- Buyers Guide
Anaren SDG Expands by Strategic Acquisitions
David Whitaker is the Passive Products General Manager for the Space & Defense Group at Anaren Inc. Prior to joining Anaren, Whitaker was a Vice President at Syracuse-based air-traffic surveillance technology supplier Sensis Corp. and a project/systems engineer and program manager for General Electric, also in Syracuse, where he managed radar programs in support of the USMC and USAF. Whitaker has an MBA and master's degree in Electrical Engineering from Syracuse University and a BS degree in Electrical Engineering from the University of Connecticut. He is a graduate of the National Security Studies National Security Leadership Course and a life member of Tau Beta Pi Engineering Honor Society.
Founded in 1967 with a focus on high-frequency technology developed for the US aerospace and EW markets – the company was behind the industry’s first Digital Frequency Discriminators (DFDs) and Digital RF Memories (DRFMs), in addition to innovative beamforming solutions for space antennas -- today’s Anaren has five facilities, 1100+ employees, and annual sales of approximately $170 M. The company is currently organized into two operating groups. Its Wireless Group (FY2009 sales of $68.6 M) develops both custom and standard, high-volume component for the wireless infrastructure and consumer electronics sector; its customers include Ericsson, Samsung and Nokia Siemens Networks, among others.
Extending the company’s legacy in EW and radar technology, Anaren’s Space & Defense Group (FY2009 sales of $98.3 M) provides a wide range of components, assemblies, and sub-systems to primes such as Raytheon, Lockheed Martin, and Northrup Grumman. The 2009 sales figure includes two Anaren FY2009 acquisitions traceable to the company’s strategy to respond to defense industry trends by expanding its technology portfolio and becoming more vertically integrated. The most recent expansion includes the acquisition of M.S. Kennedy Corp. (Liverpool, NY), a provider of high-performance analog microelectronics solutions to the defense, satellite, and aerospace markets; following directly on that was the acquisition of Unicircuit, Inc. (Littleton, CO), which has been specializing in complex, high-frequency and mixed-signal printed circuit boards for defense, space, and aerospace applications.
MWJ: What percentage of Anaren’s sales are now represented by the Space & Defense Group?
DW: The group’s sales currently represent about 60% of the total company revenues, with the average selling price for our solutions ranging tens of dollars for individual military grade components, to hundreds of dollars for smaller assemblies, to tens of thousands for complex subassemblies. This is up from approximately 30% of the business of a few years ago, reflecting the growth of this business group. The other 40% of Anaren’s business is targeted to the commercial wireless sector, where we supply standard products targeted at base stations and, more recently, at point-of-use consumer electronics and broadcast applications.
MWJ: How did the acquisitions of M.S Kennedy and Unicircuit Inc. impact the group’s annual revenue?
DW: As I mentioned, MSK and Unicircuit increased the size of our S&D Group by roughly 60%, but beyond interest in revenues, we are far more focused on the upside potential and the doors we can now open with the combined technologies and capabilities of our companies.
MWJ: What technologies did Anaren acquire that are of particular interest to potential customers?
DW: Traditionally, Anaren’s customers have relied on us for our passive technology, EW expertise, and an innovative RF engineering team that provides differentiated solutions to challenging RF requirements. Based on feedback from our customers who’ve increasingly expressed a desire to see us take on new content -- and in response to defense industry trends like the push for assemblies vs. components or, say, the drive for supply chain consolidation – we determined the time was right to again expand our technology portfolio. In Unicircuit we saw the chance to take our reputation for engineering multilayer softboard solutions to a whole new level in terms of execution; Unicircuit offers a far more complex and high-precision PWB capability than we offered previously. MSK, on the other hand, brings a host of advanced microelectronics manufacturing experience and capabilities to the table -- techniques like highly precise chip and wire. Together, and combined with other investments we’ve made recently in such capabilities as LTCC and ferrites, we’re moving into highly integrated active solutions and, as such, we’re also moving several steps up the integration ladder to supply our customers with RF hybrid modules, integrate microwave assemblies (IMA), and complete microwave subsystems. Committed as ever to remaining a supplier, Anaren has grown from primarily participating in the EW market to supplying increasing content of AESA radar systems as well.
MWJ: How has the integration of these two companies into Anaren’s S&D Group progressed so far? Was it a smooth transition?
DW: Fortunately, acquisitions made over the preceding years have taught us a lot about what to look for in an acquisition target and how to integrate once the deal is done. Lesson number one, really take your time surveying the landscape. What really impressed us with MSK and Unicircuit was the evident quality and chemistry of their respective management teams; these companies have built solid, profitable, highly reputable, and growing businesses. Lesson number two was, thus, not to meddle with their success by doing too much too fast, or by making changes without good strategic reasons. In real world terms, that’s means we’re operating these companies as stand-alone entities with common strategic goals, sharing and managing joint opportunities as appropriate, while we carefully and systematically integrate our cultures with a focus on better serving our customers.
MWJ: What can the S&D Group offer with enhanced analog module and advanced
DW: PCB manufacturing capability that it couldn’t offer before? Prior to the Group’s expansion, our forte was our microwave/RF engineering prowess supported by modest and smaller-volume manufacturing and assembly capabilities. Today, we are able to provide our customers a broader range of solutions to better address their requirements, particularly where increased levels of integrated, highly dense, and mixed signal packaging are called for. On the substrate component side, Unicircuit enables us to provide substrates with complex layering, accurately embed passives, execute laser defined vias, achieve very sophisticated yet elegant interconnects, and more. If requirements dictate LTCC substrates, recent investments we’ve made in that technology have enabled analogous capabilities using ceramic. And, of course, MSK offers huge flexibility in terms of how we populate all varieties of substrates through a variety of fabricating techniques – chip and wire, direct die attach, fluid dispense, hermetic packaging, and qualification and testing. Additionally, since the MSK acquisition, we have invested to expand their hybrid electronics assembly and test capabilities to RF frequencies, enabling MSK to address advanced EW and radar applications. Combined with our legacy in custom engineering, and even bringing over technology we’ve deployed on the commercial wireless side at this point, we’re pretty robust capabilities-wise and, we feel, very well-postured for growth.
MWJ: What kind of applications/opportunities has that opened up for Anaren and how successful has the company been in moving into new areas?
DW: Anaren can now achieve higher levels of integration and denser packaging solutions. One good example would be AESA (active electronically scanned array) applications. Traditionally, Anaren’s legacy there has been supplying EW or varying degrees of beamforming technology to ground-based radar systems. More recently, and especially as a result of the capabilities we’ve acquired in MSK and Unicircuit, we have technology very well-suited for airborne radar that addresses everything from the controls and processing, to the beamforming function and manifold, to the transmit/receive modules themselves… basically the components of the entire RF chain. As for the traction we’re getting, I am not at liberty to divulge customers or programs we’re participating on, but it’s been extremely positive in terms of both customer reactions, increased opportunities to bid, and wins alike.
MWJ: What have been some of the program successes that you have achieved that you would attribute to the acquisitions?
DW: We have been able to more effectively compete on several high-profile platform elements which would have been difficult or impossible to win prior to these recent acquisitions. MSK and Unicircuit not only provide technical capabilities, but also a significant volume of capabilities required to participate on the larger programs.
MWJ: We have run articles on the current need for upgrading aging satellite communication systems especially for the military. Is this an area where your group is involved?
DW: Anaren has been providing custom beamforming solutions to the satellite industry for many years. As individual entities, MSK and Unicircuit had also been providing high-reliability solutions. The integration of our companies has afforded us the opportunity to consolidate our offering to satellite primes, offer more competitive choices, and ultimately develop and deliver more effective solutions. So, yes… Anaren’s S&D Group has content on most of the next-generation communications and navigation satellites now being built for the DoD, and our growth strategy includes remaining, investing, and increasing content there.
MWJ: Are you also involved in defensive measures against the improvised explosive devices (IED) that pose such a threat to our forces in Iraq and Afghanistan?
DW: Yes. We’re proud to say we’ve been supplying some critical component technology to IED-protection systems, now being upgraded to address the ever-expanding threat. We continue to work closely with the prime system developers to improve their ability to protect our troops in the field.
MWJ: Can you comment on the evolution of the Space & Defense Group as a whole over the past several years, from the engineering, manufacturing and organization perspectives?
DW: By design, Anaren’s growth strategy, product pipeline, and capabilities set are directly traceable to both overtly expressed customers needs and trends we see in the market. As such, they are a kind of reverse image of what one sees in the aerospace and defense sector. For instance, as the larger primes seek to streamline their supply chains and rely on a smaller base of reliable, capable yet specialized, and assembly-level suppliers – Anaren has increased its ability to supply precisely these sorts of integrated, subassembly level solutions, while maintaining our core competency and specialty in RF and microwave. And as primes move toward open-architecture sorts of solutions that can be simultaneously deployed or shared by multiple branches of the armed services, or even modified slightly to accomplish totally different high-level duties such as EW vs. radar vs. communications – Anaren is committed to supporting that mission by supplying more modular solutions with expanded capabilities that leverage commonality of interconnects, packaging, and components. We’re even organizationally ‘modular’ in terms of how we interface with customers…who can plug and play Anaren’s capabilities in a way that provides them the best value, be it long-term R&D, design-to-spec, build-to-print, test and test development, or any combination of the above.
MWJ: Any other exciting stuff on the horizon that you can share with us?
DW: Beyond being particularly excited about our ability to support next-generation AESAs I’ve already mentioned, we’re excited about our growing line-up of military-grade surface-mount RF components… hybrid couplers, directional couplers, and like passives now in the pipeline. These enhanced extensions of our commercial line will meet military environmental requirements and will be targeted at unique military performance needs. We’re also working on some very interesting metal-backed board solutions and stacked via capabilities at our Unicircuit. And we’re enthusiastic about the family of radiation-hardened solutions for space from MSK, developed in an alliance with Linear Technology out of Milpitas, CA – as well as MSK’s ability to manufacture and test RF hybrids as a result of our recent investments.