Business

Aeroflex ready to ramp up

Aeroflex Wichita has largely avoided the effects of a prolonged economic downturn in the past couple of years, company officials said.

The Wichita division of a New York-based company has benefited from defense orders and from maintaining the top positions it has held in the some of the markets it serves.

The rollout of new products and hopeful signs in the commercial market should propel the Wichita operations beyond $100 million in sales in 2011, vice president and general manager Jeff Gillum said.

All of this comes a few weeks after its parent, Plainview, N.Y.-based Aeroflex Holding Corp., became a public company through an initial stock offering.

Aeroflex Wichita is the former IFR Systems, a Wichita-based publicly traded company that was weighed down with debt and sold to Aeroflex in 2002.

The Wichita operation is part of Aeroflex's Test Solutions division. The division comprises product development and manufacturing of a range of sophisticated electronic devices that test and calibrate mobile and hand-held radios, aircraft radios and navigation equipment, and cell phones.

The radio test sets manufactured in Wichita are primarily for military, aviation, public safety and private mobile radio sectors while Aeroflex operations in the United Kingdom manufacture test sets for cell phone makers, Gillum said.

The products that Aeroflex Wichita make are priced between $8,000 and $170,000, Gillum said. The majority of products it sells are priced between $20,000 and $50,000, he added.

The Wichita unit, which includes a 120-person manufacturing site in Lenexa, has benefited in recent years from a number of multimillion-dollar orders from the Air Force, Marine Corps and Army.

It also saw a surge in business beginning around 2003 from public safety agencies such as fire and police departments that received Homeland Security funding to upgrade their radios to more sophisticated and secure systems, partly in response to the emergency communications troubles faced by responders immediately following the Sept. 11, 2001, terrorist attacks.

But the military business is showing signs that it might be slowing.

"The military spending, we've probably started to see that decrease a bit," Gillum said.

However, the non-military commercial markets, including aviation, are showing signs that they might pick back up next year, he said.

Between a rebound in commercial business and the new product rollout — consisting of a military/tactical radio test set and two test sets for the aviation industry — Gillum is optimistic about additional growth in the next year.

The launch of those new products also is driving the company to add an additional production line for the assembly of circuit boards — key components of its radio test sets — that is expected to be operational in the next couple of weeks, he said.

Gillum said growth this year — and a decision to hold off hiring more staff even though business activity would have justified it — meant that the Wichita operations did not have to layoff any staff. He said the average tenure for a Aeroflex Wichita employee is about 10 years, probably more.

Market leader

Aeroflex and its Wichita operations get high marks from one industry analyst.

Jessy Cavazos, industry director for test and measurement for Frost & Sullivan, a business research and consulting firm, said the company as a whole "is definitely a company we would consider one of the leaders in the test and measurement industry."

As for the Wichita operations, it is the leader in the private radio test market, she said. But in the military test radio market it has "much stronger competition" from companies such as Agilent Technologies.

Overall, Aeroflex "is an extremely competitive company, a very innovative company that is recognized for the cost-effectiveness of their products, quality of their products and the reliability of their products," Cavazos said.

Despite those high marks, when parent Aeroflex Holdings had its IPO on Nov. 18, the stock, which opened at $13.50 a share, closed its first trading day flat.

Cavazos, who is not an equity analyst, attributed the flat performance to the fact that Aeroflex is in a low-profile industry and IPOs by others in that industry have been underwhelming because of it. It's not a reflection of the company itself, she said.

"It's not like the communications market," Cavazos said. "I don't think the test and measurement market attracts a lot of attention in the public domain."

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