Over the past 12 years, New Berlin-based EMTEQ Inc. has evolved from a basement startup company to a global aerospace supplier specializing in airline components, lighting, engineering and certification that expects $100 million in revenues by 2010.
The firm’s customers are primarily the military, aerospace original equipment manufacturers (OEMs) and aircraft manufacturers. EMTEQ’s founders – Jerry Jendusa, Jim Harasha and Todd Lyda – began designing and building radio frequency cables for aircraft in the basement of Jendusa’s Wind Lake home in April 1996.
That August, EMTEQ moved to a 4,000-square-foot facility in Muskego’s industrial park, and the company had $1 million in revenue. By the end of 1997, Jendusa, Harasha and Lyda had quit their day jobs to work full-time at EMTEQ, and the company started planning for its future.
“I remember putting together a memo for the four or five people (who worked at EMTEQ in late 1997),” Jendusa said. “It said we would have $10 million in revenue in 10 years, that it would be done through strategic partnerships and acquisitions. I remember talking to Jim and some of our first employees, and they all looked at me and laughed.”
But they didn’t laugh long.
Today, the company is light years away from its humble beginnings. Emteq has evolved into a global firm with about 330 employees, 290 of whom work at its New Berlin headquarters and main manufacturing facility. About 120 of its workers were hired in 2007, Jendusa said.
Emteq is also posting big revenue gains. The firm expects revenue in the $70 million range this year, up from $55 million in 2007 and $33 million in 2006. The company’s revenues do not include the companies it has acquired in recent years, Jendusa said.
By the start of next year, EMTEQ will expand into an additional 40,000 square feet of manufacturing, prototyping, engineering and office space. The company now occupies 57,000 square feet of space in a New Berlin industrial park, where it moved in 2005.
When it moved, the company believed the space would be sufficient until 2010 or 2011, Jendusa said.
“We’ve grown faster than we anticipated,” he said. “We thought we’d be in this space for five or six years, but it’s only lasted (a little more than) two years.”
Emteq makes extensive use of lean manufacturing principles, including cellular operations and lean inventory, and is carefully planning its expansion now, Jendusa said.
“We’re starting (planning) now, revising our flow and lean (mapping),” he said. “We’re also looking at our office layout and value stream mapping. We’ll also be looking to consolidate our materials, using the concept of stock replacement differentiated by customer groupings.”
Keith Winters, a member of EMTEQ’s board of directors, has known Jendusa and the company since 1996. Winters is the previous owner of KCQ & Associates, a tax and consulting firm based in Franklin.
“He (Jendusa) is customer-focused beyond anything I’ve ever seen,” Winters said. “There is a saying at EMTEQ – ‘Customer demand to customer delight.’ Those are not just words. Jerry lives it. And from him, it’s trickled through the organization. And he surrounds himself with people that are smarter than him. That’s critical. From his management team to his professionals, he’s very good in making sure he surrounds himself with smart people.”
A deeper relationship
EMTEQ has been able to grow so much because the company is constantly looking for ways to develop new products and deepen its relationship with key customers, Jendusa said.
The firm’s first product was a lightweight radio frequency cable made to military grade specifications. The company quickly started offering trays and racks for aviation uses, and by 2000, the company began selling LED lights for airplane cabin interiors. The lights were eventually adapted for some exterior uses.
“Our first innovation was with LED, and now we have hundreds of (LED) products,” Jendusa said. “As we expanded into the cockpit and cabin, we were able to expand in other areas like comfort and cabin power.”
Today, EMTEQ designs and builds a wide array of cabling, lighting, electronic components used in airline cockpits, cabins, avionics, exteriors and other areas. The company also specializes in engineering and inspection – helping airline manufacturers and OEMs develop next-generation planes and components. EMTEQ helps those companies retrofit and certify their components and planes.
“We’ve made a decision to support the aftermarket and production airframe platforms,” Jendusa said. “What we’re trying to be and what we’re working towards is being an event-based company.”
Being an event-based company means that Emteq’s customers view the company as a partner, turning to the New Berlin firm to help them design and develop next-generation components and systems for their aircraft, Jendusa said.
“We’re trying to be more of a turn-key integrator,” Jendusa said. “We’re listening to our customers, understanding what their requirements are and innovating with our products.”
The partnership process is not just for new aircraft. Emteq routinely helps customers retrofit and upgrade corporate jets. There are many luxury items in use in the automotive market that are not in use in private planes, Jendusa said, and Emteq is exploring ways to adapt some high-end items to the market. For example, the company recently introduced a heated seat for corporate jets, the first of its kind in the industry.
“When you get into a corporate jet, it’s a $30 million to $40 million jet,” Jendusa said. “When you think about innovation, it could be anything. It could be repackaging and re-concepting something for aviation.”
When the partnership process works properly, EMTEQ operates as an outsourced research & development and production partner for its customers.
“A lot of it gets into lean manufacturing and taking work away from (the customer),” he said. “We’re taking cycle time away from the client so they can build more aircraft in less time while relying on partners.”
Dave Smith, a retired aerospace executive and advisor to the board of directors at Emteq, said Emteq’s method of partnering with its clients will continue to pay off in the long run.
“One of the clever approaches that Emteq takes with its customers is that it immerses itself in the customer’s value stream map and becomes part of the customer’s organization,” Smith said. “(By doing so they) become invisible to them as a supplier, but become very visible to them as far as their organization is concerned because you are so immersed in their value stream.”
Acquisitions on the horizon
EMTEQ’s first acquisition was Avitas Engineering in Miami, which gave it increased inspection capabilities. In 2007, EMTEQ acquired Flight Components AG, a Swiss maker of exterior lighting components for the aerospace market. The acquisition allowed EMTEQ to produce both interior and exterior lighting, giving the company more ways to serve customers, Jendusa said.
EMTEQ expects to acquire a Canadian company later this month. Although Jendusa declined to identify the company, he said it will strengthen EMTEQ’s capabilities in the energy and certification services areas.
The shareholders of EMTEQ acquired the shares of Cable Technologies of Montana Inc. (CTI) last month. CTI is a Great Falls, Mont.-based designer and manufacturer of wire and cable-related assemblies. The share purchase is technically not an acquisition, but the companies have a working partnership, Jendusa said.
While it has a growing international presence – with its operations in Switzerland, Brazil and its anticipated acquisition in Canada – EMTEQ’s business model will not allow it to operate like a large multi-national corporation, Jendusa said.
“Our business model is more like a number of small business owners under a larger umbrella, where the business owner is responsible for profit and loss,” Jendusa said. “We’re doing bottom-up planning, developing people and talent, putting partnerships in place so we can expand globally.”
The people factor
Another large part of EMTEQ’s global expansion strategy is developing its people. The company launched its own in-house training program named Q University (QU) last year. The firm recently completed the first 13-month QU session and is preparing to launch the second, Jendusa said.
QU classes of 13 to 15 people meet monthly for six hour sessions, and again two weeks after that for small group sessions. The sessions are intended to develop high-potential employees and integrate them into the company’s culture of customer responsiveness, value-added solutions, resourcefulness, teamwork, speed and flexibility, Jendusa said.
“There is a certain culture we’re trying to instill, a culture of growth,” he said. “The people are the biggest part of that growth – we’re bringing in educated people and refining their education here.”
The program, originally developed with the assistance of The Paranet Group, has been refined and further developed for its second year. Emteq eventually plans to bring its QU classes to its other locations and operating units around the globe, to help create a similar culture in all of its operating units.
“We (EMTEQ) lead as a service provider, and we’re encouraging others to make decisions,” Jendusa said. “Empowerment is big, but we also have aspects that get into soft skills, business planning, finance and lean as a business solution.”
EMTEQ’s focus on finding, developing and promoting the right people will help it expand significantly in the next three to five years, Winters said.
“He has got himself surrounded with the best management talent between the ages of 28 and 45 years old,” he said. “(Jendusa) finds the best people, gives them the latitude to do their job and gets them thinking. And they just step up.”
EMTEQ’s projections show it growing to $100 million in revenues within the next three years, Jendusa said. At that point, the company will need to assess its position and carefully think about how to proceed.
Jendusa has no interest in stepping away from the company he founded and has helped build.
Marshall Schermerhorn, president of Churchill Corp., a Melrose, Mass., manufacturer of avionics enclosures that has been working with Emteq since it started, said the New Berlin company will likely acquire a large competitor in the next five years.
“Five years down the road, Emteq will take enough of their market share, and one will fail,” Schermerhorn said. “There will be some big player interaction. I can see him taking over weaker competitors.”