A Remembrance of Ed Swartz, Founder of Static Control Components

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by Charles Brewer, President, Actionable Intelligence

by Charles Brewer, President, Actionable Intelligence

On November 4, Ed Swartz, founder and longtime leader of Static Control Components, passed away after battling cancer. Born in December 1935, he was 77 years old at the time of his death and is survived by his wife, Barbara; daughter, Karen; sons, Michael and William; and nine grandchildren.

In addition to his immediate family, Mr. Swartz leaves behind one of the most well-known companies in the remanufacturing industry. Static Control was launched in the Swartz family basement in 1986, according to a statement from the Sanford, NC-based company announcing Mr. Swartz’s  death. Several years after the lucrative sale of his first business, the metal alloying firm Lee Aluminum, Mr. Swartz came out of retirement to start Static Control. Initially, the firm marketed packaging to protect sensitive components from static electricity and later moved into producing electronic instruments.

According to a post from the Triangle Business Journal, which is based in nearby Raleigh, NC, Static Control entered the remanufacturing industry in 1989 and by 2004 it had over $300 million in annual revenue. At that time, the company employed more than 1,200 people in Sanford, making it the second-largest employer in central North Carolina’s Lee County. Although the number of employees has since dropped to about 1,000, today the company is the largest private employer in the county.

Mr. Swartz, a 1957 graduate of Georgia Tech, understood the value of investing heavily in research and development (R&D). Much of Static Control’s success came from the high-quality products these investments yielded. When I started following the industry for Lyra Research’s Hard Copy Supplies Journal newsletter in the late 1990s, Static Control was already the leading supplier of toner, drums, and other components to U.S. remanufacturers, and the company was going global. My former boss, Jim Forrest, often commented how Static Control was the de facto R&D group for the remanufacturing industry. The firm has also provided the industry with technical know-how and expertise; customers knew that they could turn to Static Control when establishing new production lines or if they needed other assistance.

With its former supplier Mitsubishi Kagaku Imaging Corporation (MKIC), a subsidiary of Mitsubishi Chemical, Static Control brought to market the Odyssey product line, which offered remanufacturers matched toners and drums and other components that delivered superior performance compared to other products available on the marketplace at the time. Static Control and MKIC raised the bar on performance, which competitors then had to clear. The result was a new level of quality for remanufactured cartridges, which allowed the industry to shrug off the legacy of low-quality products it had become known for during the old drill-and-fill days of the 1990s.

By 2006, Static Control was the industry’s 800-pound gorilla. Various estimates indicated that the firm’s market share was well north of 50 percent. At that time, Lionel Brown, the COO of archrival Future Graphics, reckoned that his firm was number two, with about 17 percent market share and $70 million in annual revenue. No other remanufacturer supplier, in his estimation, held more than 5 percent of the market.

I found Mr. Brown’s comments when researching what is probably Static Control’s second most famous legal battle, which came during its messy breakup with MKIC. At the time, Static Control was selling about 10 million OPC drums annually and who knows how many tons of toner. Without rehashing all the gory details, many in the industry thought that Static Control had shot itself in the foot by divorcing MKIC and that its days were numbered. The Japanese firm, which also has had a great reputation for quality, went rushing into the arms of Future Graphics and later acquired it. Static Control was left to allay industry concerns and ensure customers that its product quality would not suffer as the firm and MKIC went their separate ways.

I suspect that Static Control lost share after it parted company with MKIC, but in the end the firm prevailed as a major player in the industry thanks largely to its continued R&D investments. I met with Mr. Swartz a couple of years after the breakup, and he assured me that his company was in great shape as it focused its R&D efforts on bringing to market chips and other higher-margin products like high-performance color toners. Recently, I spoke with Static Control representatives  who said their company is as big as ever in terms of revenue and unit shipment. Today, Static Control is among the world’s leading providers of chips for remanufacturers. Just weeks before Mr. Swartz passed away, Hewlett-Packard recognized the firm as being the lone producer of chips that do not violate its intellectual property.  

Of course, any remembrance of Ed Swartz would not be complete without mentioning Static Control’s epic legal battle with Lexmark, which began at the end of 2002. While a thorough review of the case would be too long for an obituary, on the occasion of Mr. Swartz’s passing, it is more than appropriate to reflect on how the suit has shaped the remanufacturing industry in the United States and perhaps worldwide.

With its so-called Prebate program, “killer chips,” and claims that Static Control violated the Digital Millennium Copyright Act (DMCA), Lexmark appeared to be out to shut the remanufacturing industry down, or at the very least disrupt it and severely restrict the industry’s growth. At the cost of tens of millions of dollars, Mr. Swartz and Static Control’s team of lawyers and engineers stopped all that, although the case has yet to be fully settled to this day. It is safe to say that had Lexmark prevailed in its bid to limit the availability of third-party supplies for its machines, other OEMs would have followed suit, and the remanufacturing industry would be vastly different than it is today.

To say that Mr. Swartz was a fierce competitor would be a gross understatement. Just as he recognized the need to invest in R&D, Mr. Swartz understood that such investments had to be protected. His company’s legal activities were not limited to MKIC and Lexmark. He was as vigorous in the defense of Static Control’s patents and other intellectual property as any OEM. Moreover, Mr. Swartz knew that his products sat at the high end of the performance and quality scale and all that came at a price. A consummate entrepreneur, Mr. Swartz made no bones about receiving a return on his investment, and Static Control customers are not inclined to look to the firm for bargains.

I did not know Ed Swartz well. We met several times in Sanford, and we talked a little more frequently on the phone. I doubt I spoke with him more than a couple of dozen times. Regardless, I do have some fond memories that make me smile. He was devoted to HP because the firm articulated a corporate policy recognizing the remanufacturing industry’s rights. In various advertisements, Mr. Swartz would remind folks of HP’s position by quoting the OEM’s executives. It always made me chuckle when I’d see a leading figure of the aftermarket expressing his fondness for an OEM and quoting the OEM’s executives. Mr. Swartz did not travel to many industry events, but I remember running into him at a trade event in Miami at the height of the Lexmark battle. He was wearing a Hewlett-Packard baseball cap!

In addition to being a witty guy, it was clear that North Carolina and Lee County were important to Mr. Swartz. In the articles and interviews I read to prepare this piece, I noted that Mr. Swartz would often say how proud Static Control was to provide good jobs to so many people in Lee County and around the world. He told me once that he would never move his manufacturing out of Lee County. Through investment in automation and by achieving manufacturing efficiencies, Mr. Swartz maintained that Static Control could profitably manufacture and market virtually any product right where it was.

Mr. Swartz did more than just talk a good game. He executed. I’m sure all those who benefited from his hard work, and there are many, will miss him. Rest in peace, Ed.

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