Business People-Vermont: Ladd Research Industries Inc. John and Rita Arnott, John David (J.D.) Arnott

A Hole Life

by Virginia Lindauer Simmon

John, Rita and John David Arnott photoWhen their employer, the owner of Ladd Research Industries Inc., died and the company disintegrated into bankruptcy, John Arnott (right) and his wife, Rita, had enough confidence in their product to buy the company and carry on. Now nearly 15 years later, with the help of their son, John David (J.D.), their Williston business is riding the crest of the wave of interest in nanotechnology.

John Arnott’s guiding principle is this: Victory has a thousand fathers; defeat is an orphan

The Arnott family could have written a book on the “can-do” theory of life. It’s even possible they might do that one day to add to the lineup of books published by their company, Ladd Research Industries Inc. in Williston.

Not that Ladd Research is a publisher. Books — largely scientific reference and electron microscopy handbooks — make up only a tiny part of the company’s products. Ladd manufactures and supplies laboratories worldwide with microscope parts and accessories. Products include small tools, chemicals and equipment for research and quality control, and a line of biological traps for apple orchards to help reduce the use of pesticides. By far, though, the company’s signature products are the microholes it produces for use in X-ray equipment, satellites and other applications requiring ultra-small, high-quality apertures.

Ladd is the only company in the country that drills these microholes, which can be as small as 1 micron — a human hair is 75 microns in diameter — and are used on everything from electron microscopes to focused ion beam devices.

“Because of that,” says John Arnott, the chairman of Ladd Research, “we had this unique position in a very small market. Then as nanotechnology became a hot item in the late ’90s, we happened to be there, and that’s what really turned us around.”

The turnaround, though, is at the near end of the story of this family group — John; his wife, Rita, who is president of RAJ Communications International, the holding company, and does international sales; and their son, John David (J.D.), the president and CEO of Ladd Research Industries Inc.

John, a native of Kearny, N.J., and Rita, who grew up in Wayne, N.J., met through Rita’s cousin, who lived across the street from John. “He’s about seven and a half years older than I am,” says Rita, “but we were aware of each other growing up. We met again, when I was 19 and he was 26, and started dating.”

During the Korean War, John joined the U.S. Marine Corps out of high school. After his discharge, he studied business at the University of Maryland, worked at IBM for a number of years, and eventually was hired to teach business at Fairleigh-Dickinson University.

Rita had started college by taking classes at Rutgers, but left, she says, when she was “lucky enough to get a job in journalism with the Paterson Evening News in New Jersey.” She worked there for seven years, until J.D. was born in 1964.

The family was in Newark and John was working at Fairleigh-Dickinson when he was contacted by a recruiter for Ladd Research.

“Margaret and Bill Ladd — Margaret, actually — ran Ladd Research,” says John. “She was a brilliant woman who built the business when women were not building businesses — back in 1954. I had tremendous admiration for her; she was my mentor.”

Michael Bouchard photoLadd Research does some manufacturing, such as this vacuum evaporator being built for a laboratory at the University of Auckland in New Zealand. Michael Bouchard works on the $27,000 piece of equipment.

The Ladds needed somebody to set up a medical division for product development at UVM to measure intracranial pressure. “They wanted somebody to move up and develop a market,” says John. Realizing this was a good opportunity for him, he and his family moved to Charlotte in 1974.

Rita enrolled at Trinity College to pursue her delayed degree in English, which she completed in 1981. She made sure to take enough education courses to obtain her teaching certificate, and began a part-time career in substitute teaching, mainly at Charlotte Central School, she says, “but also all over Burlington and Shelburne.”

Margaret Ladd knew of Rita’s editorial background and hired her as a freelance textbook editor. “That was through RAJ, my corporation I set up,” says Rita. (RAJ stands for Rita and John.)

Things were going along nicely, says John, “and then Margaret died in 1984.” Bill Ladd tried to keep the company going, but Margaret had been the spark behind the business.

Within a year or two, Rita was hired to help in the office. By this time, the medical division had closed down, having been knocked out by big medical companies such as Johnson & Johnson, “but the electron microscope, the scientific end, continued,” says John, who had moved to that side of the business as vice president of sales.

“Unfortunately,” John continues, “Margaret’s husband passed on a few years later. They left no will and had no children, so the company disintegrated. As the company began to fade and people began bailing out, Rita came on full time to try to help out.

“We knew it was going down,” says John. “It was heavily in debt — it ended up close to $2 million in debt — so it went Chapter 11, and the courts were going to auction it off or shut it down.”

Considering the circumstances — theirs and the company’s — the Arnotts decided to take the plunge and submit a bid at the auction. They used Rita’s corporation, RAJ, to make the offer.

“If you have a bad product and go bankrupt, forget about it,” John says, “but if you have a decent product, well, some bankruptcies are not the fault of the product. You just can’t write off a company because it’s bankrupt. If people want to work at it and make some changes, you can come back.”

The auction took place in Rutland in 1992. Fortunately, the bids were low; the Arnotts bought themselves a company. “Frankly,” John says, “if the bids hadn’t been low, we wouldn’t have been in a position to buy it. The customer base had disappeared, 35 years of work had kind of disappeared, and I thought I’d just go in and bring the customers back, but that doesn’t happen.”

J.D., who had been studying journalism at the University of Vermont and then Emerson College, left school — gladly, he says, “because it didn’t really appeal to me” — and went to work with his parents. He took up the job of running the plant, keeping the books, and “all the minutiae that needs to go on.”

The first — and biggest — challenge was to reignite the base. “Researchers tend to look on the shelf and see what they bought last time, send a requisition to purchasing and say, ‘Buy me product XXX by XXX company. Because we had been essentially out of business for several years, we weren’t on the shelf.”

The Arnotts had to severely cut the employee base. Before the bankruptcy, the company had 30 employees and just under $4 million in sales. By the time the Arnotts bought Ladd, sales were down to less than $500,000, John says. Today, sales exceed $4 million, with 13 employees.

Ladd's research group photoLadd’s signature product is its microholes, drilled to 1/15 the size of a human hair. It’s the only company in the country to do so. From left are Casey Connor, manager of the microhole department; and Damir Husrefovic, Bill Doucette and Ron Peck, who do product development research.

“My expertise — what I’ve done, if I’ve done anything right — is picking the right people” says John. “I’m not a technical guy. We were able to maintain the top people in the corporation, but it was very difficult then because we didn’t have any money, but they stayed with it, and they had all the expertise.”

It took nearly four years, he says, to bring the company back to just half of where it had been. “We had to do it by going to a lot of shows, by telephone and the website.” Since they had no money, their chemist build the company’s website. “That really changed things,” says John.

A good website can put a company on the same footing as Microsoft, he says, and the microholes gave them a “unique position in a very small market. Then, as nanotechnology became a hot item in the late ’90s, we happened to be there, and that’s what really turned us around.”

Far from resting on their laurels, the Arnotts continued to watch for trends they might ride and listen to inquiries that come their way. Although the microholes are a major source of business, says Rita, the company does other manufacturing. “Right now, we’re building a vacuum evaporator for a customer at the University of Auckland in New Zealand — which came to us through the Internet, by the way.”

A recent inquiry led the company to begin carrying laboratory microwave ovens. “We do a chemical business,” says John. “Chemicals are cured in ovens, and a microwave oven will do it quicker. Our expertise is producing products, but we do a lot of resales now, and that is fleshing out the line.”

John, Rita and J.D. divide their responsibilities according to their talents. John and Rita cover the shows, because, says John, J.D.’s children are young. J.D. handles the major client meetings; John and Rita visit the major companies, traveling to visit customers around the globe. “We’re away a hundred nights a year, maybe,” John says.

“Rita and I are away a lot. We go to Turkey or Egypt or Italy for a few weeks, or somewhere we have to be, based on the need of a product,” he says. “If people know you, they’re less likely to forget you and go to the other guy.”

As the years progress, the senior Arnotts are paving the way for J.D. to take over the company when they retire. Asked if there is a plan for that transition, J.D. quips, in typical Arnett fashion, “Not really. One of these days, they’re just going to announce to me they’re stepping out. Then we throw a little party; then we move on. I should be able to handle it just fine.” •