SEMI Oral History Interview
James E. Gallagher
March 9, 2005, Acton Massachusetts
Interviewed by Craig Addison
The late Jim Gallagher's career started in the military in 1943 when the U.S. Air Force sent him to New York University to take an M.S. in Meteorology, after which he served in Italy and Germany as a staff meteorologist. In 1958, along with several colleagues including Milt Greenberg, he founded the Geophysical Corporation of America (GCA). Gallagher held a number of positions at GCA including director and senior vice president of operations in charge of the IC Systems Group. In addition to his roles at GCA, Gallagher served as president and chairman of the SEMI board of directors for two terms from 1978-1980. In 1981, he was honored by the Semiconductor Equipment Marketing Council of Japan for his contributions in bringing influence and understanding to the area of U.S.-Japan trade relations. Gallagher died on February 7, 2006 , aged 85.
JG: I grew up in western Pennsylvania in a small town of Slippery Rock during most of it. I went from second grade through college there. My father was a teacher; actually a country teacher. In fact the Gallaghers came over from Northern Ireland in 1794. My great, great, great grandfather down through to my father; every one of them was a teacher and every one was a farmer. They would teach for the six or eight months during the year and then four months they were farmers. Except my father. My father taught and then he did other things in the summer. In fact, he ran a large recreation and park in western Pennsylvania . I grew up on that park and ran the pony ring and stuff like that as a kid. So I had that kind of experience. But by the time I was ready to go to college unfortunately my father was getting severe arthritis and rheumatism. By the time I was in college or to go to college, he was using crutches and pretty soon was in a wheelchair. So although I wanted to go on in teaching, I had other plans of where to go. But we lived in Slippery Rock and I could just walk across the main street and I was on campus. And I could go there for $42 a semester registration; $15 for the activities fee per semester and then plus my books. And since I started painting with my father when I was 14 I had, through high school and when I started in college, I had started a little business of my own which I did painting. So I could afford to go there and still have money to spare, which I couldn't do otherwise because my father was on a very limited, limited pension of less than $50 a month. So I went there and got a BS degree.
JG: I got appointed to the graduate school at New York University in meteorology. And when I came out of there, of course like everybody [during the war], you get appointed a Second Lieutenant. But I was assigned very soon thereafter right overseas. I went to the 15 th Air Force in Italy . I was trained in a kind of a new technology then, and that was upper air forecasting only. I didn't do anything with weather or anything ever in that tour. I forecast with a group of five in the headquarters of the 15 th Air Force. And what we would do was come on duty at about 5:00 in the afternoon, work all night, and by 4:30 to 5:00 in the morning we had to have out to all the wings and all the groups of the 15 th Air Force the upper air forecast. Now the reason for that is they did not have either the information or the people who had been trained in specifically forecasting from 10,000 to 15,000 up to 24,000, 28,000, which is the maximum that the B17s and the B24s in those days could go.
JG: When it was time to come home I was one of the latter ones to come home. What they did was they took the meteorologists from the 7 th Air Force, the meteorologists from the 8 th Air Force, the meteorologists from the 15 th and brought us all into Bad Kissingen [ Germany ] that did not have enough points to come home. And Milt Greenberg was in the 8 th or 7 th . That's where I met him. There were something like 20-some officers in this one beautiful, big building, right across from one of the Henkel mansions. And that's where we cooled our heels for a few months until we qualified to come home. I met Milt there. I knew him in the house. Milt was up on the third floor. So was I. But Milt was probably not quite as much a party boy as I was. We had lots of parties. So I came back. I didn't know what to do. I had plans to get my doctorate. But my doctorate was going to be in administration. I wanted to be a principal of a large high school or some kind of a school system…eventually go into college somewhere. A Colonel in Europe who knew me was coming to Washington DC . And he wrote me a letter and said, “I'm going to give you a call on such and such a date.” He said, “I'd like to talk with you. Could you come down to Washington ?” So I caught the train and went down there and saw him on a Saturday morning. And he said, “I have a job for you here in Europe .” I said, “What?” “Well,” he said. “You know, the military government over here, under General Clay…” He said, “The Germans…under Hitler the German forecasters and their Meteorological Organization withdrew from any international operations. We know there's going to be a lot of international air travel now, and there's been an organization set up called the ICAO -- which is the International Civil Aviation Organization. They've standardized the way information is to be prepared. And the Germans have had no experience in that. We need you to come back and set up a school. With your teaching background, we wondered if you'd like to do that.”
JG: So I was over there for a little over two years. Came back. Once again there was a quandary. What am I going to do? During the summer I painted dad and mother's house and did some chores for some relatives and so on just to keep busy and was again about ready to go to graduate school when Milt Greenberg calls. Milt's down in Red Bank, New Jersey . And he said, “How are you?” I said, “Fine. How are you? What are you doing?” And he told me. “Look,” he said, “The reason I'm calling is…the Air Force is considering starting a research center in a place called Bedford , Massachusetts .” I said, “Where's Bedford ?” He said, “Look on a map.” But he said, “I think you ought to consider it. We're going to move up there. I'm working in an organization that's going to be key and kind of the focal point for the geophysics portion of it. There are going to be two arms of it. One is going to be electronics and one is going to be geophysics.” And he said, “I'd like to have you consider it.” So I signed up…and we had a very outstanding doctor who headed up the organization. There were then two or three labs. We grew that into about six different types of labs. We did a lot of internal R&D for the Air Force, but also had several million in contract dollars that went to universities and so on.
JG: But then eventually we moved out to Bedford from the Watertown arsenal when the buildings were put up. Milt then became director of geophysics…research director to the Air Force Cambridge Research Laboratories. And I was number two man there. Again we had director of programming and programs and operations and so on. Different titles through the times. But that's how we got together there. I guess about 1955, we thought…we all had worked up to positions where we were near the top of government ladder, so to speak, GS14, GS15, GS16s. And that was it. We said, “Why don't we start a company?” And the summer of 1957, those fellows that I showed you a picture of, we worked all summer long, every weekend, Saturday and Sunday and we prepared a business plan. We even went so far as to prepare proposals of how we were going to do this. Our technique was to start a small company, take a lot of our colleagues with their PhDs and long hair and go and get government contracts. The very thing that we were doing we wanted to get the reverse of that – get that kind of support which would then start us. And then we would work towards the industrial applications of it. So that's what we did. We went public…I don't know when that was, '61 or '62, something like that. We went over the counter, then the American Stock Exchange and then finally the New York Stock Exchange over a period of time. But we had now collateral that we could go out and talk. So one of the early acquisitions, because we had been working with the David W. Mann Company, which was just down the road, so to speak, from us because they were building precision motions and so on for work that we were doing. And that's how we got acquainted with Burt [Wheeler] and his colleagues. They were having financial troubles at that point so we came in and bought them. We bought the David W. Mann Company or traded stock so to speak and that way acquired it. And that's how we became acquainted with a fine group of really senior technicians and inventors. And we'll talk a little more about them and what they've done in this industry.
JG: But we went on a tear of acquiring. We bought Vacuum Industries, which was a manufacturer of heavy industrial vacuum equipment for titanium sintering and so on, which was used in the new blades of the jet aircraft. And the only way you could do those was to kind of wax form them, anneal them and then furnace them so that they made these precision blades that can take high temperatures, high vector forces and so on which were used in them. Then we had a lot of experiments going on in which…we didn't have satellites in those days and we didn't have too many high flying aircraft. So we were working for some government work where we needed to get to pretty good altitudes -- up to 80,000, 90,000 and sometimes 100,000 feet. And there was a company called Viron in Minneapolis that made these kinds of balloons. We saw a possibility of using those in a different way so we were able to acquire that company instead of just doing contract work with them. So we bought them. I think that was in 1962. What they did also was to build transponders and also collecting devices for information which could be camera operated. And what we were doing was putting these balloons up at 80,000, 90,000 feet, sending them across the Atlantic, across Russia -- because that was the enemy or so-called enemy in those days -- bring them down off Japan …cutting them and bringing them down and then recovering by air, not in the water. Once it came down there was a contraption developed for the aircraft that we were using that would catch them and then bring them back. And then they would analyze the cameras. What happened was we wanted to commercialize this and get something out of it. So we got into the development of all kinds of tent kind of things that were used for remote location of scientific equipment in remote areas or even all kinds of enclosures. And that was kind of a crazy thing to do but we did it. We did a lot of them.
JG: Also very soon thereafter in 1965 we acquired Precision Scientific, which was then one of the largest producers of laboratory apparatus and equipment. They built everything from chambers that are used in laboratories to mechanical vacuum pumps to just ordinary utensils that you used. Also in this area, just down the street from where we are sitting, there was a company called McPherson Instruments. They were in the area of spectroscopy. Well that certainly was up our alley. And we got very, very interested in that and bought that company because they made a whole line of spectrographs and vacuum ultraviolet instruments, which fit in well. And they were a commercial firm and we acquired it and it became part of it. Then we bought a number of other things like Markite which was a company in New York City I think, which made high precision potentiometers which we used. And we also bought another company called PaR Systems which is a company that made automatic remote handling systems. What we were trying to do in a sense was get away from just pure, technical, high tech products into run-of-the-mill kinds of things because that's where supposedly you could make money, or at least more money than we were making on some of it. Because whenever you do this other work like in some of our operations where we made just one-of-a-kind or two-of-a-kind or three-of-a-kind, you can't make any money that way. But Precision opened that up. Vacuum Industries opened that up. McPherson Instruments opened that up. Those were good acquisitions. Like any company we were kind of “bright-eyed and bushy-tailed”. We got very enamored of growth. Growth was a very important thing. So you can only grow so fast. We wanted to grow faster than fast. And you could do that with acquiring and so on.
JG: Now those were pretty much, except for the Mann Company, those were all non-semiconductor companies. Then we said, look we've got the David W. Mann company…we then had by that time Tropel which was in high precision optics. The Mann Company had used some of their equipment. We had a lot of their equipment in Mann products designed to our specs for some of the special research projects over here in the R&D arm of GCA. And then we heard of a little company out in Palo Alto or somewhere out there which was Industrial Modular Systems, which was Art Lasch' company…that had come up with and got patents on air bearing motions that could move the wafers. Well now that tied in with the Mann Company and it tied in with Tropel with the optics and here we had something there. So that was trying to get this semiconductor group together. This is how this got together. Then we bought Ionomet which was a photo resist group. It was a small company but it was making special photo resists. Then we got Ultimation which was wire bonders…manufactured wire bonders. Then we got Hampshire Engineering which was a local company that was electromechanical and computer specialists. So they fit in with all these companies in assisting them in automating their equipment or computerizing it or whatever was required. So that fit quite well. And then we got Pulse Measurements which was a company out there on the West Coast that made wafer testers. So that tied in. And then we got into development with a group in electron beam lithography. Well, all this kind of made sense to us in that we had really non-semiconductor markets to serve. And we were trying to build up a kind of a central group for the semiconductor related companies. And we were making money. We were doing quite well. For the industry that we were in, I think we were pretty high as far as the earnings per share because we had the non-semiconductor [products] where we had higher margins. At least in the early period…that reversed later.
JG: I think you mentioned; how did you market and sell? Well, that's pretty interesting. Sales and service organizations, particularly in the semiconductor industry, needed to be centralized. You had to have some kind of central location and kind of an intelligence and an appreciation of that market. And you had to be pretty market oriented for it. So we set up a sales and service organization in the United States . Service was separate from sales. But it was all managed at one level so that there was coordination and an exchange of information. In Japan we went with Sumitomo Shoji. And that was a long term relationship right up to the very, very end of GCA. In Europe Kulicke & Soffa had an organization and I don't know whether it was a matter of desire or a matter of finances or what…that's something that they know more about than I. But anyway we worked through them, we sold through them. In the early stages, our semiconductor products [sold] through Kulicke & Soffa in Europe . And that worked out very, very well. Had no problems whatsoever with that organization. We bought that organization from them when they were either wanting to get rid of it or having problems. I can't remember that part of the story. In Korea we set up an organization. And actually in Korea we got talked into setting up…sending over parts and getting an assembly setup there. That was a big mistake. That was just an absolute big mistake. And I was part of that. I was very enthused about it. But I was green behind the ears when it comes to dealing in that atmosphere. But it did work for a while. And that was in South Korea . We even went so far as to establish a sales and service organization in the USSR . But that became rather short lived because of the international situation that was developing in those earlier days and it just was not going to work. We were not able to get clearance for products that had this high technology, particularly in the semiconductor area, and particularly in the area of Vacuum Industries with their high technology equipment for those kinds of metals. So we had some failures. One of the things that young people fail to understand is the difference in cultures. And to really understand how to do business…we were being very typical of that age and of American culture, were quite certain that what we wanted done we knew how, probably better than they did. And that's just not going to work. So we learned the hard way that you have to put trust, you have to monitor but you also have to educate and be educated or you're not going to make it. You have to learn the lesson and that's pretty hard for some of us to do; to listen. Probably I'm one of them, but I learned a lot from that.
JG: GCA went along very well. We were up operating at somewhere around $160 million a year in 1984. And a relationship developed between Jim Morgan [of Applied Materials] and Milt Greenberg…I think it might have been initiated by Jim. I'm not sure. I came into the act very soon after they started discussions. Since I was going to the West Coast frequently for SEMI meetings -- I was president from '78 to '80 of SEMI --- and this is in '83 and '84, in that time period. I was still of course very active in SEMI as a director but not active in the day-to-day operations as I was before. I would meet Jim [Morgan], and I was kind of like a Jewish matchmaker, you could say, in that I would be carrying messages back and forth. Jim and I never talked on the floor. Usually I'd meet him in the parking lot or someplace else and pass the word on or something. Well that relationship started to get pretty warm. And it was…to me it was just an ideal relationship, because here you had that part of the market covered by Jim's company -- I always say AMT -- and ours by GCA and another. Now that wasn't the whole industry by any means. But it was a good chunk. Probably our combined operations in the semiconductor industry at that time, taking away some of the few other operations of GCA; add those together we probably had $100 and some million in it and they had $120 or $130… I forget the figure. There's $250 million. That was a big company in this industry at that time. Now of course we know what the industry is like and we know what AMT is doing. Well, what happened? The general concept was to have Milt as chairman of the board. I think that was his idea, [and] Jim as president. The problem was not with Jim. The problem as I saw it developing was that Milt was not able to sit back as a chairman and have everything, operations and so on, run by Jim, which was Jim's concept of what the president should do. And Jim is no dumb-head and he knew Milt and he knew that Milt was very mercurial at times. Bright. No question. Milt Greenberg was one of the brightest guys you ever saw. He could pierce through a lot of things. But he would get very contemptible about things sometimes. And that is not Jim Morgan's way of doing things as I saw it. And although the concept was there and I think they both appreciated what it meant, I think in pure and simple terms it was that Milt wanted too much day-to-day nosing into the operations or having a say, or having his henchman located throughout the forces. And that's not Jim's way of operating. One of my greatest disappointments is that that never happened. I would have just loved to have seen that go and see the two of them operate. And they could have operated as a real good team. Milt could have…played in the financial community and used a lot of the contacts that we had. Because when we started GCA there were three major families that backed us and they probably had half the money on Wall Street. There were the Rockefellers…the Hill family and the Walker family. And the Walkers had more money than all of them. And these guys had so much money they couldn't even count it. So that was good backing.
JG: We also went and did some other things; spending money, taking on a large plant up the road of [Route] 128 with the concept that it would be used to employ people in the Lawrence area where we could get cheaper labor. It would also have the effect of giving some employment to that area. And Milt got very political at this in life. He was feeling pretty good. We all were. We were doing well and so on. And he got involved with a Senator and a couple of Representatives of this area and they promoted that concept. And our treasurer, Ephraim Radner, did his best to disabuse them of going ahead in this direction. Ephraim was from the little red schoolhouse down here called Harvard. He had his master's degree in finance and he saw very clearly that these kinds of activities, this wasn't the only one…there were others and I'm not going to even mention them, but we were spending money and commitments were being made pretty much like a drunken sailor on leave because everything was blossoming. Everything was going well. We hit that bump during that period where some of the operations, particularly in the semiconductor industry, fell off. And we had made broad commitments in those areas. We had gone into a very large plant up in Andover , a very modern plant, a very expensive plant. And to be very frank, it was money. We were just running out of money. We started to sell off operations as best we could. But when you're going downhill, so to speak, that's not the time to start selling because what you're doing is, everybody knows your problem and they're going to give the lowest, lowest prices. So that was the beginning of our slide. That, by the way, brings us back to Jim Morgan and his company because when things got really, really bad and the [GCA] board had to make some changes, Milt was essentially asked to leave and others were brought in. And I worked very closely with them on trying to fulfill what they thought were the right things to do. And what happened was basically we brought in council, financial council…one of the big firms on Wall Street. Well, it's maybe just as well I forgot it, but anyway [we] worked with them and they helped lay out plans for us. One was to continue operations but at the same time look for partnerships or sale of the operation. And of course we did finally end up with General Signal. And then that worked for a while. That certainly gave us financial stability. But then things did not work out. And Jim is one of the individuals who came in about that time…he had a whole crew come and go through the organization at two different times and was very interested in the possibility of getting a certain part of GCA, where if he had to take it all I'm sure he had a plan for divesting the other. But their analysis indicated it was not worth the risk for them, to be very frank. That was it. He would be buying something that would be a drain on where his efforts could be spent. This is I speaking. Jim may look at it differently but that's the way I interpreted it. I kept a relationship with Jim during that period and still do. But I think he made a good decision. But that was the death knell of GCA. We sold it off. I was the last individual at the auction when they auctioned off equipment in this great big building. All the operations had either been sold or closed. And there is was. It was sold to General Signal in June of 1988 and I think it was in 1990 that everything was closed up. General Signal kept me on… I don't know why they would. But they did, kept me on. I was there at the birth and I was there at the -- I guess you'd call it the cremation.
JG: We were a company that if you did anything that was the least bit not in our favor, you were out of favor. And you know, that might be a good thing, but the world is a big place. And there are some bright people all over this world. And there are ambitious people all over this world. And I know we gave Sumitomo some tough times and Nikon some tough times. We even had a very large operation…which was Sumitomo GCA in Japan . We put in assembly over there, and test and sales. And service was all over there. It wasn't running from this place. We put a big investment over there. And Sumitomo put up a lot of money also. More than we did, I'm sure, in the final analysis. But if anybody came and said to us, “We are considering…” You were out the door. Goodbye. We had no patience. In retrospect…I was a little more loose about things like that. My feeling was, “Look. We've had a long relationship. Let's talk about it. Let's see how it goes.” We didn't like to talk under those conditions. That was our culture.
JG: You asked me, what about SEMI. I came on the board in 1972 and I was appointed secretary. And like all organizations you work up through…just like the Masons or the Knights of Columbus or anything else I guess…you work up through the chairs. And once you get in there, unless you really screw up terribly, you're bound to become president. I didn't get president [of SEMI] because I was an outstanding individual in this industry. I got to be president because I was in line and I was put in line and that's how I got there. And I did the best I could when I got it. I took it as a very serious assignment. One thing I wanted to mention was the area concept. As you know we had the West Coast, the East Coast. All of the positions [at SEMI] were previously held by West Coast people because that's where the headquarters was of SEMI. It wasn't much of a headquarters in those days. But whatever it was, it was there. Shelly Weinig came to me and I still have the piece of paper. It was on February 25, 1977 in which he wrote me a page…two pages in which he discussed the…we had talked on the phone and then he wrote me this. And he said, “Look, Jim. We don't have anybody on that board or in the office. I'm concerned about it”. He said, “You've been on there for a while. Why don't we set up a system whereby we can have an East Coast and a West Coast person coming up in the ladder for presidency?” I said, “Hey. I don't see anything wrong with that. What's the problem?” Well, you know Shelly. When Shelly gets an idea, you either have to say, I disagree completely with you, don't call me again on the subject. But if you say, “Well, it sounds like…” You're tied in. You're a captive from then on. So I…with the Presbyterian background I have, said, “Hey Shelly. It's worth considering.” And of course he promoted me, which was very much appreciated. And that's how I came up through the chain in SEMI.
JG: Internationally when the issue came up about whether we [SEMI] stay national or whether we have an international or how we relate with that or do we have two separates and are they ruled by one or are they separate? That, to me…seemed to me that SEMI was a U.S. originated organization. It had a national and an international focus. To make it a complete organization it had to be international. It was as simple as that. And I never questioned it. I voted for it. Yes, there were people who felt differently, which I'm sure you've heard from some of them. But I think time has proven that it probably was a very good choice. I don't know. Because the organization is growing, it is now becoming a national and international spokesman for the industry…we have to be more professional in our management. I think that was what captivated a lot of our thinking. When you have part time people directing… we had [Mary] Law and others that were very diligent people running shows and running the office and so on. But did we have a senior individual or a staff building towards senior, where we could have international representation, could look to that office as preparing papers for positions on issues, etc. We didn't have that. We had a bunch of us who would push in ideas. And we had some beautiful brains pushing them. But we had to lift our standards, to be honest with you. We were maturing and with maturity you have to look at that one issue. Because that's the only thing that's going to keep that organization alive over a period of time. Somebody else is going to come in and eat your lunch. Take it away from you. That's the issue that was being discussed. Phil [Gregory] came in [as president of SEMI]. I'd like to talk about Phil a little bit. I liked Phil an awful lot. I think for the time that he came in and for the time he spent was just about all that we needed Phil for. Some people felt it was a little too long. But Phil had that way of walking down the hall, putting his arms around a Shelly Weinig or a Jim Gallagher or a Jim Morgan or somebody else that might be griping about something, and just telling you that he understood 100 percent what you were talking about. He had a full understanding of it. And yet in his own inimitable way he made you feel that you'd been heard. But he didn't do a damn thing about it if he personally didn't think it was the thing to do. And he didn't do this deceitfully. The man had no deceit in him at all. He just was one of those kinds of fellows that could just fall in it and still come out and smell as pure as the driven snow.
JG: It's been a grand, grand ride, let me tell you. Coming as a teacher in Pittsburgh High School making $1,800 or whatever it was for nine months of teaching. It's been a long, long ride and I've enjoyed it. I've never had ulcers, but I've had close to it, but I've enjoyed it. And some of the most talented people in SEMI, in management and in their efforts and their own companies, and their relationship with their employees…a very important thing. It's an organization to be proud of, and to be proud a member of, in my opinion.