Analytic Systems: From A Strong History to Tomorrow’s Workplace

The following article is reprinted with permission from Surrey Board of Trade: Business in Surrey, September 2009 Edition (pg 6, 11)

In 1976 Lloyd Hargrove, previously the chief civilian engineer for the underwater acoustics division of the Department of National Defense, which was also known as Anti-Submarine Warfare started Analytic Systems Ware using the ASW acronym for the company name.

Company President Jim Hargrove, son of the founder, began working for the company in 1979 as a student engineer, while studying the professionat UBC. He described his background and involvement in the company, through the succession from his father in 1993 and the company’s future directions with Editor Ray Hudson.

One of the early projects I  worked on was developing an automatic pilot for steering boats and we ended up spinning that project off into a separate company in 1983. Originally called Compunav Systems, it’s still in business as ComNav Marine and is very highly respected in that field.

In 1991, following a dispute, my share was bought out. In deciding what I was going to do, I considered taking over Analytic Systems, but my Dad was operating out of a little office in East Vancouver, where I didn’t want to be. Just by serendipity while driving around Newton one night, we found a small strata warehouse unit in Walnut Industrial Park. I had a look at it with our real estate agents, brought my Dad out and showed it to him, and said “if you’re interested in a partnership in Analytic Systems, I’ll buy this building and we’ll move the company here.” It took him only a few seconds to say yes.

Our first unit was about 2,000 square feet on two floors, and along with one employee, he and I moved the business and set up shop there (We now hold 16 thousand square feet at that complex). At that time we also re-incorporated it as Analytic Systems Ware 1993 Ltd. It was considered a prudent thing to do to sever any legal commitments with the previous company and start anew under my direction.

Were you building the products you designed or were you jobbing that part out?

I did what you’d call a vertically integrated facility, where we do most everything in house, designing and building everything here. We also decided not to do any more custom engineering. Over the years my Dad had done a number of projects in the power electronics area, so I knew there was a base of design work in that field we could draw on. Once I took the company over, we finished whatever projects we had on the books for clients, but we never took on anything new. We said that from that day forward we were a power electronics company, and we would use the intellectual property that we already owned, and work to develop new intellectual property in that specific  niche.

You know it was pretty scary in the beginning.

You know it was pretty scary in the beginning. I think in the first year we did $70 thousand in sales, which doesn’t even come close to covering the cost of having the door open. But we persevered, and we came out with our first catalogue in 1995. We focused initially on the marine industry because that’s where we had all our contacts, and slowly but surely things started to move forward. The sales continued to pick up. Because I kept in touch with everybody that I knew, we started to get some opportunities outside of the marine industry. One of the key ones was with the Teleflex Canada in Richmond, where we were invited to come to the table to do the power electronics portion of a new military cook stove they were designing for the US Army.

We helped to design one of two power electronics products for that project, and when Teleflex subsequently won the contract to build the stove, we were given a contract for what was called a battery pack. When we got that contract, we took over another half bay unit in our Surrey complex. From there we reinvested the income into the development of new products as the business kept on growing. A lot of our growth came from what is called the Commercial Off The Shelf (COTS) military marketplace. Slowly but surely, although we’ve continued to service the marine industry and the industrial marketplace, a lot of our key growth has come from the military, particularly the American military, either directly to military or through prime sub-contractors like Raytheon, Northrop Grumman or Lockheed Martin.

Those sorts of contracts are almost recession-proof too.

We’re so busy right now we haven’t even been touched by what’s going on economically. We’ve grown from 2 owners and one employee in 1993, to 75 today, and we have set up facilities both in  Delta and Surrey. In Surrey we continued to buy additional units in Walnut Industrial Park, so now we own or control about 16 thousand square feet of space there.

We use a lot of aluminum extrusions for building heat sinks or housings for the products that we make. It was one of the biggest sources for our quality problems we had with both on-time delivery and quality of the extrusion. We’d order this stuff from California where it would be made to our design and shipped to a local machine shop which would cut and machine it, have it anodized and deliver it to us with all its value added. But it would arrive with the fins bent or something would happen in the shipping of the raw extrusion – yet it would be processed anyway, which caused us no end of problems, so about five years ago we finally decided we had to go into the CNC machining business, which is a dirty messy process compared with electronics. Originally we were going to move the CNC operation in to Delta as well, but we’ve decided now after seeing how things played out, we’re leaving that in Surrey and expanding it into an independent enterprise. So the CNC work will happen in Surrey and the electronics side will be in Delta.

We’ve built this one step at a time – a process of putting one foot in front of the other.

All of our growth has been financed through either bank financing or re-investment of income, so we have complete control over what the company does. We’re not beholding to Angel or Institutional investors. We have a lot more flexibility in what we do.

What is your dream for Analytic Systems now?

We were just meeting with the people with the Tomorrow’s Workplace project and we said that this year our sales will hit around $9 million. Our three year goal is to hit somewhere around $20 million. In order to do that, we want to introduce four new product families in the power-electronics field over the next 36 months. We want to continue to develop the markets we’re in but we’re also committed to growing into and exploiting the green energy marketplace as well. So we’ve identified those three key objectives for the next three years.

What attracted you to become involved in the Tomorrow’s Workplace initiative?

Although we were pretty happy with the way things were going with the business, the concept of having people come into the business to do a global assessment of how we run our business and give us feedback on how we could do it better, was very interesting to us. We weren’t really sure what we were getting into at the outset. It’s been a very good program, but it’s been very challenging: everything from reworking our mission statement our values, our vision to the nuts and bolts of how we get to where we need to be to be a twenty-first century employer.

Can you describe some of the aspects of the program from your perspective?

It’s going to give us a vision across the business for how we can grow that is accepted by everybody. One of the key points is, rather than developing the vision at the top and flowing it down, the Tomorrow’s Workplace consultants are helping us build the vision from the shop floor up.

We’re engaging key people in every aspect in the organization that we probably would never have done otherwise. So you get a complete vision that’s easy to get buy-in from everybody in the company from the entry level assembler on up to our VPs.

Soon businesses aren’t going to be able to meet all of our workforce requirements from our domestic workforce, and we’ll need to look to new-comers to fill that demand. How diverse is your workforce, and how do see that evolving?

We have people from virtually every continent on the planet working here.

It seems that in the summer, half our staff goes to Romania for example. But we have a lot of Europeans, people from Fiji, Indo-Canadians. I think that the diversity of the community is well represented in our workforce, and everybody brings value.

Your involvement with the Tomorrow’s Workplace project is just about done, September or October. What would you say to anyone else thinking about getting involved with this program?

I think they should jump at the opportunity.

They’re going to learn an awful lot about themselves and their business, and what it takes to remain competitive. In order to keep your business competitive, you have to have good people. It doesn’t really matter what business you’re in, business comes down to the people you employ, and they walk out the door at 4 o’clock everyday. You want them to come back to work the next morning. Often that has little to do with money and everything to do with quality of life and vocational challenge. So where I think Tomorrow’s Workplace is really helping us is to identify how we can build on and improve on those areas. It’s easy to grow the business when people want to come to work for you, when you’re identified as a workplace where people will be fulfilled.

Labour is going to be in short supply and this recession isn’t going to last forever. We will see things turn back to when it’s a buyer’s market for the labour supply, and getting and holding good employees becomes difficult again. Preparing for that, I feel is the underlying theme of Tomorrow’s Workplace, how to differentiate your workplace from the one next door.

Our thanks to the Surrey Board of Trade and Analytic Systems for their generosity to print.