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Electronics giant Harris Corporation has sidelined some operations at its local plant, but instead of causing layoffs, the belt-tightening move created a new San Antonio-based high-tech company.

Startup firm M2 Global Technology Ltd. last month bought the microwave-component and metal-fabrication operations of Harris' local manufacturing plant and now serves as a contractor to the Melbourne, FL based company.

M2 is also actively competing for similar work from other technology companies - it has contracts with major players as Hewlett-Packard and Lucent Technologies - and expects to grow briskly as it adds more clients.

"If you look at what's been going on at Harris, they've been restructuring their whole company over the past 18 months," said Doug Carlberg, M2's chairman and former manager of the Harris plant.  "It's created a great opportunity for us to develop another thriving high-tech industry in San Antonio."

Harris' San Antonio plant manufactures the microwave radio equipment that the telecommunications industry uses to build its wireless networks.  The components M2 makes for Harris also can be used in satellite systems and high-definition TV broadcast equipment.

M2 now has 30 employees - mostly former employees of the Harris plant - and will expand its payroll to 65 within the next six months as it adds new customers, Carlberg said.

"It's first year sales will be more than $7 million," he said.

The company leases space in Harris' plant, but plans to move in December to a 25,000 square foot plant in the University Park industrial complex in Northwest San Antonio.

Carlberg left as Harris' San Antonio plant manager in June to do consulting work and run the Chicago-based Association for Manufacturing Excellence nonprofit group.  Shortly after his departure, Harris decided to spin off its sheet-metal and microwave component work, a move it had contemplated for about a year.

"This was an opportunity that just sort of fell in our laps," Carlberg said.

The spinoff that created M2 may not be the last for the local Harris facility, analysts said.  Harris, faced with a competitive market for its microwave radio equipment, is likely to outsource additional parts of its manufacturing process to cut costs, they said.  Indeed, it's in the midst of a company-wide restructuring and has jettisoned several operations, including its semiconductor business.

"Several of Harris' competitors in the microwave business now employ contract manufacturers," said Lawrence M. Harris, an analyst for Josephthal & Co. in New York.  "It's become fairly common in the industry."

Harris' local plant, which employs 270 people, underwent a $10 million expansion last year, but it has done little hiring since then because of the tight market for microwave radios.

Greg Geyer, manager of the San Antonio Harris plant, would not say whether other spinoffs were imminent.  "Because of the competitiveness of the market right now, we're looking at a lot of options," he said.

M2 Global’s offices are located in San Antonio, Texas, and Washington, DC.




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