FilmTec goes its own way

A year ago, Teri Peters was sweating her seventh month of unemployment after being laid off from a job screening tenants for investment property owners.

Today, the single mom is again hard at work and about to celebrate her one-year anniversary at FilmTec Corp., a high-tech water-filter maker in Edina. Sporting a pink hard hat, she drives a forklift to and fro, spending part of last week hoisting a new $80,000 electrical control box up to workers on the second-floor landing of a newly expanded plant.

FilmTec is bucking the down trend in U.S. manufacturing. Thanks to the booming water-technology business, the company is adding staff, expanding its plant and investing millions in new equipment. In contrast, hundreds of U.S. manufacturers are laying off workers as they struggle with global competition and rising material costs. In Minnesota, manufacturing employment fell by 4,800 jobs last year.

But at FilmTec, "It's kind of like it's boomtown," said business operations director Harry Engelhardt Jr.

Hidden in the back roads of an Edina office park, FilmTec is quietly growing by snagging the newly unemployed from Ford, ConAgra, Medtronic, 3M and Northwest Airlines, to name a few.

"Their loss is helpful to us," Engelhardt said. "We are adding jobs to the good ol' United States, which I am proud of. ... We have discussed moving, but this is the home of FilmTec. This is where it started, and we have chosen to keep it here."

Founded by Minnesota entrepreneurs Roy Larson and Gene Erickson in 1977 and sold to Dow Chemical for $65 million in 1985, FilmTec had 420 workers last year. It has 500 today, and expects to have about 560 by December.

FilmTec generated about $400 million in revenue last year.

Officials expect that to double by 2015, spokeswoman Karen Leinberger said.

FilmTec's dynamic growth, which includes a $100 million addition in 2006 and a second addition in the works, is thanks to the booming demand for water-filtration equipment, Engelhardt said.

The shortage of potable water around the world is boosting global sales. FilmTec has desalination customers in Israel, India, Australia and China, and also provides filters for the portable water-filtration systems used by the U.S. military in disaster areas such as Biloxi, Miss., after Hurricane Katrina in 2005.

FilmTec's synthetic membrane filters are sold to U.S. municipalities, water-treatment plants, industrial and pharmaceutical firms, food processing operations and to car washes promising "spot-free" rinses. They also are used by dairies and juice concentrators to extract liquids from cheese and oranges. Smaller cartridges are sold to filtration companies catering to the U.S. residential market.

FilmTec is growing along with other water technology kings such as Pentair, 3M's Cuno, Koch Membrane Systems, Hydronautics and General Electric, which owns reverse-osmosis expert Ionics and Minnetonka-based Osmonics, which GE bought in 2003.

Among its peers, FilmTec holds its own, Adams Harkness research analyst John Quealy said.

"From Dow's perspective, FilmTec is still a fairly minor piece of their business, given the size of the conglomerate [$54 billion in annual sales]. But once you get into the water world, they are a big competitor, a big player," he said.

With Dow's distribution might and FilmTec's reputation for quality, "we are seeing customers and investors really migrate toward larger businesses like this, as people focus on water use. The concept of water conservation and cleanliness has really caught on. And customers don't want to risk companies with unproven technology," Quealy added.

Engelhardt admits to operating in near obscurity, despite being in a market "in the $2 billion range."

"Most people don't know we are in Minnesota. Heck, half the people in Edina don't know we are here," said Engelhardt, who transferred here from Dow Water Solutions in Texas last year.

That obscurity is starting to fade, though. In 2006, Dow Chemical made the plant the new headquarters for Dow Water Solutions, which has the 500 workers in Edina and 500 more around the world.

Eric Dahlstrom, the Eagan Companies electrician who helped Peters hoist the massive electrical box that will control a new boiler, is one of 150 contractors assigned to the FilmTec plant.

"I feel very fortunate to be working here. I have a lot of friends out of work," Dahlstrom said, noting that 700 electricians from his union scramble daily to find work as a result of the housing slump.

"I've been here since we built the plant, and I've seen nothing but expansion," Dahlstrom said, looking around FilmTec's sprawling plant as robots counted and stacked scores of cloth-like mesh "membranes" into piles, rolled them into tight bolts, capped the ends and wrapped them in a fiberglass cast for strength.

The result is a highly engineered reverse-osmosis water filter, or "membrane," that can selectively remove sea salt, arsenic, ammonia, iron, manganese and scores of other trace minerals and chemicals from water.

The technology is a step up from the traditional crushed-limestone or sand filter systems that cities have relied on for decades, said Hutchinson water superintendent Dick Nagy, who oversees that city's new $14 million water treatment plant. "The [traditional] softening plants will become a dinosaur. You won't see too many of them built anymore because of the cost," Nagy said. With reverse-osmosis membrane systems, cost "is coming down and everything is able to have a smaller footprint. And you get so much more removal from a membrane system."

In Hutchinson, FilmTec's filters easily beat out seven other firms, said Scott Young, the water technology consultant who tested and ultimately chose the equipment for the city.

"We looked at seven other products that had the potential to do the job, but FilmTec was just so superior at eliminating the ammonia in Hutchinson's water," he said.

Hutchinson bought its reverse-osmosis system from General Electric's Osmonics in Minnetonka and filled it with 630 of the FilmTec membrane filters.

"We have $300,000 invested in those membranes," which last five to seven years, Nagy said.

It's worth it, he said, noting that last year the plant pumped 800 million gallons of water.

"When you run water through this membrane system it's almost 100 percent pure H²O," Nagy said. "It's some of the purest water you can produce."

Dee DePass • 612-673-7725