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Developing graphite materials for fuel cells, electronics part of push to broaden its reach

For now, the foundation of its business remains steel, but GrafTech International Ltd. in Parma hopes much of its growth will come from a flimsier-looking substance — graphite composite material that can be pressed into sheets so thin they resemble Japanese nori.

Except, instead of wrapping sushi, the stuff is used in products such as cell phones, flat-screen televisions and hydrogen fuel cells as it keeps electronic devices cooler and helps fuel cells with internal chemical reactions, said Lionel Batty, GrafTech’s director of research and development.

The new graphite materials are the province of GrafTech’s Engineered Solutions division. Its base business remains providing graphite electrodes to steel producers, who use them around the world to fire up their electric arc furnaces. However, the Engineered Solutions division is providing GrafTech with new markets and opportunities for growth, spokesman Kelly Taylor said.

The Engineered Solutions business made up about 20% of GrafTech’s third-quarter revenue of $255 million. However, if GrafTech CEO Craig Shular has his way, the company’s high-margin engineered products will play a larger role in its overall revenues, said Ms. Kelly, who noted Mr. Shular has been pushing to grow the business since taking over as CEO in 2003.

“He’d like to see it be 30%, 40% or 50% of sales,” Ms. Taylor said.

That’s fine with Mr. Batty, who said in the years before Mr. Shular’s arrival the company probably focused too much on its steel industry business, often selling off new, unrelated technologies that it developed. For instance, it developed materials that enable Energizer batteries to work, but sold the technology behind those materials off and let others commercialize them, Mr. Batty said.

This time, the company is keeping its intellectual property for its own use.

“Differentiate and protect is the motto today,” Mr. Batty said.

A horse race

Graphite is light and inert. It also conducts electricity well and heat even better — all properties GrafTech wants to exploit.

On a lab tour at GrafTech’s headquarters, Mr. Batty showed off samples of the company’s graphite materials that keep mobile phones and laptop computers from overheating, remove the heat from flat-screen televisions and LED lights and form some of the layers in a stacked hydrogen fuel cell. It’s also used in the production of solar panels and in lithium-ion batteries, Mr. Batty said.

All the new uses have potential, but it is the area of alternative energy that might provide GrafTech with one of its best sources of growth. In addition to solar panels and fuel cells, graphite also is likely to be used in the next generation of nuclear power plants that will be built beginning in 2020. GrafTech already is working with several U.S. national labs on ways to make the internal parts of a nuclear reactor out of graphite because of its ability to withstand high temperatures.

“In terms of advanced energy, we’re riding every horse in that race,” Mr. Batty said.

Much of what GrafTech is doing in regards to energy is early stage stuff, he said, but it’s already showing potential.

For instance, GrafTech has been able to convince some fuel cell makers to use graphite rather than sheets of stainless steel in their battery stacks. According to Mr. Batty, about half the market is using steel and the other half is using graphite. It’s a VHS vs. Beta situation, and if graphite wins, so will GrafTech, Mr. Batty said.

Fueled by technology

So far, fuel cells with GrafTech graphite are performing as well as those with steel, said Gary Lunz, head of government and fleet sales for New Bremen, Ohio-based Crown Equipment Corp., the largest maker of lift trucks in North America.

Crown has researched both kinds of fuel cells, because large customers were looking for ways to convert their fleets over to hydrogen.

“They both appear to be good products,” Mr. Batty said of the two fuel cell designs, adding that it was too soon to say which technology will win out, or whether each will be used in different ways.

If the fuel cell technology isn’t a home run for GrafTech, it’s likely advanced energy still will be a new source of revenue in one shape or form, Mr. Batty said.

Dave Karpinski, director of the Advanced Energy Initiative for the Cleveland-based economic development group NorTech, agrees. He said one reason his group touts GrafTech as an up-and-coming player in alternative energy is that it has so many ways to sell into the sector.

“That company is a gem we have in Cleveland that not enough people know about,” Mr. Karpinski said.

“What’s exciting about GrafTech is the transformation. You’ve got this company that was servicing the primary steel industry and now they’re in the highest-tech industries that there are,” he said. “What’s exciting is that they are in so many sectors — so they’re not going to just succeed or fail based on the success of one thing, like fuel cells.”

Published: Wednesday, November 24, 2010, 4:30 AM Crain’s Cleveland Business