Two years ago, Spokane-based Output Technology Corp. was looking ahead to 1999 as a year that would be pivotal to its future.


It recently had launched its first new product line in nearly a decade and had just made its final payment to creditors in a five-year reorganization plan overseen by the U.S. Bankruptcy Court. Company officials were optimistic that the manufacturer of high-speed computer printers was finally going to leave its problems behind and candidly said at the time that they were betting the companys future on the new product.


But 1999 proved to be a disaster.


Output had aimed its new printer, called the OTC6500, at an upper-end market in which it hadnt yet competed, and thus was seeking to build relationships with new customers and an unfamiliar set of distributors. However, the roughly $40,000 continuous-form laser printer came out of the box with significant problems.


After about a dozen units in the hands of customers and distributors, engineering and manufacturing problems quickly began to surface, component supplier problems emerged, and inadequate training and documentation were discovered, says Steven Benner, the companys new acting president and CEO. The new relationships Output was striving to build were immediately put to the test. Though the company retrofitted some of those units, it took back the others and essentially pulled the printer off the market.


We really struggled with that product, recalls Benner, who was promoted in September, upon the retirement of longtime company President Lou Sims.


Benner says it took more than a year to fix all the inadequacies of the OTC6500 and for Output to feel confident enough to reintroduce it to the market. It was earlier this year that we were sure that everything was solid, says Benner, adding that the initial response from customers, however, was cautious skepticism.


It was a very tough year, he says of 1999.


But 16-year-old Output has been, if nothing else, resilient. Today it believes it has turned the corner in terms of rebuilding trust with customers, and has even begun collecting testimonials and trade-journal write-ups about the printer, which is aimed at users that produce a high volume of accounting reports, customer statements, rebate checks, or even retail shelf labels and event tickets. The city of Palo Alto has endorsed the printer and it has gotten notice for its compatibility with a popular mid-range H-P computer.


The printer itself is a horse. About the size of a four-drawer filing cabinet, it belts out 65 pages per minute and is rated to handle about 1 million pages per month. The company is back up to only about a dozen customer installations, but marketing efforts just now are starting to pick up, says Carl Grotheer, vice president of sales and marketing.


Through the earlier adversity, Grotheer adds, Output also proved its ability to make things right for its customers, a reputation it hopes will pay dividends later.


Also, with an expected new revenue stream from the OTC6500 essentially shut down for months, Output was forced to fall back on other relationships and strategies to buttress cash flows.


It pursued sales of equipment and consumables in its other product linesthe high-speed TriMatrix Series dot-matrix printers, its high-volume EuroLine Series line printers, and its LaserMatrix Series, which was its first foray into continuous-form laser printers. But more importantly, it sought partnerships with other manufacturers to expand its lines without investing too heavily in research and development. We looked at alliances more than we ever had, says Benner.


A key result of that effort was the introduction of OTCs PrintStation line, which it launched in the summer of 1999 and added a new model to last spring. The impact-style printers, which range in speeds from 600 to 1,000 characters per second, are aimed primarily at users who do whats called transactional printing, such as warehouses that print shipping labels and bills of lading right on the loading dock, or rental-car counters. They are made for OTC on a contractual basis by an Italian company, but are packaged and shipped at OTCs plant at 2310 N. Fancher, near Felts Field in the Spokane Valley.


With the about $3,300 PrintStation in its lineup, OTC dropped a similar line called the Demand Series, which it had made for years.


Benner says more collaborations are likely. With fewer resources available for research and development and tighter windows in the market to develop new products, OTC will be looking for additional ways to add new lines or just new models within its current lines by working with other manufacturers, he says.


We have to be much faster about developing new products, Benner says.


Thats especially important as OTC continues to seek out niches within the impact printing industry that arent dwindling. Impact printers use print heads to press ink onto paper, as opposed to ink jet printers, which shoot ink onto paper, and laser printers, which adhere toner onto paper using lasers and heat. While the latter two technologies have become more dominant in recent years, impact printing is declining, and is used now mostly for specialized purposes, such as for printing multiple-layer forms or for high volume printing in accounting departments.


OTC, says Grotheer, must use its expertise in high-speed, continuous-form printers to capture market share in the laser-printing market while strategically selecting the niches in the impact printing market that are likely to remain intact the longest.


Both he and Benner say they believe the company is doing just that and expect OTC to remain a viable enterprise.


With its struggles, however, the company has continued to contract some. It now employs about 75 people, after dropping another about 30 employees over the past year or so. The privately held company doesnt disclose financial figures, but Benner says annual sales remain well below $20 million a year it earlier had been achieving, which was far below the $35 million in sales the company reported in court records back in 1992, the year prior to its Chapter 11 bankruptcy filing.


The company failed to make a profit last year, something it had been able to accomplish even while working its way through a bankruptcy repayment schedule. It hopes only to break even this year, and doesnt expect employment growth any time soon.


Were living within our means, says Benner.