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Originally published July 26, 2009 at 12:00 AM | Page modified August 3, 2009 at 2:57 PM

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Boeing drone maker creates technology jobs near Gorge

A young company that now has more than 600 workers is creating new technology jobs in the Columbia River Gorge area.

Seattle Times staff reporter

BINGEN, Klickitat County — Insitu has more than 15 offices strung along the steep-sloped confines of the Columbia River Gorge, but none of them big enough to accommodate a gathering of all the employees.

So when the time came to celebrate a milestone — the production of the 1,000th aerial drone built by the company — everyone headed for a high-school football field. There, they piled into bleachers for a round of speeches from company officials who had laid out a squadron of drones at the 20-yard line.

These drones, which resemble oversized model aircraft, have propelled Insitu from a tiny experimental startup that in 2002 had fewer than a dozen employees to a company with more than 630 workers and expected 2009 revenues topping $200 million.

The company — purchased by Boeing last year — has helped reshape the Gorge economy once dominated by aluminum smelters, timber mills and agriculture to a high-tech incubator that could spin out jobs to other parts of the Northwest.

Insitu also is a hot-growth spot within Boeing, a company beset by cutbacks in both its commercial and defense divisions. The drone maker came of age as an agile young upstart, with an eclectic management that prides itself on a collaborative approach and a company-values statement that declares "we must oppose bureaucracy for bureaucracy's sake."

Boeing's leadership would like to avoid tamping down that spirit and hopes that some of the Insitu DNA can eventually spill over into the giant corporate parent.

"There is a flexibility that comes with being a small, very innovative organization that Boeing can take advantage of," said Damien Mills, a Boeing spokesman.

But there is one facet of Insitu's workplace that the Boeing cannot replicate in its Puget Sound production lines. Insitu is not unionized, while the parent company has a long tradition of organized labor in the Pacific Northwest.

Lower cost alternative

Up until now, Insitu's growth has largely been built upon the ScanEagle, which without fuel weighs only 26.5 pounds and has a 10.2-foot wingspan. Equipped with either high-resolution or infrared cameras, the ScanEagle, which costs about $150,000 apiece, can fly for up to 20 hours at a stretch — nearly undetected — and relay images back to an operator on the ground.

After an initial 2004 test by the Marines in Iraq to gather aerial intelligence, use of the ScanEagle soared as a much lower-cost alternative to manned surveillance planes.

As of early July, the ScanEagles have flown more than 180,000 hours for the Navy, Marines, the Canadian military and other clients that lease the ScanEagle.

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More than 190 Insitu employees are now out operating the ScanEagles — some on Navy ships, others in Iraq, Afghanistan and other locations. It's these support services that generate most of Insitu's revenue.

Insitu, founded in 1994 in Bingen (population 672), has helped create a new dynamic in a Gorge economy that's been battered as some lumber mills shut down and a Goldendale aluminum plant ceased production. Many laid-off workers left Klickitat County, and unemployment rates soared.

Today, there are new job opportunities that result both from Insitu's rapid expansion and also from smaller firms in the Gorge that assist in drone manufacturing.

Innovative Composite Engineering, for example, makes ScanEagle wings, and has more than doubled its payroll in the past four years to about 60 people. On the Oregon side of the river, Hood Tech makes camera systems and catapult launchers for Scan Eagle with a payroll of more than 100.

"The aerospace industry in the Gorge is a huge deal," said Andy von Flotow, a co-founder of Insitu who later launched Hood Tech. "Who knows what the future will bring? Everybody hopes and dreams that we continue to grow. I don't think anybody is a naysayer."

This emerging high-tech industry has not insulated Klickitat County — with a population of less than 20,000 people — from the effects of the recession. Unemployment rates have jumped higher this year to 9.4 percent in June.

Still, the county tallied a 3 percent increase in jobs from June 2008 to June of this year. That contrasts with many other Washington counties that lost jobs during the same period, said Scott Bailey, a state regional economist.

And the high-tech industry has offered new opportunities for some people left unemployed by mill and smelter closures. Mike Henslee, a former aluminum worker who now does inventory control at Insitu, said he earns about half the pay of his old supervisory job at a Goldendale smelter. But he said Insitu has good benefits and he likes the company.

"You hear a lot about doing what it takes to get the job done,"Henslee said. "We work an eight-hour day but sometimes you put in 12."

Insitu has hired about 25 percent of its work force from the Gorge and Portland area, said Steve Sliwa, the company's chief executive.

The rest have been recruited from all over the country, and the Gorge's location — offering easy access to skiing, hiking, windsurfing and fishing — is part of the recruiting pitch.

The company employs plenty of engineers. But the skill sets range from Iraq and Afghanistan veterans willing to redeploy as civilian operators of the ScanEagle, to Microsoft workers ready to leave behind the Puget Sound traffic to forge a new career along the Columbia River.

New offering

In the years ahead, the pace of Insitu's expansion will hinge on the fate of a new drone offering — a kind of beefed-up big brother to the ScanEagle that has been dubbed the Integrator. The new aircraft is unarmed, but it weighs more than twice as much as the ScanEagle and can carry more equipment, offering more detailed and varied photography as well as tackle other tasks.

Insitu's development efforts have been subsidized by the taxpayer through congressional earmarks, including $3.5 million secured for Insitu by the Northwest congressional delegation in 2008 for the Integrator.

Insitu executives hope the Integrator will land a major long-term contract with the Navy and Marines that could result in production of 1,000 drones as well as support equipment in a contract that would be worth hundreds of millions of dollars. Unlike the ScanEagle, these aircraft might be owned and operated by the Navy, according to Chuck Wagner, a spokesman for Naval Air Systems Command.

Raytheon, General Dynamics and other industry players are also competing for the contract. Insitu and Boeing have demonstrated the new drone at a Yuma, Ariz., testing ground and are anxiously awaiting a decision.

"Hopefully, at the end of the summer, they will make a good choice," said Steve Sliwa, Insitu's chief executive.

As the company grows, Insitu's workforce is reaching farther afield for buildings in the steep-walled gorge. One new facility, for example, is opening in Stevenson, which is some 22 miles west of Bingen. There also is a small office in Vancouver, Wash., outside the Gorge.

Sliwa said the company is eager to consolidate its workforce, and plans to build a new headquarters. But as Insitu grows, he eventually sees the company expanding outside the Gorge.

"We may ultimately have the headquarter's footprint here, and some of the growth may end up being more in Vancouver or Seattle or whatever else is out there," Sliwa said.

Hal Bernton: 206-464-2581 or hbernton@seattletimes.com

Copyright © 2009 The Seattle Times Company

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