Published: May 25, 2008 10:56 pm      

DRS expects smooth transition in merger

For the past 15 years, DRS Technologies Inc. has been known locally as the parent company of Laurel Technologies of Richland Township.

That could change in the coming months.

DRS has no interest in divesting the local plant. But DRS may soon have a parent company of its own if a merger bid with Italian defense company Finmeccanica proceeds as expected.

New Jersey-based DRS announced earlier this month that it had entered into a definitive merger agreement with Finmeccanica. The companies expect the $5.2 billion transaction will close by the fourth quarter.

If the big merger gains all the necessary regulatory approvals, DRS will operate as a wholly owned subsidiary of Finmeccanica. DRS officials expect the deal will proceed as anticipated.

“We are not the first to go through such a process,” said Rich Goldberg, vice president of public relations and communications with DRS.

“There are numerous international companies that have purchased U.S. companies and have successfully gone through this process. The result of the process when concluded is to ensure national security is protected, first and foremost.”

Finmeccanica views the acquisition of DRS as a key component in its expansion into the U.S. defense market. As it turns out, the Italian company is using the same kind of strategic thinking DRS demonstrated while making the many acquisitions it has to help grow into a company that employs more than 10,000 worldwide.

The company hasn’t made any acquisitions since 2006, when it purchased Engineered Support Systems Inc. of St. Louis for nearly $2 billion. The company then added nearly 3,500 employees to the DRS payroll.

“We don’t buy companies just to be bigger,” Goldberg said. “We buy companies that strategically fit and complement the rest of the business.

“That has been a part of our road map to success. Since our last major acquisition, we haven’t made any other moves. But we always keep our eyes open.”

Goldberg also noted that growth at DRS has hardly been limited to acquisitions.

He said the company’s overall success is largely due to a combination organic growth and adding the right business parts through mergers.

Goldberg chalked up the company’s ability to grow organically to its commitment to retaining the same customer service principles it applied when DRS was a smaller company.

“We really take a personal interest in the needs of our customers,” Goldberg said. “Sometimes companies can get a little complacent and the difference with DRS is we consider ourselves a partner to our customers.

“Whether it be working directly with members of the armed forces or other defense suppliers, we try to be a good partner. So when we’re working with the Army or Navy, we speak directly to them, establish what needs they have and make sure we really deliver products and services that meet those needs.”

DRS Laurel Technologies plays a key role in accomplishing the company’s goals, Goldberg said.

He said Laurel Technologies is representative of both means by which DRS corporate has grown.

The plant added an instant infusion of possibilities upon acquisition, but has since grown organically to the point that the local work force represents nearly 10 percent of the entire DRS payroll.

“It’s our world-class manufacturing facility,” Goldberg said. “If you look at the growth that has been experienced there, it shows our commitment not only to that facility but to the region.

“Our organic growth, they have gotten a lot more work, but also have a lot more own facilities sending the work there because of the very high quality of work and how they can turn projects around on short deadlines.”

The company’s organic growth figures to continue even more as its different facilities learn to lean more on one another. As odd as it may seem, many DRS plants at times would be sending work to companies that are considered competitors of other business units because of pre-existing relationships in place before merging with DRS.

Joe Ward, director of business development at DRS Laurel, said he has seen more DRS business units shifting their jobs toward other DRS facilities.

“If you look at the business we do in Johnstown that is internal to DRS, it’s probably three times what it was just four years ago,” Ward said.

“Next year alone we will double our intra-corporation workload, so it’s fair to say that type of business has grown significantly.”

Ward said the growth in cooperation between different business units isn’t necessarily due to a corporate directive to keep work within the corporation. But he said senior leadership has certainly encouraged the facilities to consider using one another instead of shipping work to competing organizations.

He said another bonus to using other parts of the corporation to fill work orders is that there is complete transparency between the units. Because the units are all part of the same DRS family, they have complete access to their information that is not available from outside vendors.

“Having a clear message from above, a senior part of the organization, to consolidate methodologies has made it easier for us to approach some centers that wanted to stick with their old electronics manufacturers – or competitors,” Ward said.

“There was no directive to do business internally, though there were some strong suggestions.”