War is, as the bumper stickers once said, bad for children and other living things. For businesses, though, it's more complicated than that. The uncomfortable fact is that many government contractors do well when the country goes to war. And this war, in particular, has relied heavily on the efforts of private-sector contractors.
For an entrepreneur whose company is involved in a conflict--even one that's thousands of miles away--the experience can be transformative. War has always provided some enterprising businesses with an incentive to invent new things: Jeeps in World War II, satellites in the Cold War, armor plating for Humvees in Iraq. But a war is also a drain on the nation's human capital. In this conflict, hundreds of thousands of U.S. troops have been called to serve overseas since March 2003. At workplaces across the U.S., their talents and abilities have been missed. To mark the Iraq war's fifth anniversary, we talked with four business owners whose lives and businesses have been altered as a result of the conflict. Here are their stories.
Eight years ago, Norma Powell Byron was laid off from her job in marketing at a division of a munitions company, so she decided to go out on her own as a consultant to government contractors. Her first client was a longtime friend named Steve Adelman, CEO of SAA International, a small company that wanted help bidding on warhead design work. By April 2001, Byron had landed a contract for him, and she invoiced SAA for $150,000.
Then Adelman was killed in a private-plane crash. When neither his sons nor his workers stepped forward to run SAA, Byron volunteered to take over the business, at least for a while. She was sad because her friend had died and scared because she had never handled tasks such as purchasing materials, overseeing quality control, and running payroll. (Even today, she says the word payroll as if she were talking about climbing Mount Everest.)
When the war started, Byron's reaction was to think about research and development. Looking back on her career in the weapons trade, she saw one thing that stood out: Customers were always complaining about batteries. Artillery rounds and tank ammunition are controlled by battery-powered timers. In the desert heat, these batteries often fail. "In Iraq, they run through batteries like crazy," she says.
So Byron asked one of her engineers to look into alternative sources of power for munitions. A few days later, he told her about a lab in Columbus, Ohio, that was making fuel cells the size of pencil erasers. "I thought, We're definitely in the ballpark here. This can be done," Byron says. It took three years, working with g-force gun launchers and tiny parts that spin around 80 times per second, before Byron's company, called the Ashlawn Group, fabricated a functional weapon that used a fuel cell. Now, with a contract from the U.S. Army and a matching grant from the state of Ohio, where she plans to set up a plant, she's ready to start production. "It's not something I anticipated," she says. "I sort of surprised myself."
"Frankly," Milo Minderbinder says in Joseph Heller's Catch-22, "I'd like to see the government get out of war altogether and leave the whole field to private industry." Ken Falke sees things pretty much the same way. Falke served for 21 years in the Navy as a bomb disposal guy before he retired, in March 2002, and started A-T Solutions. He anticipated that the company would help the military with tasks traditionally handled by the armed forces. A year later, when the U.S. invaded Iraq and the Pentagon lined up contractors by the score, the Fredericksburg, Virginia, company took off. The Pentagon hired A-T to devise training material for troops, provide security assessments for vulnerable locations, and even help plan combat missions. By 2007, it had reached $35 million in sales.
At any given moment, about 10 percent of A-T's 185 employees work abroad--some in Baghdad's Green Zone--and their assignments are often dangerous. "Our specialty is teaching people how to avoid IEDs [improvised explosive devices]," Falke says.
So far the company has experienced no casualties. The closest call came one night last summer. While some A-T employees were out at chow, the tent in which they lived and slept was hit with rockets and mortars. They sent Falke a picture of the destroyed tent that night. When something like the tent blast happens, Falke says, "You take a moment to reflect on your employees' safety and the families that have been left behind, and then you move forward."
This much is known: Jeffrey Ake founded Equipment Express in his Indiana garage, in 1995, and traveled the world promoting the company's water-bottling equipment. In 2005, he went to Iraq to work on a project. In April of that year, he was kidnapped near Baghdad. A videotape of him in captivity, with two captors holding assault rifles above his head, subsequently aired on Al Jazeera.
In the weeks following, Ake's wife, Liliana, kept a low profile, so as not to compromise the government's efforts to gain his release. But there was no word of Ake's fate, and no more videos surfaced. (Liliana Ake did not respond to a request from Inc. for an interview.)
Meanwhile, Equipment Express struggled. The company had been in and out of debt for years, but Ake had always managed to keep it going. He was smart and enjoyed the adventure of doing business in unlikely places--in 1996, he wrote a book about exporting. Without Ake in charge, sales dried up. A year and a half after his disappearance, Equipment Express was liquidated. It was more than a million dollars in debt, according to Brad Adamsky, the attorney who handled the bankruptcy.
Last year, Teresa Mago, who had worked with Ake, and a partner, Jim Kyle, purchased the business's assets for an undisclosed sum and launched a venture called Liquid Packaging Solutions. They hired most of Ake's former staff and moved into a vacant plant in LaPorte, Indiana. The new company teams with original equipment manufacturers to serve customers in the cosmetics, cleaning-chemicals, and food and beverage industries; sales are around $5 million. The start-up's success is obviously bittersweet. "In the end," Mago says, "Liquid Packaging Solutions was able to come about from the groundwork Jeff Ake laid."
Mark V. Eberhard, a lieutenant colonel in the Marine reserves, was raising capital with a partner to start a chain of commercial shooting ranges when he was called up for duty in 2002. Stationed at Camp Lejeune in North Carolina, he was in a unit that provided troops in Afghanistan with logistical and administrative help.
Though frustrated by the unexpected delay, Eberhard soon came to believe it was exactly what his start-up needed. He was eligible to apply for a Small Business Administration loan for reservists, and he was eventually approved for $100,000.
With the money in his pocket, he decided to rethink his business plan. Instead of organic growth, he decided to try to buy struggling shooting ranges around the country. He raised an additional $100,000 in angel money. Then, just as Eberhard's plans finally seemed ready to fall into place, his partner--"not a high-risk guy," Eberhard says--decided to leave the company.
That left Eberhard alone at the top, prompting his investors to ask him: "Who's going to run the company if you get mobilized again?" The next step was clear. Eberhard retired from the reserves and bought a struggling range in Santee, California, for $235,000. Last year, revenue at that location reached $400,000, up from $300,000 in 2006. Of the reserves, Eberhard says, "I would have loved to stay in--and there's still a small chance they could pull me out of retirement." But, at last, he's ready to focus on his company.