RWD Technologies, Inc. - Company Profile, Information, Business Description, History, Background Information on RWD Technologies, Inc.

5521 Research Park Drive
Baltimore, Maryland 21228

Company Perspectives:

RWD is a professional services organization that focuses on providing people with the knowledge and tools they need to support their learn ing, performance and quality of work.

History of RWD Technologies, Inc.

RWD Technologies, Inc., is a Baltimore, Maryland-based professional s ervices company that helps companies maximize technology through trai ning, information technology consulting, and organizational performan ce improvement solutions. Privately held, RWD divides its business in to three categories: Performance Solutions, which helps automakers to launch new vehicles, railroads to improve reliability, and the petro leum and chemical industries to increase worker productivity; Enterpr ise Learning Solutions, providing training and other services to comp anies that use Oracle, PeopleSoft, and SAP software; and Applied Tech nology Solutions, helping pharmaceutical and other regulated industri es integrate software systems, as well as develop custom applications . Although a relatively small company, with annual sales less then &# 36;150 million, RWD boasts a client list that includes a large number of Fortune 500 companies. It serves 20 industries, including automot ive, chemical, consumer products, finance, manufacturing, medical, pe trochemical, pharmaceutical, rail, and telecommunications. RWD mainta ins 19 offices in the United States, Australia, Belgium, Canada, Fran ce, Germany, Japan, and the United Kingdom.

Founder Jumpstarts Education During World War II

The letters RWD stand for the company's founder Robert William Deutsc h. He was born in Far Rockaway, New York, in 1924, the son of a groce r, and grew up interested in math and science. In 1941 he entered Que ens College to study engineering, choosing the school simply because it was affordable. Within a matter of weeks, the United States milita ry base at Pearl Harbor, Hawaii was attacked by Japanese forces, Germ any subsequently declared war on the United States, and the country f ound itself at war. Deutsch remained in school for two years before e nlisting in the Army, which then sought to take advantage of his trai ning. Deutsch was sent to study electrical engineering at the Massach usetts Institute of Technology, and afterwards dispatched to Europe, where he helped in the communications between U.S. and French forces.

Following the war, Deutsch returned to MIT in 1946, earned a Bachelor of Science degree in physics. He then went on to graduate school at the University of California at Berkeley, and in 1953 earned a Doctor ate in high-energy physics. Deutsch next took a position at the Gener al Electric Knolls Atomic Laboratory in Schenectady, New York, involv ed in the development of nuclear reactors that could be used by subma rines. In 1957 he went to work for Florida-based General Engineering Company, and after that company was sold four years later Deutsch bec ame a physics consultant on aerospace projects for Martin Marietta, a move that brought him to Baltimore. He then became a professor of Nu clear Engineering at Catholic University in Washington, D.C., in 1962 , while continuing to serve as consultant for companies involved in n uclear power plants.

To bring in more consulting work, Deutsch tried his hand as an entrep reneur in 1965 with the launch of General Physics Corporation, which trained nuclear plant operators. The nuclear power industry was on th e rise and General Physics prospered under his leadership as chief ex ecutive officer. Most of the work was on government contract, mostly for the Navy and nuclear power plants. Deutsch took the company publi c in 1982, retaining a quarter interest, but in 1986 National Patent Development Corporation acquired a controlling interest in General Ph ysics, which by this point was generating about $115 million in a nnual revenues. In late 1987 National Patent wanted Deutsch to step d own as CEO and offered him what Forbes in a 1998 profile calle d a "face-saving retirement package." He rejected it and, according t o Forbes, "he told the world he'd been fired and sold his fami ly's 24% stake in National Patent for $18 million. Less than three weeks later, in January 1988, Deutsch used some of the cash to get back in the training business."

The 63-year-old Deutsch recruited his chief operating officer at Gene ral Physics, John H. Beakes, formed RWD Technologies and set up shop in Columbia, Maryland, the goal to provide high-tech services to comm ercial companies. It was a welcome change of direction for Deutsch, w ho had already concluded that both defense contracting and the nuclea r power industry offered a meager opportunity for growth. He saw an o pening to train workers on how to make the best use of the advanced t echnology that was being introduced in all industries. "Deutsch got t he idea for his second act," according to Forbes, "after watch ing the frustration corporate management often experiences when it in vests in new technology. Too often the employees don't really know ho w to use the new equipment properly, so the buyers don't reap maximum productivity gains." Deutsch explained the genesis of the problem to the Washington Post in a 1995 interview: "The big companies t end to work from the top down. Someone sells top management on the id ea of a new technology, but doesn't give them a system that's user-fr iendly. Top management forgets about the people who have to use the s ystem." The primary goal of RWD was to customized those systems, then train the workers who would actually have to use them, but the great er mission was to help American manufacturers regain a competitive ed ge in the world.

RWD's early work was done with Chrysler Corporation, involved in the development of training programs that helped workers in the launch of new vehicles. Unlike most consulting firms that preferred to work wi th management, RWD liked to go directly to the shop floor to deal wit h problems from the bottom up. Deutsch told Forbes, "Big consu lting companies, when they do go into factories, talk down to the wor kers. It's just not in their culture to work with people who use thei r hands and with the nondegreed." In order to gather the kind of pers onnel comfortable with this approach, Deutsch eschewed MBAs, preferri ng instead to hire engineers and computer science graduates, while al so avoiding graduates of premiere schools like MIT and Stanford or ap plicants with a perfect 4.0 grade point average. "It means the person did nothing but study and did not have any social or athletic life," Deutech explained to Forbes. "That person would have a hard t ime working in a place like this with our team environment."

Success with Chrysler led to work with Ford Motor Company to help imp lement lean manufacturing methodologies in an engine plant. This woul d lead to RWD working with Ford to implement the Ford Production Syst em in its factories around the world. RWD also learned lessons from i ts automotive work that could be applied to other industries. For exa mple, the work it did with Ford on a new production line for automobi le transmissions was useful in solving a problem for Frito-Lay Inc., which was trying to install a new potato chip production line that ke pt burning the chips. By changing the flow of oil, a lesson learned a t Ford, the RWD troubleshooters solved the problem.

After three years RWD was profitable and established enough to not ne ed a marketing department, a decision that also reflected the company 's philosophy. "Salesmen tend to promise solutions engineers can't de liver," Deutsch commented in the 1998 Forbes article, which ad ded, "RWD often approached an account by first asking if it can talk with workers: Before pitching to a food manufacturer, recently, an RW D project manager spent the day riding around with one of its deliver ymen."

Early 1990s SAP Work

In the early 1990s RWD expanded into computer systems. It helped Dow Chemical make changes to its training program to help implement the S AP enterprise resource planning (ESR) software it purchased. This pro ject led to other SAP implementations, and RWD expanded its expertise to include other ERP packages, including Oracle and PeopleSoft. As a result, the client list swelled to include a wider variety of indust ries. RWD also beefed up its information technology capabilities in o rder to offer custom IT systems for corporate customers. For example, it helped office furniture manufacturer Steelcase to create a user f riendly laptop ordering system for its salesmen and helped Holiday In n develop an easy-to-use worldwide reservation system.

Revenues grew at a rapid clip in the 1990s, totaling $18.4 millio n in 1993 and topping the $65 million mark in 1996, when net inco me approached $5.2 million. In June 1997 the company was taken pu blic, after twice postponing the initial stock offering because of po or market conditions. Not only did RWD raise $38 million, it was able to create a stock option plan for employees after they had been with the company for 12 months. Moreover, being public added credibil ity to RWD as it attempted to attract more Fortune 500 customers. On the downside, the company now had to spend hundreds of thousands of d ollars each year on Securities and Exchange Commission filing fees, e xtra attorney and accountants' fees, investor mailings, and insurance to cover directors and officers. As long as the business continued t o grow, the cost of being a public company was acceptable, but that s ituation would change within a few years. In the meantime, RWD contin ued to enjoy an upward trend in business. Sales totaled $85.7 mil lion and net income topped $9 million in 1997. RWD was serving se ven of the top ten of the Fortune 100 and 25 overall. The company was also becoming more of a global player, as 10 percent of revenues cam e from international sales, compared to just 2 percent in 1996, promp ting RWD to open an office in Europe. Most of that growth was connect ed to RWD helping Ford implement its lean manufacturing production sy stem at plants in the United Kingdom and Europe.

RWD enjoyed another strong year in 1998, when sales improved by 34 pe rcent to $114.7 million and net income totaled $13.1 million. The company was listed among Forbes 200 Best Small Companies and ComputerWorld named it one of the Best IT Places to Work. By now the ERP practice was the fastest growing part of the business, but RWD also enjoyed significant successes in the IT area. For examp le, in 1998 the company developed an intranet-based diagnostic system for 5,300 Chrysler dealer repair shops, providing mechanics with up- to-date vehicle information. A similar system was then set up for Joh n Deere equipment dealerships for their technicians to use in the fie ld.

Business began to tail off in 1999, due in large measure to clients d iverting money away to address the Y2K problem. Although RWD's revenu es increased to $124.4 million in 1999, it was less than expected , and net income decreased 60 percent to $5 million. In addition, the price of RWD stock tumbled. After starting 1999 as a company wit h a market capitalization of $300 million, it ended the year wort h half as much.

In June 1999 RWD acquired Merrimac Interactive Media Corp., an Intern et-based technical training and testing solutions provider, and then in 2000 RWD established a new subsidiary called Lattitude360 to provi de just-in-time training programs. RWD appeared to be on the rebound in 2000, as business increased during each of the first three quarter s of the year before sagging in the fourth quarter. In the end sales improved to $133.7 million while net income slipped to $4.2 m illion. However, the slowdown at the end of the year was a harbinger of more difficult conditions to follow in 2001.

Poor Economy In Early 2000s Hinders Growth

Despite a retooling of its business models in 2000, RWD simply could not overcome a downturn in the economy that led clients to cut back o n investments. Sales dropped to $118 million and the company repo rted a loss of $9 million in 2001. The reduction in corporate spe nding on IT services continued in 2002, when revenues decreased furth er to $117.5 million and RWD lost another $22.4 million. To m ake matters worse, the accounting scandals at such companies as Enron and Worldcom, resulted in new and costly regulations. To remain a pu blic company would now cost RWD about $1 million a year. Given th e company's size and struggle to regain profitability, Deutsch decide d in 2003 to take the company private once again and eliminate these costs as RWD waited until economic conditions improved. Deutsch used a company he owned with his family, Research Park Acquisition Inc., t o acquire the outstanding shares of RWD stock. The transaction was co mpleted in September 2003.

Sales continued to slide in 2004, falling to $107 million. The co mpany sought new business opportunities to turn things around, as Deu tsch once again looked to military and other government work. In Octo ber 2004 the company created a new business group dedicated to the tr aining of federal employees, anticipating that a large number of baby boomers were on the verge of retirement, creating a need for their r eplacements to be trained. The initial focus was on ERP software trai ning. RWD also developed software that in November 2005 received cert ification for the Navy Marine Corps Intranet, capable of distributing documents and training materials and providing online help. In addit ion, in 2005 RWD hired a pair of executives to expand the Applied Tec hnology Solutions division in hopes of drumming up more business from the pharmaceutical and other regulated industries.

Principal Divisions: Performance Solutions; Enterprise Learnin g Solutions; Applied Technology Solutions.

Principal Competitors: BrightStar Information Technology Group Inc.; International Business Machines Corporation; Sapient Corporati on.


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