Clear vision
Karen Borgnes keeps Pacific Aero Tech flying high by focusing on its niche of refurbishing aircraft windows
Puget Sound Business Journal
November 26, 1999
When Karen Borgnes wrote a personal check to buy half of Pacific Aero Tech Inc. at liquidation prices nine years ago, she knew virtually nothing about the aircraft window industry, and she'd never run her own business.
Since then she's built the Kent company into one of the most vigorous in its field, with major aircraft customers scattered across North America.
"I don't think there will ever be a time when I'm not in aviation. It gets under your skin," she said. "Our parts are all over the world, and I get a kick out of that."
Pacific Aero Tech has 15 employees and $4.3 million in annual revenues. While her company's size seems contrary to the consolidation sweeping the aerospace industry, Borgnes has kept Pacific Aero Tech competitive by staying fiercely focused on her niche, and by matching the biggest companies in capabilities.
"She's an independent company that has state-of-the-art equipment, and everything is done by machine," said Mary Phifer, manager of technical purchasing for Reno Air in Reno, Nev., which was recently purchased by American Airlines. "They turn out a very high-quality product at a very reasonable price."
The crystal-clear windows airline passengers look through while at 35,000 feet don't remain crystal clear without effort. After about two years in the sky the acrylic window panes become scratched and marred by the rigors of high-speed flight, and must be refurbished. Pacific Aero Tech is one of the few companies in the world that does the work.
Pacific's warehouse is packed with $1 million in aircraft windows, some refurbished, others waiting for an order before they're cleaned up. The work is done by polishing and grinding machines, including a pricey diamond-tipped device that can delicately mill away scarred surface plastic, leaving a perfect surface to be polished. The finished windows are jewel-like, covered by sheets of protective paper.
As a secondary line of business Pacific Aero Tech refurbishes electronic avionics equipment made by Gables Engineering Inc., in Coral Gables. Fla., although that only accounts for 20 percent of revenue.
Gables recently winnowed its repair facilities down to three from five, but Pacific Aero Tech made the cut.
"For such a small shop, they give really great support to us and to Boeing," said Kevin Ryan, Gables' director of customer services. "Karen is quite happy keeping it the size it is. It's an incredibly competitive market, but reputation matters a lot in this business."
What Borgnes didn't know about aircraft windows when she bought the company with partner Hugo Flinn, now an Irish banker, she did know about financial management and team building. These have been the secrets of her success. She has a degree in accounting and also an MBA, and she's worked for several major local companies, including Arthur Young and Food Services of America.
She started to turn toward running her own business fresh out of accounting school, when she was helping write the initial business plan for Immunex Corp. as an employee of Arthur Young in 1981.
"It didn't take me long to get the idea it was a heck of a lot more fun to create history than audit history," she said.
She moved on Esterline Corp. subsidiary Korry Electronics and then Food Services of America, where she did risk analysis, financial analysis and worked on mergers and acquisitions. Then in 1990 she was laid off as part of a restructuring at Food Services, and found herself wondering what was next.
When a former colleague called and offered her a job with a local aerospace supplier called Pacific Aviation Group as controller, at first she was dubious because she'd been thinking about starting her own computer company. But when she visited the place, she was hooked.
"The first time I walked through a warehouse of airplane parts it was like cupid, a bow and arrow. I just loved it," she said.
But then things got tough. It turned out subsidiary Pacific Aero Support had been selling faulty aerospace parts before she had been hired. Borgnes suddenly found herself in the middle of a major investigation by the U.S. Department of the Treasury and the Federal Aviation Administration. She also was appointed Pacific Aviation Group vice president and general manager, even though she was tempted to leave and go to another industry. The former owners were jailed.
"The only reason I didn't quit was I was pregnant, and it's hard to interview for a senior position in a huge maternity dress," she said. "If I hadn't been pregnant, I wouldn't be in aerospace today."
But she stayed and slashed employment from 70 employees to 16, relocated the company from a 70,000-square-foot site to a space one-tenth the size, paid back more than $1 million in legal fees, and took the company back to profitability. "I didn't sleep for a year, I was so stressed."
But at the end of the process, her then-boss in Ireland, Hugo Flinn, approached Borgnes with the proposal that they together buy Pacific Aero Tech, a tiny side business that had almost escaped notice under the wing of the much-larger Pacific Aero Support. Flinn is now her partner and a director of Pacific Aero Tech, as well as general manager of finance and business for Bank of Ireland Group in Dublin.
In an e-mail, Flinn called Borgnes' reputation "excellent, built from scratch through integrity and quality of product and honoring commitments made."
At the point she and Flinn bought it the company had only four people, but Borgnes has steadily built it up since then. Three of the four are still with her, and they now hold senior positions.
"I just happened to luck out and buy a company that had guys with incredible potential," she said. "I just empowered them, and said, `Go for it.' "
She's also built a multilayered incentive program, including a bonus program usually worth upward of $4,000 a year for her workers, a matched 401(k) program, a profit-sharing plan and a lucrative "hero of the quarter" award.
"We sink or swim together," she said.
Dave Pickering, one of her original employees and now a department head, admits it was "a little scary" when Borgnes had bought the company and was taking over.
"We didn't know what was going to happen," he said. But now he's developed loyalty to his boss, partly because she returns it. "She bends over backwards if people have problems," he said.
Now 40, with two children, Borgnes is clearly mindful of her unusual position as a woman executive but not fixated on it. She's also glad the role of women has evolved from her first years in business, so she now can be more herself.
In the beginning, she remembers, "We wore little gray suits and floppy bow ties, and tried to act like little men," she said. Now, "I find the trick is not to try to be one of the guys. I don't even try."
Joann Cassidy, manager of subcontractor repair for Aviation Sales Distribution Co. in Miami, said she's been impressed by Borgnes' skill as an executive.
"The airline industry is very male-dominated, so for a woman to own a business, and get it to the level she's gotten it to, is quite commendable. You're really wheeling and dealing in a men's world," she said.
Puget Sound Business Journal (Seattle): November 26, 1999
By Steve Wilhelm