BY ROBERT P. MADER
OF CONTRACTOR'S STAFF
UNION CITY, CALIF. —Mechanical piping Giant Kinetics Systems has named J. Gordon Beittenmiller its chief executive officer and a member of its board of directors. Before joining Kinetics in April, Beittenmiller had been executive vice president and chief financial officer of Comfort Systems USA. Beittenmiller replaces former CEO Kurt Gilson, who has resigned, but who has signed a contract to consult with Kinetics virtually full time.
Kinetics, a specialist in the semiconductor and biopharmaceutical piping industry, was ranked as the nation's fifth largest mechanical contractor with revenues of $452 million in CONTRACTOR's Book of Giants (May, pg. 28).
Beittenmiller joined Kinetics earlier this year as president and chief financial officer after working more than eight years at Comfort Systems, where he was one of the founding members. Kinetics is now searching for a replacement for Beittenmiller as CFO.
"The board of directors and all of Kinetics thank Kurt for the significant contributions he has made during his 17 years with the company," Beittenmiller said. "During his tenure, Kurt was instrumental in developing the company's clean process offerings, including pioneering work in our design/build biopharmaceutical capabilities. He also played a key role managing Kinetics through significant organizational and operating challenges over recent years. We are pleased that Kurt has agreed to work with the company in a significant consulting role going forward and look forward to continuing to benefit from his wide experience in our markets."
The shakeup at Kinetics was prompted by its new majority stockholder, Ares Management. In mid-January, Kinetics and Ares announced that Ares had converted its debt and notes in Kinetics into common stock as part of a recapitalization. In late 2004, Kinetics also sold off its Celerity manufacturing operation to Texas Pacific Group.
For the past several years Kinetics has consisted of construction operations in highpurity piping and process systems, and a manufacturing operation, Celerity, which produces flow controllers and other slurry processors that go inside semiconductor tools, Beittenmiller told CONTRACTOR. While Celerity is in the same sector as the process piping construction activity, it's a different activity with different customers and it had monopolized much of management's attention, he said.
As a result of the Kinetics recapitalization and Celerity asset sale, Kinetics' outstanding indebtedness has been reduced from $385 million to $40 million. Ares is now the company's controlling shareholder and MidOcean Capital Partners, Gryphon Investors and Behrman Capital retain a significant equity ownership in Kinetic Systems.
Celerity took a number of top managers with it, Beittenmiller said, including former CEO David Shimmon, and Ares decided to find new management for the construction operation.
Gilson is a construction whiz with strengths in project management and engineering, Beittenmiller said, and that's what he will focus on in his consulting work.
Tony Ressler, managing partner of Ares, said: "We thank Kurt Gilson for his substantial service to Kinetics and look forward to his ongoing contributions. We are pleased to have someone of Gordie Beittenmiller's capabilities and experience in the specialty engineering and facilities sector take a broader leadership role for the company. As we look ahead, we remain very optimistic about the outlook for the semiconductor and biopharmaceutical sectors, and the tremendous value Kinetics can add to critical process and facilities needs in these key industries."
Robert Pragada, previously East and Europe Region president, has been named the company's chief operating officer.
"As we go forward, given Kinetics' strength in high-purity markets and the company's reputation, we now can focus fully on high-purity construction around the world," Beittenmiller said.
And Beittenmiller means around the world with a constant travel schedule for him.
"I've seen estimates that a substantial majority of new chip fabs [ semiconductor manufacturing] over the next five years will be in Asia," he said. "We have a presence in Asia that I would characterize as a pretty good beachhead, but we have to get off the beach and move inland."
Some of the customers are familiar, such as Intel, while others are purely Asian companies. Japan and South Korea are difficult to break into, but Kinetics has a presence in Taiwan and Singapore. Biopharmaceuticals are mostly U.S.-based, but Kinetics is trying to book more of that business in Europe and Asia. Kinetics has 32 offices and more than 3.000 employees, located in high-technology areas where semiconductor fabrication facilities and biopharmaceutical manufacturing facilities are built.