Pounded by depressed metals prices and the Asian contagion, Spokane industrial manufacturer Rahco International Inc. has suffered substantial hits to both its revenues and employment level in the past 18 months.
Down but not out, the longtime Spokane exporter now says its seeking acquisitions, pursuing new markets, and optimistic that its prospects in the global mining industry it has served for decades are brightening.
Rahcos 1998 revenues of about $11 million were less than a third of the $35 million in sales it racked up in the previous year, and the companys employment as of late last month had fallen to about 50 people, compared with around 200 a little more than a year earlier.
Though the company has suffered downturns in the past, this one has been more severe and longer lasting, says Rahcos President Richard Hanson.
In the early part of October 1997, we had booked (orders) up to the maximum and were unable to meet delivery demand on the orders that were coming in, Hanson recalls. Then the Asian financial crisis hit. By the end of October, we had lost a $10 million project that was already in house, and we never got another order. The orders just stopped.
Still, with a big order backlog, Rahco finished 1997 with strong revenue and had enough work in house to keep its staff busy part way through 1998, he says. Since then, however, the companys only revenue has come from making spare parts and doing minor modifications and fabrication work for current customers, Hanson says.
As the work diminished, our employment began to deteriorate, he says. Now were down to a core group of people that we are trying to hang onto.
Hanson says the Asian financial crisis and a worldwide dampening of metals pricesespecially copper, the price of which has fallen by roughly half since the summer of 1997have combined to put a virtual stop on heavy-equipment investments by mining companies. But there are other factors, too, he says, including political instability in the former Soviet Union, and slower-than-expected growth in Chinas demand for Western products and technology.
The mining downturn wasnt entirely unexpected, but its severity and longevity were, Hanson says.
We always knew that we had to spread ourselves out beyond the mining industry, because there are highs and lows in that industry, he says. What we didnt see comingnor did anyone else in the industrywas that the door would slam shut like it did.
Hanson says that although everything he read at the time suggested the slide wouldnt last as long as it has, he decided after several months that Rahco would need to become more aggressive about tapping other markets.
One of those markets is the environmental-cleanup industry, in which Rahco has dabbled in the past. Hanson says the company continues to discuss with the federal government the development of remotely operated equipment that would make it easierand safer for humansto remove extremely hazardous materials from landfills for proper disposal.
Rahco also might be involved in the development of specialized equipment that would install protective linings beneath such landfills to minimize leaching into groundwater.
Another market is brand new to Rahco. The Spokane company is working with an Australian manufacturer on a possible joint venture that would make specialized vehicles that would load cargo onto military aircraft on remote, makeshift runways established for military or relief operations. Hanson says Rahco could get some engineering and testing work on that project later this year, perhaps build a prototype of the vehicle next year, and deliver as many as 50 production units by 2001.
Rahco also is pursuing the sale of more canal-building equipment, which it has made for years and sold all over the world.
Those efforts, and recent improvements in the metals market, should kick start the Spokane company. We expect to see a significant turnaround in the September time frame, both in the metals market and in the areas were putting more emphasis into, he says.
Im reasonably confident that the metals market has bottomed out, and that we will see a slow but steady climb from here, says Hanson, who predicts that copper will climb to about 75 cents a pound this year, from the roughly 60 cents a pound it had been selling for earlier this year.
Also, he says, a new processing method being used by some copper smelters has significantly reduced the costs of smelting copper, and Rahcos equipment is compatible with that method. Hanson believes that the rise in copper prices will prompt more mining operations to invest in equipment necessary to use the new method, including equipment made by Rahco.
Were hopeful, he says. Were not overly optimistic, but we think well see some markets return and our efforts in other areas to start paying off for us.
Meanwhile, to diversify itself, Rahco is looking to acquire either rights to equipment made by other manufacturers, or such manufacturers themselves. We have been in talks with companies, Hanson says.
While Rahco is known mostly for making equipment custom-designed for each customer, its interested in acquiring products that might be part of a regularly offered line of products, though adaptable to a customers needs, he says.
Rahco was founded by Spokane industrialist Raymond Hanson, Richard Hansons father, in 1946 and was operated for years as R.A. Hanson Co. The elder Hanson sold the company to Richard Hanson in 1995, after which it was renamed.
Subscribe today to our free E-Newsletters!SUBSCRIBE