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KINGSPORT — A Kingsport business is fast becoming a rising star in the global defense and commercial aerospace industries. And it’s just getting started.

Protokraft manufactures components used in various applications from rocket launchers to jetliners. Inside its nondescript building on the grounds of Holston Army Ammunition Plant, engineers and technicians dressed in lab coats sit in front of sophisticated equipment to design and create high-speed optoelectronic equipment for use in harsh environments. The technical language of the business may sound like Greek to most people, but it represents a technology that’s being sought after by customers from around the world.

Protokraft was started in the fall of 2003 by long-time friends Bob Scharf and Randy Lord. The pair — both engineers — had worked together in Florida and had started another business there in 1995. In 1999 the two sold that company to a large conglomerate, which in turn spun it off along with several other subsidiaries in an initial public offering in 2000.

Meanwhile the business started by Scharf and Lord had grown from 20 employees in 1999 to more than 120 by the end of 2000.

But it didn’t last. The following year, the Internet bubble burst, terrorists attacked American soil, and the nation’s economy took a nosedive.

“It got to be a very tense environment,” Scharf said.

Lord decided he wanted out and moved to Northeast Tennessee.

In 2003, Lord contacted Scharf, who was still working in Florida.

“He said ‘What are you doing?’ I said ‘I’m really disgusted.’ He said, ‘Why don’t you come up here to Northeast Tennessee and we’ll see if we can figure something out.’ So I did,” Scharf said.

The two decided to start another company in the newly opened Holston Business Development Center, a small business incubator at Holston Army Ammunition Plant.

“It had everything we needed, and proved to be a very simple way to get off the ground,” Scharf said.

The hard part was figuring out what their new business venture would do. Scharf said he and Lord knew they wanted to try something different from anything in the marketplace.

“We choose not to copy something and become the third or fourth or fifth supplier in the market. We decided we wanted to do something really new,” Scharf said.

Scharf and Lord had lots of ideas for the business, but they weren’t sure which idea would find traction.

Meanwhile, they needed to name the business. But since they weren’t sure what they were going to produce or offer, “we picked a name that absolutely had no meaning at all” — Protokraft, Scharf said.

“Now proto in Greek means new, and kraft in German means strength, so we saw ourselves as new and strong,” Scharf said.

Scharf had spent most of his career in technical marketing, selling components in the electronics industry. Lord had been a design engineer and had worked in the defense industry.

Together, the two started brainstorming ideas for their new venture. One idea was to enhance the way customers in the military and commercial aerospace industry implement high-speed fiber optic links. Scharf said much of the commercially available components were not built for use in typical military applications. So he and Lord began creating pictures and models of what they were conceptualizing. They took their ideas to some experts in the industry.

“The immediate response was ‘You’re out of your mind.’ There were no startups in this industry,” Scharf said.

But the two engineers were determined. And just a few months after starting their new business, they received a phone call from one of the major Army bases — not Holston Army Ammunition Plant.

“They were having a problem with something and somehow they heard we were in startup mode, and wondered if we would come talk to them,” Scharf said.

The two didn’t have any product to show — just ideas to share.

“We showed them what we were working on, and it was the most unexpected reaction I ever saw — they said, ‘Ok, how soon can we get one?’ It turned out to be a major project — millions and millions of dollars that we’ve shipped over the last six or seven years and continue to get orders for,” Scharf said.

Asked what the project entailed, Scharf said he couldn’t give specifics because of the sensitive nature of the defense business. However, he did say the project involves producing components for rockets launchers.

He said the project allowed the company to fund the development process, build its facilities and hire technicians.

“Many people at the Army have told us it was the most successful project they have ever produced. They told me that they’ve shipped tens of thousands of these systems into the field and never had a single one fail,” Scharf said. “It was a giant gold star for everybody that was involved in that process.”

It’s been seven years since Protokraft got that first contract. And today, the company is an established partner with all the major military and commercial aerospace subcontractors in the world, including Boeing, Airbus, Northrop Grumman, Lockheed Martin and Raytheon, Scharf said.

The company also has customers in Europe, Turkey and Israel, and expects to get orders soon from Brazil and Australia.

“We’ve now reached the point where instead of us proposing ideas to them, they’re coming to us and saying we really need something no one’s ever seen before, and you are the most likely candidate to build it for us,” Scharf said.

The company’s growth is reflected in its physical needs. Scharf and Lord started in the HBDC incubator in 2003 — just the two of them in one suite. As the business grew, they requested additional suites at the incubator, finally occupying 10 spaces at the 24-suite facility last year.

After six years in the incubator, the company moved into a standalone building on the property of Holston Army Ammunition Plant in late December. Protokraft now employs 20 people, and it’s expecting to employ up to 30 by the end of the year, Scharf said.

“We are actively recruiting even today for assembly people with certain technical skills,” Scharf said. “We’re probably going to be expanding and adding positions for a long time into the future because the potential for this business to grow is quite significant.”

Today, Protokraft’s products and solutions have been widely adopted in the commercial aerospace industry. Scharf said the entire next generation of Airbus jetliners is being built around Protokraft technology. He said a new jetliner which will take to the air in 2013 will include “substantial amounts” of Protokraft products. The most visible applications will be in the cockpit displays, where pilots will be able to see high-resolution graphics showing weather maps, radar maps, navigation data, route markers and other information during their flight. The displays will also include inputs from security cameras, allowing pilots to see what’s happening in the passenger cabin. Protokraft technology will also be installed in cameras mounted on the wings outside the aircraft, giving pilots a better view as they’re taxiing down the runway. And security cameras will be mounted in the wheel wells of the aircraft to prevent stowaways from climbing aboard, Scharf said.

“Protokraft technology is imbedded in all of these systems,” he said.

“And the reason it was selected — it was the smallest, lightest, highest performance option. Our technology was chosen after a very extensive search and evaluation. That’s an example of the kinds of things we are doing for our customers,” Scharf said.

On the military side, Protokraft is developing components for use in next generation missile defense systems for the U.S. and other foreign governments, Scharf said.

The company’s work will also be used in next generation ground and naval radar systems, next generation image surveillance systems, and unmanned aerial vehicles and fighter planes, Scharf said.

“All are dependent on Protokraft technologies all developed and produced and shipped from this facility here in Kingsport,” Scharf said.

“Some of the things we’re doing now are really state of the art. We’re compressing things into spaces no one ever envisioned you’d be able to get that much electronics into such a small space. There are all kinds of things going on here that people would never believe,” he said.

In addition to the defense and commercial aerospace industries, Scharf and Lord are looking at other potential opportunities to grow their company. Scharf said other industries such as those involved in oil and gas exploration, railway transportation, and coal mining all must transport large amounts of data in harsh environments. He said Protokraft technology is uniquely suited to perform in that type of environment.

The company is also hoping to expand its sales and marketing coverage geographically by establishing relationships in other parts of the world, such as Brazil, South Africa, Japan and Korea.

Protokraft is also continuing to invest in research and development projects. “We were wondering when we started in 2003 if we could keep expanding the idea past it’s narrow little original starting point,” Scharf said, referring to the company’s initial project. “Now we’re finding there’s just so many opportunities we see to take the basic idea that we started with and keep expanding as we go along.”

The security camera industry is another big opportunity. Scharf said Protokraft has been asked to take its technology now being incorporated into aircraft security cameras and use it in other security camera applications, such as cameras along highways, airports and railway stations.

“It’s another opportunity that we’re being dragged into by our business partners because the same people that make the cameras for the jetliners make them for these security applications,” Scharf said.

He said the company has plenty of room to grow at its new building on the HAAP property. And if it eventually outgrows the space, it’s hoping to find additional square footage at HAAP. Scharf said the Army and BAE Systems — the operating contractor at the Army ammunition plant — have expressed a willingness to work with the company should its space needs increase.

Ironically, while Protokraft supplies component products made in Kingsport to BAE operations in the United Kingdom, Australia, and other parts of the U.S., the company does not supply products to the local BAE operations.

All of its products manufactured here are shipped to other destinations around the globe.

Asked if the company has considered moving its operations from Kingsport, Scharf said that’s not being considered.

“We’re perfectly happy here in Kingsport and have no reason to think about moving,” he said.

Protokraft has been recognized locally for its efforts. The company has twice won the Small Business Start-Up Contest sponsored by the Kingsport Office of Small Business Development & Entrepreneurship. And Protokraft was given a TechStar Award from the Northeast Tennessee Technology Council in 2004.

But Scharf said the company isn’t seeking awards or community recognition.

“This succeeded not because we were smarter or harder working or better people — we just happened to be in the right place at the right time,” Scharf said. “We were just standing on the right square when our number came up.”

For more information, visit the company’s Web site at www.protokraft.com.

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