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Saturday, December 8, 2012

Arrival of BAE – then known as Sanders – helped Nashua economy recover

EDITOR’S NOTE: This is another in an occasional series of stories examining 50 years of Nashua business. Stories and multimedia pieces will focus on Milestones, Hidden Assets, and Movers and Shakers in the city’s business community. The Telegraph’s Nashua 50 magazine featuring Nashua’s top business leaders will be distributed with the newspaper on Wednesday, Dec. 12.

NASHUA – For 60 years, the exterior of BAE Systems’ Canal Street headquarters has hardly changed. ...

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EDITOR’S NOTE: This is another in an occasional series of stories examining 50 years of Nashua business. Stories and multimedia pieces will focus on Milestones, Hidden Assets, and Movers and Shakers in the city’s business community. The Telegraph’s Nashua 50 magazine featuring Nashua’s top business leaders will be distributed with the newspaper on Wednesday, Dec. 12.

NASHUA – For 60 years, the exterior of BAE Systems’ Canal Street headquarters has hardly changed.

Concrete and tan, the retired mill building looks nearly as worn as it did in 1952, when the company, known then as Sanders Associates, moved to town.

But in the years since, what goes on inside and outside the building has changed dramatically.

Since Sanders arrived in New Hampshire, the company, now part of BAE Systems’ Electronic Systems Division, has grown from an 11-
person collaborative to a key part of one of the world’s foremost defense engineering firms.

BAE’s parent company has locations in 50 countries, and the electronics system alone generated $4.3 billion in sales last year.

The Telegraph is profiling the company as part of a series on the region’s top economic engines.

“We’ve come a long, long way in 60 years,” Rich Ashooh, BAE’s director of strategy, said last week at the company’s Spit Brook Road office. “The company that used to be Sanders … has flourished across the world.”

But despite the firm’s global reach, BAE’s local impact remains stronger than ever, according to state planners and local business leaders.

With about 4,500 employees, BAE remains one of New Hampshire’s largest private employers. And by contracting with local businesses, the company contributes heavily to the local community, spending more than $90 million last year at more than 400 local suppliers.

“They’re really a foundation here in the state,” said Christopher Way, interim director of the state Division of Economic Development. “There’s the company itself, and then there’s the halo effect on the surrounding communities. … They really have a big footprint here in New Hampshire.”

Nashua was on the brink of collapse when Sanders Associates arrived in the early 1950s.

Many of the textile mills that had supported New England’s economy for a century had shuttered as the industry moved south, and the end of World War II had left the region without many of the machinery shops and foundries that helped it survive during wartime.

So, in the late 1940s, after the Nashua Manufacturing Co. closed its local operations and moved to Rhode Island, taking with it 2,000 jobs, a group of business and civic leaders came together to find a remedy.

They formed the Nashua New Hampshire Foundation, a development company that purchased vacant mill space and worked to recruit companies to come to town.

The group’s efforts paid off in 1952, when Sanders Associates, which had formed a year earlier in Waltham, Mass., moved to Nashua and set up shop in the Canal Street building, expanding quickly and drawing other companies in tow.

“That was when everything started to change,” Chris Williams, director of the Greater Nashua Chamber of Commerce, said earlier this year. “Sanders came, and other businesses started to follow. It changed the whole culture.”

Founded by 10 engineers from Raytheon, the company, named after founder Royden Sanders Jr., got off to a slow start. In its first year of operation in Waltham, Sanders reported a loss of $7,319 on sales of $496,411.

But the company turned around quickly after it arrived in Nashua.

Boosted by the wars in Korea and Vietnam, the company produced a variety of printed circuits and wiring boards for the military. In 1954, two years after they moved to town, officials expanded the company, leasing land at the Daniel Webster Airfield in Merrimack. In 1962, the federal government designated Sanders a formal “defense facility.”

Sanders workers focused much of their efforts at the time developing some of the first electronic aircraft countermeasures, enabling planes to fight off enemy attacks electronically rather than tactically.

“One could argue that this company parented modern electronic countermeasures,” Ashooh said.

But the company also explored other areas, developing space shuttle launch control systems for NASA, among other projects.

A Sanders engineer, Ralph Baer, even patented the first TV-connected video game, later named “Pong.”

“They were defense oriented, but at the time they were willing to look at anything compelling from a technology perspective,” Ashooh said. “They were so bright and so capable, the company didn’t want to be limited.”

The company continued to grow, in size and reach, through the 1960s and ’70s, as the federal government grew its defense and NASA operations.

But in the late 1980s, as a Ronald Reagan-era Cold War spending boost started to end, Sanders narrowed its focus back to aircraft defense, further developing its infrared technology countermeasures.

“As budgets come down, it’s very, very important to understand what you’re good at and align that with a strategy,” Ashooh said. “We’ve been very good at it since then.”

In 1986, amid a series
of industry consolidations, Sanders was purchased by Lockheed Corp., a national aerospace company that later became Lockheed-Martin. Under the new parent company, Sanders formally changed its name to Sanders, a Lockheed Co. But it only maintained and expanded its focus on aircraft defense systems.

“Sanders ended up having an honored place within Lockheed, which is a huge company,” Ashooh said. “We were a very small piece of the company, but it was still a unique role.”

Sanders remained part of the Lockheed network through the 1990s, when Lockheed merged with Martin Marietta to become Lockheed-Martin, and it maintained relatively stable employment numbers throughout the decade.

But in 1999, Lockheed executives announced plans
to sell off its Aerospace Electronics Systems division, which included Sanders. And the next year, company officials sold Sanders to BAE Systems North America, of Maryland, for $1.67 billion.

The acquisition forced a name change. For the first time in its 49-year history, the company dropped Sanders from its name, adopting BAE Systems.

“I’d assumed they would change it,” Royden Sanders, the company’s namesake, said at the time. “It is new ownership. I’m not associated with it … so I’d actually just as soon not have my name associated with it.”

The new name brought new opportunities for the now global defense firm.

Unlike Sanders, BAE Systems, with more than 40,000 employees in 40 states, focuses some of its efforts on commercial projects. In the years since the merger, the company, out of its New York branch, has developed digital engine controls now in use in hybrid-electric buses and vehicles around the country.

“So now if you go to New York City and ride a city bus, you’re likely to be riding a bus that’s driven by one of our hybrid electric” systems, Ashooh said. “These are things that help engines of all sorts work more reliably and more efficiently.”

In Nashua, BAE has largely maintained its primary focus on defense programs. But that has been a challenge over recent years amid federal funding cuts and lost contracts.

In 2009, the company laid off roughly 125 local workers and eliminated another 125 positions in anticipation of decreased defense spending. Now, with another $500 billion in automatic sequestration cuts hanging over the military as part of a federal debt limit deal adopted last year in Washington, D.C., BAE officials are facing an even more uncertain future.

“While there’s always a certain level of uncertainty, we haven’t seen anything like what we’re seeing now,” Ashooh said. “This is new territory for us.”

Earlier this year, BAE officials braced for further change as the company stood on the verge of another merger, this time with European Aeronautic Defence & Space Co., a parent company of Airbus.

The prospective $45 billion merger would have combined BAE’s military programs with EADS’ commercial efforts to create one of the world’s largest aerospace companies. But in October, officials reported the deal had fallen through.

“The problem is these are two very, very complicated companies, and did not have the running room to work out all the complications,” Ashooh said. “But it was absolutely the right thing to look at.”

With the company settled for the moment, executives are looking forward to the next field of growth: national defense.

The Sept. 11 attacks exposed gaps in the nation’s domestic security efforts, and now 11 years later, government officials are still working to integrate domestic strategies into federal regulations.

“In the wake of September 11, we, like many in the defense industry, stood up to try to solve many of those problems,” Ashooh said. “Now, we’re still trying to understand all this technology, whether or not it can be applied to certain things. That can be an area of growth for us.”

And as it grows, the company – which invests frequently in local communities, contributing to education programs and sponsoring FIRST robotics teams, among other actions – is looking forward to further expanding its local presence.

“There’s a work ethic in this region; this part of the country is well suited to the work we do,” Ashooh said. “There’s a lot of reasons why we’re proud to be here and expect to be here well into the future.”

Jake Berry can be reached at 594-6402 or jberry@nashuatelegraph.com. Also, follow Berry on Twitter (Telegraph_JakeB).