NKC has Cerner, Olathe has Garmin (major expansions)

KCgridlock · Post by **KCgridlock** » Thu Feb 13, 2003 1:21 pm

Olathe will get a new eight story office building, we are working on the site plan now.

Cerner and Garmin are a couple of the few companies in KC that are going nuts right now. Read on...

Posted on Thu, Feb. 13, 2003

A break in the tech gloom: Garmin's GPS gear propels company growth
By DAVID HAYES
The Kansas City Star

Consumers are starting to "get" the idea behind the satellite-based global positioning system, the heart of Garmin International's products.

That growing awareness of so-called GPS devices has made Garmin a bright spot in the generally bleak tech economy. On Wednesday, Garmin reported record sales and said the company would triple the size of its Olathe campus to keep up with growth.

GPS devices are being used in cars by salespeople and insurance adjusters to find clients. GPS gear is becoming standard equipment in small planes and corporate jets. Hikers and fishermen rely on them to find their way on lakes and trails. Hobbyists are using them for "geocaching" games, in which GPS-based clues lead searchers to a hidden object or a scenic site.

The find-where-you-are anywhere-in-the-world devices are even showing up on BMW motorcycles.

But perhaps nowhere is the success of this relatively new phenomenon more evident than in Olathe, headquarters for Garmin International. The 14-year-old firm has muscled its way to the top of the GPS industry.

On Wednesday, Garmin Chief Executive Min Kao said the company would break ground this spring on a $60 million corporate office expansion -- its second expansion project in four years. The project will triple the size of the company's Olathe campus, adding office, warehouse, call center, and research and development space.

The expansion announcement came as Garmin reported its 12th consecutive record year for sales. Sales for 2002 passed $465 million, as consumers, pilots and aircraft manufacturers bought more than 1.5 million Garmin products. Garmin's stock was up $1.46 a share, closing Wednesday at $30.26.

The 575,000-square-foot expansion project, scheduled for completion in late 2004, is expected to handle the company's growth for at least the next five years.

Garmin hired more than 100 employees in the Kansas City area last year, part of a worldwide expansion that added 250 workers. The company expects its hiring to keep pace with its financial growth -- projected to be as much as 15 percent this year. That would mean an additional 100 local jobs in 2003.

Worldwide, Garmin has 1,600 employees. About 740 work in the Kansas City area. The company also has manufacturing facilities in Taiwan and a sales office in Great Britain.

Back at headquarters in Olathe: "We're out of space," said Kevin Rauckman, Garmin's chief financial officer.

As Garmin moves deeper into consumer products, such as handheld GPS devices and a highly-anticipated personal digital organizer that includes GPS technology, the company's need is growing for everything from engineers to call-center workers, who answer questions from consumers.

In 2000, Garmin opened a 140,000-square-foot office and warehouse addition. The company already has outgrown it.

The new project will connect to the company's current facility and include about 450,000 square feet of office and research and development space. Another 125,000 square feet of the addition will go to warehouse space for the company's growing product line.

Garmin owns 87 acres around its campus. Company executives are planning to meet with neighbors next week to explain the project, Rauckman said.

Although the company specializes in both aviation and consumer devices, consumers drove the majority of the company's fourth-quarter sales. Garmin sold 478,000 products in the fourth quarter -- more than 5,300 devices a day.

Kao said Garmin's sales were up almost 44 percent in the last three months of 2002, hitting $133.7 million.

"In the face of weak overall consumer spending, demand for our products remains strong," Kao said. "Consumer awareness of the utility of GPS navigation continues to grow."

Garmin's sales were $465.1 million for the year, a 26 percent increase over 2001. Sales of consumer products dominated the year, accounting for $350 million of the year's sales.

The company turned a $28 million net profit for the quarter and a $142.8 million net profit for the year.

Rauckman said Garmin currently has $462.5 million in cash and securities.

Sales should increase to between $515 million and $540 million this year, Rauckman said, as the company launches some new products.

Garmin is hoping to push deeper into the consumer market with low-cost GPS receivers called Geko, which retail for under $100. Sometime in June, the company plans to start selling the iQue 3600, a PDA that allows users to link names in their electronic address book to a GPS device that provides turn-by-turn driving instructions.

At the same time, analysts expect the company's Rino devices to be a hot product. They are family radio service walkie-talkies with built-in global positioning system technology that allows users to beam their locations to one another. Garmin began marketing the devices late last fall. Many stores sold out quickly.

Later this year, Garmin is hoping to start selling its next-generation cockpit, a high-dollar integrated aircraft instrument panel that moves the cockpit from dial to digital.

Garmin, like Cerner Corp., a software firm in North Kansas City, is among the successes in a tech landscape littered by bankruptcies, layoffs and corporate failures.

That sentiment came through clearly on Wednesday, when Garmin executives held a conference call with investors and financial analysts.

"Thanks for the great quarter. We don't see too many of these anymore," said Mike Rapoport, a pilot and boater who owns Garmin stock and who also owns eight of the company's GPS devices. Rapoport, who lives in Idaho, works for Rice, Voelker, a research firm in Louisiana.

The global positioning system uses 24 satellites orbiting about 12,000 miles above the Earth that continuously transmit digital radio signals with the satellites' location and the exact time to Earth-bound receivers.

Using three satellites, GPS receivers can calculate the longitude and latitude of the receiver. Mapping technology built into the devices has allowed Garmin to build devices such as the StreetPilot III Plus, a portable GPS receiver that gives drivers turn-by-turn directions to their destinations.

Until Garmin and a couple of other manufacturers began marketing low-cost GPS devices a couple of years ago, the specialty items mostly were owned by gadget-savvy computer geeks and hard-core gadgeteers.

When the price dipped below $300, consumers such as Craig Cottingham of Olathe took notice.

Cottingham, a telecommuter who works for a Virginia computer company, received a Garmin eTrex, a small handheld GPS device, for Father's Day in 2001. He and his wife use the device for geocaching, a hobby in which users hide items and then tell others to go find them, posting the longitude and latitude on sites such as www.geocaching.com.

The geocaching Web site lists more than 42,175 caches worldwide, including 347 within 100 miles of Kansas City.

Rapoport, an analyst who covers the semiconductor industry, thinks the GPS market is still in its infancy. He noted that 400 million cell phones were sold last year, compared with 3.5 million GPS devices.

"The numbers could really go up," Rapoport said. "They keep finding new and clever applications for them."

Pete Brumbaugh, senior media relations specialist for Garmin, says there are also more basic uses for the devices.

"I heard someone say they use an eTrex to find their car at Arrowhead" Stadium, Brumbaugh said.

--------------------------------------------------------------------------------
To reach David Hayes, technology writer at The Star, call (816) 234-4904 or send e-mail to dhayes@kcstar.com.

KC_JAYHAWK · Post by **KC_JAYHAWK** » Fri Feb 14, 2003 1:25 pm

Good news for both sides of the state line. It's good to hear about two local companies excelling in this economy. Both companies are expanding and growing, which helps out the KC metro region as a whole.

Cyburbia · Post by **Cyburbia** » Wed Mar 05, 2003 2:39 pm

No plan submittal for Garmin yet, formal or pre-app. I'll post something after a formal submittal, when it becomes public information.

KCgridlock · Post by **KCgridlock** » Wed Mar 05, 2003 11:48 pm

I have seen the site plan for garmin. It includes an eight story office building and double the industrial space and parking. Nothing real fancy though.

Cerner is really building a neat campus, have any of you been around that area lately? That new sign they have out front is impressive and they are supposed to build a 180' spire there as well. That area along with the NKC hospital is starting to have a real coporate feel to it as it is stuck in industrial NKC.