What are SCMs and how can you use them to your advantage? A backyard enterprise evolves into a licensing force through its innovative products.
By Ron Hyink
Unless you observe a herd of Herefords stampeding through city streets, you might not make the connection between cattle and tall buildings – except, of course, when you’re talking about precast concrete. In fact, those two things – cattle and tall buildings – represent the earliest and the latest of a steady stream of innovative precast products that have been bringing home the beef to Smith-Midland Corp. of Midland, Va., for nearly 45 years.
Rodney Smith, president of Smith-Midland, gives due credit for the company’s start in 1960 to his father, David Smith. David was a dairy farmer who was reaching out for new ways to supplement his income when he struck upon the idea of cattleguards made out of concrete.
The cattleguard, which takes advantage of the skittish nature of cattle that dare not tread over one, has been a tremendous benefit to farmers and cattlemen by eliminating the need for a gate and, along with it, the concern that their livestock may stray off. With this arrangement, a farmer suddenly becomes exempt from having to get out of his vehicle, open the gate, drive up a few feet, then get out again to shut the gate.
Up until the time David’s idea became the first milestone for an upstart business dubbed the Smith Cattleguard Co., dairy farmers and cattlemen were relegated to making their own cattleguards. “The only competition was homemade cattleguards made out of pipes welded together and placed down on the road,” explains Rodney.
But the homemade varieties require plenty of labor to build and set in place, and they don’t stand the test of time. As for the precast concrete cattleguards, they are delivered to the site and installed, and they last practically forever. “So our company was born (with) the introduction of a product that nobody had used before,” says Rodney. The Smiths couldn’t have known then that Smith-Midland Corp., as it was later named, would continue to repeat its legacy of introducing innovative precast products and become a successful manufacturer and product licensor.
David succeeded in developing a product that could supplement his income, but he had no marketing strategy in place. “He didn’t really believe in telling everybody about it. He wanted to let people find out about it – and that was too slow,” says Rodney. After six months, Rodney joined in to help sell them. “I was still on the farm, but I was selling farm machinery for a living. So we combined my sales ability with this original product.”
Rodney’s first tactic was to take his grocery money and buy an advertisement in a popular magazine serving the cattle industry. Whenever an inquiry came in, Rodney showed up personally with photographs of the cattleguards. “And if they were the slightest bit hesitant because they’d not seen such a thing before, I would say, ‘I tell you what, I’ll deliver the product and put it in place for you, and if you like it you can send me the check,’” recalls Rodney. “All of a sudden, it changed into a no-risk proposition, and it was pretty easy to take orders.” With that bold offer, his closing rate surged to 90 percent. “And we never had a farmer who didn’t pay his bill.”
It didn’t take long for the precast cattleguards to command the attention of cattlemen everywhere. Soon Rodney was delivering the product to distant states such as New York, Michigan, Georgia and all points in between. In fact, the long-distance deliveries became a big issue such that a critical decision was looming: Reduce transportation costs by opening more manufacturing plants in the market areas. But Rodney took a different route, and that was to offer licenses for others to build the product.
“So that’s how we got into the licensing business, because it’s not economical to ship your products so far that the freight costs more than the product,” says Rodney. “By licensing other precasters, we were able to get the product into states like Texas, Illinois, Kentucky and Florida, and with local producers and local freight rates.”
Ashley Smith, Rodney’s son and vice president of sales and marketing, says there was a resistance among many precasters to take on a license to manufacture another precaster’s products (see the sidebar “License to Build”). “I think what we’re seeing now is second and third generation precasters are becoming very interested in licensing,” says Ashley, a veteran employee with the company for 20 years.
Barriers to success
Cattleguards weren’t the only product keeping the company going. Continuing its service to the cattle industry, concrete fencing and heated water troughs were added to a growing list of product offerings that gave Smith-Midland some solid footing in the industry.
Soon the precaster caught the attention of the local power company, which needed concrete transformer pads. “Somebody else was making them, but they only made them when they felt like it,” explains Rodney. Tapping into the transformer pad business paid off after a short while. “Then they came back and told us that they were putting underground utility vaults in Alexandria, Virginia, and asked us to make precast concrete utility vaults. That business has never stopped, and that’s been about 40 years.”
While these few products put Smith-Midland Corp. on the map, the company was just getting started. A business doctrine of improving and refining products was beginning to take shape. Suffice it to say that complacency was never a part of that doctrine. When Rodney started looking into the traffic safety barrier market, he made some improvements on an old theme and developed the first barrier rugged enough to be rented and reused. “Customers could call and order 10,000 feet of barrier, use it until the job was completed and then send it back,” says Rodney. “They wouldn’t have to own it, they wouldn’t have to stockpile it.”
Some 20 years later, those safety barriers, a tongue-in-groove design, transcended into the proprietary J-J Hooks, which feature a self-aligning system that allows them to be installed and removed quickly and to be configured in tight curving patterns. Since the company started issuing licenses for the J-J Hooks, precasters in countries around the world have been making them. Having traveled to 41 countries to investigate the precast industry on a global scale, Rodney confidently proclaims that these have become the largest-selling proprietary barrier in the world.
No getting around it
Traffic barriers and other security products have caught the attention of the U.S. government as well. Smith-Midland has been the go-to precaster for many federal contracts involving security dating back several years, and the post-9/11 world in which we live has revved up the company’s barrier production. “A long 20 years before 9/11, we have furnished concrete barrier to block off the side streets for the presidential inaugurations, and we worked for the Secret Service and the Washington, D.C., police for more than 24 years,” says Rodney.
The company’s most recent big-ticket job involved traffic barriers at the Republican National Convention in New York in August. As the NYPD pondered how to handle the security, it called the Secret Service who in turn called on Smith-Midland. The company subsequently delivered 125 tractor-trailer loads of concrete safety barrier to New York City, enough to totally encircle Madison Square Garden where the convention was held. “And when the convention was over, we took the whole 125 tractor-trailer loads and removed them.”
Matthew Smith, Ashley’s younger brother and sales manager of the company’s Utility Products Division, was on site for that demanding project. “That was big,” he says. Matthew, who has been with the company for 15 years, explains that the barrier project was unique in several ways. For one thing, the barriers had 2-foot-tall fences along the tops that would serve to contain pedestrian traffic.
Sally ports, or vehicular checkpoints, were also a part of the security controls. “Anybody who wanted to get inside Madison Square Garden had to go through one of these sally ports,” says Matthew. Several sally ports were placed around the perimeter of the convention site, and each sally port utilized two pop-up barriers to control access. As a car approached, the authorities would check credentials then lower the first pop-up barrier and motion the car forward, where the second barrier blocked further access. Once the vehicle was inside, the first barrier came back up. “Then they’d be stuck there in the middle,” says Matthew. The authorities could then screen the vehicle for explosives before lowering the second barrier.
The barriers once again proved their effectiveness, and Smith-Midland once again won the contract for January’s presidential inauguration.
Easi does it
Continuing the parade of Smith-Midland offerings for licensing over the years were products such as Sierra Wall sound walls and privacy fences; Durisol sound-absorbing concrete used with the Sierra Wall systems; Easi-Set transportable buildings; Sunspace passive solar homes; and Slenderwall architectural building panels. To support its licensees, Smith-Midland also created Ad Ventures, the company’s marketing arm. Smith-Midland opened a second precast plant, Smith-Carolina of Reidsville, N.C., as well.
Like the J-J Hooks, the Easi-Set transportable buildings, which the company started building in the mid-’70s, became a big hit. “After we had been licensing for a number of years and we realized the potential, we created a separate company called Easi-Set Industries exclusively for the precast licensing business,” says Rodney.
The Easi-Set transportable building concept started out as a modest 10 by 12 building. As Rodney puts it, a customer could get an instant building without having to dig footings, lay block, put up wood rafters and a shingle roof. “All they had to do is make one phone call and tell us where to put it.” New designs progressed over the years, and now the company or its licensees can deliver a precast building out of stock as large as a 40-foot Clear Span and up to 200 feet long.
With bigger came better, and Easi-Set buildings now offer heating and air conditioning, tiled floors, insulated walls, post-tensioned roofs and floors, and a variety of exterior finishes.
Up against the wall
Slenderwall is the most recent product offering the company has hung its name on – literally. Slenderwall is an architectural wall panel that hangs on the exterior of a building. The design combines a 2-inch-thick precast concrete panel with galvanized or stainless steel studs and isolates it from the building’s structural stresses such as high winds, seismic shock, and expansion and contraction.
Like the Easi-Set genre, the panels come in a variety of exterior finishes. Smith-Midland has added that special touch of beauty and style to highly visible places such as retail and entertainment developments in Times Square, the New Jersey Institute of Technology in Newark and the Marriott ExecuStay in New York City.
Rodney says products like these are helping the precast concrete industry remain competitive. “It’s pretty exciting because we’re changing the way people do business,” he says.
As an example, Rodney points out that the Slenderwall panel system is one-third to one-half the weight of a conventional competing product. And that plays a huge role where the soil conditions found in many cities are not perfect for building foundations, such as along rivers or coastlines.
“People have told us they had saved enough money on the pilings that they would have to drive to get the proper foundation to pay for half of the exterior wall,” says Rodney. The Slenderwall precast system allows old buildings to be renovated where the structure under most current building codes won’t hold heavy exterior cladding. “And guess what? The Slenderwall licensees are right in there, where we would have been left out otherwise.”
From the very beginning, Smith-Midland has come up with new and innovative products, one after the other. It’s no secret that each of its offerings has seen success to some degree. What will come next? Is there something new and innovative on the drawing board? Absolutely, say the Smiths. After 15 years of field testing and monitoring by marine engineers and state Departments of Natural Resources, Beach Prisms – an Easi-Set shore erosion control product – will be available soon for licensing.
Whatever product comes through the company’s production door, it’s sure to come with Smith-Midland’s personal touch of innovation and more licensing.