GenRad Eyes X-Rays, Car Repairs

Electronic News, June 19, 2000 by Bernard Levine

BostonaGenRad Inc.'s new boss is counting on X-rays and car repairs to pump up the tester firm's fortunes.

Robert Dutkowsky, president, chief executive officer and chairman, in his first two months at the helm of the Westford, Mass., company has originated major initiatives designed to enter GenRad into the burgeoning automatic X-ray inspection (AXI) business and expand penetration of the automotive diagnostics market into the independent repair shop sector.

Some of the moves began or were planned before he arrived, but carrying them out is now up to him. Recent acquisitions of Nicolet Imaging Systems and other firms have played a key role and more acquisitions may be coming, as he moves to boost profits, which have recently been slipping.

"I came in with a fresh look," he said. "Clearly the strategy of recent years is right. Execution has been less than perfect. With a customer base as strong as ours, we have great opportunity to grow."

Dutkowsky came from EMC Corp., a Hopkinton, Mass., computer storage manufacturer, in April, replacing James F. Lyons. Earlier, Dutkowsky was with IBM.

While the recent acquisitions were completed or in the works under previous CEO Lyons, Dutkowsky is moving rapidly to integrate and leverage them. "The acquisitions are taking us into new markets," he said at a Nepcon East/Electro 2000 press gathering here last week. More acquisitions are possible, he added.

The acquisition of San Diego-based Nicolet Imaging Systems makes GenRad a leading player in AXI gear, increasingly required to inspect BGA-packaged ICs and other sophisticated componentry on circuit boards. GenRad squares off against Agilent Technologies, CR Technology and others staking claims on this market.

Nicolet was acquired from Thermo Electron Corp., Waltham, Mass. GenRad also acquired from Thermo Electron another company, Sierra Research & Technology, Westford, Mass., which makes automated rework and repair systems.

GenRad also has made a pair of European acquisitions: Autodiagnos AB of Stockholm, Sweden, and Mastertech Automotive Ltd. of Wickford, England.

They expand GenRad's presence in automotive diagnostics into aftermarket applications. The firm has become a major supplier of testers to automotive manufacturers in recent years, with Ford its biggest customer, and now wants to extend the business to the independent repair shops of the world.

At the same time, GenRad continues to serve traditional customers including contract manufacturers and a broad range of OEMs.

"We have strong technology and a skilled workforce" of more than 1,500 employees worldwide, Dutkowsky added.

Besides mounting a major thrust into the automotive board test market in recent years, GenRad also has been concentrating on other in-circuit test products and software, with three worldwide divisions and subsidiaries in Europe and Asia. It is a leader in high pin-count and all real pin technology, and also manufacturing execution system software. It dropped out of IC test many years ago after a brief stint.

Sales last year were $302 million. While profitable, GenRad's first-quarter 2000 profits were lower than expected, $2.3 million vs. $4.1 million in the previous first quarter, although sales increased. Dutkowsky is hoping recent moves such as AXI will help boost the profit picture. "Some people who will buy our in-circuit test equipment will buy the Nicolet AXI," he said last week in Boston. "We can greatly leverage the GenRad infrastructure, using our sales force and service network combined with Nicolet."

GenRad is putting new money into Nicolet to bolster its prowess, he said. "We invested heavily in engineering talent for Nicolet and expanded their R&D budget." Ron Lindell, Nicolet general manager, and other key execs will stay, he added.

Sales of AXI gear are growing 20 percent a year industry-wide, he said. AXI equipment is used to inspect BGAs and other components difficult to check with more traditional testers. The Nicolet line features both manual and automated AXI gear. "Nicolet will help our board test division," Dutkowsky said.

Meanwhile, acquisitions in the automotive area will help the firm capitalize on growing automotive electronics, with today's cars filled with circuit boards. "A Ford Taurus has more computer power than an IBM mainframe 10 years ago," Dutkowsky said. He should know, having been at IBM for 20 years, eventually serving as assistant to CEO Lou Gerstner. At EMC Corp. he was executive vice president for several years before joining GenRad.

Bob Stasonis, GenRad product marketing manager for the EMS - Product Verification group, noted the automotive acquisitions "are aimed at aftermarket people."