Company strives for quiet success

MAKING WAVES

April 20, 1992|By Ted Shelsby | Ted Shelsby,Staff Writer

Jack Conley slips behind the wheel of a shiny silver gray Chevy Lumina van, starts the engine and drives down the road to a new chapter in automotive history.

The van driven by Mr. Conley, an electronics technician with Noise Cancellation Technologies Inc., looks like thousands of others that have rolled off the assembly line. But it's like no other in the world.

What sets this vehicle apart? Its factory-installed muffler has been replaced by a metal box filled with the kind of electronic equipment you're more likely to find at a Radio Shack than a Hi-Gear auto parts outlet.

By eliminating back pressure on the engine, the electronic muffler offers as much as a 6 percent boost in fuel savings while putting more zip in the car when you stomp on the gas pedal. It's expected to show up on new cars in the 1996 model year.

That's just one of the potential applications of noise and vibration control technology developed by Noise Cancellation Technologies, a young Stamford, Conn.-based company that has its production shop off West Nursery Road in Linthicum.

It can quiet the electric fan in the hood above the kitchen gas range, or blot out the roar of a jetliner as it flies over an office building near the airport. It can eliminate the roar of highway traffic in the cab of a tractor-trailer, reduce noise in a factory, or quiet the passenger compartment of an airplane.

Noise Cancellation Chairman and Chief Executive John J. McCloy II wants to do all that -- and more.

And by aligning with nearly a dozen other companies around the world, he has stretched his company's reach dramatically.

His company is still tiny -- it posted sales of $1.1 million last year and has 86 employees, about 70 of them in Linthicum. But cooperative agreements have allowed it to boost its credibility and market position, while moving rapidly toward turning its technology into products.

Noise Cancellation's first big move came in 1989, in a joint venture to develop the electronic muffler with Walker Manufacturing Co., the Racine, Wis., unit of Tenneco Inc. that identifies itself as the world's largest producer of exhaust systems for the new-car market.

More recently, it has teamed with Netherlands-based Philips Consumer Electronics, a $27 billion-a-year company, to reduce the noise and vibration on a variety of industrial and commercial products.

Such deals have caught Wall Street's eye.

Although Noise Cancellation has yet to post an annual profit, its stock, which was selling for a little as 38 cents a share early last year, closed Thursday at $5.06 in Over-the-Counter trading.

The concept is fairly simple, officials say, describing the so-called "black box" technology that has been around for more than 50 years.

It works like this: Noise Cancellation's electronic equipment can read a noise such as the exhaust of a car, measure it and produce a mirror-image of the sound waves. When this "opposite" sound, which sounds the same to the human ear, is directed at the original noise, the two magically cancel each other.

This "magic" already is making life pleasant for the folks living near CSX Transportation Inc.'s bulk cargo rail terminal at Locust Point. Three or four times a day, when crews at the terminal crank up the big vacuum machines used to unload rail cars, the neighborhood reverberates with a roar like the sound of a jet plane taking off.

Last year, CSX began installing Noise Cancellation's mufflers on the giant vacuums. CSX estimates that the system eliminates about 80 percent of the noise while boosting the vacuums' efficiency about 20 percent, using less fuel and unloading cars faster.

The technology's potential seems limitless. "We expect the development of noise and vibration control products to be among the most powerful growth stories of the decade with annual revenue potential exceeding $30 billion in 10 to 15 years," Gary Glaser, an analyst with New York-based Gerard Klauer Mattison & Co. Inc., said in a recent research report on Noise Cancellation.

A $30 billion market. The thought seems flabbergasting to Mr. McCloy, who remembers those days back in 1987 when he was approaching friends, neighbors and family members on bended

knee, peddling Noise Cancellation stock at 20 cents a share.

Mr. McCloy, 54, had a better understanding of stock than circuit breakers when he joined the company in 1986. He came from the world of finance.

For 20 years he served in managerial jobs with Brown Brothers Harriman & Co., a Wall Street investment banking company.

His stock-selling days are pretty much behind him now. In recent years Mr. McCloy's efforts have been aimed at positioning Noise Cancellation to grab a hefty share of the noise and vibration control market.

He says, "Our fundamental philosophy was to say: 'It is better to have a smaller piece,' and in the Walker case it's a 50 percent piece, 'of a very large business, vs. 100 percent of what could be a very small business.' "

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