Alumni Profile:
Brian James '74 M.S.
“When the ADE Corporation’s board of directors recruited me to be its executive vice president and CFO in late 2000, I recognized that the firm had great product technologies and an outstanding customer base,” recalls Isenberg School graduate Brian James ’74 M.S. “My mission was to help capitalize on these attributes and unleash the company’s potential value, either for success as an independent entity or as an acquisition candidate for a potential buyer.” Last December, James left the Westwood, Massachusetts-based manufacturer of measurement devices for semiconductor production with his mission accomplished: California-based KLA-Tencor Corporation, a leader in semiconductor yield management and process control, had acquired the firm in an all-cash transaction valued at approximately $475 million.
ADE Corporation is a leading supplier of metrology (i.e., measurement) and inspection systems for industries that make semiconductor wafers and related devices. Its systems also serve the magnetic data storage and optics manufacturing industries. In designing and manufacturing its metrology technologies, ADE must move in rapid lock-step with those fast-paced industries.
“My challenge at ADE was two-fold: first, rebuild the company’s business model including its operations to improve its financial position and, second, achieve a vastly higher share price,” explains James. The Isenberg School alumnus began by identifying core capabilities and outsourcing non-core aspects of the company’s manufacturing processes, including those calling for precision robotics. “For example, all of our newer 300mm generation products required precision robotic manufacturing capability. By outsourcing much of that design and building effort to a robotics specialists—Brooks Automation, in Chelmsford—we not only lowered operating costs but instantly improved our cycle time and robot quality. At the same time, we improved our on- time reliability to an impressive one glitch per 2,200 major deliveries,” notes James.
Finally, due to these and other improvements, ADE was able to eliminate the need for one of its three U.S. plants by consolidating two Boston facilities. That resulted in further fixed cost reductions and the ability to create yet stronger margins. The combination move helped increase margins from below 40% to over 57 %, cut inventory in half while growing revenues, accelerate new product introductions, and generate strong positive cash flow for ADE investors.
On the financial side, James further bolstered ADE’s balance sheet by substantially reducing its debt to under $4 million. A major stroke was to monetize a non-core asset through a sale-leaseback arrangement of the firm’s property in Westwood and pay off its debt. With tighter financial controls and greater operational productivity in place, the firm’s cash reserves skyrocketed from $14.7 million to $100 million. “And we accomplished that entirely through performance; we never went to the capital markets,” he emphasizes.
James did, however, hit the road in non-deal presentations to promote ADE as a potential investment. With new products coming off the design line, operational results that were among the industry’s best, and a strong market position, the firm became a favorite of investment fund managers—especially of the small cap and technology persuasion. “ADE was a great story to tell because we had succeeded in achieving a remarkable turnaround, becoming either first or second in all of our industry’s key financial performance categories,” James recalls. When KLA-Tencor, an industry leader in semiconductor yield management and process control, emerged in 2005 as the firm’s eventual buyer, James knew that the suitor represented a synergistic match, both from a financial and industry perspective.
James’ skill sets in both operations and finance reflect his own career strategy. After graduating with an M.S. degree in finance from the Isenberg School (He also holds a BA degree from the University of Vermont), he joined Ford Motor Company’s large finance staff, which, he notes, practiced many “refined” financial processes. “My desire, however, had always been to run a company, which is why I wanted to gain some fluency with operations,” he confesses. At age twenty-eight, he left Ford for Allied Signal, where he spent several years in operations management posts—a transition made possible by becoming the project leader of a materials requirement planning system installation. After running operations at Allied-Signal, he combined his finance and operations skills as a group controller for Textron’s aerospace/technology segment, and then as CFO of two privately owned venture-backed companies. “Combining my knowledge of finance at Ford and my operational experiences at Allied Signal, my marketability improved. Many companies, I discovered, placed a high premium on financial guys who could also manage the very nuts and bolts of a business and communicate the issues and strategies both up and down the org chart.
“My degree in finance was an excellent springboard for my career,” James continues. “At UMass, I learned so much from Professor Ludke’s case-based finance class. And another professor, Dr. Mark Choate, brought finance to life and made it fun. Under Professor Choate, I also worked as a research assistant on a National Science Foundation Grant –an alternative energy project that evaluated how different thermal gradients in the ocean might be harnessed to create cost-effective electricity and reduce oil dependency. That work gave me an opportunity to differentiate myself in the marketplace while interviewing with corporate recruiters who visited UMass.” Fast forward thirty-three years and James is applauding another connection with the School of Management: his son, Stephen, is a junior-year marketing major.
Another hallmark of James’ career has been his gravitation toward industries with cutting-edge technologies. ADE, for example, has little choice but to innovate continuously to adapt its measurement technologies to capture sub-atomic surface defects, shapes, and nanotopographies of increasingly complex wafers, including 300 mm wafers with 45 nanometer design rules. As surfaces become more and more refined,technologies depend more on automation and on light as a measurement medium. Measurement technologies in the biosciences, James continues, have an especially promising future. “In terms of helping to improve yields in medicines, bioscience measurement leaders like Waters Industries in Bedford have a fantastic upside for growth,” he observes. “Bio-med yields are low today, and like semiconductors experienced some twenty years ago, automated metrology systems are coming on line to help drive yield improvements. This trend will likely have an enormous impact on medicines and their cost of development.”