Interconnects and power harnesses are often considered as "secondary" technologies to military systems integrators. But designers of mission-critical avionics systems, for example, will be quick to point out that anything less than a military-grade cable assembly can fail under the wide-temperature-range, high-vibration environment found in an airframe. Because of the importance of these often-overlooked military components and subsystems, it is no surprise that the Smiths Interconnect group of companies represents one of the fastest-growing business organizations—and best-kept secrets—in the high-frequency industry.

During a recent visit from Stephen Phipson, managing director (MD) for the Smiths Interconnect group, Microwaves & RF had the opportunity to learn more about this dynamic group of companies serving both commercial and military markets. The Smiths Interconnect group includes some well-known RF/microwave companies (see table), such as EMC Technology, Florida RF Labs, and Times Microwave Systems, but also companies in non-RF but related areas, such as Polyphaser with lightning protectors and Transtector Systems with uninterruptible-power-supply (UPS) conditioners and surge arrestors.

The Smiths Interconnect group accounts for about $300 million (US) annually of the giant publicly traded (London Stock Exchange) Smiths Group, the largest engineering firm in the United Kingdom. Headquartered in London, the company was started in 1851 by Samuel Smith as a clock and watch-making business. The Smiths Group, which has an annual capitalization of better than $5 billion (US), consists of major divisions in aerospace, detection, medical, and specialty engineering businesses. The aerospace business group is the company's largest, with annual sales of about $2.2 billion, including large contracts with Boeing and most major US military contractors. The Smiths Group numbers about 40,000 people worldwide, with about one-half of that total in the US.

"Being a part of Smiths gives us great leverage in bidding on contracts," notes Phipson. "Customers are very comfortable knowing that the Smiths Interconnect companies have the backing of a massive corporation. We have a much stronger position as part of a $5 billion publicly traded company than a $15 or $20 million stand-alone company," he adds.

The Smiths Interconnect group, as with the Smiths Group as a whole, has grown rapidly through well-considered acquisitions, such as Summitek Instruments, EMC Technology, and Florida RF Labs and, as Phipson points out, the company is constantly looking for additional acquisitions to strengthen the group. The firm has a very focused approach to acquisitions, notes Phipson: "We are looking for niche positions, people who have developed a technology leadership position or an application-specific product line that others can't do. These may be the type of things that a company like Raytheon might have once done for themselves but is now oursourcing."

People are an important component of any acquisition, according to Phipson: "The team of people at an acquisition is one of the most important factors in making the acquisition. We look very carefully at the chemistry between our current group of companies and a potential acquisition. And we look for quality people, people who are able to solve difficult problems even when the odds are against them." Apparently, the company is doing the right things by its people, since many of the entrepreneurs who founded the member companies of the Smiths Interconnect group are still with their firms.

"We choose niches very carefully," remarks Phipson, "with businesses that are sustainable, with low competition, and long program lengths." He says that "our goal is to grow these companies at a quicker rate after we acquire them." He notes that there are "about 2000 microwave companies out there," and the company looks at all possibilities in terms of acquisitions.

Phipson and the Smiths Interconnect group of companies are motivated for growth. "Specialty engineering is the second largest part of the Smiths Group at more than $1 billion (US) annually, and a part of that is the Smiths Interconnect group, which is about a $300 million portion," says Phipson. "My mandate is to grow that into a $500 to $600 business in the next several years," he adds. "The more capability we add, the more of an advantage that it gives us on military program bidding," Phipson notes.

The Smiths Interconnect group of companies consists of about 2000 people in 17 different companies/facilities, including the newly established Smiths Interconnect Shanghai to serve the Chinese market. The company has also established a production facility in San Juan, Costa Rica (in the same industrial park as several other high-frequency manufacturers, such as Merrimac Industries and TriQuint/Sawtek). "The literacy rate is 97 percent in San Juan," says Phipson, noting that the presence of a well-educated labor force translates into high-quality production at a fraction of the cost for local US labor. "We've been encouraging all of our companies to use Costa Rica for manufacturing," says Phipson, "since the direct labor rate in Costa Rica is only about $1.70 per hour. We have about 120 people down in Costa Rica now handling production of both thick- and thin-film products."