Skies Finally Clearing in Glendale for Troubled Pollution Control Firm

Albert E. Gosselin Jr. keeps a statuette of a prize bull in his office that reminds the mechanical engineer never to invest in a business he doesn’t know anything about--a business, say, like cattle ranching.

Gosselin’s small Glendale company has been making devices that monitor air pollution for about 18 years, but Dasibi Environmental Corp. has annual sales of only $4.6 million, mainly thanks to the bum steers Gosselin got when advisers persuaded him in 1973 to merge his company with a supposedly cash-rich Colorado cattle ranch--a mistake that cost Dasibi time and money.

Now Gosselin, 56, said a $2.2-million infusion from a new stock offering completed in June will allow him to expand his business, a chance he’s waited for since 1973.

The plan is for the company to strike out for new markets--particularly South Korea--where Gosselin says relatively recent air cleanup efforts offer a great opportunity. “It’s a primitive enough area that we feel we are on equal footing with everybody else,” Gosselin said.

Traditionally, 70% of Dasibi’s sales have been in the domestic market. But 70% of Dasibi’s sales for the last quarter were in the foreign market. The changeover began when Dasibi won a contract to monitor pollution in Seoul during the 1988 Olympic Games. To get that contract, Dasibi sold its monitors at cost. This year, the company won a $600,000 contract to provide monitors to the Korean equivalent of the U.S. Environmental Protection Agency. And now Dasibi is chasing a $2.4-million contract to monitor emissions at a large steel plant in Pohang, South Korea.

Gosselin also plans to set up marketing offices in Asia and Europe in an effort to double the company’s sales this year to about $9 million.

Dasibi makes electronic devices that detect pollutants in the air and in smokestack gases. About the size and shape of stereo receivers, the devices use ultraviolet light to analyze gases and cost between $4,000 and $25,000.

Dasibi sells the monitors to government agencies that check air quality and to factories seeking to assure compliance with legal limits on emissions of sulfur dioxide and other pollutants.

Gosselin said Dasibi is poised to profit from any increase in environmental enforcement in the United States, such as that promised in the clean air bill working its way through Congress.

“Somebody is going to make a buck out of the clean air bill, that’s for sure,” said Dick Martin, an environmental services analyst for Louis Nicoud & Associates in New York. The $50-million annual U.S. market for smokestack-mounted pollution monitors will increase 25% a year for several years if the measure passes, said Stephen Schweich of Alex. Brown & Sons in Baltimore.

But even if the U.S. market grows, Dasibi still faces serious obstacles. It is the smallest of a handful of companies in the pollution monitor market, facing competitors like Massachusetts-based Thermo Instruments, which has annual sales of $120 million and is a division of Thermo Electron, which has annual sales of $400 million, and a Colorado-based division of Lear Siegler that has annual sales of $2.5 billion. And KVB, based in Tustin, entered the business about six years ago after making pollution reduction devices.

Besides its competitors, Dasibi also must worry about its longtime dependence on ozone monitors, which last year accounted for nearly half of its sales.

Since 1982, Dasibi has invested research and development money into monitors for other pollutants, including sulfur dioxide and nitrogen oxide. As part of that plan, Dasibi agreed in August to buy two companies with key product lines for about $560,000. AIM of Pasadena makes a smokestack monitor that analyzes emission as it passes, instead of diverting samples for analysis. But the EPA hasn’t approved that monitor for use in the United States and Gosselin says that could take awhile.

The other company, EIS, makes a computer device that helps convert data from Dasibi monitors into a computer-usable form so the company can sell entire pollution-monitoring systems, instead of just detectors.

But the competition has had similar products for several years and Schweich said it would be tough for a challenger to strip customers from better-known companies.

Gosselin got his start in pollution control in 1959 as head of a Southern California Edison project that studied smokestack emissions from oil-burning power plants. After a few years with a New York air pollution control company, Gosselin moved back to California to start his own engineering firm, which eventually went public in 1969.

It was Dasibi’s parent company, Pollution Research and Control Corp., that bought the troublesome cattle ranch in 1973 and planned to sell it for more than $1.5 million--cash he’d planned to use to expand the pollution control business.

As it turned out, ranch was worth about $100,000 and the acquisition brought Gosselin only legal headaches and a six-year cash squeeze. The history of the ranch was muddied because it had been run by executives of Equity Funding, a Century City insurance company that went bankrupt in 1973. An investigation found its books had been manipulated for years.

On that news, Dasibi’s banks seized hundreds of thousands of dollars in deposits to cover loans to the pollution control company. Suddenly Dasibi couldn’t meet major contract obligations. Sales fell from about $2 million in 1972 to about $100,000 in 1974.

“It was like a bad dream,” Gosselin said.

For five or six years, the company’s liabilities frequently exceeded its assets and Dasibi couldn’t get a bank loan until 1980. “It took that long to get credibility back,” Gosselin said.

After a few years of revamping its product lines, Gosselin converted Dasibi’s parent into a mere holding company and took Dasibi public with a new stock offering. Eventually, PRCC gave all its holdings in the pollution control business to Dasibi’s shareholders and Gosselin sold off the former parent company as a corporate shell.

Dasibi built up its sales about 70% from 1985 to 1989. Now with another spurt in the U.S. and foreign pollution control market as well, Gosselin talks of increasing sales to about $70 million in five years.

But while trying to plan for that success, Gosselin says one thought troubles him: “If we’d stayed on the straight path I think we could have been a pretty big company today.”