The management team of Bil-Jax Inc., the Archbold, Ohio-based manufacturer of scaffolding, trailers, bleachers and aerial work platforms, acquired the company from its German parent company in December 2003. Since that time, Bil-Jax has gone through significant change. RER sat down with president and CEO Jeff Ott at the recent ConExpo show in Las Vegas to discuss its new direction.
RER: Tell us about the latest changes at Bil-Jax.
Jeff Ott: I'll start by going back to the buyout of Bil-Jax from plettac AG in December '03. Our management team quickly recognized that we had a great opportunity to take Bil-Jax to places it had never been before since we would no longer have to deal with the distraction of a struggling parent company in financial distress. It's like waking up one morning with a huge load lifted off of your back. So we began by making sure that we were focusing our business efforts where they needed to be. This included a complete top to bottom review of our business strategy, placing a clear focus on our customers. How could we position Bil-Jax products and services to support our customers and help them? We now have the time and money to invest in the future. Our latest changes really are about new products. Products that live up to the Bil-Jax name of reliability and long life. We are also improving the way we manage our production to reduce lead-times to our customers.
RER: Although you manufacture a variety of equipment, you're most known for scaffolding.
Ott: Bil-Jax began with scaffolding in 1947 and that's where our foundation is. The first product we created was a patented product called a “scaffold horse.” And we intend to build upon our scaffold foundation while adding capabilities for quicker delivery, more flexibility, and ease of doing business with us. We also are working to improve our scaffolding products such as with our Pro-Jax interior-rolling scaffold. This was a huge improvement over the previous Multi-purpose. It is safer and has many more features than the predecessor. Scaffolding of course is a mature product. And we can't always necessarily introduce new scaffold products, but we can improve them with better features, better finishes, and longer useful life. We are known for high quality, durable, long-lasting scaffolds and we are working to build upon that brand identity in everything we do. A key part of our business strategy is to develop other complementary new products that help our customers improve their bottom line.
Another key part of our strategy is making our organization as efficient as possible. Speed of product to the market is more important than ever. Our customers save money if they don't have to carry extra inventory and can rely on us to get it there when they need it.
We are also trying to make sure we have the right training and support systems available to the customers.
In terms of new products, our rental customers were saying, “Bil-Jax products are known for reliability, durability and good return on investment, so we want more products.” We've increased our lift offering. We've made lifts for years but did not have the energy and available resources under the previous ownership to really grow that area. We think our new 36-foot trailer-mounted platform is the most unique trailer-mounted product on the market today. Our sales at the ARA show reflect that.
In addition to scaffolds and lifts, we have bleacher products. Over the past few years we brought staging products into the market for event rental, and we've expanded that this year with a rounded stage. It was very popular at the ARA show. Over the years we also introduced an adjustable stairway system with handicapped ramps so they can get more use from the same product and get a better return on their rental investment dollars.
Another category for us is elevating trailers. That line has evolved over the past few years. We have products ranging from 1,500-pound elevators to 12,000 pounds. The reason those products have been successful is that, number one, they are the safest way to transport equipment up to the size limits of trailers at jobsites. So you don't have to drive them up some ramp. The second is that rental companies can now use that trailer for their customers to make their own deliveries. So rental customers can rent the product, come get it, safely load it and deliver it to the jobsite where they're going to use it and return it at their leisure in a safe manner. That is a really important product that evolved out of us having our telescopic lift line and our customers asking us for something to deliver those to jobsites. It started from that and evolved into rental dealers saying they've got other products to transport. So we really adapted the whole elevated trailer concept to all of the rental dealers' products that fit within that weight limit.
RER: Why have you focused so much on improving production systems?
Ott: Customers need to have the product fast. Today is almost too late. The need has been even greater lately because customer lead-times in the industry have risen quite a bit due to the current supply/demand imbalance. If the product is not available timely, then that's not a good thing for a rental company; they can miss an entire rental season.
We have improved our staffing, our production systems, how we track our production flow every step of the way from raw material all the way via the use of radio frequency identification devices. We have a very advanced production control system for a manufacturer of our scope and size. We are an ISO 9001-certified manufacturer, which is the highest international standard for manufacturing. You qualify for that by making sure your systems are right and maintainable and are documented. In addition we have changed our designs for speed and ease of manufacturing. For example our designs use the latest technology in terms of solid modeling and laser cutting and that is helping us shorten the time between the placement of the order and delivery.
We're training our people to respond more quickly to customers' questions on the phone. We recently put our entire customer service department through offsite training in customer support.
We have improved our Web site so customers can see every product we have, and we have added services such as our dealer locator. So the dealers are now getting phone calls from leads that we generate. We're big on safety and support and educating and training the customer base, providing the materials that they need to not only keep themselves knowledgeable but to educate customers.
RER: What other services have you developed for rental companies?
Ott: We have a variety of different tools, for example, The Business Builder, it goes out every month just to rental centers and it talks about how you can improve ROI and provides other valuable aids such as product applications to increase utilization as well as providing maintenance tips to ensure longer useful life of the equipment. We're not aware of any other company packaging this information in a format designed specifically for the rental house. That's a key part of being a leader in the industry. You've got to be willing and able to share information with rental dealers.
RER: You've invested a lot of resources in the trailer-mounted boom segment.
Ott: We've been in the trailer-mount business for a long time…since the mid 80's in fact. But the new products are the result of a serious top-to-bottom engineering effort that is designed to take trailer-mounted lifts to another level. It is a niche product. If you look at what's available in our size class now, they are all articulated. We have an articulated boom too, but our newest model, which is not articulated, actually offers more reach. This came from ARA focus groups two years ago, where the focus groups asked customers what they will need to rent in the future, where is their market going, and what kind of products do the contractors want that they don't have. With trailer mounts we have learned that it is all about the reach of the machine, what we call the working envelope.
RER: Has it been difficult to obtain capital without the former parent company?
Ott: That's a great question, I'm glad you asked it. Most people think that when you're attached to a large company, that capital comes from the large company. In fact that wasn't the case at all. If anything, capital flowed in the opposite direction. So one of the great things about becoming a privately held American company is that we can invest in ourselves. We have a new capital structure in place. We have a much stronger balance sheet now; we're in a much better financial position today than we were prior to the acquisition. We have more capital available, and we have willing partners who in the right circumstances will put in more.
Our banks are happy and onboard and our employment is back up too. We're able to enjoy a better economic environment and increase sales. Unfortunately last year, steel was a big factor that hurt our gross margins. When you have a 100-percent increase in the cost of steel and scaffolding is 99.9-percent steel, it hurts. There is no way to pass that kind of increase to your customers even though the steel market did it to equipment manufacturers. And for our lifts, which have a smaller component of steel to total materials, other materials costs went up by double digits.
RER: Have you been able to pass those costs on?
Ott: Not all of them. We have gone through a couple of rounds of increases, but we would have had to raise our prices 50 percent to be even. That's not possible. But we approached it early, we informed our customers, our communication is open, and several times during the year we sent out communications about what was going on and how we were dealing with it. And we were able to work hard on our manufacturing procedures to get some costs down to help partially offset the increases. But when steel costs go up 100 percent, there's no way to become 100 percent more efficient. We have done everything we can to mitigate the impact. Our buyers are proactive. We do everything possible to leverage our size and financial strength to mitigate as much as possible the effects of steel and other material cost increases.
RER: What do you expect from 2005?
Ott: Right now there's a lot of optimism in the rental world and among equipment manufacturers. I'd imagine that optimism will carry us through the year. It would take a lot to derail the market right now. Still, we are attempting to position our company to deal with uncertainties. We're getting more balanced in our overall product offering in order to provide some security as specific product segments cycle within the seasonality of our business. That's good strategy for us. We're also looking at some of the foreign markets where we can enjoy some of the currency advantages that we have in the European market, to provide some security against the cyclicality of the U.S. market.
I'm an optimist. So I feel there's going to be a good run for Bil-Jax. We have a lot of opportunities and can even look at acquisitions. We have an excellent team of employees. In every way we're a better company today than we were a year ago, and that's really a great feeling.