Article

Flying under the radar

While helping to grow the kiosk business at Mercury Aircraft, Greg Swistak, former Factura Corp. president, has become a sort of celebrity through his low profile.

September 11, 2003

Greg Swistak, general manager of Mercury Aircraft Inc.'s kiosk division, told KIOSKmarketplacehe didn't realize so many people were wondering about him. "I've always tried to be straightforward and honest. I hope people don't have the impression that I was hiding," he said.

But that does seem to be the impression that some in the industry have had about Swistak, former head of Factura Corp., the first significant player in the industry -- a pioneering enclosure company that quietly closed its Rochester, N.Y. doors at the end of December 2002.

"A former Factura customer alerted me to their departure," said Francie Mendelsohn, president of Summit Research Associates Inc. "This guy wanted to order more kiosks from them. He went to the Web site and it was gone. He called their number and it was gone. It was bizarre."

Over the past year, the industry buzz has been that Swistak landed at Mercury Aircraft. He did join Hammondport, N.Y.-based Mercury in mid-January 2003. And Mercury has been humming along as a silent but significant player in the kiosk industry, having OEM relationships with the biggest names in the computer industry: Dell, Hewlett-Packard, IBM and NCR, along with Kodak and Waste Management. Mercury has been in the kiosk industry for some time, Swistak said, though the company calls many of its products "computer enclosures."

Mercury customers were not available to comment for this article, mostly because of the nature of their relationships. As an NCR spokesman said, "We usually present NCR to our customers as a single-source technology supplier and, as part of this, prefer not to discuss or promote our component suppliers."

Mercury, which recently had as many as 1,000 employees, is 10 times the size of Factura. "We have a lot more resources now, which I explain to customers," Swistak said. This quarter alone, the company will have produced 5,000 kiosks. Mercury also produces server racks, frames for telecommunications equipment, and enclosures for medical equipment. The manufacturing facility has more than 1.5 million square feet.

Glenn Neu, Mercury account manager, said Mercury had become interested in the kiosk industry right around the time "Greg was looking for an arm to swing to."

"We had seen the decline in high-volume manufacturing of PCs. We were looking for turnkey solutions with lower volume that we could do and not have to compete with the Asian markets," said Neu.

"Greg came in with a couple of engineers and brought Mercury to a level that not a lot of kiosk companies have," said Neu. Mercury handles complete projects, from design to fabrication, integration with components and even enclosure finishing like powdercoating.

Mercury also has 20 trucks, 30 trailers, and already travels the Eastern seaboard. The company has facilities in Mexico, Miami, Minnesota and North Carolina.

Greg Swistak

Mystery man

While helping to grow the Mercury kiosk unit, Swistak has become a sort of celebrity "Where's Waldo" in the industry.

Alex Richardson, executive vice president of business development for Netkey Inc., a former Factura business partner, said, "He slipped off the radar very quietly. I visited their factory a year ago in April. It was all state of the art, clean, and lots of units were being made."

Doug Peter, president of St. Clair Interactive Communications Inc., said, "I worked very closely with Greg. I have the highest regard for him. We used to watch the Buffalo Bills together. But I don't know where he has gone. We haven't talked for years."

Lawrence Dvorchik, executive director of KioskCom, said, "He seemed to disappear one day. I tried awfully hard to find out what happened. I had a lot of inquiries about Greg and Factura." Factura was a founding sponsor of the KioskCom show.

Dvorchik said, "Rumors have been abounding; from why Factura closed to rumblings about Mercury. I talked with a lot of people who said he might be making a play in the market. I hoped so because he was one of the founding members of the industry."

Added Peter, "I haven't heard anything about him making kiosks."

So why has Swistak maintained a low profile while, indeed, making kiosks? "There was a period where I think we felt any news was bad news. Mercury was also concerned about any fall-out from Factura. I think that's behind us," said Swistak.

And there were other business reasons, as well. "[Factura] had relationships with lots of small companies. We kept a lot of people extremely busy. But it wasn't profitable for us. When we changed, we made a conscious effort to be more selective in who we deal with. Publicity was not desirable. We just pursued OEM-type relationships."

He said, "On a more personal note, I think it took me a while to get over the failure and the effect on some of the people I considered friends."

Swistak said he tried to contact people he had spoken with regularly in the months prior to Factura's closing. And he kept in close communication with Factura's customers, offering Mercury's services.

Swistak agreed to speak with KIOSKmarketplacebecause he said that Mercury has focused, done well and has experience under its belt. "Now we are interested in new relationships. We are comfortable taking the next steps."

Neu added, "We are poised to be a manufacturer of large rollouts of kiosks for big companies."

History lesson

Factura began making kiosks in 1986. And its presence still affects the industry. "There are a lot of things out there now that we had a hand in," said Swistak.

In 1995, Swistak sold Factura to MicroTouch Systems in Mithune, Mass. "They were on a bit of an acquisition binge and we were a good fit for them," he said. By 2000, MicroTouch's stock was not performing well, and the company started seeking its own buyer.

Unfortunately, Swistak said, the market didn't value all the small companies like Factura that MicroTouch had acquired. Interest was in its core display business. Swistak bought Factura back from MicroTouch, and 3M bought MicroTouch.

3M held the paper on Factura, and the company was highly leveraged, Swistak said. "MicroTouch had made large investments in equipment, materials and people." Factura was profitable in 2000 and the first six months of 2001. Then came the technology bust and the decline in the economy.

Many of the large retailers on which Factura depended -- Sears, J.C. Penney, Kmart, Target and Wal-Mart, started re-thinking their capital investments.

By July 2001, Factura was doing mostly small jobs. Then the horror of Sept. 11 hit, and companies put their budgets on hold indefinitely. In January 2002, Factura began to experience losses, and Swistak opened his own checkbook to help the floundering company.

"It became apparent I couldn't do that for long. I asked MicroTouch, now 3M, if we could renegotiate, but they weren't interested," said Swistak. "When I bought the company back, the figures were based on sales levels three to four times what they had become."

By December 2002, Factura ceased operations. Swistak said he went to customers and told them about Mercury. "We tried hard to complete all of the open orders. We probably didn't do 100 percent, but we did the best we could." Mercury extended Factura's pricing initially.

Advice for the industry

What has Swistak learned from the Factura experience? "I still think there is too much production capacity for the need," said Swistak. "Consolidation will continue to be important."

But he added, "There is nothing wrong or unique about what we did. If sales had stayed stable, we would have been fine. We just ran out of gas."

Swistak is determined to become a visible member of the industry again. "I'm encouraging Mercury to make investments in shows like KioskCom and to become active in the industry. It probably won't be at the same level as before unless we see some real return on investment."

He said he is pleased with business at Mercury. "The company is not leveraged at all. We own all the equipment. We can weather a downturn. We are competitive."