Adapt to survive in R&D

APPLYING EFFORT: William H. Weedon's technology R&D company, Applied Radar Inc., has evolved to meet the challenges posed by a decline in military contracts. The firm is currently working within fields, such as one aimed at optimizing trading time in an already time-sensitive stock market. / PBN PHOTO/MICHAEL SALERNO
APPLYING EFFORT: William H. Weedon's technology R&D company, Applied Radar Inc., has evolved to meet the challenges posed by a decline in military contracts. The firm is currently working within fields, such as one aimed at optimizing trading time in an already time-sensitive stock market. / PBN PHOTO/MICHAEL SALERNO

At its peak, Applied Radar Inc. employed 35 people and conducted 90 percent of its business with the U.S. military. But in the last five years, military spending overall has declined, forcing the technology research and development company to tighten its belt, hunker down and search for greener pastures.

William H. Weedon, president and CEO, founded the North Kingstown business 19 years ago and says there’s been a direct correlation between military spending and the livelihood of his business.

“Probably right around 2010 is really when things started to change. It’s been steadily declining, and military contracting is getting more and more difficult,” Weedon said.

“2013 was rock bottom,” he added.

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U.S. military spending rose steadily after the 9/11 attacks on the World Trade Center in 2001, but peaked at about 4.7 percent the gross domestic product in 2011, according to the World Bank. The overall budget cuts impacted defense contractors, especially smaller companies – like Applied Radar.

Today, the company employs 12 people and has seen a 40 percent reduction in work for the military, Weedon said, which has driven 50 percent of R&D business toward other markets.

Applied Radar is working within a couple different nonmilitary fields, including one aimed at optimizing trading time in an already time-sensitive stock market.

The company is also doing R&D for markets under the umbrella of “Internet of Things,” popularly referred to as IoT, which connects electronics to just about anything in day-to-day life, from monitoring heart implants, to turning on your washing machine or dryer.

In Applied Radar’s case, remotely controlling the lights in your home.

The benefits of nonmilitary markets, Weedon says, is their potential for greater profit margins, as military contracts top out at about 7 percent to 8.5 percent. The downside, he says, is most commercial markets don’t pay overhead costs, unlike the military, which is huge in R&D.

Since the shift in 2010-11, the military has done more R&D in-house, Weedon said, which adds more competition to the market. But there are still some military sectors, including The Missile Defense Agency in Huntsville, Ala., contracting out R&D.

Applied Radar is currently being considered for a contract with the defense agency as a part of the Small Business Research Initiative, which connects public-sector industries with private-sector companies.

Although times are challenging right now, Weedon has another strategy moving forward he believes would benefit the company in the long run: attrition.

“You really have to adapt in order to survive,” Weedon said. “The last few years have really been about survival, so if we can get through the next few years, there will be more demand for our services and products because there won’t be as many companies.” •

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