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Lenthor Engineering, a Silicon Valley-based manufacturer of flexible printed circuits boards and assemblies, celebrates its 25th anniversary this year.
Flexible circuits were a young industry when Lenthor's Mark Lencioni dared to venture into it 25 years ago. Printed Circuits '86, a directory that eventually became Fabfile Online, counted only 30 flex fabricators in North America back then, primarily clustered around Nashua, New Hampshire; Minneapolis, and Southern California. Like so many emerging electronics technologies, defense electronics provided the market and the money. It's been quite a ride since then.
A few quick highlights of Lenthor's survivor skills:
In 2000 there were 75 dedicated flex and rigid-flex operations in North America. As decade's end approaches, that number has declined to 50. Lenthor grew over 20% during that period and represents an American foothold in the military and hi-rel markets, as well as for the flex markets of the future--in medical electronics, industrial, test, MEMS, solar and others yet to come.
We asked President Mark Lencioni and Sales and Marketing Manager David Moody to share their experiences looking back and their thoughts on the future of the company.
I-Connect007: Congratulations on 25 years. That's quite an achievement in this business. Mark, how did Lenthor Engineering come into being?
Mark Lencioni: Lenthor Engineering started in 1985, literally in my garage, in Sunnyvale, California. My garage was a silkscreen area. My kitchen was QA. My bedroom was the sales office. We outsourced etching and plating and some other services our first year of business. But within six months, we had a building and began putting in the wet process facilities. It was our first 3,000 square feet, and we were one of the only Class 7 plating facilities in the Silicon Valley. Here we are, 47,000 square feet later.
007: So, in 1985, what prompted you to dive into flexible circuits? This was a relatively early point in their development.
ML: I was initially intrigued just by the pure difference from building hard boards in a previous life, to being able to look at something that was a completely different geometry with the ability to bend around things, and just that open mindedness about the future needs of printed circuit boards being able to get into small places. I'd already seen the transition in the mobile market place with things getting lighter and smaller, and I saw the applications potential, and thought this is the future, right here.
But when I saw the ability to eliminate points of failure within an interconnect subsystem by using a rigid-flex technology, getting rid of connectors, having fewer points of failure, having one subassembly that you were now building, a light went on for me. That's got to be the most important thing - from the standpoint of fault tolerance systems, and things that can't break, that have to work all the time.
That was the unique thing about rigid-flex, and was a really the fun part of the flex circuit business. And rigid-flex has been where we have put our emphasis, and what we have perfected over time. We've been able to build that very consistently - making the rigid sections work like rigid boards, and the flex sections act like a complete interconnect inside the rigid subset, and then be able to fold them on top of each other, and fit them into small places. With this technology, we were able to incorporate all of the things that you would normally do in high-tech rigid technology, from surface-mount devices all the way through buried and blind vias. And especially in 1985 when we started Lenthor, it was a niche market. There were not a lot of players. I saw it as an emerging technology that was definitely coming.007: When you look back over 25 years, what are some of the things that stick out for each of you as being significant?
David Moody: One thing that sticks out for me is that when we decided to pursue rigid-flex, we ended up capturing two marketplaces at one time. This approach helped the interconnect part of our business become more solid and robust, and at the same time, we got ourselves into the rigid board business, and have been able to take some of that marketplace away, by combining the two technologies.
ML: Rigid-flex really has been our forte. It's much more challenging and also a lot more rewarding, from both the standpoint of solving a customer's complete package solution, as well as profitability. It takes a lot of engineering prowess to be able understand how things come together.
007: On the business side, what stands out over the years?
ML: I think first of all, the longevity of our company speaks for itself, having gone through several recessionary times where products were not being developed as fast, or as frequently, and there was less volume production behind what was there. We actually started our company during a recessionary period. And we have always been able to set ourselves up to grab whatever market share was available to us.
DM: From a business standpoint, there are two different aspects. One is the functional operation of a business enterprise, and being able to continue to stay up with technology in a very capital intensive manufacturing environment; and secondly, we must, at the same time, meet the ever increasing regulatory restrictions and demands being placed on us by so many different governing agencies. We don't just report to the federal government EPA. We report to as many as 27 different agencies in total. From an operational standpoint, it's a huge juggling act to do all of that, and at the same time, keep your company competitive - not only from a technology standpoint, but maintaining the ability to be able to sell your product in a price-competitive marketplace. We are faced with an ever-increasing regulatory body, increasing taxation, increasing labor costs, material costs, just the general cost of operations and staying in business, while competing against many other companies, not just next door, but from around the world. How do you continually increase productivity and move forward to chase off what's coming from behind you?
ML: In California ...
DM: Yes. We have a more unique challenge being in business in California. Those that are dealing out of states that do not require this level of regulatory compliance--it's a huge competitive advantage for them. Thus, it's incumbent upon us to stay that much further ahead from a technology and productivity standpoint, which ultimately leads to the lean initiative issue for Lenthor, because, at the end of the day, that really makes us a more productive, more competitive company.
ML: In regard to the constant, ongoing challenge of becoming and maintaining status as, hopefully, a world renowned supplier of flexible printed circuits, there is also the challenge of being a privately held, smaller company competing against a number of publicly held and well funded larger companies.
Lenthor Engineering has been able to procure the proper equipment through its own personal finances generated in profits over the years. We have stayed competitive with publicly held companies that certainly have fewer capital restrictions and many more resources to buy the latest technology and equipment and automation. So, Lenthor, being privately held, has really had to be quick on its feet, has had to use its profits wisely, and continue to reinvest in the company so that it has a future, is not left behind, and can be very competitive against best-in-class competitors.
DM: We literally cannot afford to get it wrong. We have to continue to drive forward.
ML: Yes, we look, and explore, and are nimble, as business conditions change year after year. We have to be able to adjust at an incredible speed, and stay alive and viable at all times. That, in and of itself, is a real highlight for me--being able to pull that altogether year after year, and go head to head with publicly-owned companies that have a lot more resources available to them.
007: Flexibility in attitude and action seems to be a key to succeeding over time, especially when economic times are tough.
ML: Lenthor actually started in a recession in 1985. We've actually seen four recessions--1985, 1992, 2000-2002 and 2008-2009. It's really the management through these recessionary times that made it the company it is today.
DM: Lenthor's ability to be flexible has been key, no pun intended.
ML: Our whole management team was required to go through Dave Dibble's TQM training, maybe 15 years ago, and it is still part of our core today. We focus on our systems, and we view "failures" as system failures. And we aren't afraid to move people around in the bus, or throw people off the bus! That mentality has spurred continuous improvement and helped fuel our successes. Since then, we've built on TQM with Lean Manufacturing--higher throughput, lower costs, better quality.
007: Dave, as part of the management team, what are your thoughts?
DM: This is another unique thing about Lenthor, from a company culture/management standpoint. Mark has allowed the management team to be independent and free-thinking. He has really promoted a culture where we are all free to be open, to present diverse opinions. We work to come to a consensus. With a lot of strong personalities and talented people, it can be pretty intense at times. But we are truly able to air opinions, discuss directions and options, and come to a real consensus about how to move forward. I really believe this is key to our success. There is no dictatorial approach, which is not always what you find with an entrepreneurial leader.
ML: I'm surrounded by a great group of individuals.
DM: That brings up another truly significant milestone for us. It is about our employees. One of the things that I think we are most proud of is our very unique profit-sharing program. Again, because we're not a public company, we can't provide our employees with discounted stock options. The profit plan for Lenthor employees is really driven by their performance, their specific involvement and level of engagement, and ultimately their contribution. The way the program is set up, those things are directly related to how much money is available, if we're profitable, to be paid back to them. So their direct contribution on a daily basis really drives innovation, productivity and profitability back into their pockets.
ML: And this program has been in play for more than 10 years now. It has fueled us to get longevity out of our employees, to get them to think out of the box, to get them to participate in the business as owners and to really have a stake in it. It creates a win-win situation for the employee with the job security that comes with a successful company, but also the shareholders are rewarded by everyone being very productive. And as we've been exposed to other businesses and how they run, we see that we're one of the few shops that has been able to do this and be very consistent at it, and actually have a successful story to tell from it--versus a lot of companies going in and out with their programs based on the economic conditions.
007: The employees spur each other onto their highest level of success.
DM: Exactly. And partly as a result of that, we have very little turnover in our company.
ML: And certainly one of our most significant achievements within this last decade is that we have built a really cohesive key leadership team. That has been the key to holding this whole thing together. Instead of it just being "what Mark Lencioni said and his vision to run the company," etc., it's been the team that has come together, day in and day out, who support each other, and are able to reinforce, clarify and communicate the corporate strategy and goals throughout the company, every day. The ability of that team has been crucial.
007: Mark, are there any other particular milestones that seem particularly meaningful or eventful now, looking back?
ML: One significant thing for us at the time was the acquisition of our own real estate.
DM: Yes, and our ability to acquire and absorb another company (PCB Engineering in 2002) was a real milestone. It expanded us from a facilities and capabilities and opportunities standpoint, though we didn't gain anything from a market share or a customers list standpoint.
ML: That kind of flows again into our achievements as a privately held company. Unlike other companies that do acquisitions for growth, we were able to do this acquisition with PCB Engineering, adjust it, get the economies of scale to give us the ROI, and were able to do this as a privately held company.
It helped give us the breadth and size of a solid mid sized, instead of a more "mom and pop" type shop. Now when we tour customers through the facility, they see world class facilities that have been well set up, a strategic and well thought out campus, and it's impressive.
007: Taking a snap shot today of Lenthor Engineering, what do you see that continues to keep this business exciting?
ML: Our primary markets are military/defense and medical. You literally have people's lives in your hands in both groups. And these markets will continue to be the significant domestic marketplaces. The drive for high-reliability products that are getting smaller, lighter and have to perform in the most demanding environments make our jobs here mission critical. We take great pride in our customer base and the programs we help to support for them.
007: Finally then, what do you see looking forward over the next five to 10 years?
ML: In 2007, when we added our EMS facilities and offering, that was significant. And I can say with complete confidence that we will actively pursue and engage in other value-added services for our customer base. Our customers do not want to build internationally, they want to be able to keep their technology safe. They are concerned about IP, and their work is time-sensitive. We will be adding box-build to our capabilities soon.
Other than that, in general, we really don't care what the world does--we do, but we don't. We know electronics will be around. We are always looking for ways that we can use the equipment sets that we have to create things other than PCBs for the future--you never know. We will change and evolve as needs arise.