SST too fast for slowdown
CEO cites favorable environment

This story appeared in the Antelope Valley Press March 4, 2001.

By ANN WISHART
Valley Press Business Editor

PALMDALE - Business and industry in the Antelope Valley is moving too fast to take time out for an economic slowdown, said the leader of one of the Valley's fastest growing companies.

"They are creating it out of thin air," said Joe Candella, president of Senior Systems Technology. "Many companies can't keep up with their orders."

Candella speaks highly of the cooperation Senior Systems has received in the Valley from "a business-friendly government," and an abundance of available workers found locally. A good applicant interview process and a new employee training program assures the company the best chance at continued success.

"We like the Antelope Valley," he said. "We never kept it a secret. We were welcomed into the community, and we've been a good citizen."

Expansion of the facility will require more land, something the Antelope Valley has plenty of within the boundaries of a state-approved Enterprise Zone that offers significant tax reductions to employers.

That's the story from Technology Drive in Antelope Valley.

Palmdale's answer to the Silicon Valley - Senior Systems Technology - produces high-end electronics such as mixing boards for recording studios, medical equipment and wireless telecommunications components. The major part of the nine-acre, 130,000-square-foot plant is dedicated to manufacturing printed circuit boards for a wide variety of electronic equipment.

500-plus employees
Candella nurtures the company of more than 500 employees, which relocated from Chatsworth in 1997. At present, maintaining more than healthy momentum, Candella believes the firm's commerce could be growing even faster than the current rate of between 22% and 25% a year.

"There's more work available than there are contract manufacturers," he said.

SST is putting out about $100 million worth of product a year and could book more, Candella said. He guards against over-committing his facility and workforce to avoid the possibility of disappointing customers by not meeting deadlines, he said.

Industry figures show average growth in electronics is 20% to 25% a year, a growth spectrum in which SST operates. Candella projects that in four years the company will be producing $200 million in goods, and will have used up all the space in the building at 600 Technology Drive.

"We won't be able to squeeze any more out of this building" by then, he said.

That will coincide with his plans to have the infrastructure and capital in place for an expansion, Candella said. He calls his planning "conservative," compared to the aggressive growth other companies in the same business pursue.

"I'm a risk taker, but not a fool," he said.

As an electronic contract manufacturer, SST found its niches in the emerging fields of wireless communication, health care and controllers, said Steve Taylor, vice president and general counsel. Wireless technology alone seems to be an endless opportunity for growth.

"The international wireless business is huge," Taylor said. "They can't get enough of it."

Balancing the healthy growth of the business against the urge to expand at a rate the market seems to demand takes day-to-day planning within the five-year-plan.

Part of Candella's formula for success is the anonymity of SST. The company's logo is not found on any retail product. Customers buying IBM or Hewlett Packard computers usually have no idea the "brains" of their new machinery were born and installed at SST.

"We do all the middle part," Candella said. "We build nothing unless there's an order for it."

Subcontracting advantage
As a subcontractor in the electronics manufacturing industry, there is no name recognition, but operating in the shadows of the industry offers financial security and other advantages, he said.

Up front, SST is not responsible for the ultimate design. Whether the item appeals to customers and sells or sits on the shelf collecting dust, Candella's company gets paid for supplying components, he said.

The job includes expert advice from SST's engineers on product viability. That is, will it do what it is being sold to do? The company employs a number of top quality engineers, Candella said, who offer their expertise to customers.

Being a subcontractor also protects SST from customer-driven crazes that make or break retailers. Everything made in the Palmdale plant is pre-sold, giving the company a reliable economic base. It makes excellent relations and communication with customers a must, Candella said.

"We are very close with our customer base," he said.

The plant has a large section of floorspace dedicated to testing components in conditions identical to those in which they will operate. Called environmental test chambers, the area consists of ovens and freezers that accommodate all kinds of equipment expected to be reliable in various climates. Sophisticated test equipment is used for each component or for the equipment in which the component is installed.

Customer satisfaction is one of the company's prime concerns.

"The number one thing we're known for is customer service," Candella said. "We want every customer to feel like they are number one."

Timing has been critical for Senior Systems. In the 1960s and 1970s, most big business was vertically integrated, he said. Every aspect of production was under the direct control of the corporation, from raw materials to finished product to sales.

"Today it's just the opposite," Candella said. Start-up companies looking to be vertically integrated are not taken seriously in the corporate world.

"All big companies have divested their manufacturing facilities," he said, which has opened the door for subcontractors to supply big-name corporations. Competition has caused component providers to be increasingly efficient and, consequently, has driven the price of components and the final products down, Candella said.

Core competency
Survival requires each subcon-tractors to be excellent at completing its small slice of the multi-company production effort.

"The buzzword is `core competency,' " Candella said.

From the beginning, he has recognized the need for expert specialization in the electronics field and has built both his company's expertise and its customer base with that in mind.

"I started this on my kitchen table," he said, in the early 1980s.

Before venturing into circuit boards, his company built components for toasters and car alarms. As the market opened up and he developed a more skilled workforce, the 5,000-square-foot facility in Chatsworth became crowded. By the time he moved SST to Palmdale in 1997 - taking advantage of the area's Enterprise Zone - printed circuit boards were the company's main product.

The electronics industry has been growing up to 25% per year and is likely to continue at that pace for quite some time, Candella said. He attributes this growth to research and development in the battery industry.

Battery life, charge time, power and size have been improving rapidly and consumer demand for battery-operated items has been driving the industry. The public has little idea what is involved in the technology, that the tiny battery that packs a huge wallop gives vast numbers of people access to cellular phones. Much has changed in 20 years.

"We take for granted something as simple as a (computer) monitor," Candella said. With more and more people demanding more and different electronic devices, variety in the market expands every year.

"The diversity puts us in a unique position," he said, a position he has bolstered by making sure his company has certifications that show potential customers they follow industry-approved quality guidelines in their processes.

Certification reassures customers that SST follows best practices and turns out a high-quality product, Candella said, adding, "Everything is quality."