Astro Pak Featured in LA Business Journal – ‘Cleaning Up’

Astro Pak was featured in the July 2012 issue of the LA Business Journal. See article below:

Astro Pak Corp.’s first customers, and for decades its biggest, were the Southern California aerospace companies building the rockets and command modules that shot astronauts to the moon.

But a more recent customer had more terrestrial rides in mind: Astro Pak has worked on several attractions at Disneyland, including the Indiana Jones ride, Ariel’s Undersea Adventure, and the recently opened Cars Land at Disney’s California Adventure.

Founded in Downey in 1959, Astro Pak specializes in precision clearing of sensitive and high-tech parts, from the satellite components to nuts and bolts used in jet engines. It still handles parts for aerospace companies at its Downey clean room, but most of the company’s work is now in other industries, from electronics to pharmaceuticals, and yes, even amusement parks.

That broad range of offerings has helped Astro Pak do what many Southern California aerospace contractors have failed to do over the past few decades: stay in business and grow.

In fact, the company this year opened an expanded clean room in Downey and a new clean room in Chesapeake, Va., to meet growing demand for its precision-cleaning services. In fact, despite booms and busts, the company said it now has about five times the revenue and four times the workers it employed before the fall of the Soviet Union.

“If we hadn’t diversified, we have gone out of business at the end of Apollo and again at the end of the Cold War. You have to have enough diversity to balance the ebbs and flows,” said Ken Verheyen, Astro Pak owner and president.

Today, aerospace customers represent only about 10 percent of Astro Pak’s business –about the same percentage of as water and wastewater treatment customers. Most of the company’s business is in the pharmaceutical and biotech industries.

By contrast, many small aerospace firms that were never able to expand their offerings were closed, acquired or downsized, laying off thousands of employees. Los Angeles County had 189,000 aerospace workers in 1990, a number that gradually shrank by nearly 70 percent to 59,700 by 2010, according to the Los Angeles County Economic Development Corp.

Race from space

Such losses are likely to continue, if not accelerate, as the Department of Defense cuts billions from its budget. Those cuts will be especially hard on small companies with narrow offerings, said Kimberly Ritter-Martinez, an associate economist with the LAEDC.

“As the aerospace industry has gone through ups and down, smaller suppliers and contractors have been a lot more sensitive to Pentagon budget cuts,” Ritter-Martinez said. “Unlike Northrop and Boeing, they don’t have a broad mix of products. They’ve had more trouble diversifying.”

When it was founded in Downey in 1959, Astro Pak worked exclusively on projects related to the U.S. space program. Parts going into the lunar lander, the Apollo command capsule and other space-bound equipment had to be free of oils and particles that could cause delicate equipment to break down.

That meant cleaning parts at Astro Pak’s Downey clean room and dispatching workers to launch sites to clean fuel lines. But as the Apollo program started to wind down in the 1970s, Astro Pak founded itself looking for more work. The company found it with Navy contracts, cleaning parts for deep-diving and salvage equipment. This was big business –until the early ‘90s.

“At the end of the Cold War, the Navy’s diving capability was substantially reduced. That was almost like a light switch of revenue that turned off,” Verheyen said.

Today, the company still does aerospace and defense work, such as cleaning parts of a new rocket engine being developed by Canoga Park’s Pratt & Whitney Rocketdyne, but it has put its precision-cleaning know-how and its clean-room facility to good use in growing high-tech industries.

It first breakthrough was in the biotech and pharmaceutical industries. Verheyen said it was difficult for the company, unknown outside of the aerospace sector, to attract customers. So rather than sell customers on the company’s aerospace heritage and capabilities, Verheyen created an internal team to figure out what biotech and pharmaceutical customers needed and to build a fresh marketing approach.

“Customers are dying to have people really focus on and understand the requirements of what they need,” he said. “Oftentimes, companies come in and slightly adapt what they’re doing somewhere else and miss the true need of the industry.” LAEDC’s Ritter-Martinez said Astro-Pak’s much broader portfolio is a rarity among firms formerly dependent on aerospace, but she also noted that it has likely been easier for Astro Pak, a service provider, to reach into new markets than it would be for other companies, especially manufactures.

While Astro Pak once specialized in aerospace work, its cleaning procedures could be adapted relatively easily to other products and industries without investing much new capital or hiring new talent. That’s a more difficult transition for companies that make specific widgets that go into a satellite or a jet.

“A small supplier might have just one or a handful of products,” Ritter-Martinez said. “If you’re a manufacturer and all your machinery is geared toward making a product for Boeing, you’re kind of locked in with one large customer.”

Even for companies that make products that can be used in other industries, it’s still difficult for small firms to find customers outside of the largely insular aerospace sector, said Erin Dyer, quality control manager for Glendale parts maker Accurate Dial & Nameplate Inc.

The company, which makes serial number badges and faceplates for machinery, sells mostly to aerospace manufacturers and wants to grow into the rail car and wind turbine markets. But it has no marketing department or outside sale force to reach out to those customers.

“We’ve built our business on referral and our good reputation,” Dyer said. “We only have 21 employees. The hardest part is taking time from your daily duties to create marketing materials so you can introduce your company to new customers.”

Big portfolio

Nevertheless, Astro Pak’s diversification didn’t stop with biotech and pharmaceuticals, though those industries now supply about 65 percent of the company’s revenue.

Verheyen said the company is getting more contracts in the food and beverage industry. Astro Pak recently started working on a cleaning project for Modesto’s E&J Gallo Winery.

The company also has occasional work in other industries. It was recently contracted to clean ore-processing systems at a gold mine in the Dominican Republic and does occasional work for Disneyland, where it flushes hydraulic lines that control several rides and attractions.

“Those are high-purity systems. You have to make sure they’re extremely clean,” said Jerry Knepper, Astro Pak’s vice president of sales. “It could damage the pumps if particles (in the lines) are too big.”

Much of Astro Pak’s work is performed at the customer’s location, where a field team might clean and flush lines that transfer chemicals within a pharmaceutical plant. But its largest employment base remains in Downey, where 50 of its 190 employees work. (Executive offices were moved to Costa Mesa several years ago.)

The company’s most recent business line is in sterilizing hospital rooms and surgical suites. Astro Pak in 2010 created a separate company, SixLog Corp., that uses a kind of aerosolized hydrogen peroxide to kill bacteria and other biological contaminants in rooms and on equipment.

“I can’t remember having a slow year here,” Verheyen said. “Our revenue is up 20 percent this year to date. That’s stinking healthy.”

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