THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, September 23, 1996 TAG: 9609210149
SECTION: BUSINESS WEEKLY PAGE: 05 EDITION: FINAL
SOURCE: BY JOHN KOSTRZEWA, PROVIDENCE JOURNAL-BULLETIN
DATELINE: MIDDLETOWN, R.I. LENGTH: 90 lines
Defense conversion was a chilling concept for Henry Maturi when he heard about the cuts in military spending.
For 50 years, his company had relied on Navy work.
``We got scared,'' said Maturi, executive vice president of McLaughlin Research Corp.
Later, the Navy's decision to consolidate its underwater research labs on Aquidneck Island cushioned the impact of the cuts on software engineering and service companies, such as McLaughlin.
That bought time. But Maturi didn't breathe easy. To grow, he still had to find a way to sell to new customers in commercial markets.
The answer he found was not to change what the company did, but to find ways to do more with it. The idea was to develop dual applications for his company's products - one for sale to the Navy and the other for the outside world.
It wasn't defense conversion. It was market extension.
It wasn't turning the company on its ear. But it was changing the way the company did business.
The software designed to create electronic manuals for Tomahawk missiles could also be adapted to develop manuals for lawn mowers.
Maturi, 49 and a former naval officer, arrived at McLaughlin in 1976 on the eve of the country's military buildup. The expansion of defense spending pushed McLaughlin's sales to $25 million by the 1990s. Employment grew to 300 on Aquidneck Island. The company had another 100 workers at offices it opened near military bases on the West Coast.
``It was steady growth,'' Maturi recalled. ``In the last 20 years, we invested heavily in equipment and facilities to win Navy subcontracts.''
Maturi said ``99.9 percent'' of the company's sales came from defense work. McLaughlin's engineers, tech writers, graphic designers, draftsmen and software developers worked on a variety of submarine systems, writing training programs and providing technical support and services.
Then came the cutbacks in defense spending and the base realignment program. The Newport Underwater Warfare Center facilities in New London, Conn., were to be consolidated on Aquidneck Island.
Maturi is not alone.
There are 1,200 people working in the $200 million software engineering industry on Aquidneck Island. By some estimates, 80 percent of the state's software engineers are clustered there.
Earlier this year, Rhode Island's economic-development officials targeted software engineering as one of the state's best hopes for creating future jobs.
Their plan is to leverage state and federal resources to help companies, such as Maturi's, to diversify, win new business and thereby attract new companies.
The strategy of choice is market extension.
``Defense conversion was taking a submarine builder and trying to get them to make washing machines,'' said Keith Stokes, executive director of the Newport County Chamber of Commerce.
``The new strategy is to get commercial applications from the same equipment and technologies''
Maturi had never worked with the state before. But he welcomed the idea of forming a group of eight defense contractors to meet regularly to discuss how they might help each other.
``Sometimes, the firms that are most successful aren't the big Raytheons or Electric Boats, but the smaller firms of 50 to 200 employees,'' Stokes said.
The first meetings were ``tough,'' Maturi recalled, because they all had been competitors for defense work and for years had closely guarded their technologies.
Few of the companies had developed marketing arms to sell to commercial customers. One result of the meetings was an agreement to pursue the idea of a collaborative marketing effort that could represent Aquidenck Island's software engineering firms at trade shows.
The state also has done technology audits of a number of companies to assess their strengths and weaknesses for applying their technologies to the commercial markets.
There's also been assistance to apply for state job-training grants to give workers the skills they need to compete outside the defense industry. And state officials have tried to demystify the state's procurement process to encourage the contractors to bid on state work.
McLaughlin's engineers are working on technologies to scan documents on CD-Roms, manage product data and documents, and create three-dimensional, virtual-reality displays on computer monitors.
All of them have defense and commercial applications.
Another of McLaughlin's products can convert documents, books and pictures to digital images.
Maturi said McLaughlin has bid on a multimillion-dollar contract with the Library of Congress to convert its collections to digital images for easier preservation, storage, cataloguing and accessibility.
He recently was told McLaughlin made the first cut of bidders, which included many companies that sell to commercial markets.
``We are in the ballgame,'' Maturi said. by CNB