Spokane Journal of Business

Servatron Inc. diversifies, is on track for $30 million in sales

Higher revenues projected as company broadens reach

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Servatron Inc. diversifies, is on track for $30 million in sales
-—Staff photo by Treva Lind
Servatron Inc. employs about 190 workers currently, up from 140 people in May 2011.

Spokane Valley-based contract manufacturer Servatron Inc., which moved into new quarters in March, is on track to boost its annual sales to $30 million as the company has diversified and added new key accounts, says President Tod Byers.

That target is significantly more than last year's total revenue of just over $20 million, and Byers attributes the higher projection to the company increasing its customer base.

"We've had growth with customers outside of the Spokane marketplace," Byers says. "We're seeing some diversification of some of our key accounts. We were very concentrated in one to two top key accounts. We now have five to six key accounts that are spreading our growth across a lot of industries."

The company also has added employees since May 2011, increasing from 140 workers to its current total of 190, about 25 percent of whom are temporary workers.

Overall, Byers says, the company has about 30 accounts through which it provides custom and contract manufacturing services to the electronics industry, including making handheld receivers for Itron Inc., the Liberty Lake-based maker of automated meter-reading technology. Servatron started in 2000 as a spinoff of Itron, and Itron is still a key customer, Byers says.

Byers says Servatron is benefitting from its recent move into about 60,000 square feet of a building at 12825 E. Mirabeau Parkway, in the Pinecroft Business Park. The structure formerly housed Itronix Corp., a manufacturer of rugged computers that was bought by General Dynamics. Servatron's new facility is roughly the same size as its former space, at 15520 E. Fairview, but is better suited for a number of reasons, he says.

"This building is newer," he says. "It shows better to our customers. It has more process efficiencies because we were able to better lay out our manufacturing processes."

Byers credits Keith Swenson, another company principal, with planning the move in a way that didn't disrupt customer orders. Byers, Swenson, and John Miskulin are the company's three principals.

In June, Servatron held an open house for clients that drew about 100 people to the new facility from the Spokane area and Seattle, he says. Servatron's niche since its start has been in fulfilling orders for wireless—or more specifically, radio frequency, or RF—products for other companies.

Most of its clients are involved in energy, military, and emerging technologies and are from the Spokane area, Seattle, and Portland. One key customer is based in Minnesota, Byers says.

Among its clients, the company also has a contract with General Dynamics to provide repair services, Byers says. The company's service work now makes up about 20 percent of its total revenue, and it hopes to grow that work, he adds.

Additionally, Servatron plans to gain aerospace manufacturing certification by the first quarter of next year to diversify further, Byers says. With that certification, he says Servatron could offer circuit board assembly for instrumentation panels that go into airplanes, as one example, performing as a sub-tier supplier to a top-tier company that perhaps manufactures parts for Boeing Co.

"This will allow us to leverage new accounts and grow," Byers says. "There is a push in Spokane to grow aerospace manufacturing."

He adds, "We're optimistic that once we have the certification, we'll have additional business opportunities. We're very good at complex products, and we feel this certification will open up ways to utilize our expertise."

The company also is flexible in the services it provides, Byers says, adding that being nimble is paramount to staying ahead among numerous contract manufacturers worldwide.

"We're different than what we were when we started, and we have to continue that growth and change to stay ahead," Byers says. "It's a competitive marketplace. You can't stay stagnant."

Among the items that Servatron manufactures is a GPS handheld device often used by hobbyists involved in geocaching, an outdoor treasure hunting game where people use GPS technology to hide and seek containers left by other hobbyists.

ReliOn Inc., the Spokane Valley maker of fuel-cell-powered critical backup power systems, said in a Feb. 16 Journal of Business article that it contracts out some component manufacturing to other companies here, including Servatron. Byers says that work is ongoing.

While Servatron always has made products for other companies, last year its principals and three key Servatron employees launched an in-house product and created a separate company, ClearRF LLC, to market it. The ClearRF product is a wireless phone signal amplifier intended to provide a consistent signal and prevent dropped calls.

"ClearRF has done fairly well," Byers says. "We're making sales to local customers."

The company has sold the product so far to such customers as Avista Corp., the Idaho Transportation Depart-ment, and the Washington state Department of Transportation.

"That business is starting to grow, really in the M2M, which is machine-to-machine technology, with companies integrating our amplifier into their devices," Byers says.

An example would be an alarm system that incorporates cell phone technology to issue alerts, but that is located where cell coverage is poor, so the amplifier could be used to enhance the wireless signal, Byers says.

"As the product evolves, we're finding other applications and niche markets and potentially product diversification," Byers says. He adds that so far the company is on track to sell about 600 to 800 amplifiers this year, but depending on a couple of options in the pipeline, "it could far exceed 1,000."

The device, which is slightly larger than an iPhone, has three potential applications—use in vehicles to boost cell signal particularly in areas where cell coverage is unstable, machine-to-machine applications, and in-home use, such as at a remote cabin.

"It can light up an office, not the whole home but an office, to send and receive data," Byers says.

Servatron also will add a service later this year called conformal coating, which Byers says fulfills a customer's request to "seal" a board, so that moisture or other environmental impacts don't affect a wireless device. "In the past, we've had to outsource that. We felt it is time to add that into our capability offerings."

He says the company doesn't have any immediate plans to expand its workforce. It often relies on bringing in temporary employees as needed, Byers adds, and some of them are hired into full-time positions.

"That's one of our strengths, the ability to add people as work picks up," he adds. "It's just the nature of our business."

The lowest point for the company came in 2009 as it felt the ripples of the downturn in the U.S. economy, he says, and revenues fell to $21 million from a company record of $42 million in 2008.

"When we spun off in May 2000, we were fortunate to have 78 employees and we had one big account," which was Itron, he says. "We still have roughly 50 of those original employees and we still have that big account, but lots of things have changed, which is a good thing."

Treva Lind
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