Defense contractors, regardless of their size or the sophistication of their product, are largely captive to the decisions of Washington. Consider 56-year-old Robert Schoenman, chief executive officer of State Machine Products Inc. (#120), of Dry Ridge, Ky. Schoenman has built a $5.5-million business selling Uncle Sam such prosaic products as lanterns, mess kits, and field stoves. Schoenman credits his current prosperity to Ronald Reagan. "Once he became President, the defense budget shot up," he says. "And we happened to be doing the right thing in the right place at the right time."
For Schoenman, finding the right thing in the right place meant changing the business he started in 1970 in Montana. "Montana is a great place to live," he says, "but not a great place to do business -- unless you want to cut down trees or chase cows." In 1979, with the company just under $500,000 in sales, Schoenman moved to Dry Ridge, Ky. Prior to the move, the company had been concentrating on hand tools, fixtures, and replacement parts for such units as camp stoves; after the move, Schoenman decided to bid for the primary units themselves.
Then came the Reagan election, and, Schoenman says, "we just took off." Capital to fund the growth was no problem -- "I found an old-fashioned country banker with the confidence to get behind us." Labor was readily available, "down-home types -- good, solid workers." And an executive staff was close at hand. "State Machine Products is a family operation. I have three sons, a daughter, a son-in-law, and a wife as part of the management team." Schoenman himself was taught the machinist's art by his father.
Although he admits there are times when the red tape gets "frustrating," Schoenman finds the government an ideal primary customer. "They always pay their bills. You don't need an extensive sales force, and you don't have to advertise. Typically, each sale represents a good dollar amount; you only need to produce quality."
Not that he ignores the commercial market. Two years ago his brother-in-law joined the State Machine family, charged with marketing the company's products to the public, and this past summer the company set up a network of national sales representatives. Although commercial accounts currently represent only 5% of company sales, Schoenman aims to "ease up to about 50%." Ronald Reagan, after all, won't be President forever. "One of these days someone else is going to get elected, and their thoughts are going to be different. So we have to be prepared."