Electronic sign maker rebounds
Luke Williams company refocuses, expands after floundering in mid-1990sAugust 17th, 2000
American Electronic Sign Co., which was forced to seek bankruptcy protection six years ago after losing an expensive patent-infringement lawsuit, shows clear signs of being back on a solid growth track.
The Spokane-based maker of electronic readerboards and highway-display systems has doubled its production this year, due to rising demand for its transportation-related products, and its outlook for long-term growth is bright, says Nathan Batson, the companys president and CEO.
I think it looks real good, he says.
Batson declines to divulge revenue figures, but says American Electronic Sign is projecting average annual growth in the 30 percent range over the next five years. Based on the companys year-to-date jump in production, even that estimate may be conservative, he says.
The company now employs about 65 people, up from about 45 a year ago, and that work force likely will continue to grow, he says, even though the company relies heavily on contract manufacturers for most of its products components, which it then assembles into ready-to-deliver display systems.
American Electronic Sign currently occupies about 28,000 square feet of manufacturing space in the Spokane Business & Industrial Park, at 3808 N. Sullivan, but is bursting at the seams there and has begun talking to the parks owner, Crown West Realty LLC, about expanding into adjoining space, Batson says.
The company is designing and manufacturing electronic message centers and information displays for transportation-related clients throughout the U.S., and increasingly overseas.
Were doing an awful lot in Australia and New Zealand, and also have begun to make inroads in Asia, the United Kingdom, and South America, Batson says.
Batson attributes the companys turnabout to its decision to move away from the on-premise advertising display business, which was highly competitive and growing slowly, and into the transportation industry, where the emergence of so-called intelligent transportation systems has created sizable new business opportunities.
Were in the systems business now. Were not in the sign business. Were in the intelligent transportation systems business, and its huge, amounting to several billion dollars of purchases a year worldwide, Batson says.
Intelligent transportation systems refer to the application of advanced computer, electronic, communication, and safety systems to the transportation sector. American Electronic Sign has staked out a strong presence in that still-unfolding market by developing standardized software and controllers that allow centralized control over a network of electronic highway signs.
Batson says that, from a desktop computer in Spokane, he can determine quickly the exact location, current displayed message, and solar-panel and battery status of a sign in Sydney, Australia, andwith the proper security codehe can even change the message.
American Electronic Sign now incorporates radio-frequency, cellular, and hard-wire communications systems into its signs for remote observation and programming. It also equips them, as needed, with sensors that allow them to do things such as detect fog and freezing road conditions and, in response, change their message displays automatically to warn approaching motorists.
Batson says products made for the transportation industry accounted for about half of the companys total revenue last year. That percentage has jumped to about 80 percent this year and likely will peak out at more than 90 percent, he says.
American Electronic Sign earlier this year completed work on one of its largest jobs to datea $1.9 million contract to provide variable-message signs and equipment for an intelligent transportation system on the 24-mile-long Lake Pontchartrain Causeway in Louisiana. The causeway is one of the worlds largest over-water bridges.
Other American Electronic Sign projects range from a bus-terminal display system that it currently is designing for the Port Authority of New York and New Jersey to a network of portable signs the company shipped this month to the Alabama Department of Transportation for use in hurricane evacuation. Also this month, its shipping 51 signs to Australia for traffic-control use in connection with the Sydney 2000 Olympic Games, which kick off Sept. 15.
The jobs are bigger (in the transportation industry than in the on-premise sign industry), and thats whats really fueled our growth, along with the diverse nature of the transportation jobs, Batson says.
Focusing on the transportation industry also has allowed the company to establish relationships with government agencies and other clients that likely will translate into future work, unlike in the on-premise sign industry, where theres little repeat business, he says.
Growth in the demand for intelligent transportation systems is due largely to increasing traffic congestion and the need to come up with improved traffic-management systems as a less-expensive option to building more roads, Batson asserts. Its almost like its the only viable option in a lot of areas, he says.
Roots to AS&I
Prominent Spokane businessman Luke G. Williams, whom Batson calls a fantastic mentor, founded American Electronic Sign here in 1988 to develop low-energy, cost-efficient displays for use in on-premise advertising applications. Luke and Charles Williams started American Sign & Indicator Corp. here in 1951 and invented the first alternating-time-and-temperature-display sign. They sold that company in 1983.
Williams later company, American Electronic Sign, introduced a new sign that combined reflective and light-emitting technologies. In October 1991, Williams hired Batson as an outside consultant to oversee development of a second-generation product that was brighter, more reliable, and less expensive to build than the original signs. Batson had been vice president of engineering at Key Tronic Corp., of Spokane, and had considerable expertise in plastic materials, product design, automation, and manufacturing techniques.
Under his leadership, American Electronic Sign developed its current generation of Diamond Brite Electronic Readerboards, which use a proprietary, long-lasting plastic compound in some components for added overall durability. It also introduced outdoor light-emitting diode and fiber-optic signs, software, and controllers.
Williams hired Batson to be executive vice president and general manager of the company in June 1992 and promoted him to president and CEO in December 1993.
American Electronic Sign entered the transportation market with a portable, trailer-mounted sign in January 1993. It used a new type of display that was not only light-emitting and reflective, but also retro-reflective, meaning it was highly reflective both to ambient light and vehicle headlights.
During that same period, the company recognized a market need for permanent-mounted transportation displays that were light-emitting, reflective, and reflectorized. So, it added fluorescent-coated pixels to its back-lighted, fiber-optic, and LED electronic signs to enhance their visibility, which led to the creation of another patented line of signs.
Nevertheless, the companys transition into the transportation market was slow to build.
Nothing much happened until about 1995. We were kind of floundering, not knowing how to operate in that market, Batson says.
During the early 1990s, American Electronic Sign also was sued for patent infringement, and both the company and Williams had to seek bankruptcy protection when the company lost the case in court. However, the company settled with the plaintiff, Unisplay S.A., a Swiss company, for $2 million in 1994, emerged from Chapter 11 in 1996, and since then has been expanding its presence in the transportation arena.
The signs now being made by the company come in trailer-mounted, vehicle-mounted, permanent-overhead, and other configurations, depending on a customers needs, and range in price individually from about $5,000 to $100,000.
In addition to the clients already mentioned, American Electronic Sign says it has provided products, software, and systems for the Washington, Oregon, and California transportation departments, Northwest Airlines, True Value Hardware, Walgreens, and a host of other government and commercial clients.