September 4, 1997 in Nation/World

Johnson Matthey Plans To Open Plant In Cheney New Facility Will Produce Heat Control Products For Computers

Michael Murphey Staff writer
 

Johnson Matthey Electronics has embarked on a mission to become the world’s leading supplier of heat control products for computers, and it’s bringing Spokane along on the trip.

“What Johnson Matthey Electronics (JME) is establishing here,” says Nigel Davey, president of the company’s Assembly Products Group, “is going to be one of the largest thermal management companies in the world.

“So Spokane is going to be something of a center of excellence for thermal control in electronics.”

One of the first benefits for the Spokane-area economy will be JME’s opening of a manufacturing operation in Cheney. The plant initially will employ about 250, and will grow to 400 within the next couple of years.

JME has acquired the 106,000 square-foot Cheney manufacturing facility closed by Key Tronic Corp. in 1994. Key Tronic, a Spokane-based manufacturer of computer keyboards and other input devices, shifted production from the Cheney plant to its manufacturing facility in Juarez, Mexico, eliminating about 100 full-time jobs.

The plant has sat empty since then.

Getting that plant back into operation as a high-tech manufacturing facility is a big boost for the local economy, say officials of the Spokane Area Economic Development Council. They say at 400 jobs, the JME operation there would add $6 million in annual payroll to the local economy, and represent an impact of $23 million each year.

That JME - with its primary manufacturing complex located in the Spokane Valley - is moving so aggressively into what is becoming a critical area of the semiconductor industry represents a much greater potential, though.

Davey says the world’s biggest microchip manufacturers identify heat control as one of the biggest issues facing their industry.

The faster microchips are asked to work, the more heat they generate. Early generations of personal computers generated two or three watts of heat, Davey says.

Today, much faster computers generate 30 watts of heat. By the year 2000, the machines will crank out 100 watts of waste heat. If that heat can’t be efficiently dissipated, the computers will burn themselves out.

“We saw an opportunity in this area,” Davey said, “and decided we wanted to be a part of this industry. We slowly established the core capabilities. We assembled quite a lot of equipment and made tentative forays into some sectors of the market.”

With JME starting from ground zero 18 months ago, Davey said, many people thought it was foolish for the company to try to challenge the established suppliers in the field.

“But we had three of our engineers here in Spokane say, ‘I believe we can do it,”’ Davey recalls. “So we gave them their heads and they did it.”

The devices are small aluminum grills and bases that look ordinary enough, but must be manufactured to tolerances and requirements “that are devastatingly complex.”

How fast has all this taken place?

A year ago, Davey says, JME’s sales of thermal control products amounted to less than $50,000 a month. Today, that figure “is in the millions.” The company is now producing hundreds of thousands of components a week, and Davey says that will jump to millions a week.

Eventually, Davey speculates, it could be a $300 million a year business for JME.

To get there, the company would have to be the world’s No. 1 supplier of such products. Davey thinks that can also happen within a year. After all, with the company’s rapid ramp-up of operations over the past two months, Davey says JME has already become the world’s No. 2 or 3 supplier.

Davey jokingly says this “ramp-up from hell” has left his staff impossibly busy. And it’s why the Cheney facility is so important.

Actually, he said, JME would have preferred a site at the Spokane Industrial Park, 30 miles closer to its current operation. But the building they were negotiating for there wouldn’t become available for a few months. And the Cheney plant was available immediately.

The initial staff for the Cheney plant, about 220, has already been hired and trained. That staff has swelled employment at JME’s Valley facility to about 950. But the 220 will be shifted to Cheney as soon as the plant can be brought on line. About 40 more will be hired very soon.

And within a year and a half, Davey says, the company will need to establish another manufacturing plant the size of the Cheney operation. But it probably won’t be in the Spokane area.

“It’s getting increasing hard to find the qualified engineers in Spokane,” Davey says. “Our growth and the growth of other companies is really starting to dry up the pool. And that’s a real concern for me going forward.”

Davey says JME likes almost everything about Spokane. Since coming here in 1989, the JME operation has prospered far beyond London-based parent Johnson Matthey Plc.’s most optimistic hopes. Every investment here has paid off handsomely, and much of that payoff, Davey says, has been because of the quality of workers found here.

But he’s not sure there’s going to be enough of those workers here in the future.

“I’d hire another 10 engineers tomorrow if I could find them,” Davey says. “In the long term, we need a major engineering school here to really feed into us, and into the other high-technology companies that are here, or are likely to come here.”

Davey emphasized that the quality of his staff, combined with Johnson Matthey’s deep pockets, have enabled JME to pull off the astounding feat of becoming a major thermal control supplier in the world practically overnight. Because of JME-Spokane’s strong track record, he says, the parent company was willing to gamble on the local engineers’ belief that they could pull it off.

They will put $10 million into the gamble this year, and at least that much next year, he said.

And even if other manufacturing facilities are located elsewhere, the core of the operation will be here.

“We’re certainly retaining all of our research and development here,” he says, “and all the fundamental engineering is going to be here.

“It’s not going anywhere else.”

Johnson Matthey Electronics is a world-leading supplier of high-technology materials to the semiconductor and microelectronics industries, with 25 locations worldwide generating annual sales of more than $600 million. Its parent, 175-year-old Johnson Matthey Plc., is an advanced materials and precious metals company.

, DataTimes


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