A Thriving Business In Swords And Plowshares

By day, they're defense contractors. But on nights and weekends, engineers at Sonalysts Inc. hole up in their labs to concoct new businesses. The results: Academy Award-winning sound effects for the film The Hunt for Red October, computerized TV animation, and a diving business that does underwater repairs on nuclear reactors. They've even come up with a "fish startler" that uses sonar technology to scare fish away from power-plant cooling-system intakes.

What's behind all this creativity? Defense cuts--and a little desperation. The Navy isn't expected to cut back on the research-and-development work that Sonalysts does. But this worker-owned company, founded by ex-Navy officers in Waterford, Conn., isn't waiting to be torpedoed. Unlike most of its bigger rivals, Sonalysts is a master at creating commercial businesses from Pentagon knowhow. It's so good at it that the state's Economic Development Dept. has hired Sonalysts to design a program to help other area defense companies survive.

RIPPLE EFFECT. There's plenty of need for such aid. Some 4,000 workers at nearby Electric Boat Div. of General Dynamics Corp. are expected to lose their jobs because of cuts in the Seawolf submarine program (BW--Jan. 27). The ripple effect from Seawolf could devastate southeastern Connecticut, where 72% of some 145,000 jobs are defense-related.

For people in such a fix, Sonalysts at least offers hope. Last year, revenues were up 20%, to $32 million, with nondefense businesses contributing 40% of the total--and much of the growth. While other companies are laying off workers, employment at Sonalysts was up 14% last year, to 427. Even so, President John C. Markowicz and five other executives have taken 20% pay cuts to help keep costs low.

The company keeps sales growing by leveraging one business into another. It branched out from training videos for submarine crews into sound effects and animated promos for televised Boston Bruins and Red Sox games. Building on the fish startler, other workers developed a "mussel buster" that uses sound waves to keep zebra mussels from clogging water pipes.

Markowicz says one key to finding successful commercial products is to "be resilient and accept failure." Sonalysts has had its share of duds: A video game never worked during sales presentations, a now-defunct second-mortgage subsidiary stumbled, and cases of the only book put out by its failed publishing arm collect dust in a corner.

The company's engineers have shrugged all this off. And why not? Sonalysts was recently hired to do animation for sports network ESPN. Markowicz hopes the small project will lead to a major contract. Sonalysts is also considering building its own film studio, and it plans to market its recording studio to musicians. Designers also want to revive the failed video game for interactive videodisks. At Sonalysts, even old ideas may be a good offense against defense cuts.

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