When precasters introduce new product lines, there’s always a learning curve – more frequently with selling than with manufacturing.
By Deborah Huso
Three years ago, McCann Concrete Products in Dorsey, Ill., decided it was time to introduce a new product line. Though the company has been in business for more than four decades, mainly in the department of transportation market, it was struggling with increasing cutbacks from customers in Illinois, Missouri, southern Indiana and Iowa.
“We decided we needed another product outside of highways,” said Mark Melvin, vice president of McCann.
The company’s products historically centered on highways, sound walls, barriers and box culverts. But its new product line with Easi-Set Worldwide placed the company in the prefabricated building market, which includes storage, wastewater treatment plants, electrical facilities and more. Most recently, the company constructed a 30-foot by 40-foot building in St. Louis to house a water utility.
Melvin said the production side of things went fairly smoothly, given that the company didn’t need to buy equipment or hire new employees, but things were a lot trickier learning to sell the new product.
McCann’s marketing challenge is not unique. When it comes to introducing new product lines, adding capacity, equipment and expertise is often secondary to the challenge of seeking markets and customers.
Glen Bowen, president of Piedmont Precast in Atlanta, Ga., faced similar challenges in marketing Gravix, Earth Wall Products’ DOT precast wall system, after adding it to his product mix. While retaining walls have always been a specialty of Piedmont Precast, Gravix offered an opportunity for the company to provide product to the DOT market.
Fortunately, Bowen said his company had an overlap in its customer base because it had specifiers who already worked for DOT customers. That allowed Piedmont to grab about 30 to 40% of its new Gravix contracts fairly easily, but the rest was more difficult.
Piedmont also had to cope with the challenge of a very slow market cycle for government work. “DOT work doesn’t happen overnight,” Bowen explained. “Sometimes it can take up to five years. This is not for the faint of heart. If it were easy, everybody would be doing it.”
That’s not to say Bowen would advise against starting a new product line for the DOT sector. “From a top-end standpoint, we see a lot of growth,” he noted. “The bottom-line growth is going to take more time.”
Eric Barger, vice president of C.R. Barger & Sons in Lenoir City, Tenn., saw an opportunity for growth by adding Stone Strong Systems’ precast blocks. While the company already had experience in retaining walls, the Stone Strong system allowed for taller walls. “We have a lot of hills and valleys in this area, so we saw a need for this product,” Barger said.
Like the others, Barger saw quoting, selling and marketing as the biggest struggles when adding a new product. In fact, he hired a new full-time employee to handle quoting, preliminary design and production management for Stone Strong projects.
“We initially quoted jobs based on square footage,” Barger said. “Then we saw the pitfalls of doing that.”
What they found was that they often had to do work above and beyond wall installation, such as soil stabilization work behind the walls.
“We had some guidance from Stone Strong, but the form manufacturer can’t give you total guidance,” Barger said. “We also ignored some of the guidance, because we thought it wouldn’t apply to us,” he admitted, noting that he didn’t fully anticipate the learning curve of quoting and marketing a new product until he was in the thick of things.
Barger marketed Stone Strong through radio ads but mainly by offering continuing education opportunities for architects and engineers. The company hosted events to teach industry professionals about the new product, and, in turn, the engineers and architects received education credits for increasing their knowledge base.
Like Barger, Melvin said he also had challenges with marketing and bidding on jobs. “The struggle came when we had to get people to buy our product,” Melvin said. “It was a huge learning curve, and it took me a year and a half to learn what I was doing.”
Melvin said he’s grateful for the marketing Easi-Set does for its products, which are well known around the country. In addition to receiving leads from Easi-Set’s website, Melvin worked hard to come up with lists of potential clients. “We contacted engineering firms that we knew did wastewater treatment plants, and contacted schools and did trade shows with parks and recreation departments,” he said.
In its first year, McCann manufactured six buildings. He expects 15 Easi-Set projects this year.
Melvin advises other precasters looking to add new product lines to select a product for which the manufacturer provides a lot of support. “Going with a company like Easi-Set made the process easier, which was important because we’re a relatively small business with only 30 to 40 people in our plant,” he said. “If we’d had to do it all ourselves, we probably wouldn’t have launched a new product.”
Now McCann is looking at marketing its new prefabricated building line to railroads. The company has experience in highway work, so it’s logical to push out into railroads for both retaining walls and utility buildings. Melvin recently attended a trade show for the American Railway Engineering and Maintenance-of-Way Association.
The infrastructure arm
Bidding and marketing may present the biggest challenges when introducing new product lines, but they’re not the only hurdles to overcome. Sometimes new products also mean new equipment and employees. Even though Barger & Sons had already done smaller-scale retaining walls, the company still had to purchase new forms, decorative liners to put architectural finishes on the concrete and the Stone Strong forms themselves.
Barger said the company did not have to hire new production employees. However, it took about three months to get everything set up and running to actually start manufacturing product. His employees also faced a learning curve on block formation.
“Retaining wall blocks look simple, but you have to take really good care of your forms and keep blocks at the recommended sizes,” Barger said. “It makes it harder on the customer if you don’t manufacture blocks in tolerance, because they have to use shims to place them, at best, and,
at worst, they might reject the product.”
Piedmont Precast also faced a fair amount of new infrastructure in its introduction of Gravix. “We had to purchase new equipment, hire new employees and get a lot of outside consultation,” Bowen said.
Bowen developed a new business plan for marketing the product to DOTs and hired four new employees. Piedmont also purchased Gravix forms, face molds and new casting tables, though the company did not need to invest in large-scale infrastructure like bridge cranes, which it already had for existing work.
“The biggest difference was moving from a civil engineering mindset to a structural engineering mindset,” Bowen said. “We basically went from retaining earth to retaining traffic load.”
Bowen also found the product’s three-dimensional castings on three different axes to be very complex. “It was a new era for us,” he said.
Bowen advises other precasters to carefully weigh benefits and costs before introducing a new product line. “Have a good business plan in place and decide if you want to grow your market,” he said. “Have very good control over your financial forecasting and be prepared to stay with it over multiple market cycles.”
Despite the challenges, however, Barger said introducing a new product has been worth it. Currently, the company is working on the Foothills Parkway project in Tennessee. “We’ve got walls with this project that are 48 feet tall,” he said. “We’re basically holding mountains back.”
Barger said the new Stone Strong product line has definitely provided a boost to his company’s bottom line, and that with proper planning, new product lines are a smart decision. “Know how to quote and sell your product before you get started,” he said.