HAYDEN, IdahoCorporate mergers typically have even higher failure rates than the liaisons of Hollywood stars, the venerable Economist magazine said in 2000.


Luckily for North Idaho, the experience of Hayden-based Transtector Systems Inc. has been just the opposite since it was acquired in 1998 by British conglomerate Smiths Group PLC.


We just went crazy after Smiths bought us, says Shawn Thompson, managing director of Transtector, which makes high-end surge suppressors that protect electronic equipment. In the first three years after the acquisition, annual revenues more than doubled to about $38 million, he says.


While much of that growth was due to Transtector having positioned itself well prior to the acquisition by Smiths, Thompson says, the companys new parent definitely gave us the strength to make the right investments at the right time.


After those bountiful first three years, Transtectors revenues subsequently declined about 40 percent in 2002 because of the carnage in the telecommunications industry, from which Transtector derives much of its revenue, Thompson says.


Once again, however, the company is on a growth track.


Since July of this year, business has been tremendous, Thompson says. Revenues in the first three months of the companys fiscal 2004, which will end this month, are projected to reach 45 percent of the companys revenue for all of the previous fiscal year, he says. By the end of the current fiscal year, Thompson expects Transtectors revenues to end up north of $25 million.


Also, the company has hired 20 workers since July, bringing its total employment to 143.


That work force includes 10 to 12 positions added over the summer when another Smiths unit, LEA International, moved its manufacturing operation to Transtectors Hayden facility from Tampa, Fla., Thompson says.


LEA, like Transtector, makes products for the transient voltage surge suppression(TVSS) industry and is part of Smiths Groups $280 million Interconnect collection of companies.


Smithswhich also has operations in aviation, health care, specialty engineering, and security systemsmoved LEA International to Hayden to take advantage of synergies between the two concerns, and to increase efficiency by having them share information-technology, accounting, and some purchasing activities, Thompson says.


The consolidation of that made good sense, he says.


He hints that similar combinations could be on the way.


With the backing of Smiths, youre going to see Transtector grow and become more of a full-service solution provider, he says.


Currently, Transtector is the 7th-largest player in the $220 million hard-wire TVSS market in the U.S., ranked by market share, Thompson says. When combined with LEA, the companies together would rank 4th in that market, although there are no plans to merge Transtector and LEA under one name, he says.


Cant buy em at Costco


Transtectors products arent the strip surge suppressors that many home computer users are familiar with, Thompson says.


Instead, theyre hard-wired, custom products that protect critical equipment in a variety of industriesfrom medical equipment, such as computed tomography scanners, to air-traffic control systems, to home theater systemsand that cost anywhere from $400 to $7,000 each, he says.


Transtector, which was founded in 1967 and moved to North Idaho in 1981, claims to be the first company to have utilized silicon diodes to protect integrated circuits. Together, Transtector and LEA hold five patents for their designs and have another two patents pending, Thompson says.


Transtector currently is trying to diversify its customer base to avoid relying too much on one industry, Thompson says. In addition to the telecommunications industry, from which Transtector derives 60 percent of its revenue, the company serves the health care, government, industrial, and equipment-manufacturing industries.


Health care, which currently accounts for just 4 percent of the companys business, is a particularly promising market because the aging population is sure to increase demand in that realm in coming years, he says.


In addition, Transtector derives about 4 percent of its revenue from a consulting subsidiary called R.O. Associates, which trains customers in how to use its products.


The ideal situation is to get our business to where no one sector dominates more than 35 percent, Thompson says.


The company also wants to diversify its geographical markets, and has opened offices in Shanghai, China, and London, and has established an international distributor network, he says. Currently about 70 percent of its sales are made in North America.


By virtue of its connection with the Smiths Group, Transtector should be able to expand our market presence and our market share because it can share the costs of doing that with other companies, Thompson says. As an example, he says, Transtectors office in Shanghai was established with several Smiths subsidiaries.


Thompson says Transtectors facility here, at 10701 Airport Drive, could accommodate the companys growth in the foreseeable future. Whats more, the company might explore sending some of its primary production offshore and completing just final assembly of products here, he says.


Although Transtectors products can last 15 to 20 years before having to be replaced, Thompson says customers now typically are looking for higher capability in smaller packages, which requires constant new-product development at the company.


In addition, There continue to be new niche opportunities, he says, and Transtector likes to say that it makes niche products for niche solutions to niche markets.