A MESSAgE - Park Electrochemical Corp.

A
Message
from the President & Chief Executive Officer
Brian E. Shore, President and Chief Executive Officer
Brian E. Shore, with his wife Barbara, at the polar Archipelago of Svalbard *
Park—A Unified Advanced Materials Company
of polymer chemistry formulation and coating technology and based
As I have discussed in my recent annual report letters to you, Park
upon the principles by which we work and live, Park is a unified
is an Advanced Materials Company, and, although Park operates
company which nevertheless operates in diverse markets and fields.
and works in multiple markets and industries, all of Park’s diverse
activities relate back to the unifying Advanced Materials Company
Key Electronics Industry Activities
core capabilities of polymer chemistry formulation and coating
The following are certain of Park’s key recent and ongoing elec­
technology. In addition, Park’s business is shaped and unified by
tronics industry activities:
the principles by which we operate and live and which apply to
• Engineering Optimization (“EO”)—As discussed in Sue Macaluso’s
all of Park’s diverse activities. These principles relate to integrity
letter on page 10 of this Report, EO is a new initiative which
at any and all cost. They relate to our desire to build enduring
involves working proactively with our key electronics customers to
and lasting fundamental value. They relate to taking the longer
identify, at front-end-engineering, highly complex circuit boards
and more difficult and arduous path in order to create and achieve
which may be difficult to manufacture and to optimize the design
enduring things of substance and things which will last. For
of those circuit boards and the customers’ fabrication process in
example, whether we are talking about our electronics or aerospace
order to enhance the customers’ ability to successfully fabricate
activities, we are much more inclined to try to find or develop
those most challenging circuit boards. We believe EO has the
uniquenesses and special capabilities to bring to bear for the benefit
potential to bring meaningful value to our key customers working
of our customers than to attempt to sell our products by “meeting
on the cutting edge of technology.
the market price”. We sometimes find ourselves turning away
• Customer Process Reviews (“CPR”)—As also mentioned in Sue
revenue opportunities in both the electronics and aerospace
Macaluso’s letter, we recently introduced the CPR service to our
markets when we do not believe we are capable of offering at least
key electronics customers. CPR is designed to be a collaborative
some special or unique value to the customers involved. While
effort with our customers to help optimize their circuit board
we recognize that it is almost always easier to take short-cuts to
fabrication processes. We believe CPR can be a very useful tool
achieve more immediate results, we believe those results may often
to enable our electronics customers to refine and optimize their
be transitory and unenduring. So, based upon our core capabilities
manufacturing processes.
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P A R K E L E C T R O C H E M I C A L C O R P.
Key Aerospace Industry Activities
• Mercurywave™ 9350—Mercurywave™ 9350 is a completely
new RF and Microwave circuit board material formulation which
The following are certain of Park’s key recent and ongoing aero-
was introduced during the 2010 fiscal year. Mercurywave™ 9350
space industry activities:
is discussed in more detail in both Sue Macaluso’s and David
• New Products—As discussed in Sue Macaluso’s and David
Dahlquist’s letters on pages 10 and 11, respectively, of this Report.
Dahlquist’s letters on pages 10 and 11, respectively, of this
• New Treater in Singapore—We plan to install a new IR-technology
Report, we introduced Aeroglide™ surfacing film during the 2010
digital printed circuit material treater at our Singapore Gul
fiscal year, and, most recently, we introduced E-710 Easycure™
electronics manufacturing facility to complement the existing
low temperature cure epoxy prepreg. Please see Sue’s and
treaters currently operating at the Gul facility. This new treater
David’s letters for further discussion of these new products.
incorporates all of Park’s most advanced electronics treating
• PATC Expansion—In August of last year, we announced the major
design features and capabilities.
expansion of our Park Aircraft Technologies Corp. (“PATC”) aero-
• C onversion of Singapore Treater for PTFE Coating—We are in
space advanced composite materials facility in Newton, Kansas.
the process of completing the conversion of one of the existing
The PATC expansion is designed for the production of advanced
treaters located at our Singapore Gul facility from a digital
composite parts and assemblies for aircraft and space vehicles
electronics material treater to a treater designed to produce PTFE
and will include both oven and autoclave composite parts
circuit board materials for RF and Microwave applications. This
processing equipment. The expansion, which contemplates the
converted treater will complement the PTFE printed circuit
addition of approximately 37,000 square feet of manufacturing
material treater located in Lannemezan, France and will service
and warehouse space to the existing PATC facility, is expected
the Asian market for PTFE based circuitry materials.
to cost approximately $5 million and to be completed toward the
• Treating Center of Excellence (“COE”)—We are currently seri-
end of the 2010 calendar year. Actually, the buildings have already
ously studying and reviewing the possibility of constructing a new
been completed and we are now in the process of finishing the
major electronics material treating facility at our Newton, Kansas
interior building space and equipping the facility. This expansion
campus. If we decide to proceed with this project, our objective
will enable PATC to design and manufacture advanced composite
would be to create the most beautiful and elegant and capable
parts and assemblies for aircraft and space vehicles in addition
electronics material treating facility we are able to imagine or envi-
to advanced composite materials for those applications.
sion. Obviously, talk is very cheap, but, nevertheless, I thought
• Northrop Grumman Aerospace Systems R & D Supplier of the Year
you should at least understand our objectives for our COE project
Award—The receipt of the Northrop Grumman Aerospace
if we decide to proceed. We will keep you posted on our plans
Systems R & D Supplier of the Year Award is discussed in Greg
relating to the COE project.
Strand’s letter on page 8 of this Report. I would like to add to
Park Aircraft Technologies Corp. (“PATC”), Newton, Kansas. The factory building expansion, along with the warehouse building (to the right of the main factory building),
are now complete.
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P A R K E L E C T R O C H E M I C A L C O R P.
Greg’s comments that the receipt of this award was such a
significant market presence in the aerospace industry has gone
special honor for Park. Actually, we are very honored just to
more slowly than I expected. This is particularly the case in the civil-
have even been involved in the “MLAS” program discussed
ian aircraft segment of the aerospace industry, where many pro-
by Greg at all!
grams have been cancelled, delayed or deferred because of the
recession. Although I understood from the very beginning that the
Other Observations and Thoughts About Park’s
Aerospace Industry Activities
aerospace industry, and in particular the civilian aircraft segment of
It was about four years ago that we embarked on our journey to
I believe I underestimated just how conservative and risk-averse
become a significant participant in and supplier to the aerospace
at least certain elements of that industry can be. The highly
industry. Four years later, I feel very strongly that the strategy to
conservative nature of the aerospace industry, along with the global
develop a major presence in the aerospace industry was the correct
recession in that industry, did slow our progress in developing a
strategy. However, notwithstanding our conviction about the cor­
major market presence in the industry at least to some extent.
the aerospace industry, was conservative and risk-averse by nature,
rectness of this strategy, there have been some very interesting
In any event, notwithstanding the learning experiences of the last
surprises along the way. Our initial market focus was on the busi-
four years and some of the course corrections made in response to
ness jet segment of the aerospace market. Although business jets
the learning, we remain undaunted in our efforts and activities
remain an important market focus for Park, certain of the individual
related to the aerospace industry. Actually, with the benefit of hind-
business jet OEMs and programs which we initially targeted from a
sight from our experiences over the last four years and based upon
marketing perspective have turned out not to represent the major
the serious inroads we have made in the aerospace markets during
opportunities we expected, while other business jet OEMs and
that period, I believe the strategic decision to aggressively develop
programs not originally targeted have proven to represent much
an entirely new market for Park and its products in the aerospace
greater market opportunities for Park. It is pretty obvious that the
industry was one of the best strategic decisions Park has made in a
business jet industry has been in a deep recession for the last
very long time.
year and a half. In our opinion, though, some business jet OEMs
have responded to the global aircraft industry recession with more
energy and vitality than others. It has been interesting to watch, but,
Park’s Business Development Activities
needless to say, we have adjusted and adapted our market focus
During the 2010 fiscal year, Park invested a significant amount of
toward the business jet OEMs which seem to be more energized
time and effort into business development activities, including
about their futures even in the face of the recession.
potential joint ventures and other business ventures and acquisition
opportunities. These business development activities continue to be
Over the last year, we have also expanded our aerospace market
a major focus for Park. For more discussion of these activities,
focus to include military aircraft, space vehicles and unmanned
please read David Dahlquist’s letter on page 11 of this Report.
aerial vehicles (“UAVs”) in addition to business jets. It is our expe­
rience that certain military aircraft, space vehicle and UAV OEMs
Thank You
and contractors have exhibited more vision, vitality and energy in
As always, I would like to thank you for taking the time to read my
the face of the global recession than some of their civilian aircraft
letter to you. I recommend that you take a little extra time to read
counterparts. Accordingly, we have expanded our aerospace market
the letters written by Greg Strand, Mark Esquivel, Sue Macaluso and
focus to include those OEMs and markets.
David Dahlquist which follow in this Report. I think you will find those
Generally, Park seeks to align itself with companies which are highly
letters to be of interest.
innovative and energetic. We feel we have more to offer to and learn
Thank you once again for your interest in our Company. I wish you
from such companies, and our experience is that such companies
very good luck and fortune in the coming year.
are more likely to recognize and understand the value Park is able to
Sincerely,
bring to the table. So, we have naturally gravitated and moved
our market focus toward the more innovative companies which
are constantly pushing the envelope and striving to develop new
capabilities and technologies.
Another observation about our experience four years after we
Brian E. Shore
embarked on our journey is that the process of developing a
President and Chief Executive Officer
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P A R K E L E C T R O C H E M I C A L C O R P.