IPG Photonics Corporation

It only took 10 years to transform IPG Photonics Corporation (IPG) from a small laser laboratory with less than 60 employees into the world leader in fiber laser development and production. IPG now employs over 3,000 people at 18 facilities worldwide, spanning Germany, Russia, Italy, Japan, China, Brazil and South Korea. IPG’s Oxford, Mass., facility currently employs 675 engineers and technicians. The company’s customers include Boeing, Northrop Grumman, Raytheon, Ford, General Motors, GE, Chrysler, Toyota, Nissan, BMW, Gillette, BAE, MIT, Caltech, and many other leading manufacturers and research entities.

Brilliant scientist, shrewd businessman and real visionary Dr. V. Gapontsev founded the company. Dr. Gapontsev was presented numerous awards in the U.S. and internationally. He received the Ernst & Young Entrepreneur of the Year Award for Industrial Products and Services in New England in addition to the Arthur L. Schawlow Award by the Laser Institute of America. Dr. Gapontsev was acknowledged by the United Nations as one of the 50 scientists in the world to make the biggest contribution in the development of the laser and laser technology.

Dr. Gapontsev was quick to invest all of the company’s efforts and resources in development and production of middle- and high-power lasers in the company’s U.S. and German manufacturing locations when the largest segment of IPG’s productions, the IT bubble, burst in 2001. Dr. Gapontsev effectively consolidated the production of all the company’s major components among its own facilities. The move was considered highly risky at the time; IPG forged ahead, however, confident that a vertical supply chain would lead to shorter and cheaper production times and greater control over every aspect of its operations. Outsourced production presented an opportunity for confidential product development and production information to land in the hands of competitors.

IPG has been able to rebound strongly in the years since; the IPG team worldwide takes pride in always looking for ways to increase its internal efficiencies and keep growing.

Investing Internally

The company has been responding to a surge in worldwide demand for medium- and high-power fiber optic lasers and laser processing systems by investing in the expansion of all of its manufacturing plants. IPG manufactures all of its products in-house from its main production facilities in the U.S., Germany, Russia and Italy, and it distributes through a network of sales and marketing offices in the aforementioned countries, as well as in China, Japan, Korea, Brazil, Mexico, India and the United Kingdom.

True to its form, IPG internalized all of its construction management and facility maintenance initiative with the help of Anatoli Gorski, construction and purchasing manager for IPG. “IPG brought me on in early 2006 to build a clean room at one of its manufacturing facilities, and because of the approach I use we were able to reduce IPG’s cost for construction by almost 40 percent,” says Gorski. “So we continue to build.”

A native of Russia, Gorski joined the construction industry as a mechanical engineer and spent his earliest years in cold storage construction. This eventually led him to clean room construction and a position with IPG, which ultimately cut out all of its construction middlemen. Gorski now is in charge of all IPG’s construction activities throughout the world.

Like his employer, Gorski has a knack for finding simple, straightforward solutions to a myriad of construction challenges. “Material costs these days have been fluctuating a lot, and if we see prices going up, we just value-engineer our design to bring costs under control,” says Gorski.

IPG has put its internal talent to good use. The company hired Richard Senecal, an experienced, versatile, industrial architect. Senecal works with engineers, vendors and contractors on the front end of each construction project. IPG’s addition has allowed Gorski and the construction team to take over.

“We design, engineer and manage all of our projects now and we purchase everything directly down to the last nail,” says Gorski. “All this allows us to keep the cost of construction down while achieving the high quality of construction.”

Delightfully Different

To keep costs and quality in check, Gorski looks for subcontractors with extensive, recent and related work experience in addition to glowing references from project owners.

Over the years he has been able to accumulate a small network of IPG-level contractors. However, the recent economic downturn has put a damper on some of those working relationships.

“It has been challenging to find the right skilled professionals to work with, as some of our contacts have scaled back their own operations so dramatically that they can’t perform the way they used to, and even though you might expect contractors to jump at the opportunity to build anything these days and deliver the best possible work, we have had to double our efforts to keep progress on schedule,” expands Gorski.

At the moment IPG is expanding four facilities at its world headquarters in Massachusetts to the tune of $18.1 million. The anchor of the newly expanded campus will be what Gorski refers to as Building 6, a three-story building totaling over 90,000 square feet, with a 35,000-square foot assembly and components packaging area on the first floor. The remaining two floors will house a number of offices and clean room laboratories. The building will be outfitted with a cogeneration system to turn natural gas into electricity for the facility and use the heat generated to heat water, which Gorski says will be the campus’ second cogeneration system to date.

The first floor is scheduled to open for partial occupation by late summer 2012, which Gorski estimates will double IPG’s on-site assembly and packaging capacity. Crews will complete construction on the remaining two floors and cogeneration system into spring 2013.

Simultaneously, IPG is working on a 17,000-square foot building for laser-integrated systems. IPG is also working on a 18,000-square foot metal shop, which the company will outfit with CNC machines. The metal shop will allow IPG to produce almost of its metal parts and components in-house.

Meanwhile, the company is also constructing a smaller 3,500-square foot facility where the company can produce its own printed circuit boards. There will also be a 6,000-square foot new shipping and stock room facility that should be finished by the end of 2012.

Standing Strong

From the very first day Gorski and the IPG team broke ground on the expansion project, the team has been racing to complete work as fast as possible. The company has not only maintained all of its existing employees through the recession, but it hired 130 employees between May 2011 and January 2012, and expects to hire an additional 175. “I barely have a place for my own engineers to work,” laughs Gorski.

In fact, the project is so critical to the town of Oxford that the local legislature moved to put $2.2 million in grants toward expanding sewer connections and $1.75 million in tax credits to facilitate IPG’s expansion.

The company is set for growth domestically and worldwide, but Gorski still keeps the same metrics to measure his success. “If we can control our costs per square foot and still build at the IPG level of quality, then I’ve done my job,” he says. Along the way, the IPG Photonics Corporation team will prove that the nation’s manufacturing prowess can not only be leveraged competitively, but also be a leader in the global market.