Finding a niche to grow into: Small company produces small electrical product for global market
Northern Nevada Business Weekly
At best, the worldwide market for thermistors is a niche.
Carson City’s Ametherm Inc. carved itself a position – narrow, but deep – in the thermistor niche.
The order book at the 45-employee company is bulging, managers are working hard to remove production bottlenecks and it’s cautiously adding staff.
“Things have really exploded for us,” says Eric Rauch, Ametherm’s president. “Our customers are doing very well.”
The 350 varieties of thermistors manufactured by Ametherm find uses in products ranging from tiny battery chargers to the big amplifiers that fill stadiums with the music of rock concerts.
The company’s products protect electrical equipment from a surge of current when a device is turned on.
When Rauch joined forces in 1994 with Medhi Samii, the company’s vice president of engineering and sales, they decided that Ametherm would position itself as a maker of durable thermistors sold to customers who demand quality.
That’s an unusual approach in a market where an expensive themistor costs only a couple of bucks, and a small one costs as little as a quarter. Especially among makers of throw-away consumer devices, price rather than quality is the hallmark for most thermistor manufacturers.
But Samii and Rauch have found success with their quality-first approach.
“We want to deliver as much quality as we can,” says Rauch. “We build a good part. There are a lot of manufacturers out there that still care about quality, and we care as much about their business as they do.”
And quality, Samii says, carries competitive advantages of its own. In some uses, one Ametherm thermistor can replace two or three competitive parts, and that can be critical if a manufacturer is pressed for space inside a product.
When the company began operations in Carson City 16 years ago, Ametherm was one of a handful of American manufacturers of thermistors. Today, Rauch believes it’s alone in the United States as competitors move manufacturing offshore.
But at the same time, Ametherm increasingly serves international buyers. Today, Rauch says, more than 60 percent of Ametherm’s production is exported.
“Engineers anywhere in the world can find what they want on our Web site and place an order,” he says.
The production process is straightforward. Ametherm buys raw metal oxides, mixes it, shapes it into circles (the largest is roughly the size of a quarter) and heat-cures it. A silver coating is applied, leads are soldered on and a protective coating is applied.
But with 350 products – each of them a different size, or composed of a different mixture of metals, or with leads that are kinked rather than straight – production runs at Ametherm’s plant in east Carson City tend to be short.
That places pressure on the company to wring every penny out of its production costs.
Samii, who spends his days on the shop floor when he’s not talking with customers, is overseeing the development of new automated equipment. A new oven for heat-curing, meanwhile, promises to remove a bottleneck.
Rauch and Samii have worked closely with Nevada Industry Excellence (the organization formerly known as MAP) to instill lean manufacturing principles throughout the operation.
They’ve cut delivery times for new orders, for instance, to about six weeks – half of the lead times that are common at competitors.
The company’s location in Carson City, Rauch says, also provides a competitive advantage.
He says the company has recruited a workforce with a strong work ethic. The average tenure of employees is more than four years, and several have worked for the company for a decade or more.
The business-friendly attitude of local and state officials also have helped the company’s success, Rauch says.
“This is a great place to do business,” he says.