Innovation driven by variety of forces

Grant Nobiling (left) and Derek Heth dress cables inside the computers, at Crystal Group. (Nikole Hanna/The Gazette)
Grant Nobiling (left) and Derek Heth dress cables inside the computers, at Crystal Group. (Nikole Hanna/The Gazette)

When the U.S. Coast Guard needed a waterproof computer to store videos of drug smuggling and other "bad guy" pursuits on the high seas, it turned to Crystal Group in Hiawatha.

"We have become an engineering services organization," said James Shaw, executive vice president of engineering for Crystal Group.

"People come to us with 'I like this product that you have, but could you do this with it?' Sometimes those requests for modifications are very difficult to do, but to some degree we let the market drive our research and development in terms of trying to meet that demand."

Crystal Group, which employs 107, develops, manufactures and markets rugged computers, servers, switches, storage devices and displays for the military and industrial sectors. The company, acquired in August 2011 by Dexter Apache Holdings of Fairfield, essentially reinvented itself after the meltdown of the dot-com and telecom sectors.

Shaw said innovation also evolves from lessons learned when Crystal Group does not receive a particular contract.

"We have been wildly successful with the (U.S.) Navy, so we look at what kept us from winning contracts with other branches of the armed services," he said. "We were not very successful getting contracts for drone components. We found that weight and power tend to keep you out of an application.

"A lot of the drones are battery operated and batteries mean power consumption. Power consumption means mission profile.

"We came up with an ultra lightweight computer with a composite chassis that can go into drones."

Shaw said Crystal Group offers those same ultra lightweight computers for full size aircraft and industrial equipment applications.

"The new buzzword is CSWAP -- cost, space, weight and power," he said. "Caterpillar and other heavy equipment manufacturers are concerned about not having to air-condition their vehicles because it's expensive. They're interested in rugged computers, but they're primarily concerned about up-time, reliability and keeping the existing configuration."

Shaw said Crystal Group wants to be the most trusted source of computers in the industry, but it also wants to be known as the most responsive.

"We're really into engineering customization, getting them what they need, and we kind of look at that as market research in terms of where do we innovate next, where is their industry moving," he said. "It's a great way of collecting information about the industry and where it's going. It involves building a trusting relationship with our customers to meet their needs and looking at every relationship as a data mining opportunity."

Sometimes innovation is driven by new uses for existing technology.

At McLanahan/Universal in Cedar Rapids, rock-crushing technology typically found in quarries will provide the basis for a new smaller, portable unit focusing on the local contractor market.

"We're building what I've kind of nicknamed our 'sidewalk crusher,'" said Dan Ferguson, McLanahan/Universal general manager. "It's a small crusher that I want to get into the rental market.

"A small contractor that does some parking lots, driveways and sidewalks will not have to load the old concrete into a dump truck and haul it to the landfill where he will pay a tipping fee. He will be able to rent this machine, feed it with a Bobcat and crush the concrete.

"He can pull out the rebar to be sold and put the crushed concrete back down as part of his base. We see it helping the environment and part of our organic growth."

Recycled cellular phones, chargers and accessories have played a major role in the success of HH Ventures LLC in Hiawatha, known in the prepaid wireless marketplace for its Ready Mobile, Ready Broadband and Trumpet Mobile products. Dennis Henderson, president of HH Ventures, said the privately-owned business that employs about 30 people has been transformed over the last 18 to 24 months.

"Our branded retail products have been a good business for us, but as the market has become more competitive, it has became more obvious that there are additional pressures on our product," Henderson said. "Consumers are expecting more and our carrier isn't giving away much more to us, so we're caught in the middle. For years, we only bought from one carrier, Sprint PCS, so we had a dependency on Sprint and our retail customers."

With a computer and software "engine or chassis" to support additional customers, Henderson said HH Ventures began offering wireless voice and data products on a private label basis to wholesale customers. It also expanded the number of wireless carriers supplying airtime.

"We have a fairly significant number of wholesale customers," he said. "We offer them an option of Verizon-powered handsets, Sprint-powered handsets, AT&T-powered handsets or T-Mobile-powered handsets. They choose what handset they want to provide to their customers and we help them craft a rate plan. It can be offered as a prepaid or postpaid service."

Henderson said the wholesale side of the business has provided opportunity, stability and predictability of results.

"We're continuing to invest in the engine that supports our business -- hardware and software  -- because we're starting to hit critical mass in terms of subscriber growth," he said. "About this time last year, we probably had 50,000 subscribers and today we have about 350,000 that we support.

"We're launching a nationwide voice and data plan for the 50 million members of AAA, the auto club. We also have a joint venture unfolding that will conservatively add 50,000 subscribers a month, but more likely 100,000 subscribers a month.

"Our goal is to have well in excess of a million subscribers by the end of the year, which we feel is very attainable. We're expecting to have between 3 million and 4 million subscribers by the end of next year."

Helping existing customers meet the demand for new and existing products has driven innovation and product line expansion at International Automotive Components in Iowa City. The plant, which employs about 750, produces instrument panels for the 2012 Buick LaCrosse on a production line that was moved to Iowa City from a facility in Eureka, Mo.

Moving a production line from one plant to another usually takes several months to complete. Employees of the Iowa City IAC plant were able to have the production line up and running in record time, meeting the demand for an instrument panel that includes intricate hand stitching.

Product quality also helped the IAC plant receive the contract to manufacture the instrument panel for the 2013 Dodge Dart, a completely redesigned compact with Alfa Romeo DNA. Julie Noyes, senior manager of marketing and communications at IAC Group in Detroit, said the Dodge Dart instrument panel and similar contracts with General Motors and Ford have increased the head count at the plant.

"We're seeing the need for parts as older platforms (models) ramp back up and new models like the Dodge Dart are launched," Noyes said. "It was pretty grim for awhile when we went down to 144 employee in 2009, considering that we are one of the larger employers in Iowa City."

While the sluggish economy has been a factor influencing business growth in the Corridor, Shaw said innovation has been critical for Crystal Group and other businesses to overcome such obstacles.

"If you're not innovative, you're probably going to be hamstrung by the decline of the current market," he said. "If you are growing faster than your market, you are innovating.

"As an entrepreneur and an innovator, you need to take risks, fail sometimes, learn from it, and move on. Realistically, you need to be more right than wrong, but you must be willing to take risks to gain additional market share."








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