By Candace Stuart
Small Times Senior Writer

Aug. 17, 2001 – It’s here. It’s now. And it’s nano.

Technology pundits predict nanotechnology won’t find commercial applications for at least a decade, and more likely two or three. But one area of nanotechnology is already having a modest but growing impact on industry.

Companies that develop and make nanopowders, nanoparticles and other nanoscale materials are finding niches in today’s business world. In some cases, their molecular-size wares give manufacturers a competitive advantage. In others, their products help clients reduce waste or protect people or the environment.

Like many new ventures, they face risks as well as advantages by being among the first.

“In the commodities market, if you can give a customer even a modest edge, that may be significant,” said Don Freed, vice president of business development for Nanophase Technologies Corp. of Romeoville, Ill. The company was founded in 1989 and went public in 1997, making it one of the granddaddies of nanotech. Its nanocrystalline materials can be found in everyday products such as sunscreens and catalytic converters.

More than 100 companies worldwide are developing or producing nanomaterials, according to industry reviews published by Business Communications Co. Inc. BCC calculated in a review released Thursday that the world market for inorganic nanoparticles used for biomedical, pharmaceutical and cosmetic applications was $97 million in 2000 and could grow to $144.8 million by 2005. In an earlier report, BCC found inorganic nanomaterials used in electronic, magnetic and optoelectronic applications was $333 million in 2000 and could reach $667 million by 2005.

Those figures apply specifically to applications that have emerged in the past two decades, said Mindy Rittner, a senior industry analyst with BCC and author of the reports.

Industrial nanomaterials have existed for decades, Rittner pointed out. Carbon black, a fine powder used in industry as a pigment or a filler, technically qualifies as a nanocrystalline material. But new applications are emerging as manufacturers using fine powders are seeing the need to incorporate even smaller particles in their manufacturing process, she said.

Like many nanotech start-ups, Nanophase traces its roots to a research institution, not industry. Richard Siegel launched the company in 1989 based on his discoveries while at Argonne National Laboratory in suburban Chicago. The company now holds 26 patents on several production processes that create uniform nanocrystals. It posted $2.1 million in revenues for the first six months of 2001, up 23 percent from the same period for 2000.

But it has yet to make a profit. The company lost more than $31 million between its inception and June 30, according to documents filed with the Securities Exchange Commission. Its stock, which sold for $8 a share when it went public in late 1997, has been as high as $17.50 in the past 12 months to as low as $5.25. It closed at $6.50 Thursday on the Nasdaq stock exchange.

Some of that may be the price of being an innovator. “Nanophase is very smart, but they have struggled a lot,” Rittner said.

Nanophase is successfully bringing costs down at its facilities in Romeoville and nearby Burr Ridge, Freed said. “We keep wringing cost out of the system while improving yield,” he said.

Rittner praised Nanophase for its leadership and business acumen. The company has moved from research and development to true applications, developing partnerships with BASF and other companies.

BASF incorporates Nanophase’s nanomaterials into sunscreens and cosmetics. Nanophase also is working with an automotive supplier, which uses a nanomaterial on catalytic converters, and a flooring company, which adds nanomaterials to its wear-resistant linoleum.

Being first has its pluses, she said. “There is the benefit of name recognition. If a company is interested in nanotechnology but doesn’t know anything about it, then they may think of Nanophase.”

The nanomaterials industry faces special obstacles, Freed said. Suppliers need to educate potential clients about the technology as well as its benefits. Nanophase works closely with its customers, finding ways to incorporate nanomaterial into their existing systems and machinery.

“We don’t send them a bag of material and call six months later,” Freed said. “We work together with the customer, teaching them how to use the material.”

Nanomaterials tend to be more expensive to produce than traditional materials, so potential clients must view cost relative to other factors — a competitive edge, fulfillment of a federal mandate or greater efficiency, Freed said. “Once we translate the benefit, then cost becomes a discussion but not an issue,” he said.

Nanophase favors working in established corporate markets rather than emerging ones, Freed said. That leaves the door open for start-up companies such as Nanoscale Materials Inc. of Manhattan, Kan., a private company founded in 1995.

Nanoscale Materials develops and is trying to commercialize what it calls reactive nanoparticles, or nanoscale metal oxides. The company, a spin-off from Kansas State University, wants to market decontamination products to the military and civilian markets. It has several projects in development and is scheduled to begin marketing in June or July, according to Shawn Decker, Nanoscale Materials’ director of new business development.

Metal oxides reduced to the nanoscale are more prone to react with other chemicals, Decker said. Nanoscale Materials exploits the trait to design nanomaterials that will react with — and help render harmless — toxins and dangerous chemicals used in warfare. The company has received funding from the military for its research, and is developing products potentially for decontamination kits and a topical ointment.

“We believe we can carry this to the commercial world,” Decker said. He envisions marketing their reactive nanoparticles to companies that deal with hazardous materials and spills, and any civic or governmental agency charged with protecting against terrorist acts.

Decker envisions his company taking a different path from Nanophase, which he deems a rival, but at this point a friendly rival. “I lean toward new markets,” Decker said, “more enabling than supplanting.”

Rittner, whose third and final report on the nanoparticle industry is scheduled for release this fall, said finding the proper markets is one of the biggest challenges that nanomaterial companies face. “The truth is that for much of nanotechnology, this is a product in search of a market,” she said. “They need to produce within a reasonable time period a reasonable product with the right properties, that then when it is scaled up isn’t too expensive.”


Candace Stuart at [email protected] or call 734-528-6290.


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