News
Minnesota Wire & Cable Co. Plugs Into Defense Industry
22 Jul 03 Finance and Commerce
By Jim Martyka - Few companies would be willing to launch a new division without extensive thought, planning and soul-searching.
But the head of Minnesota Wire & Cable Co. maintains that the decision to add a new unit last month was an easy one. It was the company's patriotic duty, he said.
"We got a call from the military saying they had a problem and they needed us to fix it," said Paul Wagner, President and CEO. "We said, 'Yes, sir.' And that's how Minnesota Defense was born."
Minnesota Defense will operate as a separate division of Minnesota Wire & Cable Co., a 35-year-old wire and cable manufacturer (mainly for the medical and communication industries) that is headquartered on Energy Park Drive in St. Paul. The company, which has manufacturing operations in Eau Claire, Wis., has about 180 employees and just under $20 million in annual revenues.
The new division will push the company into defense and military contracting, where the firm has dabbled for the past few years. The company will help the military with the engineering and design of products as well as testing. The majority of its work will be with the Army's Land Warrior project.
Minnesota Wire & Cable had done some small work on the Land Warrior, which is basically miniature computer systems that soldiers carry in the field for instant data, communications, vision tools and other high-tech support.
Minnesota Wire & Cable helped test the equipment and design the best wire and cables for ensuring the system would stay connected in the field. But the big call came a few months after the Sept. 11 attacks, when the company was suddenly thrust into full testing of the Land Warrior.
"It was pretty crazy," Wagner said. Suddenly we were going to different bases and watching to see how these systems would hold up to water, heat, rugged use, whatever. From that testing, we had a ton of new suggestions, especially in terms of soldier safety, system capacity and cost reduction. That's when we knew we should launch a new division."
Operating separately from the main company, Minnesota Defense will work on a contract basis. The company has three military contracts and is looking for more work. While Minnesota Defense revenue will only be a small portion of overall company revenue, officials are excited about military contracts and the high revenue that they often generate.
Minnesota generally isn't considered a hotbed for military contractors. Alliant Techsystems, a spin-off of Honeywell, is the most visible contractor in the state, producing a wide range of ammunition and weapons systems for the U.S. military. The Edina-based company posted revenues of $1.8 billion last year.
With the U.S. military excursions into Iraq and other trouble spots around the world becoming more frequent, Minnesota Wire & Cable and other defense contractors could see a growing market.
"There is always going to be growth for the companies during times of war," said an executive from Honeywell who asked to remain anonymous. "The military comes to us with bigger orders and shorter deadlines. So the work increases, but so do the revenues."
Doug Johnson, co-director of the Center for Entrepreneurial Studies at the University of Minnesota's Carlson School Management, said Minnesota Wire & Cable's decision to form a new unit is a good move for the company.
"Growth comes out of new opportunities," he said. "Launching a new business is risky. But if you have the demand there already, it makes sense."
In the immediate future, Wagner said, the company will continue to focus on the medical and communications industries. But he hopes the new division will build the firm's reputation in a new industry.
"It's a tremendous opportunity," he said. "And we're doing a service to our country."