oanna Lau poses proudly with a scale model of the Bradley Fighting Vehicle, the U.S. Army's fortified people mover. She pats its turret, every bit a proud parent. The entire tank wasn't Lau's creation, but Lau Technologies manufactures its brain, a little green box that lets the tank commander control vehicle movement and the weapons system. The tank is, for Joanna Lau, a dream machine that helped turn a promising young MBA into a budding business legend.
Defense subcontractor Bowmar/ALI had first caught Lau's attention while she was working on her MBA. What impressed her most about the company was its tenacity in staying alive despite the series of drastic cutbacks in military spending. She decided to use the company as her manufacturing case study.
In fact, Bowmar/ALI was barely surviving. Its one-time profits were turning to big losses, its suppliers would only ship COD and its reputation for quality had all but disintegrated.
In 1990 Lau, then 30-years old, walked into Bowmar/ALI, which by then was teetering on the verge of bankruptcy, and invited its 60 employees to join her in buying the company. Lau offered the employees a chance to take control from the Pheonix-based parent company, Bowmar Industries, because the backing her family could provide simply wasn't enough. About 24 employees were impressed enough with her pitch to sign on. She called a stockholder meeting and proposed a buyout. The stockholders were receptive to the idea of salvaging their investments before the ship sank.
But the ship didn't sink. With Lau at the helm, revenues surged from $7 million in 1989 to $49 million in 1994. During that time the profit picture brightened from a $1.5 million loss to a reported $2.7 million profit. Currently, the company is riding high on the crest of a remarkable 30% growth rate.
Lau's first challenge was to win back the trust of Bowmar/ALI's former clients. Before she took over, the company had gained a reputation for churning out inferior products at high prices. She wooed FMC Corp, GE-Pittsfield and the U.S. Army among others. And within five months she got her break.
In August of 1990 George Bush launched Operation Desert Shield and the demand for the Bradley Fighting Vehicle soared. Suddenly, Lau Technologies was asked to produce five times the electronic parts for which it had originally contracted. Two shifts were added and 70 temporary workers were hired. More importantly, Lau added a layer of quality control. Her good timing had given her the opportunity. Lau capitalized on it by delivering quality products on time.
At the same time, a large defense contractor named FMC was having problems with the circuitry in one of the Bradley's gun turrets. Lau convinced the firm to give Lau Technologies a try. The expected turnaround time for creating the component was 270 days. Lau engineers worked practically around the clock and created a reliable component in only 45 days. That was the turning point. Lau Technologies was on its way to securing a superior reputation. For the first time in years the shareholders-- the employees themselves--were filled with the happy anticipation of healthy profits.
At a time when defense spending has been cut in half and the number of employees at primary and subcontracting defense companies has shrunk by more than a third, Lau has lifted a company from the ashes and turned it into a recipient of the U.S. Army Contractor Excellence Award. Lockheed Martin, a defense contractor which at one point had done $7 million a year with Bowman/ALI, now does $10 million with Lau. The professionalism of Lau's team, says Lockheed sourcing director Bob Morin, is "as good as I've seen in over 20 years in this business."
"The bottom line is Joanna," says Jim Bender, a career executive at the company. "She runs the place. She's a genius when it comes to computers and she's a genius when it comes to handling people, motivating them."
The company's initial debts are all paid off. About 75% of the employees' original investments have been paid out and Lau Technologies is outfitting the U.S. Army's two main war vehicles currently used in Bosnia--the Bradley and the Abrams tank.