Start-Up Aims at Novel Use of Aerospace : Recovery: An L.A. partnership forms to use defense electronics in making a children’s safety device.
An ambitious Los Angeles partnership intended to convert aerospace technology into commercial business ventures was unveiled Friday with the announcement of a deal to manufacture child monitors based on defense electronics.
Jon Kutler, former director of the Los Angeles office of the investment firm Wasserstein Perrella & Co., said the new company--backed by unidentified investors--hopes to act as a “catalyst” for defense conversion.
The firm, California Technology Enterprise Corp., announced Friday that it has acquired A&H; International, a Honolulu-based firm that has used defense electronics technology to develop a new product known as BeeperKid.
Kutler said A&H; will be relocated to the Los Angeles area this year to begin production of the device, which alerts parents if their toddlers stray beyond 15 feet or so.
“We could have moved elsewhere and gotten lower costs, but we feel in the long run our profits will be just as high here and we will be doing something for the community,” Kutler said. “You have a tremendous base of manpower and technology here.”
The company projects sales of $40 million in five years, a level of activity it said will create 700 jobs. A&H; currently has two employees, according to Kutler.
Until now, defense conversion has consisted of attempts by major defense firms to diversify and government financial support for technology projects. Kutler’s partnership is among the first private efforts to commercially exploit defense technology.
BeeperKid turned to defense technology, licensed from an undisclosed contractor, after an earlier version of the device proved unreliable, Kutler said.
Kutler would disclose virtually nothing about his new partnership’s backing. He identified the parent of Ctec as Quarterdeck Investment Partners. Ctec has a seven-member board of advisers consisting of two retired generals, a retired admiral, an Ivy League professor, a Lockheed vice president and a former Northrop vice president.
William Sommers, a former partner in the consulting firm Booz Allen & Hamilton, said he joined the board because he was convinced Kutler had the right idea in attempting to get promising defense technology “out from under the aerospace culture.”
Said Sommers: “Defense conversion in many cases is going to have to be done this way, where somebody looks for the technology, can raise the money and then starts a new firm to do it.”
Ctec also disclosed Friday that it has signed a letter of agreement to acquire an unidentified Southland aerospace firm with sales of $60 million.
Kutler said the acquisition would be worth roughly $20 million, but he would not disclose further details.
