Still Truckin'

Still Truckin'

MANUFACTURING by Mark Gordon | Managing Editor

The risks in building on spec are heightened in a rough economy. A Gulf Coast manufacturing firm mitigates that risk by working with the U.S. Army.

Customers who buy fire trucks or ambulances from Bradenton-based Pierce Manufacturing have long been thought of by company executives as collaborators - albeit unpaid ones - on new product development.

But even with that assistance, the company's business model is heavily dependent on building vehicles on spec with little pre-arranged sales. It's a rare approach in manufacturing that is only becoming rarer in the current penny-pinching economic environment. Pierce's spec products range from wildfire-fighting brush trucks to big city, 75-foot ladder trucks. Prices range from $70,000 to more than $750,000.

"It's always a risk," says Mike Dufrane, Pierce's vice president of sales. "You could end up with too many trucks, but not enough buyers."

The strategy has largely been successful. In response to customer demand, Pierce, a subsidiary of the Oshkosh Corp., has grown its employee base 530% in the 10 years it has been operating out of its 390,000-square-foot factory in Bradenton. It now has 430 employees, after opening with 68 in 1998.

Sales have grown significantly in the last decade too, although the parent company, a publicly traded defense contractor based in Oshkosh, Wisc., doesn't break out revenues for its subsidiaries. Oshkosh reported $6.3 billion in 2007 revenues.

Still, potential trouble looms for Pierce, as its customer base is made up of county and municipal governments - ground zero for cutbacks as the nationwide economic slowdown continues. Pierce executives sought a hedge against those cutbacks, as well as a cushion to balance the risk of overstocking inventory mixing with underperforming sales.

Mission accomplished: The company recently signed a $28 million contract with the U.S. Army to build at least 60 military-grade fire truck tankers known as Hewatts. The name stands for what engineers and designers refer to as the vehicles' ability to work in any type of heat and through any type of water environment.

The mammoth trucks, which carry up to 2,500 gallons of water it sprays out of a 400-foot hose, are going to be used on military bases worldwide. Army officials, who toured Pierce's plant before a recent contract-signing ceremony, said the tankers will be especially useful on bases where water is scarce, since the truck can shoot water from its internal hoses. No extra firefighters are required, save for the personnel in the two-person front cab. Says U.S. Army Sgt. 1st Class Jim Wedding, who attended the ceremony: "It's the Swiss Army Knife of fire trucks."

Blaring sirens

In addition to supplying the Army with much needed fire trucks, Pierce is the second local company in the past few months to sign a lucrative manufacturing deal with the military. The deal follows a $302 million contract Sarasota-based Gyrocam Systems signed in May with the U.S. Deptartment of Defense to build and install stabilized surveillance cameras for use in military vehicles in Afghanistan and Iraq.

"All we hear about is the gloom and doom around here," says Peter Straw, president of the Sarasota Manatee Area Manufacturers Association. "So it's always gratifying to see a company that's expanding its product line."

While pleased with the specific Pierce news, Straw says the outlook statewide for manufacturing companies isn't as bright. Beyond general economic concerns, part of the problem, says Straw, who recently returned from a Tallahassee lobbying trip, is that state government leaders are throwing around potential incentives and tax breaks to recruit mostly aerospace and aviation firms. That, and the ever-trendy green businesses, dominate the discussion.

Straw, however, says it's companies such as Pierce or Sarasota-based valve manufacturer Sun Hydraulics that are actually making significant contributions to the business community right now, by buying new equipment for local factories and hiring employees. Straw says his mission has been to see that state bureaucrats don't overlook those companies when doling out incentives.

The Army didn't overlook Pierce when seeking out a builder for its high-end fire trucks. The trucks, which can reach speeds of up to 62 mph, were on full display at the recent ceremony, which was attended by Bradenton Mayor Wayne Poston and representatives for U.S. Rep. Vern Buchanan, R-Longboat Key, and Sen. Bill Nelson. Pierce employees drove one Hewatt truck around the parking lot during the show, in full siren-blaring and water-spewing mode.

Leadership change

The Army is the latest in a long line of Pierce customers. Dudley and Humphrey Pierce initially founded the company as an auto-body shop in 1913 in Appleton, Wis. The brothers focused on building bodies for trucks and Ford Model Ts.

By 1940, the company had 20 employees and began manufacturing and selling fire trucks in its home state. Sales reached $1 million in 1960 and a few years later the family sold the business to the Oshkosh Corp, which kept the Pierce name.

In the 1970s the company continued growing, both in the U.S and abroad. It sold 700 rescue trucks and trailers to Saudi Arabia in 1975, for instance, and later sold products in Peru. By the mid 1990s, the company was looking to open a factory in fast-growing Florida while also retaining its facility in Appleton.

It settled on the abandoned former Miller Trailer facility in Bradenton, down the street from the headquarters of Beall's, the department store chain.

Dufrane, Pierce's vice president of sales, says the company only used about a fifth of the site's 35 acres when it first moved to Bradenton. Now there are five buildings in use, where employees do everything from cutting steel and building truck bodies to painting and polishing the finished products. In addition to trucks, the company designs and sells a line of high-tech foam systems, which firefighters use for specific situations, from car flare-ups to fully-involved industrial warehouse fires.

Pierce has added some high-tech aspects to the factory over the years. It has several machines with robotic arms that assist on precise measurements and it recently bought a $740,000 state-of-the art laser cutter. And the facility has a final testing area, where every truck it builds is stationed above an underground, 40,000-gallon tank and pumped with water for three straight hours, to ensure durability.

The company also recently changed its leadership at the Bradenton factory. Dan Peters, who was most recently the president of Akron Brass Co., a Wooster, Ohio-based firefighting equipment manufacturer, took over as a general manager of the factory in May. Peters is also a past-president and board member of the Fire Apparatus Manufacturer's Association. "We are eager to benefit from his extensive experience and leadership skills," Pierce resident Wilson Jones says in a statement.

Pierce executives say there are no plans to hire more employees for the Army contract. The company will instead use its current employee base to work the assembly line process. While the current contract calls for at least 60 Hewatt vehicles, the company expects it might be making as much as 100 trucks for the Army.

REVIEW SUMMARY

Businesses. Pierce Manufacturing, Bradenton

Industry. Manufacturing

Key. The company recently signed a $28 million contract to build fire trucks for the U.S. Army.