War is a self-perpetuating growth industry and history books are crowded with the names of arms and munitions vendors who profited in its wake.

But backers of a Calgary-based manufacturer of protective ballistic armour are reaping major financial rewards with a clear conscience.

Because the products emerging in record volumes from the Ceramic Protection Corp. facility in northeast Calgary don’t kill, maim or mutilate. CPC produces lightweight ceramic body and vehicle armour hat protect the lives of soldiers and civilians every day in virtually every international troublespot, including Iraq, Afghanistan and Israel.

“We know the end-users are the good guys. That’s the important thing,” said CEO Ron Wallace, a devoutly non-militaristic chemist who’s got an over-achieving tiger by the tail.

Larry MacDougal photo, Business Edge
Chief executive Ron Wallace of Ceramic Protection Corp. displays a finished sample of the bullet-stopping ceramic panel as a load of unfinished panels waits to go into a kiln at the rear.

Since December, when company shares were trading for about $2.50 apiece, the price of CPC stock (CEP-CDNX) has more than tripled on the heels of five successive quarters of rapid growth. Buoyed by almost insatiable demand from the U.S. military, sales jumped to $17 million in 2003, up about 400 per cent from the previous year.

Yet, by Wallace’s own admission, Ceramic Protection Corp. was a company in trouble as recently as three years ago. Markets were flat and, after the horrific shock of September 11, they fell even flatter.

“It was a terrible year for us. After 9/11, all the big military clients around the world kinda pulled back, as if they were saying, ‘Holy smoke, it’s a brand new game,’ ” Wallace reflected.

But as the year wound down, the Canadian military (the company’s best customer at the time) came to the rescue with a nicely timed $2.5-million order.

It came close to salvaging the year.

“Then the U.S. Army effectively bought out the world’s supply of ballistic ceramics for the next 14 months,” Wallace added the kicker.

That sudden and urgent demand coincided with the company’s earlier efforts to forge strategic alliances with several large, U.S.-based defence conglomerates that supply the American military.

“We tremendously expanded our marketing and sales effort to position ourselves with these so-called Tier One military suppliers in the States,” Wallace explained.

“You give them good service and then they start to trust you,” he said, “because when the bullets are flying, you have to be prepared to make your deliveries on time.”

The strategy paid off. By the end of 2003, Ceramic Protection’s 68 employees were exporting 99 per cent of their protective armour plates in response to the astonishing surge in demand.

In an effort to streamline production and increase capacity, meanwhile, CPC managers undertook an exhaustive review of each phase of the company’s manufacturing and assembly process.

“We’ve gone through every stage of our manufacturing component,” said Wallace. “We’re now producing four times what we were capable of doing even a year ago.”

At the same time, corporate R&D continues at a hectic pace as the company strives to respond to requests for even stronger and lighter armour.

Fashioned from an exceptionally pure and resilient ceramic compound, these lightweight (2.7 kg) protective plates are produced nowhere else in Canada. And they do an amazing job. Almost diamond-hard, the remarkable ceramic plates are able to repel six to eight direct hits of shrapnel or rifle fire, while stopping armour-piercing bullets that would cut a 50-mm steel plate to ribbons.

“It’s a billion-dollar market,” said Wallace. “We’re trying to position ourselves to (corner) one per cent of it.”

While striving to keep pace with orders from the U.S. military, Ceramic Protection Corp. is simultaneously mounting a marketing drive to sell protective gear to police departments.

To that end, the company has developed a new flak jacket fitted with armour plates designed to replace or augment the soft-body armour currently worn by 90 per cent of North America’s 950,000 police officers.

Of course, Ceramic Protection Corp., now sitting on “significant” cash resources, has benefited immeasurably from the expertise of certain partners who came on board when the company went public in 1996.

Murray Edwards’ company, Edco Financial Holdings Ltd., remains the most significant stakeholder in Ceramic Protection Corp. and Larry Moeller, Edco’s VP of finance, sits as chair on Wallace’s board.

“We’ve received tremendous assistance from them. They are so focused and disciplined,” testified Wallace.

With the help of Edwards and Moeller, Wallace and his management group have learned a valuable lesson, to wit:

If you look after your earnings, your production and your marketing, your share price will look after itself.