Northeastern Electronics Co. Diversifies its Customer Base

Originally posted on December 21st, 2003 by Charley Hannagan for syracuse.com

Northeastern Electronics Co. Inc. looks to boost its work force by almost 50 percent next year to handle an increase in its wire and cable business.

The company’s sales grew by about 35 percent this year, and expects another 30 percent to 40 percent jump in 2004, said founder and President Steven M. Peltz. The privately held company does not release sales figures.

Northeastern is a quiet company, seldom seeking publicity since its founding in 1987-88. Motorists passing the company on Route 5 in Elbridge near the Rolling Wheels raceway can’t see its brick and metal letter sign through the overgrowth.

Inside the one-story brick building, 25 workers make specialty cable and wire for commercial and military customers. The cables go into radars, telephones, computer main frames, cash registers and just about anything else that needs wires to operate.

Peltz began his career as a manufacturer’s representative in the early 1980s. He earned a commission selling products for several factories that made parts for the electronics industry.

By the mid-1980s, Peltz turned to importing products from Taiwan to sell here. He began making his own products in 1987-88, with IBM as his first customer.

“I thought I could build a niche that revolved strictly around wire and cable manufacturing,” Peltz said.

At the time, large electronics companies made the cable and wire used in their products. Peltz offered to take over that work from them and to do it for less.

For six years in the 1990s, Peltz had a lucrative contract with IBM to make cables for its personal computers.

“It was very, very high volume,” he said. “We blew up our employment to between 100 and 125 people a year.”

Then, in late 1996 and early 1997, IBM transferred its personal computer production to Korea, and Northeastern lost the cable work.

“It was a very difficult time for us to downsize so dramatically,” Peltz said.

Over three months, the number of employees fell from about 125 to about 25 workers, he said.

“What allowed us to rebuild the company, though, was we never had a debt structure,” Peltz said.

Other than the mortgage on the Elbridge building – which was paid off last year – Northeastern has never had to borrow money, he said.

It took a lot of hard work to stay debt free all those years, Peltz said.

“If I had debt when I lost the IBM contract, I would have gone under,” he said.

Over the years, Northeastern has diversified its commercial customer base. It moved into the military market about a year ago, and that side of the factory will probably grow to become 40 percent to 50 percent of Northeastern’s business in 2004, Peltz said.

“Textbook-wise, it’s all wrong when one customer can dominate your account list by 80 percent,” he said. “But when the growth is so dramatic, what do you do? You don’t turn it away. You try to hold it as long as you can and hopefully grow on that.”

Peltz added, “Unfortunately our military presence is going to be very strong globally, which is going to open up opportunities for all types of manufacturing.”

Since getting the radar work a year ago, the company has segregated its commercial work from its military work for quality and security reasons, said Doug Hirsh, Northeastern’s engineering manager.

Workers seated at folding tables use tools and equipment to make cables. Everyone is cross-trained, which allows workers to switch off jobs, Hirsh said.

He joined Northeastern after taking a layoff from Carrier Corp. Hirsh said he likes working for a smaller company much more than for a corporate giant. The bureaucracy at the larger company was hard to swallow, Hirsh said.

At a smaller company, “you make a business decision, and you get to see right away whether it’s good or bad. It’s immediate,” he said. “Where at the larger companies you work on a major project that won’t show a return on investment two to three years down the road.”

Hirsh added, “if I want to change something, I talk to Steve. We make a decision and see the results in a day or two.”

In the first quarter, Northeastern will add five to 10 production workers and two engineers to keep up with demand.

Employees work a mandatory 48-hour work week, with some people working as much as 55 to 60 hours a week, Peltz said. The company has offered overtime since August.

“It’s a little untraditional, but our efficiency is so high with some of our production workers that it’s more beneficial for me to pay overtime than to bring new workers in right now to train,” he said.

“We get great high productivity, and for the people getting overtime, they love it because they get time and a half. It’s really a win-win,” Peltz said.