Indy Audio Labs amplifies ‘Made in USA’ movement | Crain's

Indy Audio Labs amplifies ‘Made in USA’ movement

“American-made” has been important to Indy Audio Labs’ international customers, said executives Ted Moore and Rick Santiago. | Photo by Chris O'Malley/Crain's Indianapolis

In the wake of the digital revolution, a maker of high-end audio products would seem to be as challenged as an underpowered amplifier trying to drive a high-impedance speaker.

After all, the heyday for such gear was in the 1960s and 70s. Audiophiles of that era are likely no longer fretting about signal-to-noise ratios. And millennials are often content listening to music through earbuds plugged into a handheld device.

Yet Indy Audio Labs, a small company based at Purdue Research Park, just south of Indianapolis International Airport, has found customers in 22 countries for its Aragon and Acurus line of amplifiers, pre-amps and processors. This is heavy-duty equipment, starting at $2,800 and topping out at $8,500.

Perhaps more significantly, Indy Audio Labs also found a way to make them in the U.S. – in Jeffersonville, Ind. – rather than outsource to a foreign contractor.

“Strangely, (American-made) is more important to our international customers,” said co-founder Ted Moore, a veteran of the semiconductor industry. “American-made infers quality, power and robustness. It’s kind of the audio-video analogue of the muscle car.”

In fact, Indy Audio Labs’ success may be instructional for other companies that have summarily dismissed certain product segments and the viability of U.S. production.

Adapt for digital

Moore, who is chief technology officer, and Rick Santiago, who is CEO, formed the company in 2009. Using friends-and-family financing, they bought the Aragon and Acurus lines from Indianapolis-based Klipsch Group, where they worked as engineers.

At the time, Klipsch was refocusing on its loudspeaker line but held the two esteemed amplifier brands it bought before the digital revolution.

Indy Audio Labs’ idea was to take these audio brands and make them relevant to the next generation firmly rooted in digital audio.

Santiago pointed to a partially disassembled amplifier, stuffed with thick-gauge wiring and capacitors near the size of coffee cups. He challenged a visitor to lift it.

“It weighs 70 pounds,” he said, with the kind of a proud grin a new father sports.

Santiago, Moore and director of engineering Joe Land found a way to marry such beasts with sophisticated computer controls, including simple but elegant display panels that integrate with smart phones and other current digital devices.

Santiago turned on his cellphone and the identical graphical interface displayed on a nearby preamplifier appeared on the handheld device.

“We’re utilizing the same graphic interface look and feel of a mobile phone. …. All of our products are connected to the web. We wanted to have a consistent feel for users,” Santiago said.

“We aimed to make this relevant to the younger generation,” Moore added.

They also ensured the devices kept their pedigree for advanced audio. One of the Acurus devices is touted as being the first pre-amp/processor made in the U.S. to feature cutting-edge cinema technologies Dolby Atmos and DTS:X.

In a demonstration room, they fired up a rack of new Acurus products capable of running at least 12 speakers. The Aragon brand is formidable, as well. A customer from China used a bank of Aragon amps in winning a prestigious global home theater award. The beefy amps look like they could survive a nuclear war.

“It will certainly make the sound of one,” said Santiago, playing a soundtrack that comes from all directions, even from overhead.

Manufacturing decision

But the biggest challenge might well have been in finding affordable manufacturing in the U.S. Many contract manufacturers in the Midwest lacked the sophistication. And costs were prohibitive.

They eventually found Key Electronics Inc., a Jeffersonville, Indiana-based contract manufacturer that assembles electronics for a wide range of sectors, including aerospace and medical device firms.

“It really came down to Key’s manufacturing technology,” Santiago said.

“We always seem to fly under the radar down here,” said Tom Hardy, president of Key Electronics. “But we compete with the big boys.”

Doing so costs money, and Key Electronics has spent millions of dollars in recent years on 3-D optical inspection equipment, X-ray/CT scan machines and a new inventory system that has cut the time to pull parts on some projects from several hours to just five minutes.

“There’s a tremendous labor savings. That’s the way you stay competitive,” said Hardy, a CPA by trade.

The other solution to competitive manufacturing, he said, has been to empower employees on the front line who have the most insight on certain aspects of production. Hardy rattled off a list of the latest lean manufacturing processes used by Key to avoid defects that can quickly erase profits on narrow-margin products.

As part of a focus on quality, all new employees go through a 40-hour orientation program that includes training on such things as lean manufacturing and electrostatic discharge. The program concludes with a presentation from Hardy designed to help the new employees understand the operating and leadership culture at Key.

“I’ve been to China several times and I’ve seen the operations there and they’re using the same equipment,” Hardy said. “So what’s the difference between product made in China and product made here? The difference is in the personal pride and process disciplines our corporate culture incarnates.”

Outsourcing production to Key has helped Indy Audio Labs keep its overhead costs under control, Santiago said. But there are other advantages, such as lower costs for transportation and travel as well as the ability to more closely monitor production and to make product changes faster.

“It gives us the ability to move faster as a company,” Santiago said.

Changing economics

“Just going offshore is no longer the panacea it once was,” said Steve Dwyer, president and CEO of the advanced manufacturing and logistics initiative Conexus Indiana.

Dwyer said Indiana is one of the four top states for advanced manufacturing, having employed advanced manufacturing techniques and taken to heart quality processes such as Six Sigma.

Many companies have figured out it makes more sense to keep manufacturing of propriety components local, rather than offshoring such production.

“It really makes sense to keep control of that manufacturing either internally or locally,” said Dwyer, former chief operating officer of Rolls-Royce Corp.

Santiago declined to disclose sales data for Indy Audio Labs, which remains nimble and enjoys low overhead.

For such a small company, “they have accomplished what some of the guys overseas and an army of engineers are working on,” Hardy said of Indy Audio Labs.

Expansion plans

Goals for this year include expanding its distribution network, as about 75 percent of customers are overseas. The bulk of Indy Audio Labs’ products are sold through custom audio/video installers rather than direct to consumers.

One feature not common in traditional high-end audio products is that Indy Audio’s units talk to and are controlled by in-wall touch panels common in connected homes.

“Our value proposition is ease of integration. These are no longer hobbyist endeavors,” Santiago said.

January 13, 2017 - 11:42am