Foreign demand for Carmex fuels growth for Franklin company
By Elizabeth Geldermann, of SBT
Carma Laboratories Inc. has not changed much about its business since, well, the invention of Carmex. The company has never advertised, has never promised new and improved flavor or true results and has never even changed its recipe.
However, Carma is changing to keep up with growing demand for its product. Construction began in August for two additions to the firm’s 44,000-square-foot facility in Franklin. The work includes a 7,000-square-foot expansion for more storage and production space.
"Every few years, we add on. This one is a little bigger than normal," said Carma president Don Woelbing.
Word-of-mouth testimonials of Carmex are increasingly traveling overseas. Although Carmex has been sold in retail shops in Australia since 1987 and in England since 1994, vice president Paul Woelbing, Don’s son, said sales have significantly increased in each country over the past year.
Carma is now shipping 3% of its sales overseas and has gained new clients in Germany, Italy, Spain, Portugal, France and the Netherlands.
Even a store in Iraq recently sent a letter inquiring for some Carmex, but due to current government regulation, American companies are not allowed to do business in Iraq until further notice.
Don plans to add Iraq to his export list once it becomes legal.
Carma has gained a steady 8% sales increase every year since Don’s father, Alfred, started selling his homemade lip balm in 1937. Carmex has been the No. 1 pharmacy-recommended lip balm for five consecutive years and is ranked third in sales.
That’s substantial growth for a company that first received buyers from Alfred’s frequent sales calls.
Today, the waxy, honey-colored lip balm is mixed in 1,000-gallon metal tubs, transferred into a batch of smaller 12-quart containers and poured by hand into filling machines.
The busy staff of 70 employees answers phones, places orders, fills and guides machines and hand-packages the finished product into boxes to be sent worldwide.
The Franklin plant’s expansion will allow for larger, modern production machines and easily accessible storage and shipping space.
"We are trying to automate," said Don Woelbing. "We can become more efficient with more machinery and a few more workers."
The plant’s current machinery can fill 30 Carmex tubes per minute, but the new machines will fill 96 per minute, Paul said.
Two blister-card packaging machines for Carmex tubes are also on the way. Paul declined to disclose the amount of the company’s financial investment in new machinery, but he said the equipment is needed to keep pace with the growing consumer demand for Carmex.
The secret to Carma’s success, according to Paul Woelbing, is to never compromise quality for cost and to always treat any customer fairly.
"We read every letter and answer every inquiry we get. We pay our bills every week," Paul said. "We like to treat our business as an organism. The business should grow on its own before we grow within our location."
Paul said Carma has a good relationship with most retail stores because the company does not make contracts. Every shipment is on a per-order basis. Carmex is sold to the stores at a wholesale price that is low enough to enable the stores to profit from the retail price.
Paul said some customers were disappointed with the firm’s 1996 changeover from its traditional opal glass jars to the lighter and more sturdy plastic jars. Carma expected complaints from some loyal customers and was afraid buyers might see the change as a breach in quality.
The Woelbings set aside boxes of Carmex in glass jars for individuals to buy if they prefer glass.
"We have received calls, enough that we only have a limited supply left," said Paul. "But we had a hard time getting good glass, and some shipments were sub-standard quality."
In recent years, Carma also has shipped Carmex to other manufacturers, which have packaged the product in a plastic "Click Stick" format, similar to the traditional Chap Stick format. Mint flavoring has been added to the Carmex sticks.
No matter how popular Carmex becomes, the family-owned business plans to remain just that, expanding only in physical size and only to accommodate the growth in sales, Paul said.
However, if sales continue to rise over the next few years, Carma may have a big decision to make about its location. The business has grown so extensively that when the latest additions are finished Jan. 1, the company will be landlocked. The Carma plant will reach capacity in accordance with Franklin’s commercial regulations that require at least 30% green space.
Will Carma eventually open a second laboratory?
"No," said Paul. "If another addition is needed, then we will just build a second floor."
Oct. 3, 2003 Small Business Times, Milwaukee
