| |
JUNE 7, 2004
Engineered Support Systems Supertough, superportable field equipment for the U.S. armed forces Military times have changed. During the Cold War, the U.S. could position troops near specific pockets of Soviet-controlled Eastern Europe and leave them there for months or even years, because it could always find its adversaries. Now, to fight the war on terrorism, U.S. forces must roam all over the world. Supplying the new military is different, too. No longer the exclusive realm of giant equipment makers like Boeing Co. (BA ) and Lockheed Martin Corp. (LMT ) with multiyear contracts, the companies serving today's military are often smaller and quite specialized. That describes No. 33 Engineered Support Systems Inc. (EASI ) perfectly. The St. Louis outfit builds supertough, portable gear for the U.S. military forces: 920-watt generators the size of U-Haul trailers, heaters that thrive in subfreezing temperatures, $5,000 air conditioners at their best at 115F. "It's all rapid deployment now," says CEO Gerald E. Daniels, a Boeing veteran who joined last year. Engineered now controls an estimated 70% to 90% of the mobile military-generator and air-conditioner market. That kind of dominance is not a plus for future growth. Company execs expect internal expansion of just 5% to 7% annually, but Daniels has his sights set on gobbling up other companies to beat those numbers. He intends to complete at least two acquisitions a year. At that speed he'll beat the rate charted by Chairman Michael F. Shanahan, who founded the company in 1982 and began the acquisition spree in 1998. By snatching up small manufacturers and service providers and giving their management plenty of autonomy, the company has swelled its top line from $64 million in fiscal 1997 to an expected $800 million this year. WAR GAINS As the military's needs have shifted, so has Engineered's shopping list. The heightened mobility of the military has increased demand for surveillance gear. So Engineered has sought out companies that make things like sensors, biohazard detectors, and communications gear to monitor battle landscapes. Of course, it also helps when your major customer -- the U.S. Defense Dept. -- is furiously ramping up orders. The Pentagon's budget for military products and services will grow from $78.5 billion in 2003 to a projected $105 billion by 2008, according to government estimates. Right now the focus is on troops in the Middle East, but 10 years from now, who knows? Whether it's the heat of the desert or the chill of the Arctic, wherever U.S. forces find themselves fighting, Engineered is ready to follow.  By Roger O. Crockett in Chicago Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
