The realities of a global economy are creating new challenges for a Spokane company that has historically been emphatic in its belief in U.S.-based manufacturing.
Over the years, Telect Inc. co-founder Bill Williams has been an outspoken advocate of keeping manufacturing operations at home. But earlier this year, Telect opened a Mexico manufacturing facility.
And Wayne Williams, who has just succeeded his father as Telect’s chief executive officer, says his principal challenge is to guide the further expansion of Telect’s manufacturing base into South America, Asia and Europe.
“I want to maintain the culture and philosophies that we’ve had as a company since day one,” Wayne Williams said Tuesday. “But at the same time, we see many things changing.”
To compete in a global economy, he said, companies today must have a global presence, and that presence cannot practically be limited to marketing efforts.
“In Brazil, for example,” Williams said, “we face tariffs that are too significant for us to be able to compete.”
But if Telect establishes a manufacturing operation there, those tariffs go away. And the company gets the benefit of the Brazilian government’s preference for dealing with companies that produce products domestically.
Brazil and the rest of developing South America are crucial markets for Telect.
Founded in 1982 by Bill and Judi Williams, Telect has grown from a three-person operation that included Wayne, to a company that employs 750 people in Spokane and 820 companywide.
A designer and manufacturer of telecommunications products, Telect did $75 million in sales last year, and is on a pace to break $100 million this year, Wayne Williams said.
Like another Spokane high-tech company, Key Tronic Corp., Telect watched its competitors move their manufacturing operations off shore during the past decade, but resisted making the same move itself.
But a company can’t compete on that basis anymore.
“We are seeing significant growth globally right now,” Williams said. “So much so that it’s difficult to attack all the markets that are possible right now. We have to pick the right areas, the ones with the greatest growth potential that can provide the best and quickest return so we can continue to fund our growth.”
Telect has always been determined to remain a privately-held company, and that presents another competitive challenge Williams pointed out. Growth is expensive, and many of Telect’s competitors fund their growth through public offerings.
“Our goal is to keep the company private as long as we can,” Williams said.
The company is actively exploring the possibilities of growth through both acquisitions and joint ventures. Williams said the company is considering one joint venture option now, and is looking at acquisition activity during 1998.
Telect will celebrate its 15th anniversary of operations this fall with the opening of its new 145,000-square-foot manufacturing and administration building at its Liberty Lake corporate headquarters. So Williams emphasized that a strong manufacturing presence will be maintained here. Telect recently closed a small Dallas manufacturing operation and is relocating that activity here.
But when its new facility and its facilities at the Spokane Industrial Park reach their capacities, he said, “most of our manufacturing expansion beyond that will be in the global market.”
Williams said his succession to CEO is part of a five-year plan his father implemented when Wayne became president of the company in 1994. The company’s rapid growth since then, though, has compressed that five-year plan to three years.
Bill Williams will remain Telect’s board chairman, and Judi Williams will remain vice chairman. Judi Williams will continue to focus on employee-related issues, which are complicated by the company’s growth. Bill Williams will “take more of an active role in reviewing Telect at the board level,” Wayne Williams said.
“He will be looking at adding some external board members at some time, and holding me and the rest of the management team a little more accountable,” Williams added.
He said the new roles for him and his parents will provide the focused top executive team necessary to take a company to the $100 million sales mark and beyond.
“Wayne’s new role is part of an overall transition program,” Bill Williams said in a news release. “Both Judi and I will still be active with Telect, but we’re stepping back to let Wayne take on new responsibilities.”
Prior to being named president of the company in 1994, Wayne Williams was Telect’s vice president of marketing, sales and product development. He has several of Telect’s patented connectivity products to his credit.
, DataTimes ILLUSTRATION: Photo
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