Defense Contractor Attains Employee-Owned Propulsion

Torch Technologies has ranked among the nation’s fastest growing companies 12 years in a row. It’s recognized as a great place to work and it wins kudos among employee-owned companies.

The reason for the recognition? President and CEO John Watson says it’s in the nature of the business organization itself: They take employee-ownership seriously.

Watson and Torch co-founders Bill Roark and Don Holder had all previously worked for Nichols Research Corp., a large missile defense company in Huntsville that went public in the late 1990s and was later sold. Roark and Holder suddenly found themselves unable to honor commitments made to employees. Much affected by that experience, Roark and Holder began to discuss starting their own company — one that, to avoid a repeat of what had happened to their employees at Nichols, would eventually be entirely employee-owned. In 2002, they created Torch.

“Don was in his mid-sixties when he helped found the company,” Roark recalls, “so we knew he’d be exiting, and we needed a path that would allow us to buy a founder out without having to sell the company.”

In 2005, when they had reached 50 employees, they implemented an Employee Stock Ownership Plan (ESOP). From that point on, “everyone got a stock option, so they could exercise ownership in the company when that option matured,” says Roark. By 2010, employee ownership of the company had reached 40 percent, and Roark and Holder met their goal of 100 percent employee ownership at the end of 2011.

Today, Torch is one of the nation’s top 100 defense services companies, and for the most part has seen consistent annual growth of 30-40 percent since its founding. The company expects to generate around $470 million this fiscal year. Based in Huntsville owing to its proximity to U.S. Army Aviation and Missile Command, Torch has expanded to 15 other locations, including Colorado, Florida, Hawaii, Maryland, Massachusetts, Pennsylvania, New Mexico, Texas, the Marshall Islands and Egypt.

“John came on board in 2009, and one of his first goals was to expand us outside of Huntsville,” says Roark. “I’d say he’s succeeded.”

The company also has evolved from being services-only to offering solutions. To accommodate that transition, Torch broke ground last year on a 45,000-square-foot facility, the Technology, Integration and Prototyping Center.

“We’re doing some novel things in that area,” says Watson, like developing next-generation instrumentation for capturing warhead tests. “We’re also doing a lot of work in obsolescence and re-engineering,” he continues, citing the company’s work on early-warning detection radar systems. Other projects include building repair stations and tech repair manuals for subsystems on the CH-47 Chinook helicopter and developing virtual training products.

“We’re also seeing some opportunities to take some of our defense development technologies outside into the commercial sector,” says Watson. “We’re proud of the platform we’ve built, and we take advantage of that to address more complicated problems that are out there. We’re in a military community, and we take very seriously our mission in terms of providing capabilities to our warfighters and bringing them home safely.”

That dedication extends beyond the company’s professional services; Torch also is deeply committed to community outreach. “We really feel that the cornerstones of our company are, of course, our employee owners and our customers, but the community is part of that, too. If we want to have a healthy workforce, we need to have a healthy community.”

“That’s something our employees take a lot of pride in,” adds Roark.

In 2005, the company’s employee owners formed a 501(c)(3) organization, Torch Helps, to support non-profit organizations that assist underserved communities. One requirement: the charity selected to receive the $10,000 grant must operate in the area of a Torch employee’s residence. The program solicits applications quarterly, a Torch Helps committee reviews each application to ensure requirements are met and then provides a list of recommendations to the board of directors. Finally, employees vote on the board’s selections. Torch Technologies covers all of the administrative costs of Torch Helps, ensuring that all donations go directly to the organizations selected by the employees.

“The impact we’ve had on improving things for the warfighter and the soldier, you know, we’re very proud of that,” says Roark. But he points out that Torch doesn’t often get to see those impacts firsthand. “When you see a kid get a scholarship for college because of a local program you’ve funded and [one day] you’re trading emails with him as he’s making the dean’s list — those are the kinds of things that really tug at your heartstrings. And it’s really the employees,” he’s quick to add. “They’ve built the foundation for the company to be able to do that successfully.”

On April 30, Torch Technologies attended the unveiling of the Wounded Warrior-Combat Medic Statue at the Huntsville-Madison County Veterans Memorial, a project it sponsored. Military veterans from the company stood behind the statue during the dedication ceremony.

“The military is very important to us and recognizing and honoring them is very important to us,” says Roark. The company’s name and logo are inspired by the Statue of Liberty, he points out. Their Huntsville facility is called the Freedom Center. “You can’t get lost in terms of trying to figure out what we’re about.”

Katherine MacGilvray and Dennis Keim are freelance contributors to Business Alabama. Both are based in Huntsville.