News Column

B2G Supplies Revenue Gains

July/August 2002, HISPANIC BUSINESS Magazine

The 2002 High-Tech 50: Government spending pushes revenues higher for the largest Hispanic high-tech firms.

View the 2002 High-Tech 50 DirectoryHow did the Hispanic Business High-Tech 50 increase revenues in a recession year? By catering to the needs of the federal government.

Revenues for the 50 firms totaled $2.34 billion, a 3 percent increase from the previous year. This incremental growth looks good given that 2001 saw a recession. The High-Tech 50 weathered the downturn by looking to the federal marketplace, a sector representing 37.3 percent of their total revenues.

Defense contractor MEVATEC, number 4 on the High-Tech 50 directory, illustrates the trend. CEO Nancy Archuleta managed to increase her company’s revenues by $30.5 million in 2001, a 39.1 percent uptick. MEVATEC president Tom Houser sees the company’s “technical capabilities being very well matched to many priorities of the new [Bush] administration.”

Advanced technology gives MEVATEC the edge in landing contracts and completing them on budget. “MEVATEC uses activity-based costing and activity-based management, or ABC/ABM, to identify and fix non-value-added processes, and ABC/ABM is getting a lot of interest in government circles,” explains Mr. Houser. “Successful and efficient subcontracting is a core competency at MEVATEC and has resulted in our adding subs. In fact, we currently have 71 subcontractors on one [Defense Department] contract. Part of the successful subcontracting is a result of our use of Web-based applications and other electronic means to manage our subcontractors more efficiently.”

Another High-Tech 50 company, Aerospace contractor IITC (number 31 on the directory), increased revenue 79.6 percent last year. “Did our revenues go down during the recession?” asks Francisco Garcia, CEO of Denver-based IITC. “No. On the contrary, they went up. But not because the federal government is spending more money. A lot of our growth comes from recognition.” In the last year, IITC has won three awards, Mr. Garcia explains – a competitive advantage among risk-averse procurement officials.

Looking ahead, Mr. Garcia expects defense spending to increase, although not immediately. During the Reagan administration’s military build-up, it took three years for the money to start flowing, and the Bush administration looks to repeat the timetable. “Reality hit with September 11: We were not very secure as a country,” Mr. Garcia says. “The new administration is very pro-defense. They are pushing money that way.”

“We are currently projecting growth of 10 percent to 15 percent for 2002,” says Mr. Houser. “We try to be conservative in our estimates and then beat our projections. MEVATEC is adding more commercial and state government work in 2002 and 2003, and I expect that will have a very positive impact on our profitability.”

Besides the federal markets, exporting offers an attractive niche for enterprising high-tech CEOs, as this year’s High-Tech 50 list shows. Revenues for the number 1 company on the directory, Brightstar Corp., grew from $354 million in 2000 to $621 in 2001, a 75.4 percent increase. Brightstar distributes wireless telephone equipment to nearly 6,000 resellers and retailers around the world, mainly in Latin America. The company operates in 13 Central and South American countries, with managers keeping in touch by using the products they sell to make conference calls and e-mail.

Written by Senior Editor Joel Russell. Research for the 2002 Hispanic Business High-Tech 50 directory conducted by Research Supervisor J. Tabin Cosio and Research Assistant Mike Caplinger.



Source: HISPANIC BUSINESS Magazine


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