{An old article from IBD July '95}
Twenty years ago, Simula Inc. was formed with a simple mission in mind: Finding ways to reduce injuries when a helicopter crashes.
After years of research, Simula executives launched a company that has expanded into building high-tech seats and airbag systems for helicopters, commercial airliners, rail cars and automobiles.
''If you look at our products, you miss the company,'' said Simula President Donald Thompson. ''There's a thread of technology that runs through our company. If you have the technology, you can solve new and emerging problems.''
After tens of thousands of tests into energy-absorbtion techniques -how various materials stretch, bend or begin to fail - the Tempe, Ariz.-based company has struck paydirt.
Last week, the U.K. awarded a $4 billion contract - considered to be one of the biggest military contracts of the decade - to Britain's Westland Group and McDonnell Douglas Corp. for 67 Apache attack helicopters. For Simula, this means a subcontract of $6 million- plus to build armored, crashworthy cockpit seats that are arguably the world's best, according to analysts.
Italy, France and others also want to buy military helicopters, and are expected to follow the U.K's lead on Apache orders.
And that's just the tip of the iceberg.
Simula already has built more than two- thirds of all crash-resistant seats on Blackhawk military helicopters for the U.S.
Export sales for the Blackhawk, plus potential European sales on Apache orders, are a gold mine of contract dollars.
Simula makes 11 different crash-resistant seats on aircraft around the world. Rivals such as Israel Aircraft Industries Ltd. and Martin-Baker Aircraft Co. Ltd. make only one model each.
The company's inflatable body and head-restraint system for helicopters was developed in response to government- sponsored effort in the early 1990s. Because the seat is so unique, the military is likely to award Simula a sole-source contract to install thousands on many other aircraft.
Simula should receive one such contract this month - valued at an estimated $6 million - to retrofit seats on the Army's aging Cobra helicopters. In addition, the military has asked Simula to conduct more research on the airbag technology for other aircraft.
As a result, more money could flow to Simula for its seats.
Management excitement over business plans at this $41.1 million-a-year-in-sales firm has led to a flurry of recent buyouts. They are meant to take advantage of Simula's expertise in protecting people from bodily injury.
The buyout will enable Simula to offer safer seats to airlines starting this year. One of the deals makes Simula the largest maker of railway seating in North America. The company also has snagged a deal with BMW to make an inflatable device for a 1997 model to protect against side-impact collisions.
Simula executives view the automobile market as perhaps the largest of its business prospects.
''There is no other competing producer for systems designed to protect head and neck injuries,'' said Thompson, 55, formerly a door manufacturing executive who joined Simula a decade ago.
Simula began inching into the commercial arena in 1981 when regulators asked the firm to look at jet airliner crashes. As a result, a federal regulation was issued which requires stronger plane seats.
In 1993, Simula bought Airline Interiors, a supplier of seat parts to airlines. ''It had all of the missing ingredients to get into the commercial airliner market, and a customer base,'' Thompson said.
The only element stopping Simula from launching its product line was a manufacturing base. Again, Simula filled this void with the acquisition of Coach & Car Equipment Corp., a maker of seats for the rail and mass transit business. ''They used the same machinery to build seats in airlines,'' Thompson said.
It later found another business to buy, Artcraft Industries Corp., to enhance Simula's commercial airliner strategy. There was yet another benefit to these buyouts.
Coach & Car Equipment and Artcraft Industries provide a steady stream of cash so Simula can chase after the airline market. The seat makers supply 70% of all rail and mass transit seats in North America. Together, they brought to Simula a 27% backlog.
''Suddenly, we had all of the ingredients to do airline seats. We had the machinery, the backlog to spread costs, and we were designing a new seat for a customer base where we were already certified to be a supplier,'' Thompson said.
The federal regulation on airliner seats also provided another boon to Simula. The rule requires crashworthy seats with inflatable bags for seats located behind bulkheads on the inside of a plane. Simula is the only supplier to have a bulkhead seat poised for this market.
For its 1995 first quarter, Simula reported net income of $616,100, or 14 cents a share. That compared with $334,800, or 10 cents, a year earlier. Revenue rose 10% to $13.5 million from $6.9 million a year earlier.
The company, which came public in April 1992, trades at about 23 under the SMU symbol.
Transmitted: 95-07-17 23:08:57 EDT (aaacgf7w) |
