CARS HOMES JOBS

‘Storm’  of ’09  and ’10  fatal  to C9

Shift in defense needs hurt Malta firm

Saturday, May 17, 2014
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— An advanced semiconductor R&D company that received $1.75 million in state funding to move into the Saratoga Technology + Energy Park in Malta is on its way out of business.

C9 Corp. primarily developed advanced semiconductor technologies and ceramic composites for the U.S. military. President and CEO Kevin Donegan says the company is currently undergoing a controlled liquidation and is in the process of finishing up missile defense work on two contracts.

“This is the tale of many small high-tech companies,” he said. “We thought we survived the storm of 2009 and 2010, but we didn’t realize we were mortally wounded.”

The recession was partly to blame, Donegan said. But the policies and priorities of the Obama administration also played a role.

“All of our customers were Department of Defense,” he said. “Our work was all defense-related. We had contracts with the U.S. Army and the Missile Defense Agency and the Air Force and the Navy. Things took a different direction in 2010 when Obama was no longer supporting defense contractors. He wanted to put all the funding into social services and environmentally correct businesses.”

Founded in 2005 from three different high-tech companies, C9 Corp. was largely focused on developing military-grade semiconductor wafers. In recent years, its focus switched to making ceramic missile engine components for the next-generation Standard Missile Three.

In 2007, then-Senate majority leader Joseph Bruno helped the company secure $1.75 million in state funding to move into the 280-acre STEP park in Malta. It occupied about 8,500 square feet of space inside a 107,000-square-foot facility owned by the New York State Research and Development Authority.

“I like to tell everybody we were the first semiconductor company here,” Donegan said, referring to GlobalFoundries’ arrival to the Luther Forest Technology Park next door in 2009.

Things got tough a few years into the recession, he said. During the company’s first few years, it won about 70 percent of the contracts it bid on, Donegan said. But after the recession, competition became fierce.

“When the economy tanked, there were a lot of people jumping into the business, desperate for work, bidding on contracts,” he said. “So now you’re bidding against hundreds, and our odds went down, down, down. And if defense spending had come back to what it was, we might have weathered the storm. As defense contracts were cut, people were looking to only do things they thought were critical.”

Donegan said C9 tried to win government contracts for environmental projects once it saw that that was where the money was headed. Some of the technology the company was developing had energy-efficient applications, he said, so in 2010 the company submitted a bid for a Department of Energy proposal and made it through five rounds before getting passed over.

“We spent $150,000 on the damn proposal because we had to keep submitting new paperwork for each round,” he said.

Donegan says the company also spent a lot of money over the years lobbying Congress to fund more defense projects. And when C9 did win contracts, it wasn’t unusual for the funds to be delayed.

The company employed five people, including Donegan, while most of the financial and legal work was outsourced. The current contract work should be done by August.

“It’s a little disheartening to see a company that’s been here for a while not make it,” said Pete Bardunias, president and CEO of the Chamber of Southern Saratoga County. “[Donegan] was here when I got here three years ago. We just hope that he does well in whatever he does next.”

 
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