Follow-Up File: Asia is now main market for SAES

Name: Tim JohnsonJob: Chief Executive OfficerBusiness: SAES Pure Gas Inc.

What he said then:

In October 2004, The Tribune reported that San Luis Obispo high-tech manufacturer SAES Pure Gas Inc. was poised for a turnaround after laying off employees earlier that year.

“We’re predicting that we’ll be stable for next year, if not growth,” said Tim Johnson, who’d been named chief executive officer as part of a corporate reorganization.

SAES Pure Gas makes products to purify gases used in manufacturing for industries such as electronics, semiconductors and aerospace.

A subsidiary of Milan, Italy-based SAES Getters, it has produced locally since 1989.

In 2002, SAES Pure Gas boasted 120 employees. Two years later, its workforce had dropped to less than half that level, in part due to a severe downturn in the semiconductor industry.

What he says now:

With about 80 people working at its Santa Fe Road plant, SAES Pure Gas has seen its prime customer base shift from the United States to Asia.

“We’ve always exported, but in the past the industry was largely in the U.S.,” Johnson said. “In recent years, more manufacturing has moved offshore.”

About 70 percent of the company’s products are exported to countries such as China, Korea and Taiwan.

“There’s a big growth there at the moment in the manufacturing of LEDs (light-emitting diodes). Those need very pure gas,” Johnson said. “The LED compound annual growth rate is set at about 30 percent worldwide.”

The smaller sizes of increasingly powerful computerized gadgetry also have made gas purity more critical for manufacturers, he added. That’s helped boost demand for SAES products.

Furthermore, Johnson is optimistic about a new line of products to let manufacturers recycle some of the gas they use.

“We just shipped our first gas recycling system,” he said. “That particular shipment went to Germany.”

During its turnaround, the San Luis Obispo subsidiary saved money by cutting administrative staffing and relying more heavily on its intranet.

It also standardized product components to reduce engineering and third-party manufacturing expenses.

A drop in sales did lead to some layoffs in early 2008, Johnson said, but by summer 2009 most of those employees had been hired back.

“Since this time last year, we’ve had a dramatic increase” of 15 new employees, he said. “The semiconductor industry came back very strong.”

Since about 95 percent of its workers are hired from within San Luis Obispo County, training is a high priority.

To give non-degreed employees formal qualifications, it has worked with the Los Angeles Unified School District and the state to create an apprenticeship program in which workers can earn journeyman certification.

In addition to hands-on training, apprentices attend a minimum of three hours of classes per week and take a written final exam.

Manufacturing manager Mark Canaan, who teaches most of the classes on-site, invested nearly 500 hours writing the curriculum that allowed the company to become an accredited institution.

“We can’t train fast enough,” Canaan said. “Right now, I’m trying to hire 10 more technicians. It’s not like there’s a glut of technicians, welders or machinists around here.”

— Raven J. Railey