Launched some 17 years ago, in 1996, as the archetypical entrepreneurial venture from the founder Jerry Jendusa’s basement, EMTEQ today aims to be a world-wide leader in the production and supply of a broad range of innovative products, from aircraft interior and exterior lighting to avionics. The company employs more than 550 people and is located in a FAA PMA approved 82,000 square foot facility in New Berlin, Wisconsin, with offices in Miramar, Florida; Great Falls, Montana; Winnipeg and Montreal, Canada; Taubaté and São José dos Campos, Brazil; and Bachenbülach, Switzerland. Its customers include airframe and avionics equipment OEMs, system integrators, modification centres, engineering and leasing companies, and military subcontractors. Having started in product sales the company has evolved into a comprehensive solutions provider, with a full range of design certification and consulting services, as well as a large product portfolio.
So how did it all begin? The key to EMTEQ’s success, unquestionably, lies in the fact that Jendusa combines considerable business acumen with a fine eye for spotting opportunities for product development. Most businesses that go on to become successful larger companies start from very small beginnings, and EMTEQ is no exception. “I was quite clear that I wanted to start my own business. The initial idea I had was to focus on concepts that would save weight on aircraft, and that entailed finding or building products that would be lighter and would last longer than products they were replacing,” Jendusa recalls.
This gave Jendusa the rudiments of a sound business plan since every aircraft operator wants to maximise allowable take off weight and that means being ruthless about paring down and removing unnecessary weight in every part of the aircraft while at the same time improving or at least maintaining approved safety standards. If you can go to an airframe manufacturer or an operator and show them that you can retrofit a part, with approval, which will reduce weight and improve performance, you will get a hearing. If you can deliver significantly on that promise, to a high standard, you will have a happy client and an enduring and profitable business relationship. On top of this, you also stand an excellent chance of moving from the retrofit game to being included as a supplier on new aircraft or on the fitting out of green-from-the-factory airplanes.
“Personally, and from a business standpoint, I am something of a visionary, with a finance and marketing background, and some technical familiarity. I started out with contacts within the aviation industry and with a fairly well developed understanding of some of the buying patterns of the OEMs, especially those dealing with business aircraft,” Jendusa says. His partners in the new venture were experienced with the FAA’s certification processes, with military aircraft standards and with the aeronautical and radio standards. Between them they understood lean manufacturing processes and the disciplines required to achieve part certification. “One of my partners had some experience at Hughes Aircraft in California. I had been in sales and marketing with the Carlyle Group, but all this started in my basement with myself as the company’s first employee,” Jendusa recalls.
Every new start up, no matter how successful it ultimately becomes, is a stressful and demanding experience for the founders. EMTEQ’s experience was no different in this respect. “There is no doubt that starting a new business in this industry is hard work. You have to have a passion for aviation and a knowledge of aircraft, and you need to understand the buying patterns and habits in the industry. There are extreme barriers to market entry since for just about everyone starting out trying to sell into this sector, this is a high miss, low volume industry. You have to be able to deal with the FAA, with other government organisations, with issues of aircraft liability. It is very challenging to get a product successfully through the certification process. However, the corollary of this is that the more challenging it is, the more potential there is for anyone who can navigate the process successfully. The larger the barriers to entry, the fewer the entrants, which means you have the opportunity to build a very successful business once you are in,” Jendusa comments.
The initial funding for the business came from family and friends, and from the partners themselves. “There are many ways of starting a new business, but we did it the hard way, by not taking a salary for a year and a half and through funding from our own circle. We never went anywhere near private equity. Then, as you build up your own sales and equity in the business you reach the point where you can get a loan backed by the Small Business Authority (SBA), which is where the government backs the loan from the bank, standing guarantor to the bank if your business fails. That note releases bank funding and gives you essential working capital. There are a lot of caveats in an SBA backed loan and as a business you want to get rid of that as soon as possible. Today, across all our sites, we have over 550 employees but we are still a privately held company
People who work with airplanes day and night know in depth and detail where they are experiencing pain, and where things could or should be different. If you are a new company trying to figure out a product strategy the place to start is by listening to industry professionals. “It is amazing what you can achieve in this industry if you are prepared to listen to what people say they need and then act decisively on what you hear,” Jendusa says. During a chance conversation with an operator the man complained about the fluorescent bulbs that were then standard in business jets and commercial aircraft. They failed and spares were bulky and not always on hand. They were a potential fire hazard. They could be the source of system outages if they shorted out. There was very little that was good about them.
“I knew nothing about aircraft lighting so the first thing I did was to go and hire a man who had a PhD in optics. I said to him: go and find me an alternative to florescent tubes in aircraft. He already knew about research and commercialisation projects with light emitting diode (LED) solid state lighting. We went to work to create interior lighting products utilising LED technology and that was a tremendous success for us,” he recalls. The LED replacement technology fulfilled all Jendusa’s criteria. It was lighter than the florescent tubes it was replacing. It lasted longer and it was both much more versatile and looked a lot better, giving designers working to create custom interiors a great deal more flexibility to be creative with lighting.
In developing new offices, EMTEQ has been careful to choose locations that are very conveniently situated for the various big airframe OEMs. “We have locations near Bombardier, for example, in Wisconsin, and near Embraer in Brazil. We acquired a team in Switzerland that has an excellent portfolio of external lighting products, and more recently a team in Canada to help support Transport Canada,. We have developed our European location substantially. It is now our European sales, service and support warranty centre, carrying out repairs for our entire product line. The key here is international support. Having a base in Europe with a seven hour time differential from the US mid-west, and within driving distance of some of the major completions centres in Europe, has been fantastic for us,” Jendusa notes.
He points out that from lighting and avionics, EMTEQ built on its expertise with part certification to provide consultancy and certification services to completion centres wherever its products are being used. “We do not do interior fit-outs and design ourselves. Instead we provide the whole support package to the completions centre, up to and including ground and flight testing, all of which complements the completions centre’s skill sets and helps to embed the product into the airplane. You have to understand hardware and software certification and the supplemental type certificate (STC) process to do this successfully and our completions centre clients look to us to support them in this,” he adds.
Business aviation now represents around 50% of EMTEQ’s revenue base, with military and commercial making up the balance. “I think the outlook for business aviation is very strong. We are of course nowhere near the run rates of new aircraft sales that characterised 2007, but I think the days where the industry suffered a continuing contraction in both aircraft numbers and usage are behind us. The industry has a spate of new launches planned, from the very light jets, such as the new Honda aircraft to the mid range sector with the Lear 85 and the Gulfstream 650, and beyond that to the Global 7000 and 8000. The industry has stabilised and those players who have stayed the course are going to be even stronger. There are exciting times ahead,” he concludes.