SANDPOINT, Idaho—A quiet but longtime Sandpoint-area manufacturer believes it stands to help sharpen the leading edge of the U.S. economy as it recovers.

The concern, Encoder Products Co., makes devices used in just about every type of automated industrial equipment that involves moving parts. The devices provide information to motion control systems.

"I think you'll find encoders in anything that moves," says Bill Watt, who founded Encoder Products in 1969.

Encoder Products' devices are used in oil well drilling, are common in the printing industry, and help position antennas, located in the tailfins of airliners, that link with satellites to provide broadband service to passengers' laptops.

When industry upgrades manufacturing lines, encoders are in high demand, and in today's tough economy, companies are going to be doing a lot of upgrading to become more efficient, says Watt, who still owns the company with his family. He says Encoder Products had never felt much effect from down cycles in the economy until the current recession, but now is starting to feel the U.S. economy rebound.

"We should do well," he says.

Companies can't afford downtime these days, so if you run a manufacturing line that has just ground to a halt because an encoder has failed, you need a part, you need it right now, and you need it to work, says Dan Craner, sales manager in Encoder's Americas Division office near Sandpoint.

Sometimes, the maker of the manufacturing line is no longer in business, or the equipment was made overseas and there is no manual in English, Craner says. That, he says, doesn't stop manufacturing-line managers from saying, "I need an encoder, and I don't care who makes it."

Encoder Products hears from such beleaguered callers all the time, Craner says. "If you communicate that you genuinely care and you're going to do everything you can, you've made a friend for life," which, of course, can lead to repeat business, he says.

Times like these make high-quality U.S.-made parts more desirable than cheaper foreign-made alternatives, Craner says.

"There's a re-emerging loyalty to American-made products," he says. "It's back to basics."

Steve Dilts, the business manager of Encoder Products' Americas Division, says that after an order has been faxed in, Encoder Products staff often can grab all of the needed parts from inventory, hand-assemble an encoder, complete quality control testing of it, and ship the part within 24 hours, which he calls a "best in the industry" time for a rush order.

"We've been able to make a lot of friends by donning our blue boots and red capes" and performing like Superman, says Dilts.

To provide such service and also to meet non-rush orders, the company employs about 120 people at its four-year-old, 100,000-square-foot headquarters building in Sagle, just south of Sandpoint. Encoder Products, which runs two shifts, is down from its high of 150 employees, which it reached about 18 months ago when it staffed up to meet a surge in demand. Some of those new hires have been let go in the last year, but the company would like to bring them back, Dilts says.

"Our long-term plan, and Bill and any of the other officers would tell you this, would be for continued growth in revenue from new products and new customers, and that would create the need for the additional employees." The family-owned company doesn't release its annual sales.

Overseas, Encoder Products employs another 30 to 40 people at its wholly owned British Encoder Products Co. plant, in Wrexham, in northern Wales, and 12 people at its wholly owned Zuhai Precision Encoder Co. Ltd. plant, in Zhuhai City, in the Guangdong Province of China.

In the U.S., the company sells its products mainly through some 200 specialty distributors, which "move product from our plant to the nooks and crannies of the market," and also has field sales offices in the Raleigh, N.C., and Kansas City, Mo., areas, Dilts says.

"There are a lot of technological developments forthcoming that we're going to try to tap into," including modernization of U.S. factories, he says. "We've got our fingers into solar power and wind power, as well as 60-year-old textile mills."

There's another dimension to what's happening in today's economy that bears promise, and it stems from the slower pace of business during the recession, says Dilts.

"My phone started ringing in January," he says. "The calls were from engineers. They've got time to stop and design stuff. They've got time to redesign things for greater efficiency or reduced cost. They can spend time to work on the next generation of product." While those calls haven't translated into increased orders yet, they will, he says.

In its most basic form, an encoder is attached to a rotating shaft in a motor that drives a piece of equipment such as a bottle-filling machine. As the motor turns, it turns a shaft inside the encoder, which turns a disc inside the encoder. The disc is patterned with uniform hash marks around its perimeter. A beam of light from a light-emitting diode inside the encoder flashes through the hash marks as the disc turns.

Each flash is picked up by a photo sensor, which produces an electric pulse. A controlling device counts the number and rate of the electric pulses, which enables a controlling device to keep track of and control the speed of a production line and tell the direction in which the line is moving.

Employing more than one track of hash marks offset from one another by 90 degrees on an encoder disk can enable a controlling device to determine the direction of the rotation of the shaft and enable bidirectional positioning of the equipment, which is useful in complex motion control applications, Encoder Products says.

Encoders "come in all shapes and sizes," perhaps typified best by the size of the discs inside them, Dilts says, adding, "They can be a foot in diameter to an inch in diameter." On a printing press, encoders tell cutting machines when to cut sheet paper to make pages of precisely uniform size, and they work with many types of control devices in food-processing plants, lumber mills, aluminum plants, metal smelters, on chairlifts at ski areas, in missile guidance systems, and in such mundane equipment as that inside vending machines.

"On any given day, we'll get a couple of hundred orders," Dilts says. "The odds are no two encoders in those orders are the same."

Also, if the company makes a certain encoder for a certain reason, "the chances are, we may go a year before we make another one," he says. "They're highly configurable to specific operations," and have electrical, mechanical, and environmental applications, Dilts says. He and Craner refer to the business of making them as "mass customization," which sounds like an oxymoron, but isn't given the encoder's numerous specific applications.

You can find cheap disposable plastic encoders in toys and inexpensive printers that people throw away when they break or that no longer meet their needs, but at Encoder Products, "we start at the industrial and instrumental level" of manufacturing encoders "and work up," Craner says. Carpet manufacturers use the devices, and thanks to the encoder's multiple control applications, multilayer rugs that once cost princely sums to weave now can be produced economically, he says. Says Dilts, "There's a Mohawk carpet company plant that's going through modernization—and will use 500 encoders."

Bill Watt, who founded Encoder Products in 1969 in Costa Mesa, Calif., made encoders personally at one time. Watt was a Sandpoint native who had received two years of electronics technician training at Idaho State University, in Pocatello, in the 1950s and also had served a stint in the U.S. Coast Guard when he entered the encoder business in California because "that's where everything was" then. He decided he wanted to come home and moved the company, but not its five or six employees, to the Sandpoint area in 1972. For the first four or five years afterwards, he would go on the road to handle sales himself, and he designed a cube-shaped encoder many years ago that became a staple of the company's lines. Its advantage: Because it's cube shaped, it can be mounted on any of its sides, says Dilts.

Watt says he founded Encoder Products because he saw that encoder technology in the late '60s was dominated by "contact closure devices," or devices that relied on mechanical contacts rather than optical sensing, and he believed, correctly, it turned out, that it would come to be dominated by electronics.

"I got in early," he says. "I saw a future there."

He also had noticed that automation in industry was growing, and that would lead to lots of growth for encoder companies, he says.

"We've always been known for quick delivery," but the company isn't a low-cost producer, Watt says. He adds, "We're not a big-volume producer of encoders. I don't think anybody is."

The company makes many of the components that go into the encoders it sells, cutting parts from long rods of stainless steel, brass, and alloy in its shop with precise computer-numeric-controlled (CNC) machines that cut and shape metal parts to extremely close tolerances.

Encoder Products' sizable tan building stands out noticeably during a drive north from Coeur d'Alene to Sandpoint on U.S. 95. Watt says it was built to allow for expansion and is only half full.

Much of the talk at the Sandpoint-area company is about the customers who call and ask for help to get things running again at their operations. The most harried such call Craner remembers in his 14 years at the company came from "some guy—he must have been in Arkansas—who said, 'Our chicken plucker is down!'" Craner adds, "We have the best turnaround service in the industry, bar none." If you've got unplucked chickens backing up, that service could be a welcome thing.