Dialing a retraining program to put recession on hold

Anadigics has more than 500 employees in Warren, making semiconductors the company ships from New Jersey to Asia to be popped into cell phones churned out by consumer electronics giants like Samsung and LG.

But in 2008, the company collided with what Russ Wagner, vice president of operations, called “two freight trains.” First it was the company’s internal manufacturing problems, which slowed down chip deliveries to its customers. Then Anadigics slammed into the sudden collapse in consumer spending driven by a deep global recession.

Anadigics credits its decision to embark on a major worker-retraining program — focused on quality improvement and rational production methods — for turning around the company. And by addressing its production weaknesses early, the company can now seize opportunities offered by an economic recovery that is generating renewed demand for consumer electronics.

The company laid off 160 workers in late 2008, but as business improves, Anadigics is adding to its payroll — it hired 55 employees in late 2009, and plans for another 50 to come aboard this year.

“If we see the growth that we believe we are going to see in the second half of this year, we will have to expand our work force,” Wagner said. Not only is the economy recovering, “we are taking market share” for the chips that power the amplifiers in cell phones, he said.

It was in the summer of 2008 that Anadigics won a $280,000 training grant from the state Department of Labor and Workforce Development, using the money to hire the New Jersey Manufacturing Extension Program to help reorganize its stalled manufacturing system.

The Anadigics product is a wafer embedded with semiconductors, “and we were trying to stuff new equipment in our factory to make more wafers — but we didn’t have a smooth flow of inventory through the factory,” said Douglas Dopp, vice president, wafer fabrication. “If you had walked into the factory a year and a half ago, you would have seen boxes of inventory everywhere.”

With guidance from NJMEP, instead of targeting ever-higher levels of output, “we slowed down, and quality became job one,” Wagner said. “Our quality improved tremendously, and we just kept setting the quality threshold higher.”

Robert Loderstedt, president of NJMEP, said, “Training is what allows companies like Anadigics to meet world-class standards and continue to manufacture in New Jersey.”

Mario Rivas, Anadigics’ new chief executive, came on board in the first quarter of 2009, setting forth a strategy “to make sure we grow smart — that we develop our internal operations to be something that creates value for the company,” Wagner said.

A public company, Anadigics had been generating sales of $80 million a quarter before the 2008 slump slashed that to about $30 million, Wagner said. In February, as the company reported 2009 revenue of $140.5 million — down 45.6 percent from 2008 — Rivas called 2009 a “pivotal year” that positioned the company to grow in 2010.

Even though Anadigics is in high-cost New Jersey, “we compete with companies whose supply chains are completely in Asia,” Wagner said. “Our productivity and our technology have to be that much better to compensate for a higher level of fixed costs. Our people are very, very productive, and it’s not so easy to export that.”

“Making It” explores how businesses and nonprofits are meeting the economy’s challenges and opportunities. Contact Beth Fitzgerald at bfitzgerald@njbiz.com

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With the help of NJMEP, Douglas Dopp, vice president of wafer fabrication at Anadigics, says the company learned to put quality first. Dopp is pictured in the company’s clean room, where it manufactures wafers. [Christina Mazza]

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