in a colonial New England house with wide board floors. Today he lives in a Victorian home. But he works in a strikingly modern office in Boston's waterfront area. And anyone who hears him speak about Cabot will understand that his devotion to technology is the raison d'être for his stewardship there. Burnes, 60—a lawyer who jokingly says he "went straight" 16 years ago when he joined Cabot—easily spans the world in which he works and the surroundings in which he lives. It's a dichotomy that is not all that dissimilar to the one that characterizes the company he manages. On the one hand, he is the first to acknowledge that Cabot's core businesses are commodity operations "managed to operate at ever-lower cost." Carbon black—purified soot—is a business that goes back to the company's founding in 1882. Used mostly to make tires last longer, carbon black accounts for 65% of the company's $1.8 billion in annual sales. On the other hand, Burnes runs something of a venture-capital shop. As he sees it, "organic growth is what venture capital is all about. It's about forcing businesses from new ideas." Among these new businesses are specialty carbon blacks for ink-jet printers and silica-based particles for translucent glazing panels. It's also about businesses that are just a twinkle in the eye—such as electronic inks for inventory control or sorbents for producing high-purity hydrogen. Burnes's challenge is to manage two cultures at Cabot. One is dependent on controlling costs and tweaking plant efficiencies so that the company can continue to reap the benefits of its commodity particles businesses: carbon black, fumed silica for reinforcing silicone rubber, and tantalum powders for electronic capacitors. The other challenge is dependent on husbanding new ideas out of an intimate knowledge of fine-particle HTTP://WWW.CEN-ONLINE.ORG
formation. Much of Cabot's R&D budget— $48 million in 2003—focuses on creating new businesses based on fine-particle technology. Investors so far haven't rewarded Cabot for its new technology gambits, Burnes acknowledges. In the late 1990s, Cabot's new semiconductor polishing slurries business began to grow rapidly and generate significant profits, but investors continued to value the firm's stock based on the old-line carbon black business. So in 2 0 0 0 , Burnes says, Cabot "reluctantly" spun the business off to shareholders as Cabot Microelectronics.
tries, Cabot is shifting carbon black and fumed silica production to Asia and South America. But Burnes is convinced that, for Cabot to become a more valuable company, it has to continue to use its knowledge of fine particles to create new businesses like Cabot Microelectronics. Six months ago, Cabot took a step to advance its technical capabilities into the 21st century with the $16 million acquisition of Superior MicroPowders (SMP) in Albuquerque, N.M. "Our own technology, flame-produced particles, is only commercially viable when we are producing products in large volumes" in multi-million-dollar plants, Burnes explains. Large furnaces allow Cabot to "easily make tons for tires," but producing 30 kg of a specialty powder in a large continuous production furnace "doesn't make sense," he says. Instead, SMP has developed proprietary chambers that cost about $500,000 each and make fine particles in a "short, simple" aerosol-manufacturing process, Burnes says. The new technology will help Cabot efficiently produce small quantities of high-value particles for potential use in polymer electrolyte fuel-cell electrodes, fuel-cell catalysts, and ink-jet printed active-matrix displays. The SMP technology "will help us increase our coverage of the fine-particle space from nano to micro." However, the nanoparticle technology raises an all-toofamiliar modern-day risk. Burnes, like others, is concerned that nanoparticles could affect human health. "The last thing we need to do is to loose another asbestos on an unsuspecting public," he says. "I couldn't allow Cabot to produce a product that I wouldn't feel comfortable exposing my children to." Cabot has thrived because "we only make money by selling solutions," Burnes says. So although Cabot has the ability to play in the nanotechnology arena, he says Cabot will be cautious about embracing nanotechnology. It's another dichotomy that characterizes Burnes's life as well as his business.
"The last thing we need to do is to loose another asbestos on an unsuspectingpublic. I couldnt allow Cabot to produce a product that I wouldn't feel comfortable exposing my children to!'
Still, he says: "We like the carbon black business, though it's not a cash cow It has interesting geographic expansion opportunities as well as new product opportunities." As the tire industry shifts from the U.S. and Europe to developing coun-
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