Manufacturers of the Year

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Small Company
ELECTRONIC SYSTEMS TECHNOLOGY, Kennewick

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 (esteem.com) 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.

Manufacturing Remains Critical to the US Economy