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2000 Small Business profiles
Monday, March 13, 2000
Pacific Aero Tech
by Deidre Silva
In the aviation industry, it may be second nature to keep an eye on the weather. And this year's wet and blustery Valentine's Day was no different.
"I just hope it's snowing in the mountains," said Karen Borgnes, looking up at the sky through her office window in Kent. "I'm supposed to leave early to take the kids skiing."
Borgnes, president of Pacific Aero Tech, had already revealed that she was late for work because she had to drop off two dozen heart-shaped cookies at her kids' school. Now, she was hoping to make an afternoon ski date.
"I'm probably the only person who went into business for herself so I could work fewer hours," said Borgnes, who recently increased her work schedule at her airplane-repair plant to four days a week. "We try to keep it very family-oriented here."
The "family" nature of the company can be traced back to the 1993 transfer of Pacific Aero Tech from Dublin's GPA Expressair to Borgnes and her partner, Hugo Flinn.
GPA Expressair planned to liquidate Pacific Aero Tech when Borgnes and Flinn, then executives with another GPA subsidiary, offered to buy the four-person operation for the cost of what GPA would have spent in liquidation.
"We basically just gave them (GPA) a check and a one-page contract that said: 'We'll take all risk. Love, Karen and Hugo,' " she said.
Though GPA was reviewing another bid to buy Pacific Aero Tech, GPA accepted the simplicity of the offer.
Using skills acquired as a certified public accountant and fundamentals learned while earning her MBA at Seattle University, Borgnes looked at the company's strengths and weaknesses and found that, though Pacific Aero Tech was successful in avionics repair, the cockpit- and passenger-window business offered a greater opportunity for increased revenue.
"Our window division had great turnaround times, low customer-warranty repairs and their customers tended to come back," she said, adding that replacing a window can cost up to $70,000 while refurbishing a window in Pacific Aero Tech's shop only costs about $16,000.
However, a lack of marketing made the business vulnerable -- especially to United Parcel Service, which accounted for 80 percent of the company's aircraft-window business.
Borgnes soon learned that only one company, Nordam Transparency of Tulsa, Okla., offered a full range of window-repair capabilities and that the difference between the "big guys in Oklahoma" and other window-repair shops such as Pacific Aero Tech was the proper, albeit expensive, equipment.
With this in mind, Borgnes started making the necessary capital investments to capture a bigger share of the market.
"Instead of going out and buying BMWs, we re-invested in the company," she said. First on the list was the purchase of a $200,000 diamond-mill machine that is "just like the big guys' machine." The equipment takes one-tenth the time to polish a window than if the work were done by hand.
"The right equipment has allowed us to stay competitive," she said, adding that she is also very careful to keep overhead down. "For instance, I'd rather have a nice compressor than a nice desk."
With an old desk and a distaste for debt, Borgnes increased the company's revenue more than tenfold in six years -- from $400,000 in 1993 to $4.5 million last year.
"Finance is a great background to have," she said, adding that she looks at her balance sheet every day. "I think that a lack of attention to cash flow breaks more small companies than any other means."
Borgnes declined to divulge the company's profit.
Though Borgnes credits much of the company's success to her "checkered past" as a CPA and business executive, she said that the most important quality she can bring to the table is an ethical approach.
"I sell that ethics flow from the top and have found that if companies trust you, they will do business with you," she said. The aviation industry is small; often, customer service is more important than price.
"If UPS has to ground a plane because they don't have a cockpit window, it costs them $250,000," she said. "We don't want to have caused that."
Borgnes said Pacific Aero Tech is now the second-largest operation of its kind in the world and, having beat out the "big guys in Oklahoma" for a five-year contract with a large European airline, is on the verge of signing the biggest contract in her company's history.
But Borgnes is keeping her company's growth strategy and personal goals in check.
"My partner only wants to earn enough to put his seven kids through college," she said, adding that if the company got too big, she may even have to stop working part-time hours -- not a pleasant prospect for the single mother of two.
"After all," she said, "there's nothing wrong with being a nice, little company."
Deidre Silva is a Seattle free-lance writer.
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