Cleaning Up With Clean Rooms

AdvanceTEC is thriving in the business of designing contamination-free work places. Its competitive advantages:  creativity and a willingness to take risk.

Sometimes, Tim Loughran, the managing partner of AdvanceTEC LLC, can come across as a little cocky. When asked how his 17-person engineering/contracting firm can compete so successfully against larger companies for clean rooms and other high-tech projects, his answer is simple: “We’re better engineers.” Then, after a pause, he adds: “We’re also risk takers.”

A case in point was a job the company recently won from Merck & Co. Inc. Merck’s pharmaceutical plant in Elkton, Va., solicited bids for the retrofit of an existing building for a new production line. All three of the other bidders submitted plans that required installing a penthouse on top of the building. AdvanceTEC sent in a team of “four guys with laptops” to take measurements, brainstorm ideas and conduct preliminary design work on the spot. They figured out a way to lay out the manufacturing systems within the constraints of the existing building – no penthouse required.

“In our business, there’s always a better way,” says Loughran. “We spent extra time up front to figure it out.” The company risked some $70,000 just to develop the proposal, but the plan it submitted saved Merck money on the project and took less time to execute, allowing the drug maker to ramp up production more rapidly. Best of all, AdvanceTEC didn’t have to sacrifice profit margins to get the contract.

Specializing in clean room technologies, Loughran and his partner John Burton formed AdvanceTEC in 2000 to serve the semiconductor industry. Sensing the coming collapse of the microelectronics sector soon after their start-up, they diversified into biotech – a wise move. Biotech and pharmaceuticals account for 80 percent of the company’s business today.

Now AdvanceTEC is poised for another spurt of growth – it has a $25 million backlog of work -- as it taps the big money flowing into nanotech. Universities and the federal government are plowing hundreds of millions of dollars into building nanotech research facilities, all of which require environments free from air-borne contaminants.

Pursuing work all around the country, Loughran could locate his business anywhere he wants. Although he gripes about the high cost of air fares, he’s delighted with the Richmond region as a place to grow a company and enjoy a family life. Firstly, there’s a great depth to the labor pool here, he says: It’s easy to find top-notch employees skilled in CAD/CAM design. “I can’t speak more highly of the workforce.” Secondly, he’s just a couple of hours drive from major biotech markets in the Washington, D.C., area and Raleigh, N.C.

And thirdly, Loughran says, his family loves it here, he lives close to work, and he’s only 20 minutes from downtown. What’s not to like? “Our company is built on people who came here because of Motorola and decided they wanted to live here.”

AdvanceTEC is typical of the high-performance, knowledge-intensive service companies that thrive in the Richmond region based on their ability to recruit and maintain top-notch employees, says Rene Robins , vice president-business development for the Greater Richmond Partnership. “Tim Loughran and AdvanceTEC are a case study of what gives Richmond its competitive advantage,” she says. “Really bright, creative people get transferred here and really like it. When it’s time to leave, they want to stay. Rather than move, a good number of them start their own businesses.”

Loughran was part of the crowd that thronged to Richmond in the late 1990s when Motorola, Inc., announced its intention to build a major semiconductor manufacturing and research center here. Loughran’s employer, Performance Contracting, Inc. (PCI), set up camp to serve the anticipated Motorola facility as well as the new White Oak (now Infineon) plant.

“My wife was raised in Long Island,” Loughran recalls. “She was crying all the way down the road to Richmond. Six months later, she didn’t want to leave.”

Four years later, the Loughrans did face the prospect of leaving. The Motorola expansion never materialized and PCI closed its office. Rather than move to somewhere like Dallas or Washington, D.C., Loughran and Burton decided to stay in Richmond. Between the two of them, they’d designed and constructed close to one million square feet of clean room space. They figured they could make it own their own.

What the newly minted entrepreneurs didn’t reckon on was just how quickly and sharply the economy would change. When the tech bubble burst, expansion in the semiconductor sector came to a thudding halt. Fortunately, microelectronics wasn’t the only industry that needed clean rooms. The biotech and pharmaceutical industries had escaped the downturn largely unscathed.

AdvanceTEC followed the money, switching from semiconductors to biotech. The shift in industry focus did take some adapting. The microelectronics industry is a rapid innovator; speed and time to market are imperative. Pharmaceuticals, by contrast, are heavily regulated by the Food and Drug Administration. “Projects move a lot slower. You can’t figure things out on the fly,” says Loughran. But “clean rooms are clean rooms. You move and filter air.”

Since then, AdvanceTEC has tapped into another market for its expertise: nanotech.

This emerging sector also has its procurement peculiarities. Nearly all the facilities are university, public-bid projects. But AdvanceTec prides itself on its adaptability. “We’re quick, we’re nimble,” says Loughran. “We’re having a lot of fun learning it.”

AdvanceTEC is a textbook example of the kind of high-performance, Knowledge Economy company that is sinking roots in Richmond and prospering here. The company recently earned recognition for its peers in the Richmond technology community when it won the Greater Richmond Technology Council’s “emerging company” award for a company with outstanding growth prospects.

The key, says Loughran, is hiring great people. He pays them well and demands a lot of them. And they demand more of themselves. Everyone on staff is eager to learn and expand their personal knowledge. “We’ve got $750,000 to $1 million in revenue per employee,” he says. “That’s enormous productivity.”

Because the company pays its employees so well, its labor costs and its overhead are high. Loughran tried sub-contracting some work to other engineering firms but he ended the practice, he says, because he wasn’t delivering the best quality work. He brought all the work back in house. Devising solutions to complex problems requires close communication between members of the team and the customer, Loughran explains. “It’s a very interactive process. We consult with our customers every step of the way.”

Conversely, working smart more than compensates for the company’s higher cost structure. “We select our projects very carefully, and we really go after them. Our hit rate is 90 percent,” Loughran says. “If we’re creative, if we can find a better way to do the job, we win."

-- May 2004