Corning Inc. Business Information, Profile, and History

Company Perspectives:

Corning leads primarily by technological innovation and shares a deep belief in the power of technology. The company has a history of great contributions in science and technology, and it is this same spirit of innovation that has enabled us to create new products and new markets, to introduce new forms of corporate organization, and to seek new levels of employee participation. We embrace the opportunities inherent in change, and we are confident in our ability to help shape the future.

History of Corning Inc.

Corning Inc., known as Corning Glass Works until 1989, operates as a global technology firm with three major business segments including Telecommunications, Advanced Materials, and Information Display. Its Telecommunications arm produces optical fiber and cable, optical hardware and equipment, and photonic modules and components. Through this segment, the firm makes nearly 40 percent of the world's supply of optical fiber, making it the largest fiber manufacturer across the globe. The Advanced Materials segment develops specialized products utilizing glass, glass ceramic, and polymer technologies. The firm's Information Display unit operates as a manufacturer of glass panels and funnels for televisions, liquid crystal display glass for flat panel displays, and projection video lens assemblies. Corning, along with its subsidiaries, operates in 20 countries.

Early History: Mid- to Late 1800s

Corning traces its beginnings to 1851 when Amory Houghton purchased an interest in Bay State Glass Company of Cambridge, Massachusetts. Three years later he founded Union Glass Company of Somerville, Massachusetts. After selling Union Glass he and his sons bought the Brooklyn Flint Glass Company of Brooklyn, New York, in 1864. Four years later they moved operations to Corning, New York, renaming the enterprise Corning Flint Glass Company. They chose this western New York location because of its favorable location for transportation as well as for acquisition of coal and wood, then necessary for glass manufacturing.

Amory Houghton, Jr., became president in 1875, the year in which Corning Glass Works was incorporated, and remained in the post until 1911. It was during these years that the firm began to exhibit the technological prowess for which it is known today. The company first called upon scientists at Cornell University in 1877 for help in improving the optical quality of its lenses. In 1880, Thomas Edison asked Corning Glass to make bulbs for his electric lights.

Innovations During the Early 1900s

An important milestone during Amory Houghton, Jr.'s years as president was the establishment of a research laboratory in 1908. It was the fourth such facility in the United States. The laboratory developed a heat-resistant glass, borosilicate, capable of withstanding sudden changes in temperature. One resulting 1912 product was a shatterproof lantern for railway signalmen. Another important borosilicate product, Pyrex, dated from 1915. It found immediate use as laboratory equipment, but it was some years before the company realized its consumer-market potential.

Corning continued to be managed by members of the Houghton family. Alanson B. Houghton succeeded Amory Houghton, Jr., and served until 1919, when he was followed by Arthur A. Houghton, president until 1920.

During World War I, when Corning was able to make glass that others could not produce, the company prospered as a supplier to defense contractors. In the postwar years, demand for Corning products led to the invention of a ribbon machine in 1926, which produced blanks for incandescent lamps at the rate of 2,000 bulbs per minute.

Steuben Glass, a division of Corning, originated in Corning, New York, but did not become part of Corning Glass until 1918. It specializes in fine optical glass as well as fine cut glass. Steuben began producing the crystal for which it became famous in 1933, when Arthur A. Houghton Jr., great-grandson of the founder, became president of the subsidiary. He decided that the company was to sell only quality products of the highest design, and he and a vice-president smashed over $1 million worth of lesser glass in the company warehouse.

Expansion During the 1930s and 1940s

Two presidents served in the decade of the 1920s. Alexander D. Falck was in office until 1928, and Eugene C. Sullivan until 1930. The years of the Great Depression were an era of great expansion for Corning. Under the leadership of Amory Houghton Sr., president from 1930 to 1941, technological innovations continued. Corning built the 200-inch mirror for the Mount Palomar telescope in 1934. It was the largest piece of cast glass up to that time and was the second version of the mirror. The first, which was miscast, is on display at the glass museum in Corning, New York. Corning developed such products as silicones in the early 1930s, electrical sealing in 1938, and 96 percent silica glass in 1939.

During this period, Corning began a policy of joint ventures with other companies. Owens-Corning Fiberglas was organized in 1938--a year after Pittsburgh Corning Corporation began producing glass blocks. Dow Corning was established in 1943 to produce silicones.

The early 1940s brought improvements in optical glassmaking. During World War II cathode-ray tubes were mass produced for radar detection systems beginning in 1942. Corning also manufactured a strengthened form of glass tableware for the U.S. Navy. Later advancements in the decade included improved thermometer tubing; ribbon glass as thin as newsprint and used in electronic components; photosensitive glass; and centrifugal casting used primarily for television tubes, which were first automatically produced in 1947.

Glen W. Cole was president during World War II, and was followed by William C. Decker, who served from 1946 until 1961. Amory Houghton Sr. continued to lead as the first chairman of the board, an office created in 1945.

Product Innovations: 1950s-60s

Corning developed electricity-conducting coated glass in 1950 and fused silica in 1952. Color television tubes were introduced in 1953. The process for producing Pyroceram, or glass ceramics, was developed in 1957 and led to the marketing of Corning Ware cookware the following year.

Amory Houghton, Jr., served as president between 1961 and 1964, and then became chairman of the board until his election to the House of Representatives in 1983. During Houghton's tenure as chairman, the presidency was held by R. Lee Waterman until 1971, followed by Thomas C. MacAvoy up to 1983.

Corning made the ceramic heat-resisting reentry shields and the glass windshields for the 1960s Apollo moon program. Cellular-ceramic structures--thin-walled structures used in gaseous heat exchangers--were introduced in 1961 and became key components of automobile catalytic converters beginning in the 1970s. Other developments in the 1960s included chemically strengthened glass in 1964; photochromic glass, which darkens when exposed to light, and fusion sheet glass in mid-decade; and, in the late 1960s, hub machines, used for cutting hot glass into various sizes and shapes, and optical fibers.

During the 1960s, Corning Glass was the undisputed industry leader in glass technology. Sales of bulbs, globes, and panels, Corning Ware, and television-tube blanks grew especially fast in the early 1960s and led to record earnings of $9.28 per share in 1966. Company stock sold at 48 times earnings.

In 1970, Corning's innovations included machinable glass-ceramics and immobilized enzymes. The latter permanently bonded active catalytic materials, such as enzymes, to inorganic substrates, or carriers, leading to the development of radio-immunoassay products for diagnostic testing in 1974. An all-electric melter in 1972, polychromatic glass in 1978, transparent glass-ceramic cookware in 1981, diesel particulate filters in 1986, and dental restorations in 1987 were other breakthroughs.

Problems Arise in the 1970s

Despite these innovations, Corning experienced a decline in earnings in the 1970s. Although over one-third of its products were new, the bulk of its sales came from mature products such as bulbs and television blanks for picture glass, which it sold to other companies. Competition was strong and Corning experienced a decline in market share of these products. Japanese imports of television sets, for example, curtailed the demand for Corning television glass.

Another problem involved Signetics, a semiconductor manufacturer, purchased in 1962. In 1970, Signetics lost $6 million on $35 million in sales. Corning had never developed an expertise in electronics and in 1975 sold Signetics, absorbing a pretax loss of $9.5 million. In 1972, Hurricane Agnes caused a severe flood which cut corporate headquarters off from the outside world for a time and cost the company $20 million. Earnings collapsed to $1.76 per share in 1975. In response to these difficulties, Corning closed five plants and eliminated production of domestic black-and-white TV tubes, Christmas ornaments, and acid-waste drain lines. Employment was cut in the 1970s from 46,000 worldwide to 29,000, with an increase in productivity from an industry average of 3 percent per year to 6 percent. Research and development continued, with expenditures of about 5 percent of sales, above the U.S. national average of 2 percent.

Sales volumes fell in 1982 for some consumer products, such as Corning Ware, Pyrex, and Corelle dinnerware. In 1983, Corning halted production of light bulbs. That year leadership changed from president to joint management by group presidents and chairman of the board, James Houghton.

Corelle products designs had not changed in more than a decade, and Corning had not advertised, until 1985, that its products had always been suitable for the microwave oven. The company did not begin market research until 1984. As a result Corning modernized designs of older products and introduced Visions cookware, combining the transparency of glass with the heat-resistant qualities of ceramics.

Focus on Fiber Optics: 1970s-80s

Corning's experience with fiber optics illustrated the problems and the benefits of a company based on research and technology. As a result of Corning's work, glass-fibers, or fiber optics, replaced copper wire in traditional telephone lines. A hair-thin glass fiber could carry as many telephone calls as a four-inch copper wire, using pulses of light to transfer sound. The difficulty was that light could lose its intensity as it moves through the cable. When Corning began working on fiber optics in the middle 1960s, researchers decided that a 99 percent loss over a kilometer was economically viable because it could be boosted at that point. After four years of work, and numerous failed experiments, the research team developed a working product. Physicist Donald Keck recorded the event in his laboratory notebook with the notation "Eureka."

At the time there was no apparent demand for the product. Telephone companies said that they would produce their own fiber when demand made such a step imperative. Although lacking sales, Corning continued improving the product, making the original product obsolete even before it was sold. By 1972, the fiber wire could be extended 20 kilometers without a repeater, five times longer than standard copper wire. Eventually the distance grew to 100 kilometers. These continued improvements resulted in price declines from several dollars to less than 12¢ a meter in the late 1980s.

Corning reacted to the lack of early demand by entering into several joint ventures with European cable companies, believing that local partners would eventually lead to sales to the state-owned telephone monopolies. At the same time, Corning built its own factory in the United States. This move proved successful when deregulation of the telephone industry in the United States led MCI Communications Corporation to order 100,000 kilometers of cable in 1982. Two years later the company spent $87 million on new fiber plant facilities, the largest single Corning investment ever.

By the 1970s, U.S. communication companies were developing and using optical fiber. In July 1976, Corning filed suit against ITT Corporation and its customer, the United States government, charging patent infringements. Five years later, after a countersuit by ITT and much legal conflict, ITT settled, agreeing to pay penalties for patent infringement; a short time later, the government settled with payment of $650,000 for having purchased the fiber. During the next few years, Corning filed similar suits against Valtec Industries and Sumitomo Electric Industries in Japan. These suits too were settled in Corning's favor, in 1984 and 1987 respectively.

Corning's work on laboratory glass instruments led it into laboratory-related services, through the acquisition of other firms. MetPath, a leading clinical testing service in the United States, was purchased in 1982. Hazelton Laboratories, purchased in 1987, became one of the world's leading independent suppliers of services for biological and chemical research. Enseco, acquired in 1989, specialized in environmental testing.

Expansion Through Joint Ventures

During the 1980s, Corning entered into more joint ventures--over two-thirds with foreign firms--than most other U.S.-based firms. More than half of its 1987 profits came from joint ventures. Dow Corning, with $1.5 billion in revenues, was as large as all of Corning's other joint ventures. The international alliances covered the globe, and included more than 15 joint ventures with companies in Europe, Asia, and Australia, producing such products as optical fiber, specialty glass, ceramics, and cookware. Acquisition of joint-venture partners continued in 1989 and 1990. IBM invested in PCO, an optoelectronics company controlled by Corning. Mitsubishi Heavy Industries, Mitsubishi Petrochemical, and Corning became partners in Cormetech, a pollution-control company. In June 1990, Corning joined with a company in India to form Samcor Glass. Corning entered such relationships to provide instant market penetration and to bring new technologies to the company. In 1989, Corning acknowledged the diversification of its products by changing the company name to Corning Incorporated.

By this time, Corning served as a prototypical "knowledge" firm. While it had always depended on research for new products, it moved even more actively into new products, quality of production, and training. For example, Corning's Total Quality program cut irregularities on a new coating process in fiber optics from 800 parts-per-million in 1986 to none in 1988. By 1991, workers spent five percent of their time in paid training. While many U.S. firms floundered due to Asian competition in the late 1980s and early 1990s, Corning was able to transform itself into one of the world's leading technology companies, while successfully maintaining its strength in manufacturing.

Obstacles and Changes: Mid- to Late 1990s

While operating as a leading technology firm and eventually the top manufacturer of fiber optic cable, Corning was forced overcome many obstacles during the 1990s. In 1992, subsidiary Dow Corning stopped manufacture of its silicon breast implants after controversy erupted over the possible dangers of this product. Hundreds of women filed suit against the firm, claiming Dow Corning hid health risks associated with the breast implants. Corning's earnings were negatively effected by the ordeal and the subsidiary eventually declared Chapter 11 bankruptcy in 1995, after a highly-publicized $4.25 billion class-action lawsuit.

In 1997, Houghton retired naming Roger Ackerman his successor. John W. Loose was elected president of Corning Inc. Under new management, the firm began divesting unprofitable businesses as part of its focus on growth in new business and technology. In 1998, the firm's consumer products division was sold to Borden Inc. By this time, its clinical lab-testing unit had been spun off and over half of the firm's other businesses were scheduled to be divested or sold, signaling Corning's commitment to its communications, environmental, and advanced materials business segments.

During this new focus however, the Asian economy began to falter. The firm supplied fiber optic cable to much of the region and when the crisis put a halt on many Asian telecom ventures, Corning's earnings felt the crunch. In fact, earnings dropped by 44 percent in the first half of 1998 as the firm was forced to lower its fiber prices. Company sales remained flat for the year.

The downturn of Corning's earnings did not last long, however, and Ackerman continued to focus on new technologies. According to a 1999 Business Week article, "Ackerman began building up other businesses that supplied the almost boundless demand for broadband telecommunications. His goal was to move Corning beyond fiber, by making it a major supplier of photonic components that increase the amount of information a single strand of fiber can carry." The article also stated that Ackerman "spotted double digit growth opportunities in a number of Corning's high-tech niche businesses, from the ultra-thin glass used in liquid-crystal displays (LCDs) to the high-purity fused silica that helps etch computer chips."

In 1999, earnings increased by 18 percent. During the year, the firm acquired several firms to strengthen its position in the optical communications market. BICC plc's telecommunications cable businesses were purchased as part of Corning's international efforts. The company also acquired Oak Industries and Siemens AG's global optical cable and hardware businesses.

Corning entered the new millennium on solid ground. The telecommunications, LCD, and advanced materials markets were all experiencing strong growth due to increased demand for bandwidth, the growing number of information display products available to consumers, and tightening environmental regulations. As such, Corning secured revenue gains of 36 percent. Sales increased to $7.1 billion in 2000, a 50 percent increase over the previous year.

While its fiber business continued to thrive, Corning once again faced obstacles in 2001. A slowing economy and a decline in demand for optical components forced the firm to cut 5,900 jobs. It also closed three plants related to its Photonic Technologies division. Corning management however, remained optimistic about future growth. The company's 150-year history of overcoming hardships, remaining on the cutting edge of technology, and strong focus on research and development left both Ackerman and Loose confident that the firm would be able to tackle market downturns.

Principal Subsidiaries: Corning Asahi Video Products Co. (51%); Corning Cable Systems LLC; Corning Cable Systems GMBH & Co. KG (Germany); Corning GMBH (Germany); Corning Japan K.K.; Corning Netoptix Inc.; Corning Noble Park Pty. Ltd. (Australia); Corning Oak Holdings Inc.; Corning Optical Fiber (50%; U.K.); Corning Optical Fiber GMBH & Co. KG (Germany); Corning Precision Lens Inc.; Corning S.A. (France); Intellisense Corp.; Optical Technologies Italia S.P.A. (Italy).

Principal Operating Units: Telecommunications; Advanced Materials; Information Display.

Principal Competitors: Alcatel; Lucent Technologies Inc.; Pirelli S.p.A.

Chronology

• Key Dates:
• 1851: Amory Houghton purchases an interest in Bay State Glass Co.
• 1864: Houghton and his sons buy the Brooklyn Flint Glass Co.
• 1868: The glass company is renamed Corning Flint Glass Co.
• 1875: Corning Glass Works in incorporated.
• 1880: Thomas Edison asks Corning to make bulbs for his electric lights.
• 1908: Corning establishes a research laboratory.
• 1918: Steuben Glass becomes part of Corning.
• 1938: Owens-Corning Fiberglass is created as a joint venture.
• 1943: Dow Corning begins operation.
• 1953: Corning introduces color television tubes.
• 1958: Corning Ware cookware is marketed.
• 1972: Hurricane Agnes causes severe flooding, costing the firm $20 million.
• 1976: Corning files suit against ITT Corp. and the U.S. government for patent infringements.
• 1987: More than half of the firm's profits stem from joint venture operations.
• 1989: Company changes its name to Corning Inc.
• 1992: Subsidiary Dow Corning stops manufacturing silicon breast implants amidst rising controversy over ruptured silicon-gel implants.
• 1995: Dow Corning declares Chapter 11 bankruptcy.
• 1997: Corning announces plans to sell its consumer products division.
• 1998: Earnings fall due to the Asian economic crisis.
• 2001: Corning operates as the number one producer of fiber optic cable; the firm celebrates its 150th anniversary.