Share this article

print logo

HEATING ELEMENTS AND IGNITORS FIRE AKRON FIRM'S SUCCESS

Flanked by glowing rods and hissing furnaces, Jack Davis meanders through a 50,000-square-foot plant in Akron, living up to his reputation for being a walk-around, hands-on manager.

On some days though, it's still hard for him to grasp that one the nation's largest manufacturers of silicon carbide heating elements sprouted its roots in his garage.

"Nobody thought we would make it," Davis said with a chuckle, recalling those risk-laden days back in 1964 when he and Stanley Matys decided to battle a corporate Godzilla.

Matys and Davis were working in the heating element department at the Carborundum Co. in Niagara Falls and growing increasingly frustrated. So they decided to strike out on their own.

"I guess ambition had a lot to do with it. And thinking you can do it better," he recounted.

I Squared R Heating Element Co. Inc. was born, it's name coming from a law of physics that explains the conversion of electrical energy to heat energy.

What are heating elements? Think of those wires in your toaster that emit an orange glow when you toast a bagel. Now think on much larger scale.

Some of the tubes made in this plant on Clarence Center Road are 10 feet long and go into huge industrial furnaces. The tiniest components are two-inch ignitors that are used in millions of gas dryers. The heating elements are sold under the trade name "Starbar."

The rods are as fragile as glass and are made from a green silicon carbide powder -- picture what a beach might look like in Emerald City. The fine powder is mixed, then pumped out of a machine like thick spaghetti.

The young entrepreneurs started their business on a shoestring. Buying new equipment would have cost up to $200,000. Davis said one of the early challenges was using "Yankee ingenuity" to find quality used equipment for less.

By the end of the first year, the company moved into a small building on Colvin Boulevard in the Town of Tonawanda. Three years later, an expansion prompted a move to Lancaster.

But the biggest move came in 1982, when I Squared R bought an industrial complex in Akron that was -- in a twist of irony -- built by Carborundum, their former employer. The company currently employs 75 people.

In foreign markets

In a relative rarity for a Western New York corporation, about one third of I Squared R's products are sent to foreign countries, including France, Germany, Italy, Korea and Japan.

Davis agreed that turmoil in the Asian financial markets has forced the company to discount prices in the Pacific Rim. If prices continue to drop, it will be tough for the Akron company to compete effectively with Japan's three heating element manufacturers.

But many U.S. companies have been buying products from I Squared R for over three decades. Deletech Inc. is a Denver-based industrial furnace manufacturer that once supplied NASA with high-temperature units that were used to study Moon rocks.

Deletech CEO Calvin L. Stevenson said he started buying heating elements from I Squared R in 1973.

"They came into the picture by having better pricing than anyone else. I Squared R has actually forced competitors to cut prices," he said.

Closer to home, Lancaster-based Harper International has been a customer of I Squared R since the late 1960s. The manufacturer of high-temperature industrial furnaces also started out in a garage, but back in 1924.

Joseph P. Shea, a Harper parts and service specialist, said I Squared R is a textbook example of how quality products and good service can spawn growth.

"It had to be tough for the company to start out on such a small scale, especially working against a competitor the size of Carborundum. But they've done it, and they've done it well," Shea said.

In a world where partnerships can be recipes for tension, Davis and Matys have managed to forge a business alliance that capitalizes on their unique strengths. Davis handles marketing and all facets of administration. Matys does the research and development.

"Even at the very beginning, we had an understanding," Davis said. "I told Stan, 'If you can make them, then I can sell them.' "

They've been selling millions of dollars worth of silicon carbide heating elements every year since they started. This in a business environment that has seen shrinking competition and global consolidation. Carborundum has been the target of numerous sales over the years. The Globar plant in Niagara Falls is currently owned by the Kanthal Corp., a subsidiary of Sandvik, a Swedish manufacturer.

"I call it the selling of America to foreign interests. When that happens, most of the company's research is done in the home country. That's a shame," Davis said.

Davis said a number of companies have tried to convince him to sell the privately owned company. No dice. At least not yet.

The biggest concern of this 65-year-old CEO is what he calls "the death tax." Estate taxes must be paid when someone dies and tries to turn over large assets to heirs. Davis said his estate would be staring at a 60 percent tax.

"The only way a company like this can pay that kind of tax is if the heirs sell the business. The government is basically forcing small, successful companies to be sold because of this death tax," he said.

Davis hopes it won't happen with I Squared R. He has worked with financial experts to try to devise an workable estate plan. Two of his sons -- Robert and Alan Davis -- have been involved in the business for years and hope to one day succeed him.

Power costs a lot

But don't think this success saga is heading for a bad end or is devoid of challenges. The Newstead business went through a long and costly ordeal to be annexed into the village of Akron so it could buy sewer services.

Davis said power costs have also been a burden. Even though it receives a small amount of cheap hydroelectric power from the state, I Squared R pays an average $50,000 a month for electric service, he said.

Davis said he could probably lower the utility tab by pushing for additional supplies of inexpensive power.

"If you threaten to move or tell them you're losing money, you usually get cheaper power," he said. "But I haven't threaten to move."

Not that there haven't been opportunities. Back in the early 1980s, a municipality in Idaho courted I Square R. Davis said his community ties and loyalty to his workers prompted him to reject the offer.

Bonuses retain workers

Speaking of workers, Davis credits his company's bonus system for helping to retain long-tenured workers. The average employee has been on board for nearly 12 years.

A percentage of the monthly profits are divided among the workers. Davis said a worker can double -- even triple -- his hourly rate in a good month. He urged companies to consider implementing a bonus system.

"It makes each employee an entrepreneur. They work harder and smarter."

Trying to grow a heating element business is tough, especially in an era of corporate consolidation and at a time when many industries in Western New York have vanished. Curtiss-Wright, General Electric and other large manufacturers were once lucrative accounts.

"Seven or eight years ago, we had problems. I went in and said to Stan. 'Look, sales are flat. We need a new product,' " Davis recalled.

That's when I Squared R developed its molybdenum disilicide heating element, a product made from a combination of metals that emits higher temperatures and is used in the glass industry.

Continued innovation will be critical if the company hopes to thrive. Davis is already thinking several years ahead. And not about retirement. He likes to tell people that he's going to die at his desk. And it's not for the money.

"Money loses its value as you accumulate more and more. It's the feeling of accomplishment. When I drive in and see this big building, then think back to how it all started, I feel pretty good about everything," he said.