David Granado’s DA Defense Logistics HQ is another one of those El Paso companies that has gone from nothing to the big time in a relatively short time without attracting much attention at home – until this year.
Granado’s company fixes things and keeps them working for the Army, from massive M1 Abrams tanks and the vehicles that transport them, to sidearms and everything in between.
With 461 employees, DA Defense also maintains various federal and state agencies’ equipment and facilities. It also operates overseas with U.S. forces, especially in the Middle East, making sure they have what they need.
Granado, 44, is a retired chief warrant officer from Deming, New Mexico. He started DA Defense in 2009 with nothing but a keen understanding of what the Army needs and an appreciation of federal regulations that would help him help the Army.
“I walked into every bank in El Paso,” he said. “Everybody refused me.”
This year, the Small Business Administration recognized Granado, naming him its Small Business Person of the Year for the El Paso District and runner-up for the agency’s 2017 state title.
And Inc. Magazine has taken note of the company’s 1,331 percent growth in the past three years, ranking DA Defense at 333rd in the nation for growth. The company had earnings of nearly $22 million last year.
DA Defense will top that this year, but it’ll mean working long hours and six-day weeks to keep up with demand, Granado said.
Stationed at Fort Bliss in 2001, Granado was deployed again and again to the Middle East where he made sure troops had equipment that worked and represented U.S. interests in dealings with foreign leaders.
“I just kind of went and came, went and came back, and then never left El Paso and retired,” he said.
He found El Paso was a great place to start a logistics business because he knew Fort Bliss and the training and combat needs of its units and soldiers so well.
The company now has offices in California, Arizona, Texas, Georgia, North and South Carolina, Kentucky, Tennessee and Virginia. It also has operations in Hawaii, Germany, Japan, the U.A.E. and Kuwait.
Granado sat down with El Paso Inc. and talked about how he grew the company, how the Army is taking back the logistics and maintenance work it started outsourcing a little over 15 years ago and what that will mean for his company.
Email El Paso Inc. reporter David Crowder at email@example.com or call (915) 534-4422, ext. 122 and (915) 630-6622.
Q: You’ve flown under the radar in El Paso, but this year you were named the SBA’s El Paso District Small Business Person of the Year and one of McDonald’s Hispanos Triunfadores. What do you think of the sudden recognition and why now?
I’m also part of the El Paso Hispanic Chamber of Commerce and the president elect of the 8(a) & Government Contractors Association here in El Paso.
In being part of all of those, we always want to look and recognize others. So, the Hispanic Chamber of Commerce just called me and said, “Your growth and charts are off the wall. We brought in all these companies, and you ranked right up there in the top one or two when it comes to growth, and you’re spread across the globe in what you do and employee and revenue growth is over 1,000 percent every year. So, we’ve got to do something on you.”
Q: It seems the Army prepared you for this line of work. Tell us about your career.
I retired as a chief warrant officer 4. I started off enlisted as a mechanic and went up the mechanic ranks enlisted, and then about eight years in, I went over to the warrant officer ranks. There, you take on whole new areas of responsibility. All of a sudden, 20 things are your responsibility, not just one or two.
Being a logistics officer, one of the things I was charged with was ensuring that the logistics needs of a soldier were met. We moved soldiers around the United States, relocating strategically for different reasons. I was always at the forefront of that, ensuring that they could move there, sustain themselves, train and be proficient and ready to go.
That eventually became doing it in other countries as well. Doing that all over the place is how I got my skills and what DA Defense does now.
Q: As you talk about the success of your company and growth, I wonder, did you come into this at just the right time and place?
Honestly, I don’t think it was the right time. I think it was the years of experience and education in the field, and knowing your place and who the key players are in this industry. Then, it was mimicking what the big players do in a small package. Being able to make decisions on a Day 1 and change things on Day 2 is a little bit hard for large companies.
Q: We heard that you led negotiations for the government with the King of Jordan while you were in the service. Were you often in the role of representing U.S. interests?
Yes. I recently went to the United Arab Emirates where we are training their army on U.S. tactical equipment they have purchased through a treaty. Once that happens, U.S. companies are authorized to train them to repair that equipment. That is what we do.
Q: When did you realize you could turn your Army career into a business opportunity, and how did you get started?
The getting-started piece was the hard part. I realized it in my last year in the service. I had a few job opportunities put in front of me before I even retired. Large companies came knocking and wanted me to assist them. I realized that if I do this on my own, and do what they’re doing and mix it with what the needs are of the military and Defense Department that I would have the luxury and freedom of not only taking care of them but their families as well.
Q: What was hard about getting started? It must be an expensive business to get into.
It is. I walked into every bank in El Paso. Everybody refused me. I spent the first year after retirement not working or promoting the company. I spent the first year doing two things.
One was forming and establishing the company correctly to meet the government’s requirements. Second, I spent that year traveling across the U.S. and to other nations, knocking on people’s doors, telling them who I was and what I was doing. They were mostly people I knew before. I spent 21-plus years in the military traveling the world, so I had some good contacts.
Q: Who finally gave you the capital that you needed to get started?
Nobody did. We are self-funded.
Q: How did you do that on a warrant officer’s retirement?
Obviously, that didn’t do it. Part of it had to do with knowing the government rules. The Small Business Administration has an encyclopedia of rules and regulations to help small companies. If you can look it up, you’ll find there are, in small clauses and fine print, rules that sway toward the small business to help them. You can also ask for an advance, and it’s pay as you go.
Q: The government itself helps finance your operation?
Yes. The government appreciates it when a company comes and knows the rules and they request what they’re supposed to request in accordance with the rules. If the company comes and says I can do this, here are my qualifications, but here is where I need help, nine times out of 10, the government will help you so you can help them.
Q: But you have to master the bureaucracy.
Q: When you founded the company, what did you start with?
There was a contract with the government that involved what is called pre-disposed training equipment. The program was designed to refurbish this equipment, make it useful and put it back into the Army inventory. They had training equipment that continually got used and abused. Soldiers train real hard with it and then put it back on the lot. It just gets torn up.
We came up with an idea to repair that equipment to the minimal level where it’s safe and operational, so they can continue to use it instead of getting new equipment. When that program came together, it was exactly what I used to do – maintaining equipment.
I went out and found mechanics who knew how to do this kind of work. I spent every day with them, doing performance reports that I’ve done for 20 years. My first crew started with three people and then went to six, and within six months, we were at 33 employees.
Q: What did you work on?
Q: So you grew fast from the start.
Yes. But there is such a thing as growing too fast. If you want to be sure you cover all the angles and all the risk, you’ve got to do it at a moderate pace and you’ve got to know when to slow down and get things right and then move forward again. My first year was pretty slow.
It wasn’t until the second year when we had people and profits in place that we could accommodate the growth. So we let it come in at 20 percent and then 30 percent, and then we doubled one year and then doubled again.
This year, we doubled again, and our plan is to double in size every year. Unfortunately, we’re pushing work away so we can stay on that path. But it seems like we’re going to hit another growth spurt this year that was not anticipated. We’ve been working overtime six days a week for about the past three months.
Q: Do you see DA Defense becoming a big company?
I am trying extremely hard not to make it a large company.
Q: Why stay in El Paso if much of your work is somewhere else?
It would have been very easy to go to the East Coast where the large companies are. However, I thought the way to minimize risk, since I was so familiar with Fort Bliss, was to stay here.
Q: What does your company do here now?
We do a couple of different things for the Defense Department in this area. At Fort Bliss, we do everything that has to do with scheduled and unscheduled maintenance on tactical equipment. That’s everything from a small generator, to a Humvee to an M1 Abrams tank. We tear them apart, rebuild them, test them and issue them back out.
The 1st Armored Division is the largest division at Fort Bliss and one of the largest in the U.S. Army. We have serviced at this point about half of their equipment. The numbers are in the thousands.
Q: The Army’s got to be doing some of this work on their own. They can’t rely on an outside, private company in a wartime situation for the repair of their equipment, can they?
No. They don’t rely on it entirely. However, I will tell you just from having firsthand knowledge of this, the Army has a priority and that is to fight a war, train and be certified in what they do.
Their primary job is not to repair a vehicle. So, when they do go to train and their focus is on training, somebody’s repairing and getting their equipment ready for it as well.
Q: Wasn’t there a time when the Army did all this on its own?
Q: When did that stop?
Around 2001 when the Gulf War was beginning. Before that, I was a mechanic and a warrant officer, and we did probably 90 to 95 percent of the work on our own. When the pace picked up and the U.S. presence in the Middle East grew, all of the other tasks that a soldier does became second, third and fourth priority, which is where industry moved in and filled those voids.
So, that’s when it happened – because the soldier was out there doing other tasks.
Q: So we won’t find someone like you in the Army today?
Q: You learned how to do all of these things in the Army and did it for a soldier’s wages. My hunch is it’s a lot more expensive today, and the chain of training in the Army was lost.
Yeah, it has been. There have been a lot of studies and articles about the expertise in the military that has gone away. Now, the Army is going back and saying let’s do our own work.
Q: The Army’s going take it back?
The Army’s sort of going back to that, but it’s going to be a transition that’s going to take another 15 years to get back to where it was again. So now we are in training mode.
Q: What were your earnings last year and what are you looking at this year?
Last year, we hovered at just about $20 million, and this year we’ll be hitting close to $30 million.
Q: How much of the work is for the military and how much is for civilian agencies?
We do very similar work. For example, here in El Paso, we have another facility on the Eastside, a four-acre facility. We are also an Oshkosh service and warranty center. Oshkosh is a manufacturer of most of the military tactical vehicles. We service more than 8,000 vehicles in our area.
We also do similar work for the Border Patrol, Immigration and Customs Enforcement, Department of Homeland Security and for the El Paso Intelligence Center. If it is a government agency of some sort, we service equipment. All the border crossings from Presidio to Arizona have equipment, lifts, air compressors and we service all the border stations.
Q: How much does one of your tank mechanics make in a year?
A tactical vehicle mechanic makes $85,000 a year.
Q: Do you think you’ll ever go public?
I guess that might be the next chapter. But I’ve not sat down and talked to anybody about that yet.