Both moves, says company President and CEO Wayne Williams, are intended to boost Telects presence and competitiveness in the global market, which the Spokane Valley manufacturer is making a priority of taming. Earlier this year, Telect opened a sales and customer-support office in England and is considering doing the same thing in South America. Now, it is talking with a company in China about a possible strategic alliance that would propel Telects products in that huge, developing country.


Separately, 16-year-old Telect:


Expects to post sales this year of about $122 million, a 28 percent gain from 1997 and above expectations, despite a slowing in sales early this year from the Asian financial crisis. The company expects sales to continue to surge in 1999, to roughly $150 million, Williams says.


Now employs about 1,100 people worldwide, up about 125 this year. About 250 of the companys employees work outside of Spokane.


Is looking for 15,000 to 25,000 square feet of office space it could lease in the Spokane Valley because it has run out of office space at its sprawling complex at Liberty Lake. The company completed a $7.5 million, 120,000-square-foot expansion just over a year ago.


Is installing a $1 million surface-mount computer circuit-board line at its Liberty Lake plant so it can bring in house some work it currently contracts out.


Has launched a new e-commerce web site through which customers can buy its fiber-optic and local-area-network equipment directly, using a credit card, rather than ordering through a distributor.


European plans


Earlier this year, Telect began using a contract manufacturer in Poland to support its European sales. Now, the Spokane Valley company wants a plant of its own in Europe, says Williams. The company hasnt decided where to put the plant, but is looking most closely at Poland, which Williams describes as having the political and economic stability, infrastructure, and educational system Telect needs.


Telect also is studying the possibility of acquiring a manufacturer that already is in Poland, rather than starting a plant there from scratch, he says. In either case, Telect expects to have a plant operational there sometime next year. Williams says such a plant most likely would employ about 100 people initially, but adds, Were planning to do some substantial growth there.


Williams says the new plant would take on some manufacturing currently done in Spokane, perhaps including both complete products that would be sold abroad and components that would be exported either to Spokane or Guadalajara for assembly. Its also likely that components made here will be exported to Poland for incorporation into finished products. He says those decisions will be based on core competencies that might emerge in Poland and on the most cost-effective ways to deal with labor, tariffs, and shipping costs.


Last winter, Telect opened a sales and customer-support office in Southampton, England, which serves Telect customers in Europe, Africa, and the Middle East. That office, which employs fewer than 10 people, likely will stay in England even if a plant opens or is acquired in Poland, Williams says.


The company has said it eventually would like to open a similar office in South America, most likely in Brazil. Williams says Telect had hoped to have an office in Brazil open by now, but held off when the international financial picture became shaky earlier this year as a result of the financial woes in Asia. That possibility now is back on the table, though no specific plans have been made yet, he says.


What could happen sooner is a greater presence for Telect in Asia. Williams says the company currently is negotiating a possible strategic alliance relationship in China, though he declines to disclose further details about those talks. He says an announcement on such a pact could be made in January.


Expansion in Mexico


Telects small manufacturing plant in Guadalajara, which celebrated its first birthday last winter, is expected to quadruple in size next year. Ground was broken recently on an about 60,000-square-foot building adjacent to the 14,000-square-foot plant Telect currently leases in a business park there. The business park is erecting the new building, and Telect will lease it as well, Williams says. He says the plant will take about six months to complete, and because it will be owned by Telects current landlord, he doesnt know what the construction costs will be.


Activity at that plant has soared. Earlier this year, the plant employed about 85 people, and Telect expected to add another 20 employees there by the end of this year. Now, however, the plant employs about 150 people and runs multiple shifts, Williams says. He says employment will grow again when the new facility opens next year, but he cant predict yet how many more workers will be hired.


That plant, too, will begin to take on more of the manufacturing work Telect currently does in the Spokane Valley, where it uses about 110,000 square feet of manufacturing space at its 156,000-square-foot headquarters campus in Liberty Lake and leases another roughly 120,000 square feet of space in the Spokane Business & Industrial Park a few miles to the west.


Williams says, however, that as Telect shifts more work to Guadalajara and perhaps Poland, employment in Spokane wont necessarily decline. He says that if any reductions in the companys assembly work force here are required, they likely can be handled through normal attrition. Also, the companys workers here are cross-trained so they can take on new tasks when production of a product line is shifted elsewhere and a new product is launched here.


Also, he says, Telect is expecting continued substantial growth overall, and might end up requiring additional assembly workers here despite any shifting of production overseas. In any case, Williams says, the mix of new hires by Telect in the Spokane area is likely to change in coming years to include more technical people who would work in new product development, and employees to support those efforts. Evidence of that is Telects current search in the Valley for additional office space, which Williams says he hopes to have secured within the next month or so.


Overall, he says, employment here is likely to remain stable or perhaps even grow modestly, even with expansion by Telect abroad.


Other developments


The launch this fall of Telects new e-commerce web site, located at http://www.fiberlan.com, was intended to make it easier for technology managers at the companies that use Telects products to order them easily and at anytime day or night, says Williams. It also was in response to a belief by Telect that its products werent getting as much attention from distributors that also carry competitors products.


The site currently markets only products related to fiber-optic cabling and systems, but other Telect products will be added to the site gradually, he says. End users can buy the products on line using a credit card, and have their purchases shipped via overnight express if desired. The products are offered at a discount from street prices, Williams says.


Though the e-commerce site could be perceived as an end run around Telects distributor network, Williams says Telect has talked to its distributors and they understand the move. He says that some of the computer technology Telect uses to manage the e-commerce site also eventually will be used on the companys main Internet site, at http://www.telect.com, to enable distributors to order products through the company more efficiently.


We see a natural evolution taking place in the buying process, Williams said in a recent announcement about the site. Over the next three to five years, a new generation will enter the work force, one that has grown up on computers. They already buy a lot of products for themselves over the Internet, and theyll expect to do so in their work environments as well.


Separately, Telect currently is installing a surface-mount circuit board line at its Liberty Lake complex. The line, which is costing Telect about $1 million, is expected to be operational by January.


At that time, Telect will begin bringing in house some of the surface-mount work it currently contracts out, Williams says. He says Telect wanted to gain greater control of turn-around times, quality, and cost on the circuit-board work.


He says workers from elsewhere in Telects operations will be shifted to the new line, but its unclear yet how many workers will be assigned to the line. The boards built on the line would be used in products assembled here and elsewhere.


Also, Telect has completed a spinoff of its Control Products Division, which primarily provided security electronics to the corrections industry. Were out of the jail systems business, Williams says.


The company announced in August its intentions to spin off the division, and recently completed the transaction by selling certain assets, inventory, and proprietary products and technologies to Calvert Technologies Inc., a 25-year-old company located on the West Plains. Terms of the sale werent disclosed.


Telect shifted employees from that division to a new one called the Integrated Systems Group, which has existed at Telect informally for years but now will ramp up its activities. That division custom assembles panel, cabinet, and rack telecommunications systems for customers, using both Telect products and those of other companies. It then sends a team to install the gear at a customers site. Williams says customers asked for such an arrangement so they wouldnt have to deal with several companies to buy and have a custom system installed. We can handle the whole thing, he says.


Telect was founded in late 1982 by Williams parents, Bill Williams Jr. and Judi Williams, who remain chairman and vice chairwoman of the company, but arent active in its day-to-day management. The company produces a wide range of communications cables, connectors, and switching equipment for analog, digital, and fiber-optic applications.