Spokane Journal of Business

Logan Industries looks global

Telect spinoff to employ 150 by year-end, open additional facilities outside U.S. soon

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Newly spun off from Liberty Lake-based Telect Inc., Logan Industries Inc., a contract manufacturer for the electronics and other high-tech industries, plans to add about 20 jobs here by the end of the yeargiving it a total of 150 workersand expects to open manufacturing plants outside the U.S. within 18 months.

Spokane-based Logan already is on track this year to top the $10 million in annual revenues that it had generated as Telects diversified products group before it was sold to Harold Alexander, a longtime senior vice president and director at Telect, in a transaction that closed last month, says Milton Cole, Logans vice president for global operations.

The spinoff was announced in March and described as a way to let Telect focus on its core telecommunications-related business and to allow the new company to develop a separate market for its manufacturing capabilities. The sale was completed in early June. In its first month of operation, Logan exceeded revenue expectations by about 20 percent, Cole says.

Logan hopes to boost its sales 30 percent to 35 percent annually, says Herb Jones, Logans vice president of sales and marketing.

Its an aggressive target, Cole says, adding, however, that a trend in the industry toward increased use of contract manufacturers will help Logan meet that goal. More and more, larger companies are moving away from managing their own production, he says.

Logan primarily makes cable harnesses used in medical equipment, computer peripherals, automotive systems, and other electronic equipment. Its customers include several divisions of Hewlett-Packard Co.; Intermec Corp., an Everett, Wash.-based printer manufacturer; and Portland, Ore.-based Tektronix Inc., another electronics manufacturer. Logan also continues to make cables for Telect. Most of Logans customers were long-standing customers of Telects diversified products group, which did contract manufacturing, Jones says.

This spring, Avista Labs, a technology-development subsidiary of Spokane-based Avista Corp., selected Logan to manufacture its fuel-cell generators, which will be used in field tests this year. Under the terms of the one-year agreement, Logan will buy raw materials for, assemble, and test at least 200 fuel-cell generators, which are microwave-sized modular units that can be used to produce primary or backup power for homes or businesses, according to Avista. The fuel-cell generators, pioneered by Avista Labs, are intended to be an environmentally clean energy alternative. Avista Corp. has estimated Avista Labs future value at $1 billion to $2 billion.

Logan officials decline to discuss the manufacturing contract with Avista.

Sales abroad

As Logan grows, Cole expects to see its largest and fastest revenue gains come from international sales. Currently, most of Logans customers are located in the Western U.S., but about 10 percent of the companys business comes from customers in Europe, Canada, Mexico, and Japan. Company officials hope international business will account for about 25 percent of Logans revenues by the end of 2000.

One thing we want to do is position ourselves to serve customers on a regional basis, Cole says.

To that end, Logan hopes to open two or three manufacturing facilities elsewhere around the world by the end of next year. Such facilities probably would be located in countries where labor costs are low, and would allow Logan, which currently focuses on making high-quality wire and cable components in relatively low volume, to compete for high-volume orders, Jones says.

The company, however, is committed to remaining in Spokane and would maintain its headquarters and a manufacturing facility here, Jones says. Additional facilities would be used to complement those here.

Its not our intention to eliminate what we do here or move jobs away, he says.

Keeping jobs and creating new jobs here was one motivating factor in establishing Logan, Jones says. While the sale of the Telect division allowed both companies to move in the optimal direction and focus more closely on their respective markets, it accomplished that without disrupting employees lives with layoffs or transfers, he says.

Jobs were created, not lost, Jones says.

Logan had 128 workers when it left Telect and became an independent company. It currently employs 132 people, he says. The about 20 new jobs Logan will add by the end of the year all will be in assembly work.

Logan plans to relocate within the Spokane Business & Industrial Park. It currently subleases about 43,000 square feet of space from Telect there. Logan plans to move by September into a 48,000-square-foot space in the park that can accommodate both its manufacturing operations and its administrative offices. The move will allow both companies to continue to grow, Jones says.

By the end of the year, Logan also expects to receive international quality-assurance certification. The operation had ISO certification as a division of Telect, but must go through another review of its processes and be recertified now as a new company, Cole says.

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