Company:Lumonics

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Lumonics
TypePublic
IndustryElectronics, Semiconductor, Laser
FateAbsorbed
Founded1970
FounderAlan Buchanan, Gordon Mauchel, Alan Crawford
Defunct2002
HeadquartersKanata North Business Park
Key people
Robert Atkinson, Scott Nix
Productson the Wayback Machine
Revenue$374 million US (2000)
Number of employees
1,550 (2000)
Websitewww.lumonics.com (on the Wayback Machine)

Lumonics was a global laser manufacturing company based in the Kanata North Business Park region of Ottawa.

Founded in 1970,[1] it was the first venture capital (VC) financed high tech company of the ones that based themselves there[2], thus clearing the path (started by Computing Devices from nearby Bells Corners back in 1948) for the subsequent VC and start-up fueled growth that led to the region later becoming known as “Silicon Valley North”.

With an average sales growth of almost 89% per year over its first decade, in 1980 the company went public.[3] After its acquisition of JK Lasers in 1982, it became “the third largest laser company in the world”.[4] Following a period of private ownership by the Japanese firm Sumitomo Heavy Industries Ltd. starting in 1989,[5] it once again went public in 1995 and went on to merge with Massachusetts based General Scanning Inc. in 1998/99, to become GSI Lumonics, “the largest producer of laser-based manufacturing equipment in the world".[6]

The company’s name was changed to GSI Group in 2005[7], then finally Novanta, its current name, in 2016.[8]

The original Impact, LaserMark, and excimer laser product lines of Lumonics were sold by GSI Group in 2008/2009 to LightMachinery[9] in the Nepean region of Ottawa, many of whose employees originally started out at Lumonics in Kanata.[10]

Corporate history

Founding And Initial Expansion

As paraphrased by The Globe and Mail, one day “over cocktails”, the wives of “fellow neighbors and weekend pilots”, Al Buchanan and Gord Mauchel, “wondered aloud why the two did not quit their jobs and start their own business. It sounded like a good idea".[11]

Early in 1970, Buchanan, Director of Engineering at Leigh Instruments at the time (and formerly Vice President of Computing Devices before that), and Mauchel, president of Spectra Research, together with a third silent partner, Allan Crawford, president of Allan Crawford Associates of Toronto, started to do just that, co-founding a yet to be incorporated company under the initial name of “Lumonix Limited".

That summer the tentative company submitted, and successfully won, an application for the right to manufacture and sell Transversely Excited Atmospheric (TEA) gas lasers invented at the Government’s Defense Research Establishment in Val-Cartier, Quebec.[12]

With the success of that in hand, the three co-founders officially incorporated the company in November of that year, with Buchanan as President, and began operations at 1755 Woodward Dr. in Ottawa in January of the following year, 1971.[13] The spelling of the company's name was changed to "Lumonics" to avoid confusion with another company named "Lumonix".[14]

The following year, in 1972, Robert Atkinson (formerly part of Corporate Finance and Acquisitions at Leigh Instruments) came on full time as Vice President and Treasurer, along with Mauchel as Vice President of Marketing who had prior to that only been part time.[15]

In exchange for 25% of the company, Lumonics received additional financing in 1973 from the venture capital arm of Maclaren Power and Paper, the first venture investment made by the only local venture capital operation in the region from then through the 1980s (over which time it was acquired by Noranda Inc. in 1979 and spun off as Noranda Enterprises in 1983).[16]

With the additional financing in hand, in 1974, the company built and moved to a new 14,500 square foot company-owned facility on a five acre property at 105 Schneider Road in Kanata.[17]

1976 “marked” the introduction of the company's first industrial product, Lasermark, capable of marking information on products (up to over 70,000 per hour on an assembly line) using a high-energy laser pulse through a mask and focusing it on a surface, without any risk of smearing that could otherwise result from existing ink-based processes at the time. Within only two to three years, the product would grow to become over 50% of the company’s revenue.[18][19]

In 1977, Lumonics developed and introduced the excimer laser, which like the TEA laser emits very short intense pulses of light, but instead produces output in the ultraviolet, rather than infrared, portion of the light spectrum. This opened up whole new areas for potential research and applications.[20]

From 1978-79, the Kanata plant was expanded with new 10,000 and 25,000 square foot facilities.[21]

IPO

Having gone from revenues of $35,707 CAD in 1971 to $5,863,729 CAD eight years later in 1979, an average growth rate of almost 89% per year, in June of 1980, the company changed its name from “Lumonics Research Limited” to “Lumonics Inc”, issued 800,000 shares of common stock for public sale in September, and obtained a listing on the Toronto Stock Exchange in October.[22]

The following year, a new 7,800 square foot subsidiary plant, Lumonics Corporation, was established in Phoenix, Arizona “to become the centre of [the company’s] industrial laser sales, service and customer engineering activities", and Robert Atkinson took over as president of the main company, with Buchanan becoming chairman and CEO.[23]

Acquisitions, Turnover and Takeover

Amidst a contracting economy at the time, in 1982, after many exploratory discussions and six months of intensive negotiations, Lumonics acquired Rugby England based JK Lasers Limited, comparably successful manufacturers of pulsed-based lasers whose synergies were that their products (solid state based lasers) were compatible, but not competitive, with those of Lumonics (gas based lasers) and sold to markets in Europe, rather than in North America. Both companies had a major focus on industrial automation, but JK also on medical applications. As a result of the acquisition, Lumonics became “the world’s third largest company specializing in laser products".[24][25]

After another $10 million share issue to institutional investors in January of 1983, a subsequent 2 for 1 stock split, and a 250% increase in orders at the JK subsidiary, construction was begun on a new 50,000 square foot plant there.[26]

In March of the following year, Laser Identification Systems, which had just commenced operations in a new 23,000 square foot facility in Camarillo California, was officially adopted into the Lumonics Group of companies[27] to handle the expanding market for marking and engraving. “Since commencing operations in 1979, [it had] established world dominance in computer-controlled laser systems used for marking silicon wafers produced by the rapidly expanding semiconductor industry".[28]

In 1985 the new Camarillo subsidiary was renamed Lumonics Marking Corp (LMC) and the JK Laser subsidiary was renamed Lumonics Ltd.

After 14 years at the helm, in January of 1985, Buchanan resigned from the company, with Mauchel succeeding him as Chairman of the Board.[29] Following an $8.4 million acquisition of Photon Sources Inc. of Livonia, Michigan by the company in December of that year (as the subsidiary, Lumonics Material Processing Corp. or LMPC), in a surprise move the following March, Mauchel announced that he too would retire in September 1986, in turn handing over the reigns to Atkinson, who added the third role of Chairman to his existing ones as president and CEO,[30] until a new president, Hugh MacDiarmid, could be and finally was appointed in March of 1987.

In 1986, due to "the very disappointing financial results of [the] most recently acquired Photon Sources Inc", together with the overall effects of "a slow U.S. economy and depressed conditions in the semiconductor/electronics industry", Lumonics reported its first loss since 1971.[31]

Following a deal with Sumitomo Heavy Industries in the spring of 1988, enabling the company to enter the Japanese market in exchange for yielding exclusive distribution rights there for certain products,[32] Lumonics ultimately agreed to an $80 million private takeover by the Japanese conglomerate in May 1989.[33] Given the need for government approval (in accordance with the Investment Canada Act), much discussion occurred over the lead up, regarding the foreign takeover and ownership of companies in Canada,[34] that ultimately reached a record number by the end of the year, triggering even greater concerns amongst critics over foreign control of the Canadian economy as a whole.[35]

Second Public Offering, Final Merger, and Absorption

After a six year hiatus, Lumonics returned to the public markets in 1995 when Sumitomo offered back up a 40% stake in the company on the TSE.[36] Scott Nix, formerly VP of the US subsidiary, was promoted to the newly created position of president and COO at the end of the year[37] and eventually Sumitomo gave up its majority stake in another offering in 1997[38] (though continued to remain a significant shareholder until its bankruptcy in 2010).[39]

In 1998, the company announced it would merge with Watertown Massachusetts based General Scanning Inc., to become GSI Lumonics, “the largest producer of laser-based manufacturing equipment in the world".[40]

With the two companies having “very little competitive overlap, but operat[ing] in similar markets with complementary technologies, the merger was successfully completed on March 22, 1999",[41] and the new company was listed on both the TSE and Nasdaq stock exchanges.

But though "billed as a merger of equals” under the terms of the agreement, with only 200 of the 1800 employee global workforce in the Ottawa region following the merger, the company’s "operational heart" was now in the US.[42]

Leading up to the peak of the dot-com boom in 2000, the number of employees grew back to as high as 400 of a total of 1550, the stock was the top performer in the TSE 300 for the first 6-7 months[43], and revenue for the year peaked at $374 million US[44] (or over $555 million Canadian) - on paper elevating GSI Lumonics to the fourth largest high tech company in the Ottawa area.[45]

But the region still only nominally remained one of the company’s headquarters. With the recession that followed in 2001, the local workforce was gradually reduced back down to only 200 again and early in 2002, after almost 30 years as head office, the Kanata facilities were finally "boarded up",[46][47]  and “the real power shifted to the U.S. operations, where Chuck Winston, the chief executive at General Scanning and at GSI Lumonics, works".[48]

The company’s name was changed to GSI Group in 2005,[49] then finally Novanta, its current name, in 2016.[50]

After the Lumonics name disappeared, only weeks before his death in 2005, original co-founder Alan Buchanan told the Ottawa Citizen: “I am deeply disappointed that technology invented in Canada and the traditions of a company that developed it could be abused in this way".[51]

The original Impact, LaserMark, and excimer laser product lines of Lumonics were sold by GSI Group in 2008/2009 to LightMachinery[52] in the Nepean region of Ottawa, many of whose employees originally started out at Lumonics in Kanata.[53]

References

  1. ↑ Lumonics Annual Report, 1980, p. 7
  2. ↑ Callahan, John and Charbonneau, Ken (December 2003), "The Role of Venture Capital in Building Technology Companies in the Ottawa Region",p. 24
  3. ↑ Lumonics Annual Report, 1980, p. 2
  4. ↑ Chevreau, Jonathan(April 16, 1982), “Market Perspective Lumonics agrees in principle to acquire J.K. Lasers”, The Globe and Mail, p. B9
  5. ↑ Urlocker, Mike (May 17, 1989), “Sumitomo buys local laser firm”, The Ottawa Citizen, p. C9
  6. ↑ Tuck, Simon (October 29, 1998), "Lumonics and GSI to join forces Merger creates world's biggest producer of laser-based manufacturing equipment", The Globe and Mail, p. B9
  7. ↑ “GSI Lumonics announces name change”, Industrial Laser Solutions, June 28, 2005
  8. ↑ “GSI Group Announces Corporate Name Change to Novanta Inc", Cision PR Newswire, May 12, 2016
  9. ↑ “LightMachinery acquires the Lumonics excimer laser product lines from GSI Group”, LaserFocusWorld, July 14, 2008
  10. ↑ Light Machinery - About - History, lightmachinery.com
  11. ↑ McCaffrey, Gordon (August 13, 1979), “Laser products built by Lumonics are on the beam in world markets”, The Globe and Mail, p. B3
  12. ↑ “2 Canadian firms get laser contracts”, The Globe and Mail, July 23, 1970, p. B11
  13. ↑ Lumonics Annual Report, 1980, p. 7
  14. ↑ “Ottawa firm unveils laser”, The Ottawa Citizen, September 16, 1971, p. 8
  15. ↑ “Lumonics Inc.”, The Globe and Mail, August 26, 1981, p. B4
  16. ↑ Callahan, John and Charbonneau, Ken (December 2003), "The Role of Venture Capital in Building Technology Companies in the Ottawa Region",p. 24
  17. ↑ Lumonics Sees $1 million year, The Ottawa Journal, October 8, 1974, p. 8
  18. ↑ Lumonics Annual Report, 1980, p. 8, 12, 2
  19. ↑ Chevreau, Jonathan, “MARKET PERSPECTIVE Lumonics expects sales to rise up to 35% a year”, The Globe and Mail, p. B6
  20. ↑ Lumonics Annual Report, 1980, p. 8
  21. ↑ Lumonics Annual Report, 1980, p. 16
  22. ↑ Lumonics Annual Report, 1980, p. 2
  23. ↑ Lumonics Annual Report, 1981, p. 8, 4
  24. ↑ Lumonics Annual Report, 1982, p. 7, 8, 2
  25. ↑ Chevreau, Jonathan(April 16, 1982), “Market Perspective Lumonics agrees in principle to acquire J.K. Lasers”, The Globe and Mail, p. B9
  26. ↑ Lumonics Annual Report, 1983, p. 2, 4
  27. ↑ Lumonics Annual Report, 1984, p. 9
  28. ↑ The Lumonics Group of Laser Companies (brochure), p. 3
  29. ↑ Howlett, Karen (November 16, 1984), “Changeover at Lumonics part of plan”, The Globe and Mail, p. B20
  30. ↑ Barr, Greg (March 8, 1986), “Mauchel leaving chairmanship at Luminics”, The Ottawa Citizen, p. E11
  31. ↑ Lumonics Annual Report, 1986, p. 3
  32. ↑ Rojo, Oscar (April 8, 1988), “Lumonics, Sumitomo forge pact on lasers”, Toronto Star, p. F7
  33. ↑ Urlocker, Mike (May 17, 1989), “Sumitomo buys local laser firm”, The Ottawa Citizen, p. C9
  34. ↑ Crane, David (April 4, 1989), “PM should seek private money for hi-tech firms, official says”, Toronto Star, p. C3
  35. ↑ McCarthy, Shawn (Oct 10, 1990), “Foreign takeovers increase to record”, Toronto Star, p. D1
  36. ↑ Bell, Scott (August 10, 1995), "Lumonics shares back in play: Laser maker expected to raise up to $80-million as Japanese parent reduces its stake", The Globe and Mail, p. B9
  37. ↑ “Lumonics Inc. appoints president”, The Ottawa Citizen, Dec 15, 1995, p. B7
  38. ↑ Brethour, Patrick (May 24, 1997), “Lumonics to issue shares Sumitomo to sell majority holding”, The Globe and Mail, p. B2
  39. ↑ GSI Group Annual Report, 2010, p. 131
  40. ↑ Tuck, Simon (October 29, 1998), "Lumonics and GSI to join forces Merger creates world's biggest producer of laser-based manufacturing equipment", The Globe and Mail, p. B9
  41. ↑ Lumonics Annual Report, 1998, p. 8
  42. ↑ Bagnall, James (October 29, 1998), “Lumonics pulls off $149M merger: Deal with U.S. competitor keeps headquarters in Kanata”, The Ottawa Citizen, p. E1
  43. ↑ Adams, Scott (July 29,2000), “How to buy fibre that's good for you: Valuations in fibre optics may be stretched, but the pros insist the boom is here to stay”, National Post, p. C1
  44. ↑ Lumonics Annual Report, 2000, p. 18, 19
  45. ↑ FP500, National Post, 2001, p. 112-131
  46. ↑ Hill, Bert (March 28, 2002), “From upstart to player to ghost: Lumonics rode booms and busts and survived everything but a 'merger of equals.'”, The Ottawa Citizen, p. D1
  47. ↑ Pilieci, Vito (March 28, 2002), “GSI Lumonics to wind down Kanata plant: Ottawa laser pioneer will shift work to facilities in U.S., U.K. Head office stays in Ottawa, but 50-60 jobs lost”, The Ottawa Citizen, p. D1
  48. ↑ “Ghost: Power shift to US”, The Ottawa Citizen, March 28, 2002, p. 42
  49. ↑ “GSI Lumonics announces name change”, Industrial Laser Solutions, June 28, 2005, p. 1
  50. ↑ “GSI Group Announces Corporate Name Change to Novanta Inc", Cision PR Newswire, May 12, 2016
  51. ↑ Atherton, Tony (July 11, 2005), “Lumonics co-founder perfected the balance of work and family”, The Ottawa Citizen, p. D1
  52. ↑ “LightMachinery acquires the Lumonics excimer laser product lines from GSI Group”, LaserFocusWorld, July 14, 2008
  53. ↑ Light Machinery - About - History, lightmachinery.com



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