When Inc. magazine -- a Boston publication that describes itself as "the magazine for growing companies"--came out with its December list of the nation's 500 fastest-growing private companies, the Washington area made a strong finish, with 27 of the 500 slots occupied by local firms.
The area contenders make up a crazy-quilt collage of enterprises, ranging from a publisher of books about computers started by a former "frustrated housewife" to a fourth-generation needlecraft merchant. Between these extremes come the computer software designers and defense contractors that, when viewed individually, are both diverse and creative in the ways they make their profits.
The Washington Post contacted many of the 27 area firms ranked by Inc. magazine to find out more about who they are and how they fit into the scheme of Washington business.
The magazine, which has a circulation of about 400,000, ranked the 500 companies not by size but by growth in sales since 1977. In order to qualify for inclusion on the list, each company had to satisfy the following requirements:
* The firm had to be independent and privately held.
* It had to be at least five years old and show an increase in sales from 1977 to 1981.
* 1977 sales had to be at least $100,000 but less than $25 million. Sales in 1981 had to exceed 1980 sales. Firms that showed growth in the five-year period but registered a decrease in 1981 sales were not included.
Maryland and Virginia companies outside the metropolitan area occupied an additional seven of the 500 slots. Ronald Hsu Construction
This Capitol Heights construction firm grew in sales by 3,300 percent between 1977 and 1981 with the help of a three-year contract to rewire the White House, contracts to remodel the exteriors of the Smithsonian Arts and Industry Museum and the vice presidential living quarters at the naval observatory on Massachusetts Avenue NW and other work for the Army, Navy and Air Force.
Ronald Hsu, president of the minority-owned firm, noted that while his is "still a relatively small company, and the profit is very thin compared with other trade companies . . . we are the No. 1 construction firm in the whole nation for the [Inc.] list."
The firm, which has 100 employes, had 1981 sales of $4.2 million. Advanced Technology
This McLean professional services, engineering firm achieved 2,216 percent sales growth in Inc.'s 1977-'81 survey period. The Department of Defense (primarily the Navy) accounted for 80 percent of its contracts, according to corporate communications manager Lin Gale.
A good portion of these defense contracts are concerned with logistical engineering. Advanced Technology has also done training and inventory planning for nuclear power plants, Gale said. In this region, it has worked on Baltimore Gas & Electric's Calvert Cliffs plant.
Other government agencies, such as the departments of Education, Energy, Health and Human Services, and Housing and Urban Development accounted for 13 percent of Advanced Technology's contracts, with private industry awarding the remaining 7 percent, Gale said.
The firm's headquarters will be moved to a three-building complex in Reston in December 1983. Its 1981 sales were $31.8 million. The firm employs 672 people. Convex Corp.
Ranked 66th in the Inc. 500, Convex Corp. is one of many companies that are growing along with changes in communications technology.
The new USA Today newspaper uses Convex equipment to check possible glitches in the satellites that send stories from Gannett newspapers around the country. International Telephone and Telegraph's Worldcom division, RCA Global and Western Union International use Convex "dataline conditioners" to correct distortion in the transmission of high-speed data over telephone lines.
Convex President James Turner explained that his company's dataline equipment acts as an "equalizer" in adapting phone lines -- originally designed to transmit voices -- to carry high-speed data.
The firm is currently developing a "hybrid computer and test set" that Turner said will help automate the work of telephone repairmen. "It would enable a telephone company to spend more for equipment and less for labor," he said. The new product is scheduled to debut next summer.
Convex is also concluding negotiations on a contract to sell equalizers and other communications equipment in Saudi Arabia, Turner said.
The company has nearly doubled its sales every year since it was founded in 1976. As Turner noted, the market itself has grown -- by his estimate -- at an annual rate of about 35 to 40 percent over the last 15 years.
Convex had 1981 sales of $2.2 million, a 1,488 percent increase over its 1977 sales of $141,000. Located in Fairfax, it employs 33 people. Industrial Training Corp.
Just behind Convex on the Inc. 500 list, Industrial Training Corp. in Rockville produces and markets videotaped and written employe training programs, primarily for heavy industries such as electrical utilities, petroleum and petrochemical companies and the paper industry.
Industrial Training produces "off-the-shelf, generic training programs," rather than the more expensive, custom-made company curricula, according to Treasurer Frank Hatcher. Training instructors often use the firm's materials to supplement classroom instruction, although the products can be used as a "self-paced" course, Hatcher said.
In September, the company began marketing a new bank teller training program. Hatcher said automatic teller networks do not present a threat to this new product's marketability. "All industries are looking to automation, but there will always be people," he said.
Industrial Training's sales increased 1,477 percent from 1977 to 1981. Its 1981 sales were $3 million. It has 36 employes. $ Vector Group Inc.
This Springfield-based computer company grew by 955 percent in the five years surveyed, almost entirely from sales to doctors, lawyers, architects, accounts and other professionals. The Vector Group is No. 121 on the Inc. 500 list.
A couple of weeks ago, the company signed 16 new clients, said President Vincent Loparo. Half were doctors' offices, one was Massachusetts General Hospital, two were church organizations and the remainder included a small business and a consulting firm.
Vector Group sells mini- and microcomputers and programming, computer-related supplies, training, maintenance and other services needed to computerize billing, record keeping, insurance and other office paperwork.
Loparo founded the company in Pittsburgh in 1975 to provide "specialty application software" to labor organizations. When he found he was spending much of his time in Washington, he moved the firm here in 1979. The relocation changed the character of the company.
"When we got here, the computer industry was changing dramatically," Loparo said. "We changed with it, with the new wave of desktop computers."
The company has offices in Pittsburgh, Boston, Denver and Troy, Mich. It projects sales of about $5 million at the end of 1982. If a planned acquisition goes through, Loparo said Vector Group's 1983 sales will be about $7 million. The firm has 55 employes. Centec Corp.
The Reston firm of Centec Corp., No. 146 on the Inc. 500 list, has evolved since 1975 from an engineering and computer software company into a manufacturer of four diverse products.
President Paul Minor said Centec's computer graphics work on "dreary" federal budget documents led the company to design its Cheetah slide-making machines, which enable users of IBM personal computers to produce high resolution, 35-millimeter slides.
In another instance, the company's engineers had been doing assemblyline energy surveys when they began to notice the recurrent loss of heat in paint-curing ovens. They responded by conceiving a microcomputer system to control the heat loss. Hence the company's second product.
The third product was created after Centec chemists had been doing lab tests on electric transformer fluid for polychlorinated biphenyls (PCBs). The tests for the company's utility clients were time-consuming and expensive, Minor said. The chemists then developed a field test kit for PCBs, which can be carried in a case shaped like a trumpet and which allows the fluid to be checked on-site at a greatly reduced cost.
Centec's fourth product is "advanced decision support" software that enables managers "to play what-if games" on computers, Minor said.
The company's growth from '77 to '81 was 851 percent. Its 1981 sales were $4.4 million. Comsearch
Comsearch, also located in Reston, uses computers to help its clients--which include MCI Communications, Satellite Business Systems, cable television networks and electric utilities--eliminate electrical interference.
President Harry Stemple described his 55-person firm as a "spin-off company" formed in 1977 by former employes of the Collins radio division of Rockwell International.
Comsearch is currently exploring cellular radio systems and low-power television, Stemple said, in addition to doing some government contract work. "We're doing a reverse of some local business," he said. "We started out in the private sector and now we're doing some defense work for the Department of Navy."
Rated No. 160 in the Inc. 500, Comsearch projects sales in its current fiscal year of about $4 million, compared with $2 million the previous year. Computer Science Press
Company President Barbara Friedman said she was "a frustrated housewife" before she formed Computer Science Press, a $1.8 million business in Rockville that publishes text and reference books about computers.
The firm traces its origins, Friedman explained, to the frustrations her husband Arthur had in getting a textbook published..
Arthur Friedman, who is now chairman of the George Washington University electrical and computer science department, exchanged complaints about unpleasant treatment by publishers with some of his Bell Laboratories coworkers who were also published authors. And this led Barbara Friedman to form Computer Science Press to publish her husband's second book.
The company now sells books on computers to university book stores, the B. Dalton chain and some local booksellers. Expansion into sales of computer software for teachers is planned, as is a 10-part newspaper for elementary school students on computers. The firm has also signed an agreement with the Tandy Corp., owner of Radio Shack, to produce educational books and computer diskettes.
Computer Science Press, which Friedman says is "51 percent women-owned and operated," has 20 employes. It is ranked 196th on the Inc. list. Research, Analysis & Management Corp.
RAM Corp., a management and engineering consulting firm in Rockville, was described by Vice President Bill Wiley as a "one-stop shopping center for all different management abilities" such as logistics engineering, data management and contract preparation. The company achieved a 647 percent growth in sales from '77 to '81 by providing services to large Navy shipbuilding projects.
Wiley said about 90 percent of RAM's business is with the U.S. government, and the remainder is with commercial shipyards. Its projected sales for 1982 are $5.5 million. The company has approximately 100 employes and additional offices in Arlington, Annapolis and San Diego. It was founded in 1975. Ram is No. 209 in the Inc. 500. PE Systems Inc.
While other companies design communications equipment, PE Systems of Alexandria figures out ways to protect what's being communicated, especially at the Department of Defense. The firm makes "text encryption devices" that encode communication during transmission, "file encryption hardware" and "terminal authenticators" that make sure a specific computer terminal is authorized for access to a specific data base.
Marketing manager Jim Protiva said this hardware development is a new activity for PE Systems and that the company has been and still is highly involved in providing command, control and communications systems -- known in the trade as C3 systems -- for the government.
PE Systems has also "gotten involved with the U.S. Navy in a foreign military sales program to Saudia Arabia that has accounted for a major increase in growth," Protiva said.
Sales for the company, which was founded in 1981, are projected at about $9 million for 1982, compared with 1981 sales of $2.2 million. PE Systems employs about 140 people and has additional offices in Norfolk, San Diego and Riyadh, Saudi Arabia. It ranks 227th on the Inc. list. Sachs, Freeman Associates Inc.
This engineering consulting firm in Bowie, like RAM Corp., contracts heavily with the Navy, although it specializes in "high-level physics work," in fields such as laser technology and nuclear power, said Executive Vice President Herb Sachs.
The firm has also designed radio systems for police and fire departments in Virginia, Indiana, Illinois, Wisconsin and elsewhere. But Sachs emphasized that "it's all what's called software -- we build no products."
Sachs said the firm, founded in 1969 "on a shoestring," now has 115 full-time employes. At the end of its fiscal 1983, it expects to have sales of $6 million. It was No. 250 on the Inc. 500. Raven Systems & Research Inc.
A "100 percent minority-owned" information and data processing company that currently receives assistance from the Small Business Administration, Raven Systems & Research Inc. gets 85 to 90 percent of its contracts from the U.S. government, primarily the Environmental Protection Agency, the Department of Commerce, the Drug Enforcement Administration and the General Accounting Office.
Chief of staff Beau Buckner said "a large portion" of the firm's growth derives from a contract with EPA's pesticides program office awarded in 1978 that brings in about $4 million annually.
Raven, at Fifth and E streets NW, was founded in 1971. It has 350 employes and offices in Seattle, Boulder, Colo., Pascagoula, Miss., and Atlanta. Its 1981 sales were $8.7 million. It was No. 262 on Inc.'s list. Phillips Publishing Inc.
This Bethesda newsletter publisher recently came out with its 18th newsletter, entitled "Personal Computers Today," which adds to a repertoire of communications publications that includes titles such as "Satellite News," "Video News" and "Video Games Today."
Phillips also went to press last week with an 850-page directory of the consultants, law firms and other businesses involved with satellites in this country, according to President Thomas L. Phillips, who founded the company in 1974.
The company projects its 1982 sales at about $8 million. It has 55 full-time employes. It was Inc.'s number 268. Morino Associates Inc.
Morino Associates of Vienna achieved a 492 percent growth in sales over the last five years by developing two types of software for companies that use the "top-of-the-line, mainframe IBM computers," according to spokeswoman Betty Cooke. These customers include about 30 of the Fortune 500's top 50 industrial companies, she said.
One of the company's software products monitors computer time-sharing -- or "who's doing what, where and when on the computer," Cooke said.
The company, which has about 45 employes, opened a London office this year. Its 1981 sales were about $4.4 million. JWK International Corp.
Recent contracts received by this Annandale research and development firm include work on a Federal Aviation Administration air traffic controllers' training program and a study on computer automation for the government of Egypt.
JWK Corp.'s 442 percent sales growth from 1977 to '81 has been achieved through government contract awards primarily from the Department of Defense but also from the departments of Energy, Health and Human Services, and Transportation. Controller Ken Williams said that although the firm's livelihood has been hit by Reagan-administration budget cuts, defense and defense-related contracts are still coming in.
The company is minority-owned and started out with help from the Small Business Administration. It was founded in 1973 and had 1981 sales of $7.7 million. Wild & Wooly Needlecrafts Inc.
Founder and president Peter Schlossberg is the fourth generation in a family of needlecraft sellers -- his great grandmother had a needlecraft store in Brooklyn. He operates 11 stores around the metropolitan area, and will open a 12th in March at the Montgomery Village Fashion Center in Gaithersburg.
Schlossberg launched his first store at Bailey's Crossroads in 1975, and said he is still profiting from "a demand in the Washington area that's been unsatisfied." The company has about 80 employes and projects sales for 1982 at $2.6 million. Inc. magazine said it had 277 percent sales growth from 1977 to 1981 and ranked it number 366.