Powell Industries, Incorporated of Houston, Texas Prospers and Expands through Diversity and Innovation

---

Written by William Whitney, Senior Correspondent for Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The petrochemical industry has been aware of Powell Industries, Incorporated (Houston, Texas) (NASDAQ: POWL) since the late 1940's. Early on, Powell, then under the direction of founder Bill Powell, zeroed in on the booming post war petrochemical business from their headquarters location in Houston. Initially, the company simply sold distribution and transmission switchgear, but by the 1960's was a full fledged assembler - after having made their first public stock offering in 1956.

Unlike many purveyors of that time, Powell developed a respected sense of innovation in direct response to their customer's ever-changing needs. So, it is no surprise when Industrialinfo.com found corporate Marketing Manager Gary King at the recent Southwestern Electrical Exposition (SWEE)... they were doing what they seem to do best - asking a lot of questions of customers and prospects.

"We think of ourselves as innovators - and we have been very successful at that over the years - but it might be more attributable to reacting to customer's need," says Mr. King. One such innovation of long standing is their proprietary Power Control Room", which essentially is a completely pre-manufactured structure outfitted with switchgear and control equipment that allows for complete testing prior to delivery.

Asked if the success formula is pure and simple Research and Development (R&D), Mr. King replies, "Probably a lot more D than R." "In example," he continues, "take the issue of arc flash, of which there might be 500 incidents alone each year in the United States. And, arc flash is not to be minimized. For instance, an unprotected flash generated from a 15,000 volt source - within the first 5-10 milliseconds could produce a plasma ball of 25,000 degrees Celsius - which is hotter than the surface of the sun!"

Now, heavily mandated throughout the industrial world for safety and pragmatic reasons, the introduction and availability of arc protection in the United States was largely a result of Powell's efforts. Mr. King is quick to point out, "The technology was - and usually is - already there, the idea is to put the right innovations into the right place."

However, North American industrial business trends are changing rapidly in almost every corner of the spirited global economy. The previously acceptable practice of maintaining status quo in a given market segment will not assure growth or continued prosperity.

"The electrical business industry has changed rather dramatically. Take a large oil company for instance; twenty years ago they would have had a comprehensive engineering department, but today you'll find those areas greatly downsized - with considerably more outsourcing," Mr. King observes.

The Powell Group model apparently has prospered with that philosophy. During the buoyant 1990's they were diversifying into the mining, pulp, paper, semiconductor, and transit industries - and still maintaining their presence in the established core industries of oil, gas, petrochemical, and utility markets.

With more than 50 years in utilities, refineries, municipalities, energy companies, and heavy industries, Powell Industries looks for continued expansion within electricity, water, wastewater, traffic, commuter trains, and natural gas.