Everywhere. Every Day. With a low profile and more than 100 years of history, Elkhart's CTS Corp. has crucial products and services for a wide range of industries.

CTS CORP. IS HARDLY A household name in Indiana. In fact, it maintains a rather low profile in the state's business community as well. But for more than 100 years, the Elkhart company has grown into a global operation by quietly developing, acquiring and manufacturing a wide range of components and sensors that are used in the automotive, computer, communications, medical, industrial, defense and aerospace industries.

That's why the CTS motto of "Everywhere, every day" is no exaggeration and the company's annual sales are approaching $700 million with continued growth in a challenging economic climate. It's an impressive story of a company that came to northern Indiana in search of cheaper commercial and industrial space and found a place where it could grow into a global electronics manufacturer.

MAKING THE FIRST TELEPHONES

CTS traces its roots to Chicago, where it was founded as the Chicago Telephone Supply company back in 1896. In a time when most people still traveled by horseback, the company recognized that the new telephones were more than a passing fad and ramped up operations, moving to Indiana in 1902 to take advantage of more space and lower costs in Elkhart.

Through the rest of the 20th century, CTS kept pace with the rapid innovation in electronics and communications. In the 1920s. CTS engineers began adapting telephone technology to home radio receivers and developed a new line of variable resistors that served as a key product for decades. In the 1940s, the company manufactured remote radio and radar for the U.S. Army and then in the 1950s, it began supplying the emerging television industry

CTS went public in 1962 on the New York Stock Exchange, where it still trades under the CTS symbol. In the 1970s, CTS expanded out from the electronics industry and the company's products were used in vehicles to meet automobile emissions regulations and in medical devices, such as pacemakers. That was followed by the boom in computers and communications devices which took place in the 1980s and 1990s, increasing demand and competition for CTS products. And as the 21st century began, CTS found itself back in the middle of a rapid expansion of telephones as wireless communications took off.

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FOSTERING INNOVATION

"The success behind our long history of innovation and growth can very well be attributed to our focus on delighting our customers with the innovative use of our core technologies and manufacturing excellence," says president and CEO Vinod M. Khilnani, who assumed that position last year after serving as senior vice president and chief financial officer since 2001.

Khilnani, who has worked in finance, strategy and mergers in the U.S. and Europe and has more than 30 years of leadership experience, including 18 years at Cummins, says managing constant change in technology is important.

That ability to adapt to changes in technology and create new products has helped the company to survive in an industry where many others have not. Khilnani says continued innovation at CTS led to a diversified base of products, which include hundreds of electronic components, sensors and switches. He says that diversity helps the company in two ways, by limiting exposure to downturns in any one market while also allowing more opportunities for growth when another takes off.

"Diversification of product-mix and industry focus is an important lever to reduce volatility and risk for the corporation on the one hand and to provide growth opportunities on the other," Khilnani explains. "Today, we are essentially focused on two broad segments--components and sensors and electronics manufacturing services. In each of these two segments, however, we want our products to penetrate many different industries from automotive and wireless communications on the one end of the spectrum to medical, defense and aerospace to the other."

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That strategy still seems to be working as the company just announced its second quarter revenues increased to $186.1 million with net earnings of $10.0 million, compared to revenues of $169.6 million and net earnings of $5.9 million for the second quarter of 2007. Although its domestic automaker customers experienced a severe decline during the period, CTS saw offsetting growth from its relationships with Asian companies.

"We were pleased to report a strong quarter, driven by improved financial results across both segments and reflecting success of our diversification strategies," says Khilnani. "New global customers, many in Asia, new technologies and successful penetration of targeted markets such as defense and aerospace, industrial and medical are allowing CTS to better perform in an uncertain economic environment."

ACQUISITIONS

CTS is also expanding its operations by acquiring other companies that fit its specialized profile of material and process technologies.

Last December, the company completed the acquisition of Minnesota-based Alpha Ceramics Inc., a privately held company that provides piezo-ceramic materials for sensor and transducer manufacturers in military and aerospace markets. In January, CTS completed the acquisition of Arizona-based Tusonix Inc., a leader in the design and manufacture of ceramic electromagnetic interference and radio frequency interference filters, capacitor assemblies and related components.

"The company's decision on areas for expansion is frequently driven by opportunities to create synergies through broader applications of our core technologies," Khilnani explains. "Examples of that include utilizing our piezo-ceramic technology in medical, defense, and oil and natural gas exploration. Another example is to broaden our sensor and actuator technology from light passenger vehicles to motorcycles on the one end to diesel engines on the other."

A GLOBAL PERSPECTIVE

In addition to adapting to and developing its own technological changes in the electronics industry, CTS has also been one of the first Indiana companies to effectively take advantage of operating in a global economy. While CTS has facilities across the United States, it also has operations in Canada, Mexico, China, Taiwan, Thailand, Singapore, Scotland and the Czech Republic.

"A geographic balance is necessary to compete effectively and grow in today's global economy," Khilnani adds. "Many of our customers are global and they frequently require that CTS maintain a presence in other countries by manufacturing near their local operations and customer base, whether in Singapore, Czech Republic or China."

Looking to the future, he expects that CTS will benefit from the international relationships and markets that it has already developed.

"I believe there are attractive growth opportunities on all of the continents we operate in--North America. Europe and Asia, and CTS is well-positioned with an excellent global footprint to participate in the growth opportunities. CTS has already operated in Asia for over 40 years, and Europe for over 25 years. Macro trends driving growth in our sensors and actuator businesses globally include tougher emissions standards and increased fuel economy. Trends like explosive growth in wireless communication are also fairly global, creating opportunities everywhere, every day"

INVESTING IN INDIANA

To take advantage of opportunities in new technologies and expanding markets, CTS also invests in research and development, spending almost $50 million over the last three years. Current initiatives include research in smart actuators for light-duty diesel engines and in micro-technology for the electronic components piezo-ceramics business, which has applications in products such as miniature pumps and industrial inkier printer heads.

CTS is also working with Indiana universities to help develop curriculum that prepares students to enter a high-tech, global workforce. The company provided Indiana University South Bend's School of Business and Economics with $500,000 for the establishment of the CTS Center for Experiential Education last year.

"This donation is helping IUSB foster links between students and the business community by tailoring the education it offers to what the private sector needs, in effect helping to make the curriculum as relevant as possible," Khilnani says. CTS also donated the same amount last year for engineering scholarships to Purdue University.

Khilnani says the state is an excellent location for small and mid-cap companies that are seeking longterm growth.

"The environment in Indiana is very good to nurture you," he says. "I believe business will continue to be attracted to Indiana for its Midwestern values, its excellent communities, its natural resources and its great workforce. We need to aggressively market these benefits."

CTS Corp.

Original name: Chicago Telephone Supply

Established: 1896

Traded on NYSE: ticker CTS

Annual sales (2007): $686 million

Total employees: 5,800

Indiana employees: 450

Corporate headquarters in Elkhart: 100

Automotive headquarters in Elkhart: 350

Additional operations in: Arizona, California, Illinois, New Hampshire, New Mexico, Canada, Mexico, China, Taiwan, Thailand, Singapore, Scotland and Czech Republic