Study: 1 percent of companies add 44 percent of jobs
The Apak Group, a Dauphin County software and information technology company, is moving into a new 2,500-square-foot office this May.
A construction crew is finishing office walls and central air duct work in the space on the second floor of the Hershey Center for Applied Research in Derry Township.
It's an exciting time for Apak's executives, who cut their teeth in 2008, right about the same time the economy slid further into recession.
Apak, which writes software and IT solutions for facility management, records keeping, manufacturing efficiency and system monitoring, has been growing about 30 percent a year and steadily added employees for the past five years, President Bob Adams said.
"(Companies) are jumping at the chance to be the next facility," Adams said.
Apak is part of a small but influential group of high-growth companies, called "Higros" for short by the Team Pennsylvania Foundation that's been studying them for several years. Higros are companies growing employment twice or more in five years, according to a study by the foundation, also known as Team PA.
Higros, representing slightly less than 1 percent of all business establishments in the state, are responsible for 44 percent of the net hiring between 2005 and 2010, according to the Team PA study.
"Maybe we should be spending our time and money learning more about these high-growth companies," said Matt Zieger, Team PA president and CEO.
Essentially, the study points out that the constant growth of small and medium-size companies has a far larger impact on the state's economy over a sustained period than the one-off large job announcements that many politicians favor, Zieger said. Although those large one-time events are important, they make up a much smaller segment of ongoing growth, he said.
"When was the last time you read a press release about a company that hired two people every quarter year after year?" Zieger said.
Apak isn't much different than some of those Higro companies the Team PA study talks about.
It started with four partners: Adams, Todd Plummer, Mark Kraenbring and Frank Aponte. It's grown at least twice in the past five years, adding two software engineers and a contractor to work on IT build-outs at client facilities such as Lancaster County-based Turkey Hill Dairy Inc.'s ice cream plant, or Colorado-based WhiteWave Foods Co.'s soy-milk plant in New Jersey.
Last year, Apak added a director of client relations to develop business outside food processing. Within the next year or two, Apak could hire another client relations associate and software engineer, Adams said. It's targeting 40 percent growth for 2013 and would like to add four to five people in the next five years, he said.
"We go through our month-to-month cycles like anyone else, but it's been sustained growth," Adams said.
Team PA is finding there are some common traits with Higros even though they are fairly representative of Pennsylvania's diverse industry demographics, Zieger said.
Higros have a greater representation than other companies in the manufacturing sector, according to the study. Lancaster, Lebanon and York counties are among the top counties for the number of manufacturing Higros. They are also more represented in the medium-size brackets than the general population of companies.
They're more likely to export their goods and services and change their industry classifications to adjust to market conditions, new products and new business directions, Zieger said. Essentially, Higros are adaptive companies, he said.
Apak, too, is looking at business outside the U.S., as well as using the problems of one client to design software products that will be useful for all its clients, Adams said.
"For economic development and policy makers trying to help job creators, (Higro information) is really the Holy Grail," Zieger said.
In time, it could mean changes to how the state manages economic development initiatives such as industry clusters, a state-industry partnership to address industry growth, job training and other issues.
Team PA works closely with Gov. Tom Corbett's administration on issues involving the intersection of business and government to improve the state's economy.
"Higros are definitely part of DCED's and the governor's strategy for economic development," said Steven Kratz, spokesman for the state Department of Community and Economic Development.
Policies and proposals that help small businesses navigate regulatory processes, tax reforms and helping companies with innovation, commercialization, incubation and marketing take some cues from findings about Higros, he said.
Good management, re-evaluation of your company, and looking for new products and markets is really the key to sustained growth, Adams said.
"We don't want to go out and attract 100 clients overnight and not be able to deliver the systems," he said.
By the high numbers
Higros, or companies with more than two staff expansions in five years, are an influential part of Pennsylvania’s economy, according to a study by economic statistics company Outlier and Team Pennsylvania Foundation. Here’s a look at Higros by the numbers:
Higros as a percent of Pa.
establishments: 0.9 percent
Number of Higro establishments: 6,951
Jobs created, 2005-2010: 112,050
Percent of net Pa. jobs: 44 percent
Higros sales 2010: $3.9 million
Higro sales change from 2005:
Other company sales 2010: $996,697
Other sales change from 2005: -28 percent
Higros by industry sector:
Services: 84.5 percent
Construction: 10.3 percent
Manufacturing: 7.8 percent
Agriculture: 0.6 percent
Mining: 0.1 percent
Top local counties by percent of manufacturing Higros:
Lebanon: 14.5 percent
York: 11.6 percent
Lancaster: 8.9 percent