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For a company and its owner, a long climb back

Carl A. Bannwart says Power Magnetics is finally on a growth path.

Carl A. Bannwart is so uncomfortable with attention, his decision to wear a pink shirt seems like a courageous step.

Until, that is, the 58-year-old president of Power Magnetics Inc. starts talking about the business challenges he has endured the last 10 years. Then his grit truly becomes evident.

So, too, do the rigors of the hard-bitten world of U.S. manufacturing, where longevity no longer guarantees survival, and innovation and modernization have become essential for thriving.

For decades, the going has been a torturous road of lost work to foreign competition and punishing economic downturns. Only recently has the misery on the factory floor started to ease.

Most area manufacturers have reported increases in product shipments and new orders since September, according to a Federal Reserve update on economic activity issued last week. But those promising results were not across the board: Makers of testing/measuring instruments reported gains, while those in construction-related products characterized demand as flat or declining.

Power Magnetics' Bannwart stepped out of his comfort zone one afternoon last month to declare, before a gathering of 100 employees, vendors, family members, and local officials, that his transformer-manufacturing company is finally on a growth path. It was a belated 40th anniversary celebration for the Trenton company, founded in 1968 by his late father, Carl T. Bannwart.

"Today, it feels like we are just getting warmed up," an impassioned Bannwart said.

A decade ago, he wasn't even sure he cared enough to save the business.

His confidence was rocked by product failures. His company had antiquated equipment and processes, and was losing ground in an increasingly competitive market.

During recent interviews at the factory and in his kitchen in Lower Makefield, Bucks County, Bannwart was extraordinarily candid about Power Magnetics' near-collapse, his related emotional breakdown, and the climb back for both.

His motivation: pride in surviving. His hope: that struggling small-business owners will conclude "there's a lot to be said for . . . not giving up."

The beginning of what almost was the end for Power Magnetics came one week in August 2000, when two customers - in Mississippi and Illinois - reported failings of its transformers.

For Bannwart - whose father died in 1975, leaving the then-recent college graduate to run Power Magnetics with his mother, Elinor - the product failures were personal. The resulting six-month depression was so severe "functioning was difficult," he said.

A doctor helped mend Bannwart's emotional wounds.

To cure his business ills, he turned to someone he had shielded from the day-to-day details of Power Magnetics: his wife, Ilene Pearl Bannwart.

They met as members of Philadelphia's Singing City Choir in 1984 and married three years later. While he ran Power Magnetics, she worked in corporate and foundation giving for the Philadelphia Orchestra, and later in patient advocacy at Graduate Hospital. After the couple adopted their son, Carl R., in 1992, Ilene Bannwart took a career break to raise him.

The family was at the Lower Makefield pool in August 2000 when the disheartening news came: A $100,000 transformer in use in a Mississippi oil-drilling operation was giving off fumes that made life on the work boat unbearable. The transformer had been shipped from Power Magnetics before the varnish on it had set, Carl Bannwart said.

Within days would come an allegation of performance failure by $200,000 worth of Power Magnetics transformers used in the testing of diesel engines in Illinois. A two-year legal battle over blame would end in a private settlement.

"Just devastated," is how Ilene Bannwart described her husband's reaction to the one-two punch. "There were times when he thought he should just throw in the towel."

She had not developed the company affinity that essentially was part of her husband's DNA. But as the daughter of a paint-and-wallpaper chain store owner in St. Louis, she knew well the pull of a family business.

Allowing her husband to walk away from Power Magnetics was not an option. She urged him to rally and agreed to help. Yet when she arrived on the scene there, what she quickly concluded was: "We weren't quite ready for prime time."

Recognizing her own limitations, Ilene Bannwart brought in business consultants: one private, one through a New Jersey state agency.

The private consultant, Joe Menard, said he found in Carl Bannwart a business owner "innovative in product development," but paralyzed by the product failures, "because you don't want to make another mistake."

Among the changes Menard said he recommended, and Carl Bannwart implemented: replacing Power Magnetics' production manager, legal counsel, and accountant; adding new equipment to streamline production; and improving inventory and cost control. A $500,000 state economic development loan helped finance some of that.

Counterintuitive though it might have seemed at a time of zero profit and dwindling orders, Menard urged Bannwart to spend money on sales and marketing "in order to reach beyond what you are currently doing."

That meant visiting customers and reestablishing contact with those who had not done recent business with Power Magnetics.

That the company and Bannwart were having problems was news to three clients contacted by The Inquirer last week, in Wisconsin, Kentucky, and Quebec. Each has been doing business with Power Magnetics for more than 10 years; none said it has ever had a problem with the company's products.

The customers praised Carl Bannwart's technical expertise and his ability to meet any deadline, no matter how tight. Their confidence in the company is no less solid now that they are aware of the problems it has had, the customers said.

"My hat's off to him that he's had his troubles but continues on," said Stephanie Fritz, purchasing manager at Thermex-Thermatron L.P., of Louisville, Ky., which builds radio-frequency heat-sealing equipment. "That makes me like him even more."

As part of continuing on, Bannwart has forged new markets for Power Magnetics, in part by tapping into the burgeoning alternative-energy market, where transformers are needed for wind turbines and electric cars.

Power Magnetics' payroll - down to nine at the height of the chaos - is now up to 30 employees. Bannwart expects to double that and the plant's production capacity in the next two to four years.

Annual sales are close to $10 million; profits are back.

Which means Ilene Bannwart has returned to her own career - these days, as a designer of high-end women's jackets under the iPearl label. She considers herself a wiser businesswoman from the Power Magnetics experience, having picked up pointers on a variety of topics, from product to customer relations.

Her husband, for so long feeling like just an engineer at Power Magnetics, finally has a sense of ownership - now that he's rescued the company.

"I feel now that I've accomplished something," he said.