LaBarge Looms Large

In the 1970s, the sewing industry was dying off in the Ozark Mountains, and a U.S. Department of Defense contractor was eyeing the seamstresses.

If the women could do that kind of intricate needlework by hand, the company figured, they could probably thread tiny cables in the guts of artillery shells.

Plus, the hills of Arkansas were full of hard-working, patriotic people who would work for less money than their counterparts in the cities, where the cost of living was higher.

So in 1978, LaBarge Inc. of St. Louis opened a plant in Huntsville.

“What LaBarge offered was better pay, air conditioned facilities and benefits,” said Vernon Anderson, vice president of operations. “[LaBarge] knew there were people in Huntsville that would stick with them and be hard workers.”

The Madison County seat, best known as the hometown of former Gov. Orval Faubus, had a population of about 1,500 and a college-graduation rate about half the national average, making it seem an unlikely place for a high-tech defense plant.

But the Huntsville workers proved themselves early on. The plant’s first assignment was to make 1.5 million timers for artillery shells. They did such a bang-up job, LaBarge kept sending work to Huntsville and expanding the plant.

The 69,000-SF facility now has about 180 employees (almost a quarter of Huntsville’s workforce) and pumps an estimated $5 million a year into the local economy through wages.

Three years after christening the Huntsville plant, LaBarge opened a 68,000-SF facility in Berryville, 31 miles to the north in Carroll County. The Berryville plant, which has about 125 employees, makes cables that are often shipped to Huntsville to be assembled in harnesses, which go in everything from Black Hawk helicopters to mail sorting machines.

Going High-Tech

LaBarge had $182.3 million in sales last year, up 39 percent from the previous year. Sales by market were: defense, 45 percent; industrial, 19 percent; natural resources, 19 percent; commercial aerospace, 5 percent; government systems, 4 percent; medical, 2 percent; other, 6 percent.

The company has six plants that employ about 1,200 altogether. The other four are in Tulsa, Houston, Pittsburgh and Joplin, Mo.

Females still account for most of the employees in the Huntsville plant. Anderson believes women are just better at intricate work and are more patient with it than men. Some of the original employees from 1978 still work at the Huntsville plant, which is considered a prized gig in mostly rural Madison County.

The work LaBarge does in Arkansas has become more high-tech over the years, Anderson said. The Huntsville plant now employs about 20 college-educated engineers, many of whom graduated from the University of Arkansas in nearby Fayetteville.

About 100 employees at the Huntsville plant work to assemble products. Many of them have a skill that LaBarge was looking for when they were hired, but mostly the company just looks for dedicated hard-working employees.

Richard Spencer, the plant’s general manager, said that although they do offer a considerable amount of training, employees who test the final projects need experience before they come to the plant because it’s too complicated to train them on the job for that role.

Anderson said the work is low-volume but it is labor intensive because there is a high cost of failure. With 40 percent of LaBarge’s work in Huntsville dedicated to defense, the job must be done right the first time.

“In this business, of course, it’s a life-or-death situation,” Anderson said. “So it’s a pretty high reliability. It’s very closely inspected, tested and monitored to make sure that it fits requirements.

“We just don’t go hiring anybody … There are very few people out there that can do this.”

The Projects

Just like a building contractor, LaBarge bids for work from companies that need specialized manufacturing. When companies contract with LaBarge, the products they need have already been designed. LaBarge does the assembly.

LaBarge is currently building mail sorting machines for Northrop Grumman Corp., de-icing components for Bell Helicopter Textron and luggage-scanning machines for L-3 Communications Security and Detection Systems.

“Most of the business we get is bid work,” Anderson said. “We have to be the best value. We’re not necessarily the cheapest, but when they look at what we’re providing in terms of engineering skills, material management and total capability … we get those contracts.”

Because each plant specializes in particular types of manufacturing, the work is sent to the appropriate facility. LaBarge then orders all the parts needed and begins manufacturing.

Northrop Grumman contracted LaBarge for $40 million to build 3,000 mail sorter machines for U.S. Postal Service distribution centers, Anderson said. They received the design and made it happen. The plant produced eight mail sorter machines a day for about a year, building the complete assembly, which included wires, belts and doors. Huntsville’s expertise is in manufacturing near-complete and complete box assemblies.

In November, the plant received a $1.2 million contract from Bell Helicopter to manufacture the central de-ice distributor for the V-22 Osprey, tiltrotor military aircraft. The tiltrotor aircraft takes off vertically from the ground. Production is to continue through April 2007.

Although LaBarge is known for its defense contracts, the company has several commercial clients, including L-3 Communications, which has a $9.2 million contract for LaBarge to make X-ray luggage scanners, which are used in European airports. LaBarge will finish about 95 percent of the box assembly and then ship it to L-3 to be finished. That contract is expected to continue through December 2006.

Manufacturing Business

As with many manufacturing facilities, there are ups and downs. When Spencer joined LaBarge in 2002, he had 210 employees, but layoffs ensued because of completed contracts and the sluggish economy.

“This business is very difficult to keep a constant production line because all over our customers have different interests, and their interests don’t all coincide at the same time as far as keeping manufacturing going,” Spencer said.

At one point, Spencer said he was down to 140 employees, but production is up and he has contracts that extend into the 2007 fiscal year.

Spencer said the war in Iraq hasn’t increased production in the Huntsville plant, but other LaBarge plants have seen an increase in production.

LaBarge’s 2003 fiscal year showed a 34 percent drop in net earnings, from $3.39 million in 2002 to $2.25 million. That followed an 11 percent decline in 2002 from $3.83 million in 2001.

The decrease was due to “protracted economic slowdown” and a drop in contracts, according to the company’s 2003 annual report. LaBarge sold its ScadaNET Network remote equipment monitoring business that year because it had accounted for a net loss of $1.1 million.

In 2004, net earnings increased 205 percent from $2.25 million to $6.87 million, largely due to the purchase of Pinnacle Electronics LLC of Pittsburgh for $43.1 million, the annual report stated.

Net earnings again increased for the 2005 fiscal year, which ended July 3, up 58 percent to $10.87 million. The company’s 2006 fiscal year is starting slow, with first quarter net sales of $39.63 million compared to $43.63 million for 2005’s first quarter, a 9.2 percent decrease. First quarter net earnings were also down 12 percent from $2.30 million last year to $2.03 million this year.

“Sales and earnings were down in the first quarter compared with a year ago due to customer delays in certain start-up programs and rescheduled shipments to certain other customers,” Craig LaBarge, president and CEO, said in a press release. “Production has now ramped up on most of the affected programs and we expect shipments to proceed without further delays.”

LaBarge Contracts

2005 contract amounts for the Huntsville and Berryville facilities:

Feb. 10 — Northrop Grumman Corp. awarded $2.6 million to LaBarge to produce electronic chassis used in the F-16 aircraft. Production has been taking place at the Huntsville facility since 2003.

March 8 — L-3 Communications Security and Detection Systems awarded LaBarge $3.2 million to manufacture X-ray electronic equipment for an airline checked-baggage screening system. Production is taking place in Huntsville.

March 30 — LaBarge wins an additional $5.4 million in contracts from Northrop Grumman’s Electronic Systems sector to manufacture antenna switch phase shifter units for the Multi-role Electronically Scanned Array radar system. The work is taking place at the Huntsville facility.

Aug. 26 — Sikorsky Aircraft Corp. awarded LaBarge more than $9 million to provide wiring harness assemblies for various models of UH-60 Black Hawk helicopters. Production is taking place at the Huntsville, Joplin, Mo., and Tulsa facilities.

Sept. 14 — An additional $2.4 million contract was awarded to LaBarge from Lockheed Martin to continue production of electronic components for the Aegis Weapon System, a naval defense system. Production is taking place at the Huntsville facility.

Oct. 21 — Bell Helicopter awards LaBarge $1.2 million contract to produce electronic subassemblies for the central de-ice distributor and the blade de-ice distributor for the V-22 Osprey, a tiltrotor military aircraft. The work is taking place at the Huntsville facility.

Nov. 8 — BAE Systems awards LaBarge $2.2 million to produce Ethernet Switch Units for its A3 Bradley Combat Systems vehicles. Production is taking place in Huntsville.

Nov. 15 — LaBarge wins an additional $2.2 million contract from The Boeing Co. to continue production of wire harness assemblies for the cockpits of U.S. Air Force T-38C training jets. Production has been taking place at Berryville since 2000.