- Buyers Guide
MWJ: You recently joined Mercury Systems as General Manager of the RF and Microwave Components Group, what was it that drew you to this company?
AS: I had recently followed Mercury Systems’ movement into the microwave sector through acquisition, and realized that there was something special growing here with the additions to an already strong portfolio - and the idea of what those teams could accomplish through collaboration with the resources and channels of a great company like Mercury. The microwave industry is a small and tight knit one, so I had known and respected many of the engineers and management team as prior customers, vendors and competitors. When the opportunity arose to lead the RF & Microwave Components group, I was very happy to join.
MWJ: Can you share a specific example of an advantage that you have seen from these teams working together?
AS: There are many, where the most exciting for me is the technology leverage to create truly differentiated products. In my short time here I have been part of multiple technology “jams” that pull engineering and marketing folks together from across the country into a single conference room to drive innovation and share lessons learned. Mercury Systems has one of the most interesting thermal management technologies that I have seen in my 25 years in the industry. Coupling this together with the high power amplifier, switch, limiter and isolator technologies from the former Micronetics and LNX teams is already resulting in product improvements that can only be attained when you combine the modeling strengths from one group with the real time measurement capabilities from another.
MWJ: Over the last few years Mercury has acquired several leading RF companies as you mention a couple above – what synergies and expertise have these companies given to the overall company?
AS: Two items come to mind right away. There are several philosophies regarding the integration of acquisitions from holding a collection of entities to assimilating the acquired entity. Mercury has and continues to look at best practices from each of the acquisitions to adopt and promulgate these through the organization at an enterprise level. This is true several dimensions, and ranges from business process refinement through expanded use of customer resource management tools, unification of ERP and shop floor control systems, as well as improvements to the quality management system. Similarly, incorporation of assembly and test automation as well as process development from some acquisitions are expanding to other sites.
One of the most compelling results of the synergies and expertise when combined with the resources of Mercury is the rollout of our newest Advanced Microelectronics Center (AMC), where we will combine the engineering and manufacturing strengths of two acquisitions into a single 70k sq-ft. facility with class 100k and class 10k clean rooms in Hudson, NH - which provides the scale and resources to give our customers confidence to award programs that would have been too large for either of the acquired entities to support in the prior state as individual companies.
MWJ: With all of the acquisitions, Mercury has become a complete end-to-end subsystems supplier – what opportunities and leverage has this given the company?
AS: There are several advantages in complete end-to-end ownership of the sensor processing chain at the subsystem level that begin at the front end with the generation and reception of microwave signals through digitization, processing and storage to ultimately exploitation and dissemination of the information that Mercury Systems leverages every day.
Since Mercury Systems is organized into divisions that focus on each of these segments of the sensor chain, we have the distinct advantage of customer intimacy that comes from the relationships with internal as well as external customers. The RF and Microwave Subsystems group that produces IMAs is a customer for my group, while Mercury Defense Systems is a customer to each of our business units. Having relationships with your customer and their customer which are aligned by shared corporate goals results in insights to technology roadmap development including “golden keys” that can be real differentiators for our businesses as a whole to maximize the value to our customers through technology acceleration.
In addition, Mercury’s customers benefit from the fact that engineers in the component group can rely on internal subsystems expertise to develop better solutions with much less required oversight – making their job easier while receiving an even better product fit.
Finally, since Mercury is not a systems level OEM, our prime customers understand that we leverage systems level expertise to provide value at all product levels with the comfort that we do not compete at their level.
MWJ: Aside from the technology acceleration, what other industry trends are you seeing, and how is Mercury responding?
AS: One of the well-correlated messages from our customer base is the need to consolidate supply chain logistics while at the same time outsourcing more complex components and subsystems with higher performance at lower costs. These products need to absolutely work every time to guarantee mission assurance.
As I survey the competitive landscape there are very few competitors with the product line diversity of Mercury. Indeed, many of our lines compete with companies that only serve that product line. Where we compete with companies that provide only ferrites, or mixers or power amplifiers, we serve all of these and several more. As such, our teams engage more often in block diagram solutions with several components versus addressing a single need, which is a better fit for the customer pain point just mentioned. Often, the set of microwave components leads to a customer desire for Mercury to integrate the parts into a subsystem or integrated microwave assembly – where our RF and Microwave subsystem group takes the lead.
The ability to provide coverage for the total customer need doesn’t end there. As an example, new counter improvised explosive device (CIED) systems normally supported by high power amplifier companies often need digital receivers as well, where our Huntsville team formerly known as Echotek can add value. Finally, the entire set can be integrated by our Services and Systems Integration (SSI) group in Chelmsford to provide the fully integrated subsystem solution.
In an example like this one, the value proposition to our customers is greatly enhanced since we can design and deliver several parts of the subsystem. This value goes well beyond the obvious pricing advantage due to bundling. When a customer can buy several parts of the subsystem from a single vendor, they can do so knowing that the complex parts will work well together.
MWJ: What are you near term goals for the RF and Microwave Components group?
AS: The RF and Microwave components group has a broad product line including ferrite products, mixers, control products through switch matrices, voltage controlled oscillators, high power amplifiers, low noise products and test equipment solutions including noise sources through complex carrier noise generators. The line has been developed over years of requests from a diverse customer base to create a broad catalog of derivative products which are highly focused on electronic warfare and radar applications.
In the near term we look to continue this commitment to protecting our warfighters, but are increasing our proactive R&D developments to provide not only a higher diversity of products, but better customer service through real time data capture and sharing via automated test sets in development.
MWJ: As part of the Mercury Commercial Electronics business unit, what market sectors will this group focus on in the next few years?
AS: While a significant portion of our revenue is aimed at the EW and radar markets, we also have a strong presence in the commercial telecom marketplace via base station power amplifiers, point to point digital microwave radio through our ferrite lines, and test and instrumentation through our control components line, as well as low noise and CNG test equipment lines. We also see several opportunities to leverage our technology into homeland security applications.
MWJ: What are the major areas of growth opportunities that you see in the near future for Mercury Systems as a whole?
AS: While sequestration has impacted the defense business overall, our customers continue to affirm that there are several programs that are expected to “turn on” in the new government fiscal year beginning October 1. Based on our visibility, we are optimistic that we are well positioned given our technology and strong sales channels.
MWJ: UAVs have been a hot area in the defense market and are projected to grow in the commercial sector now, what advantages does Mercury bring to systems for UAV applications?
AS: UAVs provide a great venue for the collaboration of both RF and Microwave technology from recent acquisitions as well as digital and processing technology that has been at Mercury’s core competency for decades. Mercury is unique in its ability to design and manufacture both of these technologies and integrate them into a solution for our customers. We look forward to extending our already existing UAV leadership to new programs as they emerge.
MWJ: Does Mercury intend to continue to acquire new companies and if so, in which market sectors would you see those coming from?
AS: Mercury is dedicated to our growth strategy through both organic and acquisitive means. While the recent economic uncertainty presents challenges from an acquisition standpoint, it can also create opportunities when the rebound happens and the uncertainty is lifted. Our recent acquisitions have been in the RF and Microwave sectors, and these continue to generate interest for us looking forward.
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