What software start-up doesn’t dream of becoming the next Google or Microsoft?
In contrast, very few small manufacturers dream of becoming the next General Electric or Ford. Okay, Tesla does, but that’s just the exception to the rule.
That’s the advantage of writing code: if what you create turns out to be big, scaling up is mostly a matter of securing funding and hiring more coders. Scaling up a manufacturing operation is a much more difficult proposition, no matter what Elon Musk would have you believe.
That’s why being a big fish in a small pond can be a very good thing if you’re in manufacturing. As an example, consider Optex Systems Holdings, Inc., a U.S. manufacturer of periscopes and other sighting systems.
The Benefits of Specialty Defense Contracting
When you think of defense contractors, USD$45-billion giants like General Dynamics are probably the first to spring to mind. But there are also smaller defense markets, like the $8-10-million U.S. periscope and vision block market.
Optex controls a significant portion of that market—approximately 75 percent, according to the company. Optex also reports that it controls roughly 30 percent of the $40-50-million worldwide market.
Although the company’s bread and butter comes from defense contracts, Optex CEO Danny Schoening has stated, “One of our priorities has been to increase our margins by securing more commercial contracts while maintaining our established footprint in armored vehicle platforms.”
As an example of this strategy, the company recently entered into a partnership with Night Force Optics, a supplier of scopes for hunters and competitive shooters. Under the terms of the agreement, Optex will supply Night Force with optical assemblies via its Applied Optics Center (AOC) division.
Although the deal with Night Force will not put Optex-branded products into the hands of commercial users, the company also recently entered into an agreement with outdoor store Cabela’s to offer its spotting scopes and monoculars directly to the consumer market. These products, by the way, are already being used by the U.S. armed forces.
Optex may never be the next General Electric, but it doesn’t need to be to succeed. That’s one of the biggest advantages of being a big fish in a small pond: unlike the small fish in the big pond, there’s no risk of being gobbled up or crushed by venerable leviathans like Ford or Chevrolet.
Which would you rather work for: big fish or small? Comment below.