High-end High-tech

By staying true to its European roots and being able to do some things uniquely American, Karl Suss America and its president, Peter Szafir, have made Vermont a leader in the semiconductor equipment industry.

by Larissa K. Vigue

Peter Szafir, president of Karl Suss America Inc. in Waterbury Center, is at the helm of a company that creates micro-technology that most computer users would find in desk tops. He says his interest in the high-tech industry stems from his childhood hobby of "tearing apart toasters and radios and putting them back together."

Peter Szafir, president of Karl Suss America Inc. in Waterbury Center the only North American production facility subsidiary of the German-based Suss Microtec, has learned to be metaphorical when talking to people outside the semiconductor equipment business. To describe Karl Suss's highly specilialized product line of precision lithography, test and bonding equipment, which includes such mysterious-sounding items as mask aligners, flip chip bonders, spin coaters, and probe systems, Szafir uses this analogy: "Say you start with a piece of steel. At the end you might have a gear. In order to get to that point, the steel has to go through different machines. It's the same thing in the semiconductor industry to make a chip. You start off with a silicon wafer. Like that piece of steel, it goes through different machines and processes before it turns out to be an integrated circuit with some specialized application. We make (some of) those machines."

Karl Suss (rhymes with "loose") America started as a subsidiary in 1979, though the first 10,000-square-foot building wasn't operating until 1980. In 1981, more facilities were added to the site, but manufacturing would not become a part of the operation in early 1982. Over time, five condo-like guest houses were added with kitchenettes "for our own people that come over from Europe or Asia for an extended period, customers who come for demonstrations and interviewees," Szafir explains. "It's a German touch unique to the U.S."

Szafir came to the company in 1982 as one of those interviewees. Even as a boy, he seemed destined to work for a company that valued hard-working, highly skilled technicians. Growing up with first-generation Polish parents and five siblings in the-then-farming community of Hadley, Mass., Szafir learned "what it took to work hard and have aspirations live the American dream." Two older brothers who became engineers influenced Szafir's career choice. So did his childhood interest in "tearing apart toasters and radios and putting them back together."

Shortly after Szafir entered the Air Force Academy in Fort Collins, Colo., his father passed away. The death instilled in Szafir a desire to return home, and he enrolled in the University of Masschusetts, graduating in 1978 with a bachelor of science in mechanical engineering. In 1979, he went to work in Florida for current Suss customer Motorola. That was the era, Szafir recalls, "when pagers were the communication device of choice." He says he liked the technology, but what really intrigued Szafir were the overall operations and manufacturing issues like "how to keep things running, find better ways of doing things faster and working with people to get things rolling."

Szafir was pulled back to New England a year later, and he took a job with Varian-Extrion in Gloucester, Mass., his introduction into the semiconductor capital equipment manufacturing industry. Until 1982, he was part of a new product development team that acted as a liaison between the research and development (R&D) sector and the manufacturing side. Though he liked the job, he and his wife dreamed of moving to Vermont, where they had vacationed. "On a whim, I put a resume together and gave it to a headhunter," Szafir recalls. "A week later, I got a call from a German company I'd never heard of. Sometimes, you have to believe in fate."

Szafir was hired as Karl Suss America's first North American engineer, after the company had spent a couple of years setting up its infrastructure and training its new Vermont technicians on the systems. "They were just beginning to bring the tools over in kits and adding the labor and maintenance here," Szafir explains. "The goal was to expand and develop the manufacturing (side)." Although German-born Peter Heinz was Karl Suss America's general manager at the time, Szafir says Heinz "wanted to run it as an American company. He didn't want to import management; he wanted new ideas."

Denis Place, left, business unit manager of probe systems; Steve Wisloski, vice president of sales; and Mike Gagne, vice president of operations, make up some of the brass at Karl Suss America. With their help, the company is looking to top $130 million in revenues this year in U.S. sales and $250 million, worldwide.

When Heinz left in 1996 (to helm the Karl Suss America spin-off SAL Inc. in South Bulington), Szafir, who had gradually moved up the ranks as manager of manufacturing, operations manager and assistant general manager took over as president. Three years later, after deciding to transfer ownership outside the family upon the death of founder Karl Suss's son Ekkehard, Suss Microtec went public. (Winfried Suss, Karl's other son, remains with the company as chairman of the board.) The company's going pubic is what makes Szafir's job "exciting." He says the "transition has benefited us quite a bit. We have to act more worldwide in a positive way, (like) revamping our accounting reporting from a global perspective and improving our infrastructure and management information systems." Next quarter, the company begins a year-long process of converting to new computer systems for their customer database and administrative functions, part of upgrading policies and procedures related to its ISO 9000 standard of quality certification.

Even for someone who has long studied the company's profile, understanding Suss' product line and target market means constantly "ramping up." John McAulliffe, president of Allen Agency Insurance in Williston, which has handled Karl Suss America's property and casualty coverage for 15 years, says he has had to pull out his "encyclopedia of insurance coverages" more than once to serve his client. "It's one of the most intriguing accounts I have. The product is so diverse and complicated, to understand it is a project in and of itself. And the international aspect presents a whole different type of exposure." Taiwan, for example, is the biggest market for Suss Microtec's second-to-largest selling machine, the Vermont-developed and -produced GYRSET® System spin coater. The GYRSET® design minimizes air turbulence inside the coater chamber, thereby uniformly covering the wafers with the liquid film necessary to create circuits. It helps a great deal, McAulliffe says, that company executives like Szafir, who's been with the company for 18 years (the last five as president), "put a value on the insurance product. They understand we've got to have open access to the books. They treat all their vendors very fairly, like family."

Last year, the Suss family of machines and their components with price tags ranging from $25,000 to over a million dollars apiece grossed $70 million in North America. That represents more than half of the $130 million Suss Microtec, a publicly traded company on the German Neuer Mrkt, or New Market, brought in worldwide. By the end of 2001, Szafir expects Karl Suss America's revenues perhaps to be as much as $130 million. Worldwide, the company is projecting as much as a $250 million gross in that period. Part of that will be due to the expansion of its sales and service centers, like the satellite office in Phoenix, Ariz., which will see its staff increase from five to approximately 40 workers over the year.

The Vermont plant, which houses about 170 of Suss Microtec's 800 employees, is already busting the seams of its 35,000 square feet, more than triple its original size when the site opened in 1980. Physical expansion of the blend-into-the-surroundings, hill-top chalet-style site off Vermont 100 has become a necessity. Though the 40-plus acres of land owned by the company make that possible, ACT 250 requirements are slowing the process. Nationwide, Szafir expects to add another 30 people by the end of the year to the 210-strong U.S. work force, which, in addition to the Vermont and Phoenix employees includes sales and service representatives in San Jose, Calif., Boston and Chicago. To that end, the company's "very aggressive HR manager and her team are doing fantastic things recruiting internationally on the Internet" and at colleges and universities, Szafir says, to combat the country's current lowvirtually nonexistent in the high-tech industryunemployment rate.

This growth begs the question: What about the supposed recession?

"The high-tech industry has always gone through down cycles," Szafir says. "This isn't really a true recession there's a slower rate of growth, but we're still growing. And even during a downtime there are still segments that do well. There are always investments that continue for the next generation of chips and new technologies to reduce cost and improve performance."

This is where most of the action happens at Karl Suss: The production area.Technicians are busy putting together such esoteric products as mask aligners, flip chip bonders, spin coaters and probe systems.

Suss, Szafir says, specializes in the "advanced packaging" and micro-electrical, or MEMS, markets and has a broad enough product line to offset the industry segments that have slowed down since early last fall. Even those, Szafir says, should soon be picking up speed again. "Most people point to the beginning of the third quarter (of this year) as an upturn in the industry."

The competitiveness of the the industry means Suss must abide by a non-disclosure agreement with several of its thousands of worldwide clients including its largest, which, hints Szafir, "You'll find inside every PC." He's free to drop some recognizable names like Motorola, Nortel and Lucent Technologies, as well as the less familiar GDS Uniphase and Siemens, "the European version of a combination of IBM and AT&T," Szafir says. Although IBM ranks as one of Suss's largest customers worldwide, it's "mainly on the testing side," that Big Blue purchases Suss machines for its Vermont facility in Essex, Szafir says.

One of Suss' newest customers is Conexant Inc., a Boston-based supplier of seminconductor products and systems solutions for communications electronics clients. Steve Walker, Conexant's RF design and test engineer, needed a wafer measurement device called a "prober" that was both flexible enough to allow for ambidextrous use by his engineering group and precise enough to control positioning. "I looked at a lot of probe stations," says Walker, who ended up purchasing a Karl Suss system six months ago. "It blew (the others) away. It's the BMW of probers."

Well before the semiconductor business became an industry, the German salesman Karl Suss was investing in vision literally. In 1949, Suss created a small business in Munich, Germany, to handle distribution for an optics company that manufactured microscopes and other products with high-definition lenses. Four years after Germany lost War World II, it was a good time to be a business person in Germany. "With reconstruction, there were a lot of companies being formed, (many) privately owned" ventures, Szafir says.

In the early 1960s, Suss tuned its attention toward a fledgling industry: the production of integrated circuits. There were few machines for the task at the time, and most of those were prototypes. Though Suss had no experience in the new technology, he knew that "part of the heart of the machines was optics lenses transmitting wavelengths of light onto wafers," says Szafir, who suspects that making the connection was an epiphany for Suss. "A light bulb probably went off in his head and he said, 'I know enough of this stuff to make something!'"

It helped that Suss had two sons, Winfried and Ekkehard, with Ph.D.'s in mechanical engineering and economics, respectively. "Fairly quickly, the business was transferred away from Karl to his two sons," Szafir says. "They built the (manufacturing) company. They'd put the machines in the back of their car, drive overnight to somewhere in Germany, do a demonstration for customers." The first of those machines was the mask aligner used in the wafer imprinting process developed in 1964 in cooperation with Siemens' engineers.

Though the brothers established a solid customer base, Szafir says they were conservative businessmen who thought long-term. "The downside was that they didn't take advantage of some of the upswings in the economy, so the short-term returns weren't as high" as they might have been, he says. On the other hand, "during recession times, the company wasn't (strongly) affected. Basically, they were there to focus on specialized markets, adapt machines to specific applications and work closely with customers. Overall, they . . . (created) a very secure niche."

In the early part of the 1970s, the company had branch sales offices throughout western Europe. Toward the end of the decade, it had established sales and service centers in Japan and Thailand, employed approximately a hundred people and offered a diverse product line. The next step was to better position Karl Suss to serve its largest potential market: the U.S. In 1977, the Suss brothers opened a sales office in Silicon Valley. It quickly became apparent that "in order to serve the customers, they needed some local expertise," Szafir explains. "Just to be a sales and service site wasn't enough." In the pre-Internet, instant communication era, the nine-hour time difference between California and Germany made transforming the Sillicon Valley site into a fully functioning subsidiary unrealistic.

Company executives considered Massachusetts, New Hampshire and North Carolina before settling on Vermont. "They believed in training employees long-term," Szafir says, "and were looking for stability in the work force." A presentation by then-Vermont Economic Development Secretary Al Moulten, which highlighted the state's desire to house high-tech, high-wage non-polluting businesses, convinced executives they'd find what they were looking for in Vermont. They learned that not only did Vermonters have the ability to learn the detailed mechanical engineering necessary to perform the tasks, Szafir says, but that northern New Englanders were well-known for a strong work ethic and company loyalty. Plus, he adds, they liked the Waterbury Center site for its panoramic views and proximity to Montreal. Today, the only downside to Vermont, Szafir says, is the behind-the-times wireless communications infrastructure. When colleagues, like Szafir's boss, Suss Microtec CEO Dr. Franz Richter, come over from Germany with their "tri-band" phones that are suposed to work anywhere in the world, they don't work. "It's embarrassing," admits Szafir, however, he can't say why that's the case.

Management and operations changes might come and go, Szafir says, but one thing will always remain the same, "that sense of who we are and how we got here. If we lost that, it would be a shame. In building a team to take us to the next level, we look really hard to find people at all levels who are self-motivated, ambitious, intelligent, (and who) share their ideas. We have dedicated people who are always willing to help out ... (They know we're) all in this together, trying to make something special."

Originally published in April 2001 Business People-Vermont