Manufacturers of the Year


Small Company

Founded in 1982 by Tom Kirchner, Electronic Systems Technology enjoyed 10 years of growth through 2007 and record sales that year. Then the recession hit. The instinctive response to a 30 percent drop in annual revenue and a net loss for the year, which is what Electronic Systems Technology ( experienced in 2008, is to slash costs, especially in payroll.

This maker of wireless modems in the public safety, industrial control (mines, utilities, food processing, oil and gas) and federal markets didn’t dodge the cuts, but it tried an alternative to layoffs. Salaried employees trimmed half a day from their weekly working hours; benefits were maintained. Hourly employees took a full day off (recouping half their sacrifice through a state program that pays partial unemployment benefits). These measures reduced payroll expenses by 10 percent.

Electronic Systems Technology also reconfigured international sales travel, chopped office-supply purchases by 44 percent over three years and moved testing of new modems to evening hours to avoid a bottleneck in production.

Through it all, Electronic Systems Technology developed and launched new products and services for its customers. It returned to the black in 2009 and finished 2010 with a 19 percent gain in revenue and a much healthier profit. In January 2011, employee hours returned to full time, and the company embarked on development of new products that will position it for growth opportunities in applications where telephone modems and cable systems are unavailable or impractical.

Midsize Company
DATA I/O, Redmond

Data I/O CEO Fred Hume photographed by Hayley Young

Rocked by the recession, a shift of many of its potential customers to China and technology changes in its industry, Data I/O has been battling back. This maker of devices that program semiconductors reported revenue for 2010 that was up 42 percent from 2009, and turned an $811,000 loss in 2009 into a $3 million profit in 2010. Data I/O’s stock price, up 53 percent from Dec. 21, 2009, to Dec. 21, 2010, indicates that investors liked what they saw.

How did that shift happen?

Strong international sales, accounting for 88 percent of overall revenue, helped a great deal. So did attention to the financial details: Data I/O cut inventory levels by about 40 percent during an 11-quarter period, and it has no long-term debt.

The company is seeking more growth. With the exploding demand for wireless devices and consumer, automotive and industrial electronics, and all the programmable circuits within them, Data I/O figures that need will translate into more demand for its products. The marketing pitch to electronics manufacturers: Data I/O’s devices are equipped to handle the large files that are loaded onto handheld gadgets, and its proprietary designs will protect them from malware or theft of intellectual property.

This year, Data I/O plans to roll out a new software product and to boost revenue above and beyond recovery levels. In fact, CEO Fred Hume says the business might even consider acquisitions to achieve its goal. Toward that end, it has hired an investment banking firm to advise on strategic alternatives.

Large Company
Heath Tecna, Bellingham

CEO Richard Ballantyne, center foreground, with members of the Heath Tecna management team, photographed by Hayley Young

Heath Tecna, founded in the 1950s, makes the stuff on the inside of planes that most passengers never think about, but would certainly notice if it weren’t there: ceiling and floor panels, storage bins, closets, lavatories, galleys. And it doesn’t just make the stuff. It provides airlines and aircraft manufacturers with engineering services for designing the interiors of new planes or reconfiguring existing aircraft.

Heath Tecna has jumped from 285 employees in April 2010 to more than 600 now after winning the interior-package contract for a new Mitsubishi regional jet and landing other contracts with international airlines (adding $40 million in export sales in 2010). But it did more than throw additional bodies into the labor pool. It worked with Impact Washington, state government programs and Bellingham Technical College to set up an accelerated hiring and training program.

The company also placed major emphasis on lean operating principles, which shortened the time needed to build interior components, reduced the space needed for production and improved quality. Next up: moves to minimize material waste and energy consumption.

For Mitsubishi, Heath Tecna will develop and supply interiors and furnishings for the new jet, design and fabricate flight deck and cargo compartment linings, and manage the integration of other components, including water, waste and vacuum systems, crew seating and escape slides. This year, the company also will unveil interior upgrades for existing Boeing 737s and 757s.

Honorable Mention:
Bruker Elemental, Kennewick

How do you know what percentages of what metals are in a part? Hold a Bruker analyzer up to it. There’s a lot of technology behind such a seemingly simple approach. The devices from Bruker Elemental’s handheld business unit use a low-level X-ray beam to read the signatures of the specific elements in whatever is being studied. Applications include identifying metal alloys, determining the content of metal scrap, environmental analysis, mining, even art and archaeology. Started in 2000 as Keymaster Technologies, the company was acquired by the German company Bruker in 2006. Revenue and employment are growing, thanks in part to overseas sales, representing more than half of Bruker’s total handheld business.

Honorable Mention:
C.C. Filson, Seattle

C.C. Filson is a small company with an outsize reputation in the outdoor-apparel sector because of the sturdiness of its products. But Filson didn’t get to be more than 100 years old by resisting change. Among its alterations: moving to web-based sales, setting up a program to pair experienced sewers to train new hires, cutting waste by allowing customers to receive shipments in used boxes and collaborating with Levi’s on new products. For Filson, those innovations have meant revenue and employment growth; these developments allowed the company to continue making its products domestically.

Upgrading the Tuber Section

Upgrading the Tuber Section

Lamb Weston’s expansion of a french fry processing plant showcases the state’s potato industry.
No doubt you’ve noticed that Washington is in the grips of a gustatory frenzy, with an entire industry growing up around the desire to provide eaters and drinkers with the latest in exotic, artisanal, handcrafted, small-batch, organic food and beverages.
For sheer economic impact, though, few comestibles can top the humblest of vegetables and possibly the most popular mass-market product made from it: the potato and the french fry.
Lamb Weston, part of packaged-foods giant ConAgra Foods Inc., is adding a second french-fry production line to its existing plant in Richland. Construction is expected to be finished by autumn 2017. 
Even by the standards of big agriculture, in a region that does food processing in a big way, the Lamb Weston project is no small potatoes. The $200 million-plus investment will add 128 full-time positions to a plant that already employs 500. The new line will increase annual processing capacity by more than 300 million pounds of spuds.
Potatoes don’t get quite the same attention as Washington’s other major agricultural commodities — wheat and apples — but they are a big deal nevertheless. In 2014, potatoes were a $771 million crop in Washington, placing the state second only to Idaho (which touts “Famous Potatoes” on its license plates) in the nation. The Washington State Potato Commission says Washington growers plant more than 160,000 acres annually in the Columbia Basin and the Skagit Valley, producing yields per acre that are the highest in the world — about 30 tons — and twice the national average.
Making stuff from potatoes is also a big deal in Washington. Nearly 87 percent of Washington’s potato crop gets processed as dehydrated potatoes, potato chips and frozen french fries. The commission says Washington leads the United States in frozen french fry production, accounting for 20 percent of the nation’s output. Fries are also a major contributor to Washington’s export economy: Of the french fries made in this state and shipped internationally, Japan alone purchases about 65 percent.
Growing, harvesting, transporting, storing and shipping large quantities of potatoes make for a sizable economic presence. With about 4,500 employees across the Columbia Basin, Lamb Weston operates an innovation center in Richland, it has corporate offices in Kennewick and it runs processing facilities in Connell, Pasco, Quincy and Warden, in addition to the Richland plant that’s being expanded. It sources potatoes from growers in the Columbia Basin — its purchases will increase when the new line begins operating — and it sells frozen potato products like packaged french fries under its own brand names as well as for sale by retailers under private labels. 
It’s not alone, of course. Idaho-based Simplot has potato-processing plants in Moses Lake and Othello, each making an array of products, including french fries. The Canadian potato giant McCain Foods also has a french fry plant in Othello.
French fry consumption is considered a maturing market. At times in the past decade and a half, there have been reports of consumption plateauing and even declining. Still, the London-based market research firm Euromonitor International predicts a 10 percent increase — about 2.6 billion pounds — in the worldwide frozen-potato category between this year and 2020.
That projection appears to be enough to encourage ConAgra, which is spinning out Idaho-based Lamb Weston as a separate publicly held company this fall, to invest not only in the Richland expansion but also in Boardman, Oregon, where it plans to make more hash brown patties and potato puffs.
“We have a tremendous opportunity to help our customers realize their global growth projections,” says Lamb Weston President Greg Schlafer of the expansion, “but we need to make more french fries to do that.”
The Richland project will add operations, maintenance and technical staff — a mix of salaried and hourly positions — to run the line. But the economic impact goes beyond those employed at the plant, during and after construction.
For example, more food processing means more work for companies that manufacture food-processing equipment, such as Walla Walla’s Key Technology, which makes optical inspection systems, laser sorters and sizing, grading, and packaging conveyors for potato lines. While the company won’t get specific about customers and their projects, Key’s most recent quarterly earnings report mentions “a large seven-figure order received from a major potato processor.”
The Lamb Weston expansion also signals the potential of the Tri-Cities and the state as a place for large-scale food processing. Schlafer cited cooperation from Governor Jay Inslee’s office, the state Department of Commerce, the Association of Washington Business, the city of Richland and the Tri-City Development Council, or TRIDEC, as being key “community partners.”
TRIDEC President and CEO Carl Adrian believes the Lamb Weston announcement will certainly be heard elsewhere in the industry. While they might not care to admit to it, Adrian says, executives at other food companies see announcements like Lamb Weston’s and start asking, “If they’re there, how come we’re not?” 

Potato Power
The humble spud’s impact in Washington state.

160,000 | Washington acres planted in potatoes
#1 | Washington potato growers’ worldwide ranking in per-acre yield  
87% | Proportion of Washington potatoes processed into french fries, potato chips and mashed potatoes
99% | Proportion of Washington potato farms that are family owned
$4.6 billion | Industry’s impact on the state economy
23,500 | Jobs supported by the Washington potato industry
8% | Proportion of potato volume that becomes a byproduct (such as starch for the paper industry or feed for the cattle industry) in a french fry plant

Shoestring Operations
Companies making french fries in Washington

Lamb Weston | Plants in Connell, Pasco (2), Quincy, Richland and Warden

J.R. Simplot Co. | 
Plants in Moses Lake and Othello

McCain Foods | 
Plant in Othello
SOURCE: Washington State Potato Commission