Gerber Scientific, Inc. Business Information, Profile, and History

History of Gerber Scientific, Inc.

Gerber Scientific, Inc. is a leading producer of machinery for use in manufacturing. The company's four main subsidiaries make devices that are used to produce apparel, graphic designs and printing, electronics, and optical devices, among other functions. Gerber was founded by one man, who came up with an innovative device while still in college. Although its product lines and areas of operation have expanded dramatically since the 1940s, the company remained committed to the spirit of inventiveness with which it was originally conceived.

Gerber was founded by H. Joseph Gerber in 1945. Gerber had emigrated to the United States from Vienna in 1940, at age 16, when he was forced to flee the Nazis. After arriving in Hartford, Connecticut, Gerber completed high school in two years. He then won a scholarship to Rensselaer Polytechnic Institute (RPI) in upstate New York, which he entered at age 19. As a junior at RPI, Gerber came up with a new kind of graphical numerical calculator, which he called a Gerber Variable Scale. This device looked like a slide rule, but used a triangular calibrated spring to make calculations.

In order to market his invention, Gerber formed the Gerber Scientific Instrument Company. While he was still in college, he turned to one of his former employers, who did a test sale of the new instrument, and then loaned Gerber $3,000 to start his own company. Gerber and his partner became equal owners of the new venture.

In 1946, Gerber graduated from RPI with a degree in aeronautical engineering. Two years later, on May 12, 1948, his fledgling enterprise was formally incorporated as the Gerber Scientific Instrument Company. The company's main product, the Gerber Variable Scale, rapidly became popular among engineers, scientists, and students. Two years after his company was founded, Gerber became the inspiration for a play entitled "Young Man in a Hurry," which was produced in New York and broadcast on television.

In its early years, Gerber Scientific was a one-product company, devoted to production and distribution of the variable scale. Over time, however, the company began to market additional engineering tools devised by Gerber. Gerber used his company as an outlet for what he called his "spirit of invention," as he told Business Week. All in all, Gerber turned out dozens of new tools designed to assist engineers in drafting and design. Among these were the Gerber GraphAnalogue, the Gerber Derivimeter, and the Gerber Equameter. These devices either converted graphs into digital information and equations, or converted equations into graphs. While they were original and clever ideas, however, the natural market for such tools was small, limited to a select group of drafting engineers and thus such innovations sometimes proved to be dead ends, financially speaking, for the company.

In 1961, Gerber Scientific sold stock to the public for the first time. Although the company had been in operation for more than 15 years, it sales had risen only to $738,000, despite the high degree of respect that Gerber had earned from his fellow engineers. In the first years after its public offering of stock, however, Gerber began to change the direction of his company. Using the expertise in basic drafting which it had long possessed, Gerber's company began to develop products with much broader uses. This new generation of Gerber inventions allowed for the automation of production processes, as well as design tasks.

The basis of these new machines was work that Gerber had initially performed on a contract for the Navy in the early 1960s. In response to this assignment, Gerber developed expertise in techniques to convert numbers to designs, and designs to numbers. In the mid-1960s, the company used this skill to develop a numerically controlled device that could automatically draw a precise engineering design on the basis of digital information. Gerber himself invented and patented this first truly digital drafting machine.

A Gerber customer, the International Business Machines Corporation, (IBM), which was trying to develop a computerized apparel design and production system, asked Gerber to convert this machine for clothing production by replacing the drafting pencil with a knife. With this change, the device could be programmed to cut fabric to a desired pattern automatically.

Although IBM later abandoned its apparel project in the face of the garment manufacturing industry's persistent refusal to automate, Gerber persisted in developing and perfecting the product, which he dubbed the "Gerbercutter." In addition, Gerber moved forward with another application of its designs-to-digits technology.

In response to a request from the RCA Company in 1964, Gerber modified its automatic drafting equipment a second time, replacing the pencil with a beam of light. This innovation allowed for the automatic production of printed circuitry, for use in electronic devices. The light produced a design on a photographic negative, which was used to make a master plate for printed circuit boards. In this way, Gerber provided for computer photoplotting, which also helped to automate manufacture of integrated circuits and better color television screens. With the technological innovation of its Gerber 400 photoplotter, Gerber dominated the printed circuit board industry in North America for the next two decades, as its device became a worldwide standard in the field.

By 1970, Gerber was also ready to introduce its first Gerbercutter. Although the machine represented a step forward in automation of the apparel industry, it was slow to win acceptance among garment manufacturers. The Gerbercutter was slow and awkward to use, and clothing makers were reluctant to invest in the new technology unless it could be guaranteed to cut costs, a difficult premise to prove. "The garment industry just was too sluggish to accept that kind of innovation," Gerber later told Business Week.

Despite weak demand, Gerber persisted in making changes to the Gerbercutter. For instance, in order to make the robotic cutting of limp fabrics more precise, Gerber invented a system of vacuum compression, which made flexible materials momentarily rigid, allowing identical cutting of a thick stack of fabric from top to bottom. Eventually, this technique made robotic cutting of pieces for luggage, shoes, furniture, and car and airplane parts possible.

Sales of the Gerbercutter remained sluggish in the early 1970s, but, by the middle of the decade, other companies had begun to introduce minicomputer systems that could be used for computerized design of apparel. In tandem with these machines, the Gerbercutter became a far more useful tool, since it could be programmed by the computerized design system. In 1976, sales of the $500,000 Gerbercutters began to grow dramatically, as large apparel makers turned to automated systems. Gerber began to receive large orders from companies such as Blue Bell, Inc., and the VF Corporation. The machine's new buyers liked its precision cutting, which led to more efficient use of fabric, and claimed that use of the Gerbercutter was able to reduce costs by five to ten percent.

In the same way that Gerber's fabric cutting device became most useful in conjunction with other machines, the company's photoplotting instruments were also most effective when linked to computer-aided design and manufacturing (CAD/CAM) systems. These systems used a minicomputer that allowed engineers to develop designs on a computer terminal, and then feed instructions to the photoplotter. In the mid-1970s, Gerber decided to enter the market for CAD/CAM systems, already dominated by half a dozen other firms, as well. In April 1978, the company introduced its first CAD/CAM product. Six months later, the Gerber Scientific Instrument Company changed its name to Gerber Scientific, Inc., to reflect the growing variety of the products that it made.

By 1979, sales of Gerber's CAD/CAM product had grown to $10 million. Sales of the Gerbercutter were also booming, as the company's backlog of orders rose to $13 million, up from $4.7 million just a year before. Overall, sales of this device had quadrupled over just three years, rising to account for one-third of the company's overall revenues. At the end of 1978, Gerber reported a 50 percent rise in its profits, as it announced an order for 14 new computerized cutting systems.

Despite these gains, Gerber's heavy outlays for research and development of new products, such as its CAD/CAM system, put a strain on the company's limited finances. In an effort to alleviate some of this pressure, the company raised funds by selling additional stock to the public in August 1979.

In order to position itself for further growth in the markets in which it competed, Gerber also undertook a restructuring of its corporate organization in April 1979. At that time, the company split its operations into three subsidiaries: Gerber Systems Technology, which produced CAD/CAM devices; the Gerber Scientific Instrument Company, which handled its traditional drafting products; and Gerber Garment Technology, which marketed the Gerbercutter and other tools for use in the apparel industry. "The banks recognize that we're structured now to grow," a Gerber executive explained to Business Week. The company ended 1979 with $45 million in sales.

Gerber's strong performance persisted in 1980. Demand for its products continued to grow, and halfway through the year, Gerber's backlog of unfilled orders had reached $35 million. Overall, the company's annual sales rose by 65 percent to $74.4 million, and earnings topped $5.8 million. In the following year, this figure rose to $8.8 million.

As it moved into the 1980s, Gerber began to expand its presence in foreign markets. In March 1981, the company formed Gerber Scientific France S.A.R.L., and in October of that year, it established Gerber Systems Technology International, Inc. This subsidiary was set up to take care of sales and customer service for the company's European clients. A month later, Gerber also founded Gerber Scientific Scandinavia, AB. Gerber held ten percent of the world market for CAD/CAM equipment by the end of 1981.

Gerber continued its international expansion in 1982, setting up a German subsidiary. Although Gerber introduced a new low-cost CAD/CAM system in 1982, called the Autograph system, which sold for under $100,000, the company's income dropped that year to $3.26 million.

In 1983, Gerber made its first acquisition of another company since the late 1960s, when it purchased Camsco, Inc., which it renamed Gerber Camsco. The company also continued to augment its international operations, founding Gerber Scientific Italy in March 1983. In May of that year, the company enhanced its capital-raising operations when it added the Gerber Venture Capital Corporation. In addition, the company undertook an effort to expand its technology into new applications, entering a joint venture to make an automated laser cutter for sheet metal.

This move was part of a major shift in one of Gerber's primary markets. Although constant innovations in its photoplotting equipment had allowed Gerber to maintain its standing as the industry leader in the printed circuit board field for nearly a quarter of a century, in the mid-1980s, the development of laser photoplotting caused a shake-up in the field. New companies and ideas arose to challenge Gerber's dominance. With the development of laser raster imaging, and the increased popularity of desktop computing, the number of potential clients for printed circuit board technology grew dramatically, and attempts were made to produce low-cost photoplotting systems, undercutting Gerber's hold on the market. In an attempt to respond to these challenges, Gerber made a strategic acquisition that brought it expertise in the new technology. The company purchased the Eocom division of American Hoechst in the spring of 1984. This company made laser imaging devices.

In the mid-1980s, Gerber also saw its dominance of the fabric-cutting field challenged. In 1986, the company filed a patent infringement suit against a French competitor, which had been founded in the early 1970s specifically to undercut Gerber's market share. The French firm modified Gerber's technology, offered its products at a lower price, and employed an aggressive sales force to seek out sales in the United States, winning 12 percent of the market. In 1994, however, Gerber finally won its long-running patent infringement suit against this company, and was awarded $5.7 million in damages.

In response to these challenges on its native ground, Gerber looked increasingly to foreign markets for further growth. After forming the Gerber Foreign Sales Corporation in December 1984, Gerber won an export license to ship its SABRE-5000 CAD/CAM system to China in late 1985. Despite this gain, the company's financial results in the mid-1980s were weak, as Gerber reported a loss of $1.364 million in 1984, and $790,000 in 1985.

Gerber added a Canadian subsidiary in March 1986, and then incorporated a Japanese arm a month later. In May 1986, GGT Canada, Limited, a subsidiary of Gerber Garment Technology, was created. That fall, Gerber formed GGT International Ptl. Ltd., to market the Gerbercutter in Australia. With these moves, the company hoped to shore up its flagging sales. Nevertheless, Gerber reduced its staff by more than one-third in late 1986.

Gerber's efforts to expand its worldwide presence in the market for apparel manufacturing equipment continued in 1987. In January of that year, the company formed GGT International (Far East) Limited, and three months later, it also established a New Zealand branch, called GGT International (NZ) Limited. In addition, Gerber launched its first mass market photoplotting device for use with a personal computer in March 1987, as the company attempted to catch up with changes in the printed circuit board industry.

At the end of 1987, Gerber also made an acquisition in the United States, purchasing the business and assets of Cambridge Robotic Systems, Inc., for $3 million. Nine months later, Gerber reorganized its foreign operations, transferring control of Gerber subsidiaries in six European countries from the parent company to Gerber Garment Technology. All of the European outposts were subsequently renamed.

At the same time, Gerber also formed GST Far East, Limited, a subsidiary of its systems technology unit. The company closed out the decade by entering the Mexican market, through the formation of GGT International de Mexico, S.A. de C.V.

At the start of the 1990s, Gerber marked its presence in another major market, when its optical division was formally incorporated as Gerber Optical, Inc., a wholly owned subsidiary of the company. In July 1990, Gerber also entered the Portuguese market.

During this time, a general recession in the economy produced a cutback in levels of factory output, and this, in turn, cut into demand for Gerber's manufacturing products. In response to these circumstances, Gerber adopted a policy of focusing on research and development to generate new products and keep sales levels high. Nevertheless, the company reported a drop in revenue in June 1992, of seven percent, to $261 million.

In mid-1992, Gerber reorganized its corporate structure yet again, combining two of its subsidiaries, the Gerber Scientific Instrument Company, and Gerber Systems Technology, Inc., into one entity, the Gerber Systems Corporation. Throughout the mid-1990s, Gerber worked to cut its costs, tighten its operations, and make the most of its assets, in an attempt to return to profitability in the changing marketplace. By 1993, those efforts had started to bear fruit, as the company once again began to report profits. Although its export operations, which contributed one-third of total revenues, remained weak, the company was able to introduce innovative new products to shore up its bottom line. In particular, Gerber rolled out new devices in its commercial graphics arm. With a long history of successful innovation behind it, Gerber appeared to be well-positioned for success in the late 1990s, despite its transitional difficulties in the previous decade. Founded in the spirit of inventiveness, the company's continued success appeared to depend on ongoing success in that endeavor.

Principal Subsidiaries: Gerber Systems Corporation; Gerber Garment Technology, Inc.; Gerber Scientific Products, Inc.; Gerber Optical, Inc.; Gerber Venture Capital Corporation; Gerber Foreign Sales Corporation.