Trans-Tech Inc. restructures, taps into new markets

March 20, 1994|By Ted Shelsby | Ted Shelsby,Sun Staff Writer

ADAMSTOWN -- Diversification in the defense industry is not as simple as beating a sword into a plowshare, companies are finding as they search for new products and markets.

The struggles have been so widespread that Norman R. Augustine, Martin Marietta Corp.'s chief executive, draws rueful smiles from colleagues when he says: "The industry's record is unblemished by success."

But one Maryland company apparently didn't get the word that it was supposed to fail.

Trans-Tech Inc., a small manufacturer in this rural crossroads of Southern Frederick County, may in fact be a textbook case of post-Cold War restructuring.

The 38-year-old company developed and thrived by supplying ceramic parts used in the Patriot and Hawk missiles, B-1B bomber and the Aegis shipboard weapon system. But it shows no signs of suffering from the Pentagon's deep budget cuts.

The factory floor is humming with activity two shifts a day and sales are growing at a rate of 20 percent a year. And while other companies are laying off workers and consolidating, Trans-Tech is expanding -- recently opening a new plant in Frederick and another in France -- and has added more than a hundred workers.

If it's so simple, then why are so many other companies struggling to cope with defense cutbacks? The answer, of course, is that it was not easy at all for Trans-Tech.

Seven years ago, the company concluded it had to diversify to survive. It meant not just branching out into new markets, but virtually a complete restructuring.

At the time, 90 percent of Trans-Tech's sales came from the military, it's annual growth hovered around an anemic 3 percent and it exported only about 10 percent of its products.

All of that has changed, and almost everyone credits Joseph J. Alberici, the 37-year-old president and chief executive officer, for the remarkable turn around.

Mr. Alberici was hired by Trans-Tech's parent company, Alpha Industries Inc., in 1987 and told to do what many thought to be impossible: find new markets and make sales soar.

Mr. Alberici, who had been with Murata Erie North America, a subsidiary of Murata Manufacturing Co., the large ($3.4 billion in sales) Japanese electronics firm, was one of the few who believed the goals could be achieved.

Even Trans-Tech's employees doubted that success would result. But while the workers grumbled, Mr. Alberici searched for new applications for the company's products.

He found, for instance, that the ceramic insulators used in the radar that guides the Patriot missile could also be used in cellular telephones, global position satellite equipment, telecommunication products, satellite television receivers and wireless computer communication links.

But Trans-Tech learned that the difference between military and commercial markets is like night and day. To succeed, the

company had to greatly reduce the time it took to design and manufacture new products, slash per-unit costs, and significantly increase the number of units produced on each production run.

And some of the biggest obstacles came from within the company.

"I can't remember how many times I heard workers say,'There's no way we can do this. This guy's crazy. He just doesn't understand how we do things around here,' " Mr. Alberici recalls.

Production runs had to be expanded from 500 to 1,000 pieces to 20,000, 50,000 and even 100,000 parts. And it was no longer acceptable to have 30 percent of the parts failing to pass inspection.

"The commercial market doesn't afford the company such a luxury," Mr. Alberici told his employees. "In the commercial market parts are priced so competitively, you make them right the first time or you lose money."

There were other challenges as well. Trans-Tech's parent, Alpha Industries of Woburn, Mass., was having financial troubles and could not offer financial support.

The shift in strategy also put Trans-Tech on a collision course with some fierce Japanese competitors with strong footholds in the market. On top of all this, the company was moving into new markets where the price of its products was dropping as much as 30 percent annually.

It's no wonder that a number of Trans-Tech workers had doubts about Mr. Alberici and the course he had put the company on.

"Yeah, I thought he was crazy," recalled Jerry Hahn, a 38 year-old assistant supervisor in the machine shop. "But I wasn't alone. About 95 percent of the people in the company felt that way."

Mr. Hahn, who joined the company as an assembly line worker fresh out of Frederick High School 18 years ago, said things were much different when the company was primarily a defense contractor.

"We more more laid back. We had a six to eight week turn-around," he said, referring to the time it took between receiving an order and shipping the products.

"We were in low gear. The atmosphere was one of being very relaxed," Mr. Hahn said. "We were set in our ways -- we had been doing it this way for 20 years."

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