Pro-Dex Inc. is leaving its Santa Ana headquarters for a bigger facility in Irvine.
The manufacturer of small industrial motors signed a 10-year lease for a 28,000-square-foot building at 2361 McGaw Ave. The deal is valued at $3.6 million.
The company needed more room for growth, said Chief Executive Mark Murphy. Its lease in Irvine is about 10,000 square feet more than what it had in Santa Ana.
The company’s Santa Ana lease,for 18,000 square feet at 151 E. Columbine,was first up in June 2006. Pro-Dex temporarily extended it, but decided to move to Irvine by the end of the year.
“This move is an investment in the long-term growth and profitability of Pro-Dex,” Murphy said. “On the list of key initiatives required to transform the company, this is an important one that will support and even enable several others.”
Tiny Motors
Pro-Dex designs, develops and makes tiny motors that go into medical and dental tools. They’re often custom-made for customers, who also include industrial and aerospace companies.
Pro-Dex’s products are found in hospitals, dental offices, medical engineering labs, scientific research facilities and high-tech manufacturing operations around the world, according to the company. Some of the motors end up in parts for Boeing Co., Airbus SAS and NASA.
The Irvine headquarters also will house the company’s micro motors division, which accounts for most of the company’s sales. Micro motors makes tiny rotary drives.
Its micro systems unit makes more sophisticated products at its Beaverton, Ore., facility.
Pro-Dex counts a market value of nearly $15 million. The company employs 86 people in OC, and some 122 companywide.
Murphy sees the move as a way to expand and grow revenue.
“Securing new development projects that ultimately lead to incremental and recurring manufacturing revenue remains one of management’s top priorities and we have begun to improve our execution against this goal,” he said.
The company ranked No. 49 on last year’s Business Journal list of the fastest growing public companies, with a three-year sales growth of 41%.
Profit Slump
Pro-Dex has been working on turning around slumping profits. The company’s made efforts to streamline its business and cut costs.
Last year, it tapped Murphy as chief executive.
He replaced Patrick Johnson, who stepped down from the position after holding the job for six years.
In early 2006, the company acquired Astromec Inc., a maker of motors. The buy boosted Pro-Dex’s sales, which rose 23% to $4.6 million in the second quarter, versus a year earlier.
Astromec accounted for nearly 19% of sales in the quarter.
Still, Pro-Dex has work to do.
The company posted a second-quarter profit of $1.4 million, down nearly 18% from a year earlier. Backlog orders held steady at about $12 million, on par with the prior year.
The company cited “a less favorable product mix,” lower profits from its Astromec products, higher warranty costs and manufacturing inefficiencies for the earnings decline in the second quarter.
Medical Hit
Pro-Dex also took a hit in its medical device business last year, which saw profits drop off as the company changed its strategy from being a bulk supplier to a customer designer.
Custom designing motors allows the company to get them to market quicker, Pro-Dex said in its annual report.
Sales for 2006 came in at $17 million, up 21% from the prior year. Profit for the year fell 54% to $825,000.
“Our customers changed, our selling strategy changed and our products changed,” Murphy said.
Murphy believes the company fell short in engineering and manufacturing, which struggled to keep up with the changes.
“The investments made in people and processes were insufficient to achieve the required fundamental reinvention of these critical support areas,” he said.
