“Multiplier Effect” Helps a Technology Company Grow its Export SalesApril 26, 2012
Doug Barry is an International Trade Specialist in the Trade Information Center, part of the U.S. and Foreign Commercial Service
CTRL Systems is a Westminster, Maryland based business specializing in ultrasound applications for use in different industries. The company sought help from government export promotion programs including the International Trade Administration (ITA). CTRL’s founder and president Bob Roche spoke with Doug Barry of ITA’s Trade Information Center, U.S. Commercial Service.
Barry: Your company literature says that you are a “nondestructive testing company.” What then is a destructive testing company?
Roche: Well, destructive would mean you’d have to tear something apart to do something productive. But in our case, it’s ultrasound, nondestructive, testing allowing for diagnosis while the equipment is still in motion.
Barry: And it’s mainly leaky pipes?
Roche: A leak is one of the applications of ultrasound. There are several others. In the case of a leak, one of the main uses is in the area of energy conservation and cost reduction. And one of the key ways of reducing costs is with compressed air. Compressed air historically has a wastage of 20 percent to 30 percent. So with our technology, users can quickly locate and repair and confirm the repair and then reduce consumption. Our CTRL Energy Savings Program will also show the cost of energy before and after the repairs
Barry: What are some of the more interesting leaks you’ve handled?
Roche: One claim to fame is that we put this technology on the International Space Station in 2001. NASA had been spending eight years trying to do that. We helped them with it in six months.
Barry: Did you go up there yourself for the install?
Roche: No, I didn’t get to go. NASA uses it for when they dock and the two doors come together. They can quickly scan and make sure they’ve got a good seal before they open the units. While on mission, it’s been able to find failures on board the space station. One of the situations was when they were losing their internal oxygen out to space and they had to quickly find those problems and save the precious commodity of oxygen, which there’s not a whole lot of in space.
Barry: Give us a little background on how you developed the international side of the business.
Roche: I would like to say that it was a well laid out plan, but actually it was more of a “too dumb to know that you couldn’t do it.” Our technology is a handheld diagnostic technology. It is cross-language in application – and English is a universal language for commerce, especially for engineers. So there was no barrier for us to deliver the product outside our borders. We began doing some marketing through the Internet. We began working with the Export Assistance Center of the International Trade Administration and the Maryland Department of Economic Development. The Export Assistance Center in Baltimore introduced us to our first customer in Germany back in 2000. We now sell our product around the world. Export is between 38 to 42 percent of our annual revenue stream.
Barry: What’s your experience in China?
Roche: We’ve been working in China for about ten years. Four years ago we began doing a pilot program into their power industry, and we now have about 25 percent of their power plants using the CTRL UL101. We expect to have about 40 percent penetration by the end of this year. Within the next two to three years, close to 100 percent of the power plants will be using our technology.
Barry: How do you protect your Intellectual Property in China?
Roche: Our product is protected through IP and not through patent. Secondly, we develop relationships with partners that we feel as comfortable as we can possibly be. Third, we have had companies try to reverse engineer our technology. They have reverse engineered the application but not the functionality and performance of our technology. So with that in mind, we’re not fearful to go anywhere in the world, including China. The other way to circumvent piracy is always innovating and always advancing your technology so that by the time someone matches what you’re currently doing, you are already on to the next version of the technology, advancing it to greater performance.
Barry: Where are the devices made?
Roche: The handheld sensors are made in the U.S. A few years ago we wanted to take a couple of our components and reduce their cost of production. They were being machined, but would lend themselves to injected mold process. At the time cost in the U.S. was still prohibitive. So we sourced them in China. About a year ago, we were running into difficulties in communication and production runs. We were able to find U.S. vendors who could now provide compatible pricing in our run rate qualities. So I see it as a real success story where old pricing matrix’s forced companies to offshore, but now U.S. vendors have made adjusted which allows us to bringing it back into the U.S.
Barry: Can you give us another example of how the Department of Commerce helped you to accomplish a business goal that was meaningful?
Roche: We talked about the business in Germany. This led to a relationship with an engineering firm that has taken our technology and built it into a very specific application– assessing the condition of an automotive engine and the odometer reading for accuracy and whether it has been fraudulently modified. They’re doing quite well selling this package in West Europe and the Baltic countries where a high percentage of odometers are tampered with. So our software algorithms using our ultrasound technology is now giving people a new means of addressing this problem.
Barry: What has your company learned in doing business overseas?
Roche: What we learn is that everything is both regional and timing, so something that we may have done successfully here can then be conveyed to another region of the world and they can replicate that success to their client’s benefit, or vice versa. A client overseas – just like the automotive situation – may find a niche with the technology, having it deployed with great success and then bring that to other segments around the world. So that’s more what we’re learning is the interchangeability of success and best practices. 75 percent of the people that’ll be using our technology in the next five years don’t know it exists today.
Barry: You’re describing a multiplier effect. By virtue of being out there in the world and meeting these other companies, they have an aha! moment after seeing what you have and apply it to a purpose that you hadn’t thought of before.
Roche: That’s true. Our technology is what allowed them to do that. We are learning new applications every day
Barry: You mentor other companies that are interested in exporting. What is the single most important piece of advice that you give these folks who come to you for counsel?
Roche: I just strongly suggest to them to give it consideration– to evaluate what exporting could mean to their company. Mostly I think owner’s just don’t have as much time as they have questions. That is where the local District Export Council and Export Assistance Center can be of great help. In the long run I think they will be pleased with the return.