2004 was quite a year for Joel Moskowitz, both professionally and personally.
The chief executive of Costa Mesa-based Ceradyne Inc. saw sales and profits soar with military demand for the company’s bullet-proof ceramics.
Conflicts in Iraq and Afghanistan have fueled 50% a year sales growth at Ceradyne, which makes bullet-proof vests and other armor. The company expects sales of $200 million for 2004 and $340 million this year.
The company’s shares ended last year up more than 130% with a market value of more than $900 million.
“We’re just doing great,” Moskowitz said.
The company’s performance in 2004 earned Moskowitz an honorable mention for the Business Journal’s businessperson of the year.
The issue of battle armor was brought to a head in December when Defense Sec-retary Donald Rums-feld visited soldiers in Kuwait and was asked why they had to dig through scrap metal to fortify their vehicles.
Demand for battle armor has kept Ceradyne busy. By next month, the company expects to be making 30,000 vest plates a month, up from 20,000 a month, according to Steven Gish, an analyst with Roth Capital Partners LLC in Newport Beach.
By 2006, Ceradyne plans to start making ceramic armored patches for vehicles.
But 2004 will go down as bittersweet for Moskowitz. In October, he said he planned to reduce some of his duties at Ceradyne to be treated for Non-Hodgkin’s Lymphoma, a cancer of the lymph nodes and the fifth most common form of cancer.
After months of feeling tired, headachy and nauseous,and following an awful time on what should have been a relaxing trip to Hawaii,Moskowitz went in for a checkup and was diagnosed.
Now he said he’s undergoing chemotherapy and most of his hair has fallen out.
Still, Moskowitz said his doctor told him he has responded better than expected.
“I still go to work everyday,” he said.
Moskowitz is quick to attribute the company’s success to his management team.
“The guys who’ve been with me for 10 to 20 years, they’re really running the show,” he said.
Even so, Moskowitz said he’s bolstering the company’s management team. He said he’s looking to hire about 12 managers, including more for marketing.
As part of a diversification effort, Moskowitz said he plans to begin setting up marketing teams to cross sell the company’s products.
Things weren’t always so smooth at Ceradyne for Moskowitz.
Back in 2002, added business resulted in shrinking profits as Ceradyne proved unready to profitably handle an increase in military orders.
But in 2003 Moskowitz fought back, taming costs, applying lean manufacturing tricks and hiring a new chief financial officer. The problem went away, and profits started growing in tandem with sales.
That put Ceradyne in a strong enough position last year to buy ESK Ceramics GMBH, a German maker of ceramics for consumer and industrial products that will allow Ceradyne to be less dependent on military spending.
Moskowitz has big plans for Ceradyne. He said he plans to open a plant in Germany and make body armor for NATO soliders. He also wants the company to become a player in armor for vehicles, a segment now dominated by Jacksonville, Fla.-based Armor Holdings Inc.
Ceradyne’s ceramics are found in most military helicopters and in the seats of special forces vehicles. The outcry over the lack of armor for vehicles prompted Ceradyne to move into that market, Moskowitz said.
Ramping up production will take time. Making armor for a military vehicle is more complex, according to Moskowitz. He said he’s targeting 2006 to start production.
Eventually the military is expected to make armored vehicles as opposed to just armor patching existing ones.
Ceradyne last year opened an office in Wixom, Mich., in a bid to get some of that business. Wixom is near the city of Warren, where the Pentagon’s Tank-automotive Armaments Command center is based. The unit makes decisions on armored vehicles for the Army.
The Michigan office also plans to roll out an armored Lincoln Town car for Ford Motor Co. this year. It’s set to cost $145,000 and is geared toward heads of state and other government officials
If the business goes as expected, Ceradyne will need to build another plant, Moskowitz said. Michigan and Kentucky are in the running, he said.
Even with reforms in California, the Golden State is out, according to Moskowitz. Ceradyne uses a lot of electricity, he said. It costs 14 cents a kilowatt hour in California, compared to 4.5 cents in Kentucky, he said.
The challenge for Ceradyne is to ready for a slowdown in military spending. The ESK buy is what Moskowitz called the key to the company’s future.
ESK makes “evaporation boats”,the metallic material that lines the insides of bags of chips and other products to keep the contents fresh. ESK also makes parts for the auto industry and supplies some of the boron carbide that Ceradyne uses in its ceramic products.
Ceradyne picked up $100 million in yearly non-military business with ESK, Moskowitz said.
Defense still dominates, though, according to analyst Gish. In the third quarter, 60% of Ceradyne’s $56.3 million in sales were to the military.
The company’s military reliance should start to shrink this year, Gish said. For 2005, the analyst said he projects $326 million in sales, about 52% going to the military.
“In my opinion, they’re doing an excellent job,” Gish said. “They’re managing their growth very well.”
