Purcell (Liberty Lake, WA) bucks telecom slump- Equipment-cabinet maker doubles revenues, staff while filling unusual market void

Purcell Systems Inc. http://www.purcellsystems.com/ is bullish on the telecommunications industry.

That might sound like sarcasm or a sick joke to those who serve the telecom industry and have watched that sector’s sales and staffing levels collapse.

By Linn Parish Spokane Journal of Business

Yet, the 3-year-old Liberty Lake maker of outdoor equipment cabinets started operations during the height of the telecom boom, and has benefited from some unique market conditions that came as the boom became a bust.

Pete Chase, the company’s president, says Purcell doubled its annual revenues in 2002—to about $12 million—and is on pace to repeat that performance this year.

“We’re doubling in a flat market,” Chase says. “If the bubble comes, sales could go through the roof.”

Chase and Purcell’s other two founders, William Miller and George Thompson, project that sales will continue to double annually for the next few years—and that the company’s annual revenues will reach $100 million within three years.

Purcell’s staff size has grown at a comparable rate. The company currently employs 75 people and is bringing in a handful of additional workers later this month. That’s up from about 40 employees a year ago.

Chase says he expects the company’s employment to reach about 100 people by the end of 2004, then flatten out somewhat. Most of the increases will involve additions to the company’s sales and engineering staff, he says.

To keep up with the growth so far, Purcell has moved twice in three years—from Miller’s garage and home office to an 8,000-square-foot Liberty Lake building to the company’s current, 19,000-square-foot quarters at 22924 E. Appleway in Liberty Lake.

The company currently is considering leasing additional office space in a neighboring building. It was mulling yet another move late last year as manufacturing space grew tight, but decided to pursue lean-manufacturing processes instead, says Miller, who is Purcell’s vice president of production.

Last December, the company streamlined its manufacturing operation and cut down on parts inventory, Miller says. As a result, the company boosted its production capacity sixfold in its current space, and now no longer needs to move to accommodate volume growth in the near term.

Cabinet customization

Purcell makes roughly 30 different types of cabinets that range from about the size of a pay phone to a good-sized bedroom closet. Those 30 base models can be customized to meet customers’ needs, Miller says.

Nearly all of the company’s cabinets are used outside and are climate controlled, with fans or air-conditioners, and they often include backup power-distribution systems. In some cases, security or monitoring equipment is installed in or near the cabinets.

Most often, such cabinets are used for equipment storage at the base of an antenna, though in some cases they’re used to hold equipment inside buildings.

The cabinets can range in price from a few hundred dollars to tens of thousands of dollars. Chase says that might sound like a lot, but the costs always pale in comparison to the value of the equipment that the cabinets protect.

Purcell doesn’t disclose the names of its clients, but says all of its customers are in the telecom industry.

Thompson, the company’s vice president of engineering, says a key to Purcell’s success is its ability to customize cabinets in a variety of ways to meet customers’ diverse needs.

Now, he says, “All of the things that made us nimble when we were small, we’re trying to bring with us as we grow.”

As a startup in January 2000, the company keyed in on what are called competitive local-exchange carriers, or CLECs, which offer local telephone service. That market dried up soon thereafter, however, and Purcell lost customers and was left with some uncollectible accounts receivable. The company was able to stay afloat during the rough spots with a steady flow of small orders and some money from two local venture-capital firms—Raven Ventures LLC, of Spokane, and Big Horn Ventures, of Post Falls.

At that time, Chase says, large network providers and multiproduct telecom equipment suppliers made the bulk of the telecom cabinets on the market. As the sector began spiraling downward, most of those companies retrenched and began concentrating on their core business products, shedding their peripheral product lines, including telecommunications cabinets.

That left a huge void in the market that Purcell sought to fill, and that dynamic continues to fuel the company’s growth.

Other, smaller effects of that downturn helped Purcell as well. For instance, as the young company grew, it was able to get quality office furniture and equipment on the cheap from companies that were paring down or going out of business, Miller says. Also, he says, Purcell was staffing up as others were laying people off, which means the company has had its pick of quality job candidates.

“We’ve had miracle after miracle in this business,” Chase says.

Another factor in Purcell’s recent success is the expiration of a no-compete clause that limited its potential customer base. Before launching Purcell, the three founders had worked in sales at Northern Technologies Inc., a Liberty Lake-based manufacturer of surge-protection devices, and a two-year agreement prevented them from selling to the same customers they served at Northern Technologies.

While the products made by Northern Technologies and Purcell are distinctly different, the customer bases are similar, Chase says. When the no-compete clause expired last year, he says, Purcell was able to pursue business with customers he, Thompson, Miller, and others had developed relationships with through the years.

The three founders still seem surprised about how quickly their company has grown. They recount stories about having only one phone line and having to end calls quickly to receive purchase orders via fax.

They go on to talk about how big of a deal it was to hire their first employee and to spend a couple of thousand dollars on the company’s first sign.

One thing that isn’t so clear is how men named Chase, Miller, and Thompson came up with a name like Purcell. Chase says he always liked the Purcell Mountains in British Columbia, and all of them thought the “cell” part of the name jibed with the telecommunications industry they serve.

“Really, it just sounded right to us,” Chase says. “In the beginning, we all had fun taking messages for Mr. Purcell when a salesman called.”

http://spokanejournal.com/spokane_id=article&sub=1635