Andrew Corporation

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Andrew Corporation

10500 W. 153rd Street
Orland Park, Illinois 60642
U.S.A.
(708) 349-3300
Fax: (708) 349-5943

Public Company
Incorporated: 1947
Employees: 2,924
Sales: $430 million
Stock Exchanges: NASDAQ
SICs: 3679 Electronic Components Nee; 3357 Nonferrous Wiredrawing & Insulating

Andrew Corporation is an international supplier of communications systems equipment and services. Long known as the world’s leading supplier of parabolic microwave antennas, Andrew also presides over large portions of the international markets for satellite dishes, cellular phone system equipment, and coaxial cable. The company operates in three main areas of business. Its commercial division provides antenna systems and coaxial cable for telecommunication. A government division manufactures specialized antenna and radar systems for detection and surveillance for use by the U.S. government and its allies. Andrew Corporation’s Network division manufactures products which allow computers to link networks worldwide.

Andrew’s sophisticated technology is employed in various forms throughout the world. For example, Andrew developed a steam-resistant fiber optic cable which is the only type approved for use in New York City’s steam ducts. The company also built a substantial business providing cellular communication in tunnels, where cellular users had traditionally had problems. Andrew worked on communications for the new English Channel tunnel and received contracts to install distributed communications systems in the subways of Vienna, Warsaw, and Sofia, Bulgaria. Andrew also developed earth station antennas which were powerful enough to transmit signals to a satellite from remote locations, yet were small enough to be carried in a suitcase.

The company was founded in 1937, when 34-year-old engineer Victor J. Andrew began to manufacture equipment for the directional antennas used by AM radio broadcasters. Andrew received a Ph.D. from the University of Chicago in 1932, and then worked at the Army Signal Corps Laboratories in Fort Monmouth, New Jersey, and at Westinghouse in Chicopee Falls, Massachusetts. But Dr. Andrew soon returned to Chicago to go into business for himself. He rented a bungalow on the city’s southwest side and installed a modest array of tools and equipment. His first sales were for custom designed phasing, tuning, and transmission line equipment for AM radio, though Andrew also offered his services as an engineering consultant to broadcast antenna users. Andrew had intended to make consulting the major part of his business, but World War II brought with it a ban on new broadcast station construction, and so he had little consulting work to do. Andrew concentrated instead on manufacturing, developing a number of new products, and achieving significant sales of phasing and tuning equipment and of coaxial cables and rigid coaxial lines.

A strong demand for broadcast products spurred the company’s initial growth, and the company moved to new quarters in the same Chicago neighborhood several times in its first ten years. During World War II, Andrew received large orders from the military for coaxial cables and later for dry air pumps which the Air Force used to pressurize airborne radar pods. After the war, Andrew continued its ties to the military, supplying coaxial transmission line which was used to monitor nuclear blast testing both above and below ground. In 1947, the company was incorporated as Andrew Corporation, with Victor Andrew installed as board chairman and CEO, and his wife Aileen named president. That same year, Andrew bought 430 acres of undeveloped land in the Chicago suburb of Orland Park. The clear land was necessary for outdoor testing of antennas, and eventually the company built its manufacturing and management facilities there as well.

Andrew Corporation began marketing microwave antennas for both civilian and military communications in 1949, and Cold War demand for Andrew’s products during the 1950s kept the company busy. Andrew made switching devices, waveguides and high powered coaxial lines that were used in military radar systems. Its HELIAX continuous, semi-flexible coaxial cable came on the market in 1953 and became an important part of company growth. Coaxial cable, including HELIAX and RADIAX slotted coaxial cable, continued to make up the bulk of the company’s business in the early 1990s.

As demand for Andrew’s products grew, the company opened new offices in the United States and abroad. The company incorporated a branch, Andrew California Corporation in 1951, in order to take advantage of the growing west coast electronics industry. And two years later, the firm opened a Canadian affiliate because Andrew had had substantial export sales to Canada. The Whitby, Ontario affiliate immediately did well for itself. The Whitby affiliate was involved in other British Commonwealth markets and opened up new opportunities for Andrew abroad.

Andrew Corporation had been actively scouting European markets since 1958, and in 1966 the company was offered a large microwave antenna system contract in England, with the proviso that a portion of the equipment had to be manufactured in Australia. Due to the clause, Andrew entered both the British and Australian markets at once, founding Andrew Antennas Proprietary Limited in Australia and Andrew Antenna Systems Limited in the United Kingdom the same year. The Australian division took on a contract for the installation of microwave equipment along a 1,500 mile route from Adelaide to Perth. The company experienced many initial difficulties caused by the long distance between the U.S. design team and the Australian affiliate. But despite many costly set-backs, the project was completed satisfactorily, and the Australian branch eventually became one of Andrew’s most successful foreign operations.

In the early 1970s, Andrew’s market began to change from government and military contracts to private sector applications. In the United States, companies were allowed to compete with AT&T in long distance communication beginning in 1972, and these so-called Other Common Carriers (OCCs) utilized microwave antennas for their telephone service. Andrew was an acknowledged world leader in microwave technology, and its business grew appreciably as the OCCs such as MCI and SPRINT undertook large scale construction projects. Andrew’s growth in the microwave antenna business was at times as much as 25 percent a year between 1972 and 1984. The company held around 60 percent of the world market share in microwave antenna systems, with higher percentages in its top markets in the United States, Canada, and Australia.

The company had unparalleled technical expertise and had been in the market longer than any of its competitors, and in the early 1980s Andrew’s dominance was unchallenged. Sales in 1980 reached $89 million, with two-thirds coming from domestic markets. That year Andrew began a public company, though the Andrew family retained a substantial portion of the stock.

When the U.S. Justice Department broke up AT&T in 1982, Andrew grew even more rapidly. AT&T itself was one of the company’s top customers, and with the breakup it and the OCCs demanded more and more Andrew microwave transmission technology. The company experienced record sales, peaking in the fourth quarter of 1984. But sales declined abruptly in 1985 when fiber optics began to supersede microwave technology in some areas. Fiber optic cables were found to transmit voice and data faster than microwave systems and with less distortion. Andrew management had had some signs that this might happen, but had anticipated more time to get ready for the new technology.

Floyd English, who became president of Andrew in 1982, had worried for years that the company was too narrowly focused. As soon as Andrew’s sales began to slacken, English took measures to shift the company into other markets. The company began acquiring smaller firms that would help Andrew open new markets. Andrew was particularly interested in cellular telephone technology and in re-entering government work with intelligence gathering communications systems. Andrew bought Scientific Communications, Inc. and Kintec Corp. in 1986, both small military communications manufacturers. With these acquisitions, Andrew was able to get domestic army and navy and international contracts for antenna receivers and optical tracking equipment, and by 1987 sales in the company’s government products division had climbed by 88 percent.

Though sales had increased, earnings did not, and the defense electronics business experienced difficulty because of cost overruns and technical problems. Andrew’s government division operated at a $3.9 million loss in 1988. In 1991, DRAGON FIX radio transmission interceptors manufactured by Andrew were utilized in the Persian Gulf War, yet the government division still did not turn a profit.

In the late 1980s, the company predicted that corporations would continue to need enhanced communications between distant computer work stations, and Andrew planned on becoming a major player in the computer networking market. Andrew bought two companies involved in computer linking technology, Scott Communications, Inc. and Local Data, Inc., in 1987. In 1990, it spent $15 million on a similar company, Emerald Technology, Inc. These acquisitions formed the core of what became a major business area for Andrew. By 1993, computer interconnect technology made up about 15 percent of Andrew’s total sales.

Andrew also expanded its mobile communications business rapidly. Andrew developed an innovative slotted coaxial cable called RADIAX that eliminated problems with cellular phone use in tunnels, subways, and buildings. The company won a contract to wire the new English Channel rail tunnel with a new distributed communications system utilizing the company’s RADIAX cable, and subsequently worked on many subway projects, particularly in Europe and Russia. Andrew entered joint ventures in Russia to build fiber optic communication systems in subway systems in Moscow and St. Petersburg and then created another joint venture to build and operate a 400 mile fiber optic network between Moscow and St. Petersburg. The Andrew network gave callers from these metropolitan areas clearer signals and access to international communications links. This was especially important to Western companies operating in Russia, who had not had effective communication with home offices. In 1994, Andrew worked on in-building communication systems for the new Denver International Airport and in one of the world’s largest office buildings, the USAA building in San Antonio, Texas.

By 1992, Andrew had completely recovered from the decline in its U.S. microwave telecommunications business. Sales that year were a record $442 million, with almost half coming from overseas (an area that had been just 10 percent of profits in 1990). Earnings were also strong, and the company’s stock performed well. The computer networking business area turned only a modest profit, but 1992 was the first year the government business area was profitable. While this area had lost $1.9 million in 1991, the next year profits were $5.6 million on sales of $66 million.

Though the U.S. cellular market showed signs of maturing, Andrew had hopes for continued growth abroad. Andrew had been a major supplier to a consortium led by its long-time customers AT&T and GTE, and their Argentina contract was worth an estimated $35 million. Andrew also took on a $5.6 million job for subway communications in Hong Kong in 1994, and had many new orders in Eastern Europe. In addition, Andrew’s involvement in Russia promised substantial growth opportunity because the country averaged 10 phones per one hundred inhabitants.

Andrew has grown in diverse directions throughout its history. Andrew’s early years were devoted primarily to military applications of broadcast technology, whereas the 1970s and early 1980s saw a narrow concentration on microwave antennas for U.S. long distance telephone carriers. After this market declined in 1985, Andrew recovered relatively quickly by investing in new markets and technologies. Andrew’s worldwide market presence leaves the company poised to take advantage of developing needs in many countries. With a global customer base that is stable or growing, Andrew seems well positioned to continue expanding its core business lines.

Principal Subsidiaries:

Andrew Data Corp.; Antennes Andrew S.A.R.L. (France); Andrew S.R.L. (Italy); Andrew Kommunikationssysteme AG (Switzerland); Andrew Corp. Mexico S.A. de C.V.; Andrew VSAT Systems, Inc.; Andrew Ltd. (United Kingdom); Andrew Canada, Inc.; Andrew Australia; Andrew Corp. (Japan); Andrew Systems Inc.; Andrew SciComm GmbH (Germany); Andrew NPG, Ltd. (United Kingdom); Andrew KMW Systems Corp.; Andrew Kintec Inc.; UCI/ Unified Communications, Inc. (80%); Andrew SciComm Inc.; Andrew AG (Switzerland); Andrew International (Russia); Andrew SciComm Inc. (Saudi Arabia); Andrew Espana, S.A. (Spain).