Northern Technologies set to grow
Company hopes to expand its Liberty Lake facility, acquire two manufacturersJanuary 27th, 2000
Northern Technologies Inc., a Liberty Lake-based manufacturer of electrical-surge-suppression devices, has been acquired as part of a larger transaction, sparking some big expansion plans here.
Within the next 16 months, Northern Technologies expects to make two acquisitions of its own, to expand its facility here, and to open offshore manufacturing facilities, possibly in both Europe and South America, says company President Stephen Baker.
Northern Technologies, which was founded in 1985, was sold in 1996 by Baker and his partner, Doug Walton, to Deerfield, Ill.-based Jordan Industries Inc., a $3.5 billion company that then operated Northern Technologies under its telecommunications division.
Jordan sold that division for about $980 million last week to Emerson Electric Co., a $14 billion St. Louis-based company, Baker says.
Under the new ownership, Baker says that Northern Technologies, which now employs about 110 people, is expected to boost its annual revenue by about 25 percent each year. The Liberty Lake company posted about $28 million in annual revenue last year and expects sales of at least $34 million this year, he says.
The acquisition by Emerson isnt expected to affect Northern Technologies negatively, Baker says. The company plans to retain its name and employees, and is expected to remain at its Liberty Lake headquarters, at 23123 E. Mission, he says.
Northern Technologies builds devices that are designed to protect expensive electrical equipment that its customers cant afford to have go off line, such as medical, communications, and security equipment.
The company now is aggressively pursuing acquisitions and has its eyes on two possible targets. Baker declines to name them, but says that both are large international manufacturersone French and the other Swedishand each has annual revenues of between $20 million and $25 million. He says Northern Technologies currently is in due diligence with both companies and hopes to complete acquisition of one of them by mid-summer. The acquisitions arent expected to increase employment here, he says.
Meanwhile, Northern Technologies has outgrown its 27,600-square-foot building in Liberty Lake and plans to build a 17,000-square-foot facility on a lot just east of its current building within the next 12 to 16 months, provided Baker can sell Emerson on the project. He says the additional building would be used both for manufacturing and as office space.
Once the expansion project is completed, Baker says Northern Technologies will be able to expand its work force here to between 135 and 140 employees. About a quarter of the companys work force is made up of production workers, while the remaining employees include engineers, salespeople, and administrative and support-staff members.
In addition to expanding here, the company also is looking to expand internationally. As its international sales grow, Baker predicts that Northern Technologies will not be real competitive if we just have manufacturing operations here. He says its likely that the company will open a manufacturing facility in Europe and one in South America within the next 12 months.
In some countries, such as Brazil where they have high value-added taxes, it makes sense to manufacture in those countries. He adds that it also makes financial sense to operate a manufacturing facility in Poland or Hungary to serve European markets.
Last February, Northern Technologies acquired Lake Stevens, Wash.-based High Mountain Communications for an undisclosed sum. High Mountain, which erects, services, and maintains cellular communications towers, now is a Liberty Lake-based subsidiary of Northern Technologies and employs about 25 of Northern Technologies 110 employees. The acquisition has allowed Northern Technologies to become a full-service provider to communications companies. Northern Technologies now can erect a tower, ground radio equipment contained in a steel box at the foot of the tower, and protect that equipment from lightning strikes and other power disturbances.
From six devices to 300
In its early years, Northern Technologies made just six surge-suppression devices, which mostly were marketed to hospitals here, Baker says. The devices were designed to protect expensive, sensitive medical equipment, such as computerized tomography scanners and magnetic resonance imaging machines, from power disturbances that could cause the equipment to malfunction and possibly even explode.
In 1989, Northern Technologies began making surge suppressors for the blossoming wireless communications industry, too, and landed Chicago-based Centel Cellular as a customer. Centel eventually was bought by Sprint, and because of Northern Technologies relationship with Centel, it became a major supplier of surge-suppression equipment for what then was called Sprint Cellular, Baker says.
As the cellular industry took off, we were right there, he says. Sprint was the market leader, so many of the other carriers followed their lead, and we gained several other customers.
Wireless communication since has expanded to include both analog cellular service and digital personal communications service (PCS), and Northern Technologies has been able to serve providers of both worldwide. Baker says that about 55 percent of the companys business revolves around cellular and PCS transmissions.
In addition to serving the medical and cellular-PCS markets, Northern Technologies now designs and builds more than 200 surge-suppression devices for the cable television, paging, and TV and radio broadcast industries. The company also makes equipment that protects security systems at correctional facilities from power surges.
You dont want the lights going out and the security system going down in a prison, Baker says. We are always looking for equipment like that to protect. Protecting equipment thats critical to a particular industry and cant be disrupted is our niche.
A seven-person research-and-development department at Northern Technologies designs new devices for current customers and for markets the company doesnt serve yet, Baker says. He says that through the years, the company has produced several specially designed devices for customers such as Sprint and Motorola.
We are very customer oriented. We listen to what the marketplace wants, and we try to build products that meet or exceed those expectations, Baker says. We also try to look forward to where the markets are headed so that we can be market leaders rather than market followers.
Northern Technologies has been targeting some of its communications-related products at companies in former communist states and developing Third World countries, both of which are in the process of building infrastructure for wireless communications.
Baker explains that in some Third World countries that have no phone systems, governments are finding it worthwhile to build wireless communication systems rather than land-line systems. Although it typically costs more to build a wireless communication system than it does to build a land-line system, maintenance costs for wireless systems are far less expensive in the long run, he says.
Third World countries are where the growth is going to be down the road, Baker says.