Purcell Systems Inc., a maker of outdoor cabinets for telecommunications equipment, says that after flat sales in 2006, its on track to boost its revenue by roughly 50 percent this year.


The Spokane Valley-based company expects 2007 revenues to total $80 million to $100 million, compared with about $65 million last year, says President and CEO Pete Chase. It expects its 2008 sales to be even higher, thanks to efforts it has made in recent years to diversify its customer base and expand its product line, he says.


08 will be the next huge quantum leap for us, Chase says. Our diversification efforts are finally working.


Purcell currently has 150 full-time employees and about 50 temporary workers. Its located in an 88,000-square-foot leased space at 16125 E. Euclid, in the Spokane Business & Industrial Park. It leases an additional 55,000 square feet of warehouse space elsewhere in the park.


Originally focusing solely on serving the wireless telecom industry, the seven-year-old company recently has been pursuing the wireline, or conventional telephone, industry, while also penetrating international wireless markets.


The wireline industry now makes up 35 percent of the companys revenues, and international markets make up 25 percent of its sales. Domestic wireless companies comprise the balance of its revenue. Chase expects wireline customers eventually will make up more than half of the companys business.


Once you break into that market, you see high volumes, he says. This is just the tip of the iceberg.


Consolidations and mergershallmarks of the telecom industrypresent some of Purcells biggest challenges, especially with regard to expanding its wireline market share, Chase says.


Establishing a relationship with a big telecom manufacturer requires time and effort. When companies merge, a work force upheaval typically ensues, requiring suppliers such as Purcell to start over in its negotiations with new personnel.


Ive become increasingly aware of larger events in the industry that are not directly related to cabinets but could eventually affect us, Chase says. Its a very competitive business.


Wireline equipment makers sales cycles can run as long as two years, so serving that market requires a willingness to wait before investments pay off, Chase says. In 2003, Purcell set out to target the regional Bells, which provide branch-exchange phone service, and it has had some success in that. Those Baby Bells will be a primary driver of the companys expected growth next year, he says.


To diversify has been really key for us, because any one of our market segments can implode without warning, Chase says. Sales cycles are long, so it takes quite awhile, but if you dont diversify, youre dead.


Telecom companies now are using alternative energy sources to power their remote equipment, something they previously paid little attention to. Now, more customers are interested in ways to harness such energy to power their equipment. In response, Purcell has started integrating fuel cells into its cabinets.


Project Lightspeed


One of Purcells areas of concentrated growth has been in selling to customers that serve the residential market. The company is participating in Project Lightspeed, an initiative led by AT&T that involves a nationwide deployment of fiber-optic networks to neighborhoods. Although the project started two years ago, Purcell is just now seeing revenues result from its involvement, Chase says.


Project Lightspeed, while boosting Purcells revenues, also presents challenges. Some local municipalities and neighborhoods where the equipment is being installed have raised concerns that the large utility boxes required for such broadband connections increase noise pollution, he says. In response, Purcell has developed a line of heat-exchange and air conditioning technology for cabinets that cuts down on the noise created by devices that dissipate heat from the telecom equipment inside.


Purcell makes about 30 different base models of cabinets, all of which can be customized to meet customers needs. The cabinets range in size from 18 inches tall to nine feet tall. One of its newest cabinets supports whats called WiMAX equipment, which enables the delivery of last-mile wireless broadband as an alternative to wired broadband such as cable and DSL.


Looking for new revenue sources, Purcell began offering this year to install and maintain both the cabinets it makes and those that other companies make, Chase says.


Meanwhile, the companys Stockholm, Sweden-based subsidiary, Purcell Systems AB, employs a total of 12 people at its sales and engineering offices in Sweden and Poland. As a result of those operations, the Spokane Valley companys sales in Europe are increasing rapidly, Chase says.


For now, the companys focus internationally is on boosting sales in Europe. It also has started marketing its products in Latin America, though, and has made its first sales in Panama and Costa Rica. Chase suspects Latin America likely will be the companys next targeted area for growth internationally.


Growing pains


Purcells rapid expansion has come with its share of growing pains, many of them people-related, Chase says. One of the main challenges relates to its evolution from a young startup to an established operation that relies on more mature, formal processes to function. With that shift has come a fairly high number of personnel changes, as the more entrepreneurially-minded employees, including the two men who founded Purcell with Chase, have gone on to pursue other ventures, he says.


We started out entrepreneurial, but if you dont apply process, its difficult to maintain growth, Chase says. You have to continually adjust the team that you have.


The companys executives also have tried to keep employee morale high despite periodic slumps in the telecom industry over the past seven years.


You have to try to keep that enthusiasm level up, Chase says. The (telecom) industry can break your heart; it can go up and then down, and you dont understand why.


Meanwhile, Purcell has had to invest in infrastructure to keep up with its growth, including a companywide computer system upgrade last year that will allow us to execute our next level of growth, he says.


The company, which follows lean-manufacturing principles, has been seeking ways to make its processes more efficient. That strategy has resulted thus far in the company avoiding adding extra manufacturing space here in recent years, and keeping its employment levels fairly steady, despite growing demand.


For me, (lean manufacturing) is the only way to keep in telecom and still maintain profitability, Chase says. Its about expense slashing by eliminating waste, not necessarily people.


Spokanes economic climate has changed in recent years and helped foster a favorable business environment for Purcell, Chase says. A number of angel investor groups have formed here and invested in startups. Purcell has received $20 million in venture financing, and has used that financing to plow $100 million back into the local economy, he says.


Contact Emily Brandler at (509) 344-1265 or via e-mail at emilyb@spokanejournal.com.