Inc. 5000 Applicant of the Week: KG Technologies

How this third generation of latching relay manufacturers is creating smart technology to save money and energy for utility companies

Courtesy company

KG Technologies is run by the third generation of Gruners. From left to right, Wolfgang, Philipp, and Thomas Gruner.

As applications for the 2011 Inc. 500 | 5000 pour into our offices, we thought it would be worthwhile to shine a spotlight on some of the companies that are vying to appear on our ranking of the fastest-growing private companies in the U.S. (For more information and to apply, go to http://www.inc.com/inc5000apply/2011/.) One that caught our eye was Cotati, California-based KG Technologies.

Most of us never think about electric meters, those little circular measuring units attached to the outside of our homes. Thomas Gruner, on the other hand, fully understands the importance of electric meters because his company KG Technologies, manufactures the latching relay switches that can control these meters remotely.

KG Technologies is developing technology that uses clever and innovative ways to save energy and money for both producers and consumers of electricity. Now that grids and meters have finally gotten "smarter," KG Technologies utilizes "smart" latching relays to connect and disconnect your meter to the energy grid by remote.

"In a situation where a customer would not pay their bills, the utility can now disconnect the power without sending a technician out—sending a technician out for one call costs up to $150," says Gruner, CEO of KG Technologies. "Phoenix, as another example, has 40,000 empty homes that are still connected to the grid. With our latching relays, you could turn those off and save that energy for the utility companies. Plus, there's advantages for rolling blackouts."

At the moment, 1.8 billion meters worldwide need to be replaced, and KG hopes to be the top supplier of intelligent, safe, reliable products and solutions for quality energy management.

"We have secured seven out of the top meter manufacturers worldwide," Gruner says. "Currently, there are only two competitors worldwide for our product: BLP, in Great Britain, and the other one is Gruner AG, which has the same last name as mine because it's my grandfather's company."

It's true: Two of the world's top latching relay manufacturers were born of the same family; today, they are competitors. Energy management has been a Gruner family business since 1953, when Thomas' grandfather Wolfgang Gruner founded Gruner AG in Germany's Black Forest.

For decades, Gruner AG was a world leader in relay manufacturing. Wolfgang even employed his son, Klaus, who later moved to the United States in 1985 to help expand Gruner AG's market overseas. When Wolfgang died decades later, management changed and the company was sold.

Gruner AG continued its operations under new management, but the original Gruner family was out of the game. That changed in 1992 when Klaus and his wife founded KG Technologies in Chicago. The couple ran their fledgling company until 2005, when Klaus' wife died and Klaus subsequently transferred the company to his three sons. Thomas, Philipp, and Wolfgang Gruner all run KG Technologies to this day.

While business has grown rapidly since 2005, KG Technologies remains a small company: Gruner only employs 12 total workers in the United States, while all the manufacturing is done in China. Yet, despite its size, KG Technologies has caught up to Gruner AG thanks to recent advancements in technology.

"It took us about four years to actually develop a product that meets the international standards," Gruner says. "We now have a product that is patented, exceeds all international standards, and we believe it's the highest quality product in the market."

In 2006, the company made $300,000 in sales; in 2010, KG raked in $40 million. Thanks to signing lucrative clients like General Electric, KG has earned enough money to expand into Germany and Hong Kong within the next two years.

"We're constantly adding people, test labs, and sample shops," Gruner says. "Our goal is to become market leader in the industry and to supply the energy market with the best switching solutions that one can offer. We are very well adapted to supplying very large capacities, which reduces lead time and cost to our customers."