Clear Cut

REVIEW SUMMARY
Company. Sarlo Power Mowers
Industry. Manufacturing
Key. Finding a niche and being nimble are two keys to U.S. manufacturing success.

Who says Americans don't make stuff anymore?

Sarlo Power Mowers has been building rugged lawnmowers in Fort Myers for 76 years, and its success proves that U.S. manufacturers can outsmart even the most ruthless Asian competitors.

None of it has come easy, of course, especially in the last few years of the recession. But the family-owned business operates lean and has been nimble enough to avoid going head-to-head with cheap imports.

Tony Sarlo, the company's president, is reluctant to disclose sales information for competitive reasons. However, he says revenues are up 16% for the year to date compared with the same period a year ago. And sales in 2010 exceeded the prior year by 14%.

The Sarlos' success has come in large part because they're willing to take risks despite the family's conservative business approach, but they can shift rapidly when things don't quite work out the way they expected.

For example, Sarlo sells its hardy mowers to state prison systems but realized that this business wouldn't be as reliable as it once was because of state budget cuts. In addition, a deal to build hand-held trimmers didn't meet expectations. So Sarlo acquired two retail locations at the height of the recession to focus on commercial landscapers in Naples and Bonita Springs, an effort that has proven successful.

Tony Sarlo is the third generation to run the business, started by his grandfather Anthony Sarlo, an Italian immigrant who settled in Fort Myers. The first mower he built ran on a washing-machine engine. Tony's wife, Eloise, and two children, Mark and Michael, as well as Tony's brother, Joe, are all involved in the business.

The lawnmowers the company builds in a 40,000-square-foot plant in Fort Myers have a reputation for being solidly built. Prison systems buy them because they're rugged and can cut through tough roadside grass. Hardware stores such as Ace sell them upon request, and they cost from $600 for a home mower to $1,700 for a commercial-grade mower.

Retail opportunity
In February 2008, Sarlo paid off a commercial loan that had been used to expand the business during the boom years. “It couldn't have come at a better time,” says Sarlo.

That's because in June 2008 the Sarlos seized an opportunity to buy a retail store in Naples that focused on commercial lawn companies, which thrived on maintaining lushly landscaped upscale residential communities. “They still need to maintain an image,” Sarlo says. “Naples is a good market for the commercial cutter.”

Commercial lawn-maintenance companies in Naples purchased equipment from Sarlo in Fort Myers, but someone else serviced that equipment later. With the Naples store, Sarlo could capture more of that service-and-parts business and make more sales. Besides, Sarlo says the profit margins are better on parts and the service business is “substantial.”

Still, June 2008 was a challenging time to be expanding. Sarlo remembers driving south on a deserted U.S. 41 from Fort Myers to Naples. “It was a daily reminder that times were lean,” he says.

The prior owner of the Naples operation is now the store manager. “The personal relationship is what carries,” says Sarlo. He estimates there are about 1,800 licensed commercial landscapers in Lee and Collier counties.

To snare business from much larger competitors, Sarlo says the key is to help commercial lawn companies be more efficient. “We're in it for them,” says Eloise Sarlo, who is the company's vice president. For example, Sarlo sells oil in 55-gallon drums that can save a large operator as much as $1,000 a year. The same goes for edger blades, which Sarlo buys in bulk quantities. “It's a lot of small things,” says Tony Sarlo.

The success of the Naples store emboldened the Sarlos to open another store, this time in Bonita Springs in June 2009. Bonita Springs is located halfway between Fort Myers and Naples, straddling the Lee-Collier county line.

Like many opportunities in business, this one appeared and the Sarlos had to move fast. “We didn't have the luxury to plan it out,” he says. But the situation is ideal because it's a one-stop shop for commercial lawn-care companies: Sarlo's store is part of a four-business complex that includes a nursery wholesaler, a landscape-supply company and a trailer-repair center.

A benefit of retail stores is that some homeowners are willing to pay more for one of Sarlo's big-wheel mowers because of the quality craftsmanship. In addition, Sarlo says he plans to sell the Snapper line of mowers that will cost homeowners less than the Sarlo mowers. Engine manufacturer Briggs & Stratton supplies Sarlo with engines and owns the Snapper line.

For now, Sarlo has no plans to add another retail location. “I don't really want to take the focus away from developing these locations,” he says. The company financed the Naples and Bonita Springs stores internally. “We were very cautious,” he says.

The retail business is much steadier than government contracts because of public-sector cuts. “We have a large order going to Camp Pendleton,” says Sarlo, referring to the Marine Corps base in California, “but you can't depend on it every year.”

There are some challenges with commercial landscape operators, too. Those who have blemishes on their financial records can't get financing, Sarlo says. He notes that two of 10 customers are able to obtain financing; the rest have to pay cash. “So we started selling used equipment,” Sarlo says. “A lot of people wanted to trade in, but we shy away from that and put it on consignment.”

In part because of that, the large commercial landscape-maintenance companies have captured market share from smaller ones. “The big guys are weathering the storm and getting stronger,” says Sarlo, who notes that landscapers who failed were those who speculated in real estate during the boom and were caught by the bust.