Local makers of flight-navigation tools turn up the technology, and the world notices
This week's announcement that Max-Viz Inc. has landed more than $7 million in venture capital funding threw a spotlight on an oft-overlooked regional industry.
The makers of 'situational awareness' devices, as they are called, develop high-cost, high-margin tools that help pilots get their bearings in the air and help observers 'see' unseeable objects on the ground. The industry has more than held its own in brutal economic times.
The products run the gamut from Max-Viz's enhanced vision systems to Flir Systems Inc.'s 'gyrostabilization' instruments that secure sensors and cameras to police and news helicopters.
Many of the products utilize thermal imaging, a technology that captures the upper portion of the infrared light spectrum and makes it possible to visualize objects based on the heat they emit.
The commitment to infrared has paid off. Max-Viz recently scored a huge contract to supply its infrared-driven sensors to Cessna. Another local company, Flight Dynamics, owned by Cedar Rapids, Iowa-based Rockwell Collins, supplies devices to most major airlines.
Then there's Flir, the local industry's lodestar, which holds several government contracts.
Flir's status as market leader was punctuated by its stunning comeback from death-knell status in January 2001. Its stock resurged quickly that year and has continued to rise through 2002 while most other publicly traded technology companies have seen their stocks plummet.
Flir leads the way
Flir gets most of the credit for establishing Portland as a hub of the situational awareness industry. The company was established in 1978, and its alumni include Dick Kerr, Max-Viz's chief technology officer and inventor of a groundbreaking sensor technology.
Then again, Portland's secret weapon may lie in its climate.
'Portland is a pretty foggy city, and it really demonstrates the need to create these kinds of products,' noted John Desmond, Rockwell Collins' vice president in charge of Flight Dynamics.
Max-Viz, for one, has capitalized on the fog, collecting two rounds of venture capital totaling $7.8 million.
Greg Fawkes, Max-Viz's president, says the cash infusion shows that his company occupies a hot space.
'Basically, the advent of enhanced vision systems will lead to a transformation in aviation that's as dramatic as the shift from wood and canvas to metal, and from propellers to jets,' he said.
Most plane accidents, he continued, stem from pilot error, which are often caused by a loss of situational awareness. Enhanced vision systems, or EVS, use thermal imaging to determine what lies behind fog and other obstructions, effectively providing help during times of potential distress.
Max-Viz's EVS products cost between $120,000 and $350,000. They are gadgets that are favored among idle-rich fliers as well as military and commercial aviators.
Max-Viz won Federal Aviation Administration approval for its EVS line last October, just five months after opening for business.
The company now employs 24 workers Ñ most of whom sport big-time infrared development experience.
For its part, Flight Dynamics is known for its holographic head-up guidance system, which provides visuals for information collected via Max-Viz and Flir sensors. The system reflects landscape images, derived from infrared sensors, off a glass screen that sits at the pilot's eye level. The system is used on 20 types of aircraft, including Boeing 727s and 737s.
'These devices show you the flight path and project where you'll touch down on the runway,' Desmond explained.
Airlines using Flight Dynamics systems include Alaska Airlines, Horizon Air and Southwest Airlines. The company also partners with the U.S. Air Force, and earns about 40 percent of its revenues (Desmond won't disclose the numbers; his division is profitable, he said) from European customers.
The head-up systems cost between $250,000 and $500,000. 'If you do it to a fleet of 100 airplanes, you spend a lot of money,' Desmond noted.
Which, he added, will contribute to the division's ultimate growth. 'We're always looking for growth, even in times like now when the airlines are experiencing turmoil,' Desmond said.
Military, TV stations sign up
The same goes for Flir, which makes thermal imaging and broadcast camera systems for aircraft and other applications. Along with straightforward situational awareness items, Flir's thermal imaging products help with such tasks as search and rescue missions and federal drug searches.
About half of Flir's business comes from the governmental side, including the military, U.S. Customs and the U.S. Coast Guard.
Another big business chunk comes from Flir's gyrostabilization systems that secure camera systems to television news helicopters.
'Every helicopter in Portland has one, and pretty much all of the top 100 stations in the country have them,' said Andy Teich, Flir's senior vice president of sales and marketing. 'We dominate that business.'
That Flir even remains in the market, let alone dominates it, is stunning. The company recently settled Securities and Exchange Commission charges that former executives fraudulently inflated profits to meet analysts' forecasts in 1998 and 1999.
While Flir neither admitted nor denied wrongdoing, four leaders, including Chief Executive Officer Kenneth Stringer, were jettisoned.
The CEO door thus swung open for Earl Lewis, a Flir board member who engineered Flir's 180-degree financial turn. When Lewis took over, Flir's stock was mired below $5 and was losing money each quarter.
Steve Bailey, Flir's chief financial officer, said Flir laid off about 200 of its 900 employees worldwide and cut back on some production. After the cuts, the company refocused its energies toward keeping existing product lines profitable, a strategy that continues to pay off for investors nearly two years later with the stock trading this week at more than $40 per share.
'The new management team did a great job cleaning things up, but fundamentally, the business wasn't broken,' said New York-based Needham & Co.'s Jim Ricchiuti. 'They always had good products, a good market share and profitable products.'