Firstlogic, Inc., a La Crosse-based global provider of enterprise information quality solutions, today announced the formation of a Federal User Group to serve Firstlogic federal customers and business partners. The new initiative creates a forum for customers to share data quality best practices, identify similarities in technical requirements and solution deployments. The inaugural meeting of the Firstlogic Federal User Group will take place Thursday, March 31, at the Crystal City Marriott at Reagan National Airport in Arlington, Va. Agenda items include a training track on advanced matching techniques and a question and answer session with Firstlogic’s federal, project management, development and professional services teams. Firstlogic also announced that Jim Young, a staff consultant with EWSolutions, has been named the chairman of the user group. For more information on the Firstlogic Federal User Group meeting and to register for the event, visit http://www.firstlogic.com/federal.
Manufacturing a rebound
The Milwaukee industrial real estate market is in better shape than most other metropolitan areas in the country and is poised for a rebound this year, according to new reports by Colliers International and Integra Realty Resources Inc. The Milwaukee area had an industrial space vacancy rate of 7.1 percent by the end of 2004, according to the Colliers report. The report predicts vacancies will decrease, absorption will increase and rents will increase for Milwaukee-area industrial real estate during the first part of this year.
The national industrial space vacancy rate was 9.5 percent at the end of 2004, according to the Colliers report. Milwaukee had the 10th-lowest vacancy rate of the 54 metropolitan areas listed in the report.
"This is very good news for Milwaukee," said James Barry III, president of James T. Barry Co. Inc./Colliers International in Milwaukee. "Our diversified economic base is starting to come back."
In the Integra report, Milwaukee had a 7.57 percent industrial space vacancy rate, compared with the national average of 11.42 percent. In that report, Milwaukee had the seventh-lowest industrial space vacancy rate of 51 metropolitan areas. The report also says the Milwaukee industrial real estate market is nearing the end of a recovery cycle and is about to enter an expansion period.
"Anecdotally, we are seeing a lot of activity," Barry said. "Manufacturing people are looking for crane space. People are looking for rail access. We haven’t seen that in a while."
Milwaukee’s industrial space vacancy rate is lower than most other metro areas in the Midwest, according to the reports. At the end of 2004, Chicago had a 9.5 percent vacancy rate, Cleveland was at 10.1 percent, Detroit was at 13 percent, Minneapolis was at 14.8 percent and Indianapolis was at 8.8 percent.
Some Milwaukee area-industrial real estate brokers predicted vacancy rates would fall this year as the economy continues to recover and the local industrial companies that were strong enough to survive the last recession continue to grow and expand.
"From 2000 to 2004, the vacancy rate went up to about 9 percent at the worst, then it steadily started coming back," Barry said. "I think a lot of these companies have tried very hard to make do with what they have. There is an increasing need for manufacturing and warehouse space. What they are still very reluctant to do is hire people."
Vacancy rates for industrial space in Milwaukee are lower than most other markets in large part because this area had less speculative industrial space built prior to the recession, Barry said.
"We started out with very little speculative space compared to other markets," he said. "Unlike a lot of other cities, like Chicago, where capital went flying in and a lot of space has been built, slowly, we’ve been absorbing space the last few years."
Another factor is that some obsolete industrial buildings, such as the former Allis Chalmers complex in West Allis and old warehouses in Milwaukee’s Historic Third Ward, that were previously vacant, are being been converted to other uses such as office space or condominium space.
The Milwaukee area has a shortage of available industrial sites, Barry said. If industrial vacancy rates drop to about 5 percent, development of new industrial parks could pick up, he said.
However, developers will have difficulty finding large sites for new industrial parks with access to most of the labor force, Barry said. As a result, some obsolete industrial buildings could be torn down to clear space for new industrial development, he said.
Such development could eventually occur in Milwaukee’s Menomonee River Valley, Barry said.
Industrial space vacancy rates in the Milwaukee area should continue to decline this year, Barry said, which will result in increasing lease rates and more speculative development of industrial space.
"Barring a calamity, I would predict going into 2005 and 2006, we will be at a level of (industrial real estate) activity equal to 1999 or 2000," Barry said. "I wouldn’t say we’re there yet, but it will steadily be up there in 2005."
The Colliers and Integra reports give differing views of the Milwaukee area office market.
The Integra report says the Milwaukee area office market is in the later stages of a recession. Intregra says downtown Milwaukee has a 14.7 percent office space vacancy rate, compared with the national average of 16.22, and a suburban office space vacancy rate of 18.68 percent, compared with the national average of 16.19 percent.
"The office market is stagnant," Barry said. "But some of the other cities have vacancies in the 20s. Milwaukee is quite a bit lower than that.
"The office market is probably going to come back and be OK," Barry said. "We’ll probably see a new office tower built (downtown), and the musical chairs (of tenants) will continue. Space will be absorbed slowly."
The Colliers report says Milwaukee had a downtown office vacancy rate of 9.8 percent, compared with the national average of 14.6 percent, and a downtown class A office space vacancy rate of 12.9 percent, compared with the national average of 14 percent, by the end of 2004.
The reports says Milwaukee had a suburban office space vacancy rate of 8.4 percent, compared with the national average of 15.8 percent, and a suburban class A office space vacancy rate of 14.3 percent, compared with the national average of 16.5 percent, by the end of 2004.
Barry plans to eventually build a mixed-use structure on a 25,000-square-foot parking lot his company owns along the east side of the Milwaukee River between Knapp Street and Juneau Avenue.
"We’re considering it," Barry said. "I think we’re trying to think about what the potential mixture should be between office, retail and residential. I’m a bit concerned about office going into this market."
Barry plans to move his company’s offices to the new building, when it is built, and then eventually redevelop the site of the company’s current office building located at 1232 N. Edison St., across the street from the parking lot.
March, 4, 2005, Small Business Times, Milwaukee, WI
‘Back to the city’
It isn’t taking long for Aries Industries Inc. to grow into its new headquarters. When Aries, which manufactures robot-mounted cameras and support equipment for sewer and pipeline inspection, relocated from Sussex to downtown Waukesha last year, the company added about 15 new employees and continued its trend of double-digit annual growth.
In December 2003, Aries bought its new 80,000-square-foot headquarters at 550 Elizabeth St., Waukesha, a few blocks west of Carroll College. The purchase and redevelopment of the facility, built near the turn of the century, cost about $3 million.
Aries had been housed in leased space in Sussex since the company was founded in 1985. The company had expanded its space in Sussex to about 40,000 square feet, but ran out of room to grow, said James Lenahan, president and chief executive officer of Aries.
The company had virtually no choice but to move from its former operations center last July, Lenahan said, because the firm did not own the building and lacked the ability to add more space there.
"We were at the point where if we wanted to grow, we needed to move," Lenahan said. "It took us a year and a half to find what we were looking for."
Aries has continued to grow since the move. The firm had 85 to 90 employees when the company purchased the new building and has about 105 employees today. Lenahan said the company will likely add three to five new employees in 2005.
He estimated Aries’ revenues for 2004 were in the "mid-$20 millions," approximately 18 percent over 2003. Lenahan said the company has projected double-digit growth for 2005.
"We’re optimistic about the year," he said. "We’re well-positioned in the industry to see continued growth into the future."
Lenahan said he learned about the building his company purchased through his involvement with the Waukesha County Economic Development Corp.’s visioning committee, which was asked to look at the county’s needs for manufacturing and commerce for the future.
"Over the next 10 to 15 years, it will be difficult to get employees to outlying factories," Lenahan said. "We said, ‘Let’s bring jobs back to the city, where people live and work.’ It’s been good for the city, the county and our employees. They’re close to banks, shops and restaurants. And it’s been good for us because there’s a larger employment pool."
Aries’ relocation was particularly good news for the City of Waukesha because of its choice of location, said Steve Crandell, director of community development for the city.
"It was more important as an infill for the city, bringing a successful business into the heart of the city," Crandell said. "It’s been a wonderful addition to the community."
Aries is currently using the first three floors of the building. Lenahan said future growth can be accommodated in floors located above the current operations, which are being used for storage now.
The basement houses the "clean" environment needed for electronic assembly, as well as Aries’ maintenance area, where robots and cameras are repaired. The first floor is split between assembly spaces for its remote-controlled robots and a large, 500-foot-long assembly line, where trucks, trailers and vans are outfitted with equipment needed for pipe and sewer inspection.
Lenahan said Aries’ customers, which include municipalities and contracts, don’t just purchase robots and cameras from the company, but an entire inspection system, including trucks, computers, controllers and all related equipment needed to inspect sewers and pipelines. Although the manufacturing facility and administration center is located in a residential neighborhood near downtown Waukesha, Lenahan said noise shouldn’t be a problem with neighbors.
"In the summertime, all the doors stay closed, because the whole line is air conditioned," he said.
The second and third floors house Aries’ sales and administration offices.
The building was constructed in 1909, Lenahan said. One of its first uses was for the manufacturing of Jiffy-Jell, a flavored gelatin that was the forerunner of Jell-O.
In recent years, the building housed a plastics injection molding company and several small manufacturers.
Redeveloping a property with a lengthy manufacturing history in Waukesha did present some challenges, such as transforming an old railroad depot into the manufacturing line for trucks, vans and trailers, and turning an old, dusty basement into spaces that house a training center and the clean environment for electronics assembly and the maintenance department.
However, the renovation project also revealed some hidden treasures, such as near-pristine hardwood floors on the third floor and a large safe left from the Jiffy-Jell days.
Lenahan said the fact that Aries’ building is listed on the National Register of Historic Places made it even more attractive to him.
"I wanted to preserve the beauty of it," Lenahan said. "And I love to save old buildings."
Aries was awarded with a 2004 Historic Preservation Award by the Wisconsin Historic Preservation Trust, recognizing the company’s restoration project.
Aries also was recognized during the 2004 Governor’s New Product Awards, presented by the Wisconsin Society of Professional Engineers, for its ThermalView camera. The camera takes infrared images of pipes to better identify potential cracks and leaks.
Lenahan said the award was a confirmation that Aries has been doing the right thing in spending about 3 percent of its sales profits on research and development.
"That’s an important number," Lenahan said. "We’re constantly striving for new products, looking to the future. We have listening groups within our customers and our industry. We’re constantly developing new products – we respond to the market’s needs. And that keeps us in the forefront of good profitability."
Aries Industries Inc.
Location: 550 Elizabeth St., Waukesha
2004 revenues:
More than $20 million
Product: Television inspection equipment for pipelines, including remote-controlled robots and support vehicles
web site: www.ariesindustries.com
February 18, 2005, Small Business Times, Milwaukee, WI
Corporate wellness
The recent withdrawal of Vioxx, a popular painkiller used for treatment of arthritis, has created a flurry of attention focused on the use and safety of prescription drugs. In September, Merck & Co. voluntarily removed Vioxx from the market because it was found to increase risk of heart attack.
An estimated 20 million people have taken Vioxx since the drug was launched in 1999. The number of injured patients is estimated to be from 30,000 to 100,000, resulting in what will most likely be one of the biggest litigation issues in the pharmaceutical industry. Concerns have also been raised about Celebrex, another medication in the same class of Cox-2 inhibitor drugs.
What has followed is a barrage of media coverage and public concern about the cost, safety and effect of prescription drugs. Is all of this activity a backlash against the pharmaceutical industry, or is there a growing trend by Americans to consider less costly, less risky and safer options to drugs?
Prescription drugs continue to be the fastest-growing area of health cost in America. Drug purchases in 2004 topped $216 billion. This was an increase of 11.5 percent from the previous year. Data from one large Milwaukee health plan shows that if you are an employer with 2,000 employees and dependents, you can expect that 1,700 people will use their prescription benefit an average of 11 times.
The United States leads the world in the development of new drugs, and yet America ranks 29th in life expectancy. While these drugs have a valued impact on quality of health, millions of Americans see pills as a solution for everything from weight gain to sadness. We have become a quick-fix society. Most of us have an expectation that when we see our physician with a health concern, we will leave with a diagnosis and a pill to solve the problem.
Despite the fortune spent on medicine in the United States, very little money is spent to treat the causes of chronic diseases before major illnesses develop. The Center for Disease Control reports that 54 percent of heart disease, 37 percent of cancer, 50 percent of cerebrovascular disease (strokes) and 49 percent of arteriosclerosis (hardening of the arteries) is preventable through lifestyle modification.
The increased incidence of disease resulting from unhealthy lifestyles, including obesity, poor nutrition and lack of physical fitness, coupled with the $2.5 billion spent annually on consumer advertising, prompt the demand for more drugs.
However, people increasingly are saying no to pills and seeking other options.
Patty Heying, a registered nurse and independent contractor, did exactly that with great results. Following a diagnosis of hypertension and high cholesterol, the 42-year-old Heying declined her physician’s recommendation for prescription medication until she could try natural options first. Through diet, increased exercise, natural supplements, stress management and use of therapeutic grade essential oils, she successfully reduced her blood pressure and cholesterol.
Within eight months, in a follow-up visit to her physician, her blood pressure returned to normal and her cholesterol fell from 278 to 202. She has continued to keep her blood pressure and cholesterol within normal range.
However, Heying would tell you that avoiding prescription drugs isn’t as simple as making a decision to stop taking them. When she recently applied to a local health plan for individual insurance, she was denied coverage for not seeking follow-up treatment for her hypertension and elevated cholesterol. When she received a letter of rejection, she called the health plan underwriting department and was told that the use of prescription medication would have indicated appropriate follow-up treatment.
The irony of our health insurance system is that it rewards people for taking drugs but limits payment for nutrition counseling and health club memberships. Even if you are conscientious about the overuse of prescription medication, you will get little encouragement from the health care system. Patient compliance is too often defined as being obedient about getting your prescription filled.
Has the system given up on the health care consumer’s ability for self care? It is a well-established medical fact that diet and exercise are significant factors in reducing coronary artery disease, but unfortunately, many doctors still do not spend significant time on prevention. Yet, can you blame physicians for reaching their limit with human nature? Most people will ask for and expect the easiest, quickest solution. Generally, that is a pill.
What does the removal of Vioxx and concerns about the drug category mean for the millions who suffer from arthritic pain? What options do patients and physicians have? Patients who are currently taking Vioxx should contact their health care providers to discuss discontinuing use of the drug and possible alternative treatments, such as weight control, exercise, massage, dietary supplements, relaxation techniques and acupuncture.
For arthritis sufferers, such alternative treatments can provide relief for many patients. For instance, some studies show that the omega-3 fats in fish oil, flax seed and walnuts may have an anti-inflammatory and analgesic effect on arthritic pain. Another supplement that is popular for ease of arthritis and muscle/joint pain is glycosamine-chondroitin. It is currently the focus of a large study by the National Institutes of Health. Since dietary supplements are another form of medication, they should be used with caution.
Connie Roethel, R.N., M.S.H., is president of Complementary Health & Healing Partners (CHHP), a corporate wellness and health promotion services company with offices in Mequon. She can be reached at (262) 241-9947.
February 18, 2005, Small Business Times, Milwaukee, WI
Counting on the future
In 1975, the United States was third among all nations in the percentage of 18- to 24-year-olds who earned science and engineering degrees. Today, it ranks 17th, behind Taiwan and South Korea, Ireland and Italy. Unless that slide in scientific competency is reversed, the nation’s economic welfare and security will be threatened.
That was the conclusion of a report issued in May 2004 by the National Science Board, a federal advisory panel that has long charted America’s standing in the global science and engineering market. The urgent tone of the report has been heard by business leaders, science and engineering educators, and federal and state policymakers.
It helps explain why Gov. Jim Doyle has proposed tougher math and science graduation requirements for Wisconsin students, and why initiatives such as "Project Lead the Way" are catching the eye of state business leaders and educators.
In his annual State of the State speech, Doyle proposed adding a third year of math and science to high school graduation requirements so that state students are better prepared "for the challenges of the 21st century." He’s right about the nature of the problem. While children in other nations bone up on math and science, American students shy away from those courses for many reasons – starting in middle school.
As the National Science Board warned last year, the United States must do a better job of growing its own math, science and engineering graduates. In the past, bright foreigners beat a path to our door and filled any gap produced by a lack of home-grown grads. That outside flow is threatened today because of new limits on the entry of highly educated foreigners and more intense global competition for their skills. Visas and visa applications for students, exchange visitors and highly skilled foreigners have dropped sharply since 2001.
At the same time, many Asian and European nations have realized that science and technology are crucial to their economic growth. They are better prepared to offer their best and brightest educational opportunities and careers
at home.
"For many years, we have benefited from minimal competition in the
global science
and engineering labor market, but attractive and competitive alternatives are now expanding around the world," said Warren M. Washington, chairman of the National Science Board.
The result is a squeeze play – fewer American students are signing up for math and science, and fewer foreigners are filling the gap. The result is a shortage of skilled workers in the very fields that are driving the 21st century economy.
Doyle’s proposal is one answer. Another is Project Lead the Way, a national, nonprofit organization that prepares students to excel in technical fields. The program introduces middle school and high school students to engineering principles through hands-on exercises applying math and science concepts to real-world problems. Students who complete the program can receive college credit that gives them a head start toward their degree and a solid background that helps them navigate technological challenges.
In March 2004, the Kern Family Foundation in Waukesha launched Project Lead the Way in Wisconsin with a three-year grant. Business leaders are supportive of such projects because they forecast a national shortage of skilled workers – perhaps as soon as 2006.
"If we’re going to have these highly skilled folks in sufficient numbers, the ability to grow our own is going to be more important," U.W. System President Kevin Reilly said.
Whether it’s an extra year of math and science in high school or a focused program such as Project Lead the Way, or a combination of both, Wisconsin must do more to steer students toward careers in math, science and engineering. The handwriting is on the wall; it’s time to read it and act.
Tom Still is the president of the Wisconsin Technology Council. This column originally appeared at Wisbusiness.com, a media partner of Small Business Times.
February 4, 2005, Small Business Times, Milwaukee, WI
Counting on the future
In 1975, the United States was third among all nations in the percentage of 18- to 24-year-olds who earned science and engineering degrees. Today, it ranks 17th, behind Taiwan and South Korea, Ireland and Italy. Unless that slide in scientific competency is reversed, the nation’s economic welfare and security will be threatened.
That was the conclusion of a report issued in May 2004 by the National Science Board, a federal advisory panel that has long charted America’s standing in the global science and engineering market. The urgent tone of the report has been heard by business leaders, science and engineering educators, and federal and state policymakers.
It helps explain why Gov. Jim Doyle has proposed tougher math and science graduation requirements for Wisconsin students, and why initiatives such as "Project Lead the Way" are catching the eye of state business leaders and educators.
In his annual State of the State speech, Doyle proposed adding a third year of math and science to high school graduation requirements so that state students are better prepared "for the challenges of the 21st century." He’s right about the nature of the problem. While children in other nations bone up on math and science, American students shy away from those courses for many reasons – starting in middle school.
As the National Science Board warned last year, the United States must do a better job of growing its own math, science and engineering graduates. In the past, bright foreigners beat a path to our door and filled any gap produced by a lack of home-grown grads. That outside flow is threatened today because of new limits on the entry of highly educated foreigners and more intense global competition for their skills. Visas and visa applications for students, exchange visitors and highly skilled foreigners have dropped sharply since 2001.
At the same time, many Asian and European nations have realized that science and technology are crucial to their economic growth. They are better prepared to offer their best and brightest educational opportunities and careers
at home.
"For many years, we have benefited from minimal competition in the
global science
and engineering labor market, but attractive and competitive alternatives are now expanding around the world," said Warren M. Washington, chairman of the National Science Board.
The result is a squeeze play – fewer American students are signing up for math and science, and fewer foreigners are filling the gap. The result is a shortage of skilled workers in the very fields that are driving the 21st century economy.
Doyle’s proposal is one answer. Another is Project Lead the Way, a national, nonprofit organization that prepares students to excel in technical fields. The program introduces middle school and high school students to engineering principles through hands-on exercises applying math and science concepts to real-world problems. Students who complete the program can receive college credit that gives them a head start toward their degree and a solid background that helps them navigate technological challenges.
In March 2004, the Kern Family Foundation in Waukesha launched Project Lead the Way in Wisconsin with a three-year grant. Business leaders are supportive of such projects because they forecast a national shortage of skilled workers – perhaps as soon as 2006.
"If we’re going to have these highly skilled folks in sufficient numbers, the ability to grow our own is going to be more important," U.W. System President Kevin Reilly said.
Whether it’s an extra year of math and science in high school or a focused program such as Project Lead the Way, or a combination of both, Wisconsin must do more to steer students toward careers in math, science and engineering. The handwriting is on the wall; it’s time to read it and act.
Tom Still is the
president of the Wisconsin Technology Council. This column originally appeared at Wisbusiness.com, a media partner of Small Business Times.
February 4, 2005, Small Business Times, Milwaukee, WI
The Bentley Co. expands into Madison
The Bentley Co. of Milwaukee is expanding into the Madison market with a new office and has launched another company to streamline its services.
The Bentley Co., which is based at 8600 W. Bradley Road, will have a grand opening Feb. 8 for its new office in Madison at 2924 Marketplace Drive.
The firm also has formed BMG Corp., a new company that offers integrated program management services and property investment, development and management services.
Todd Bentley, vice president for BMG, will lead its property development activities in Milwaukee.
The new Madison office for The Bentley Co. and BMG Corp. will be overseen by vice president Peter Szotkowski.
"Madison and the Dane County area are such a vibrant market, and we are very pleased with the project base we established in 2004," Szotkowski said.
Szotkowski already has landed his first project in the Dane County market, as The Bentley Co. will construct the new Deer Park Buddhist Center north of the Village of Oregon. The Bentley Co. will construct the new $2 million, 16,000-square-foot facility.
The Buddhist organization has outgrown is current temple in Oregon, Szotkowski told SBT.
Szotkowski brings a Madison insider connection for business to The Bentley Co., as he most recently was a principal at Affiliated Construction Services Inc. in Madison.
The Bentley Co., which was founded in 1848 by John R. Bentley, is the nation’s oldest family-owned and operated general contractor, with six generations of family leadership.
Thomas Bentley III, the firm’s chief executive officer today, noted that BMG Corp. will enable The Bentley Co. to provide "one-stop shopping" for its clients.
"The concept of one-stop shopping is hardly new, but for business owners, brokerage companies, developers and their investors, streamlining and systematizing the program development and the building process can accelerate return on investment," Thomas Bentley III said.
The company hopes to grow its staff and its presence in the Madison market, according to spokeswoman Christine Plewa.
"We just keep growing and growing. After 157 years, you wouldn’t think that would be possible, but it is," Plewa said.
February 4, 2005, Small Business Times, Milwaukee, WI
Survivor
Michael DeBakker’s story is one of tragedy, perseverance, survival and rebirth. And that just covers the past 12 years.
DeBakker and his first wife, Peggy, founded Milwaukee Broach Co. Inc. in 1985. The company began as a manufacturer of components used in jet engines for military and commercial aircraft.
Like many startup companies, Milwaukee Broach, lost money in its early stages. By its third year, however, the company was turning profits, and its workforce grew to 150 employees in the early 1990s.
In those early stages, DeBakker might have seemed like the movie character Rocky before his first big fight, feeling he was unstoppable on his way to the top.
Then the first punch came. An economic downturn slowed the company’s growth, stalling profits.
The slowdown was followed by a second, more direct punch in 1993, when tragedy hit DeBakker’s family and the company. Three times. DeBakker’s wife died of breast cancer. His father, Donald DeBakker, and his plant manager, Gerald Goodchild, each died of strokes.
Suddenly, DeBakker was a single father of two boys, ages 8 and 11, and the president of a company that faced an uncertain, precarious future.
However, his tribulations continued. A third punch sent DeBakker and Milwaukee Broach staggering against the ropes.
The company was embroiled in a bitter lawsuit between 1995 and 1997 over the value of shares held by a minority shareholder. Although the case was settled in 1997, DeBakker said the time, energy and capital spent to fight the claim took a heavy toll.
To survive, his company needed an influx of cash, and it came from DeBakker’s personal savings.
"We had to pay off the lawsuit when it was settled, and when the company isn’t doing real well, it falls onto the owner," DeBakker said. "We were also in a time of recession, battling on both ends."
Somehow, he never lost faith.
"When you’re an owner, the money doesn’t matter as much as the success. With all the blood, sweat and tears, if I made it through that, I felt like we could make it through and persevere," DeBakker said.
However, fate was not done battering DeBakker and Milwaukee Broach.
A potential knockout punch came with the terrorist attack of Sept. 11, 2001, and the recession that followed. The Menomonee Falls-based company appeared to be dead in the water, DeBakker said.
Seven employees had to be laid off, and DeBakker asked his management staff, including himself, to take a voluntary 20-percent pay cut to keep the company afloat.
The company was hemorrhaging money, posting "huge red numbers," DeBakker recalled.
Things got bad enough that DeBakker even reached into his own personal finances – again – to keep the lights on.
"All I could do was be honest with the management team," he said. "They understood where we were and knew I was personally funding this company to go forward. It was hard to keep focused – but that’s where our people stepped up. They never lost their focus.
"Every owner gets there," DeBakker said. "You have to decide if you’re going to delve into your personal wealth. It’s lonely out there. Ultimately, that decision comes down to you pacing the floor at 3 a.m. It also comes down to your family and the people helping you from the outside. Those were tough days."
Determined to survive, DeBakker and his management team deployed a three-pronged corporate strategy. They invested $1.5 million in new equipment and invested in training their employees. Perhaps most importantly, they diversified the company’s product line. The management team was determined not to allow the company to be subjected to another economic slowdown in the cyclical aircraft industry.
By branching into automotive parts, hand tools and electric generating equipment, Milwaukee Broach began serving a more diverse lineup of industries to pick up the slack when the aircraft industry dipped.
By December 2003, orders started coming in from the company’s diversification plans, thanks to an aggressive sales staff, DeBakker said.
"And that month, we got a huge defense contract," he said. "We got a huge one for power generation, as well."
In January 2004, some of Milwaukee Broach’s aircraft manufacturing clients started placing new orders, as their businesses began to rebound.
Today, Milwaukee Broach is on the rise. The company posted $3.2 million in revenues for fiscal 2004, and DeBakker is forecasting about $4.2 million in revenues for fiscal 2005.
That is a remarkable turnaround, considering how DeBakker and the company have overcome death, recessions and a lawsuit.
DeBakker said he thinks of his employees as family, because many of them have been with the company since its early days. DeBakker said his feelings about the employees, paired with his commitments to faith and his own family, helped him through the darkest times.
Milwaukee Broach has grown from a small shop into a company that does global business from three locations in the United States. In addition to the Menomonee Falls plant at N52 W13821 North Park Drive, the company has facilities in Antigo and South Carolina.
Like Rocky, DeBakker took his punches and kept getting back up, somehow stronger each time.
All seven employees who were laid off have been hired back, and five new employees were hired last year. Two more employees were added recently, and the company will hire additional staff this year, DeBakker said.
DeBakker said some of the credit for Milwaukee Broach’s survival should go to his advisory board.
One of those advisory board members, Stuart Schroeder, an attorney with The Schroeder Group, a Waukesha-based law firm, said DeBakker’s positive relationships with his employees, vendors and customers kept the business alive.
"There were times when Mike was remaining upbeat when some of his advisors, including yours truly, were not so sure he was going to be able to do it," Schroeder said. "He has had a real wonderful attitude while going through all this. That was the key thing which allowed him to persevere. He has a wonderful relationship with his suppliers and his employees. People are willing to give him time and go that extra mile for him – they had faith in the guy that he would be able to do it."
Today, DeBakker faces much more manageable problems than he has in the past.
"We’re actually trying to slow down a tad," he said. "You have to be careful when you look at how heavily you get involved with a customer. Pre 9-11, we had three major customers. Now we have 10 major customers who make up 75 percent of our sales."
DeBakker has remarried and has two more children with his wife, Kristin.
"I need to give credit to my wife and her family for their support," DeBakker said. "They walked the floors with me at 3 a.m."
Michael DeBakker has gone the distance.
Location:
N52 W13821 North Park Drive, Menomonee Falls
Product: Components for jet engines, power-generating turbines, the automobile industry and hand tools
Number of employees: 40
Annual Revenues: $3.2 million in fiscal 2004
February 4, 2005, Small Business Times, Milwaukee, WI
What’s next?
Southeastern Wisconsin real estate professionals are generally optimistic that retail and residential development in the metropolitan area will remain strong in 2005, and that the industrial real estate market will improve this year.
However, the outlook for the area’s office market is mixed, with some viewing the glass as half-full and others contending it is half-empty.
Indeed, several questions are hanging over the commercial real estate market in the Milwaukee area as 2005 begins.
What will happen to PabstCity, the proposed redevelopment of the former Pabst Brewing Co. complex into a downtown Milwaukee regional entertainment center? Unveiled more than two years ago, the $395 project is on hold as the developers, Milwaukee-based Wispark LLC, Cleveland-based Ferchill Group and Atlanta-based TerreMark Partners LLC are trying to secure financing for the project. The developers originally said they wanted $75 million in tax incremental financing, but several city officials, including Mayor Tom Barrett, balked at that request. The developers also are facing a lawsuit by one of the project’s original partners, Jim Haertel, who alleges the other partners have not kept their promise to give him ownership of a portion of the complex.
For now, Wispark officials are remaining tight-lipped about the status of the PabstCity project.
"We don’t have anything to share with you right now," said Wispark spokesperson Margaret Stanfield.
Some real estate professionals believe the PabstCity proposal will eventually move forward.
"I think (PabstCity) is going to happen in some way, shape or form," said Daniel Cohen, director of tenant representation for Mid-America Real Estate.
Will development occur in the Park East freeway corridor, or will the land remain vacant?
City officials decided to tear the freeway down to free up a large tract of land on the north side of downtown for development. About 16 acres of the 64-acre corridor is owned by Milwaukee County, and the County Board recently passed rules that would require developers of the property to pay union-level wages to construction workers and would favor developers that agree to provide affordable housing, green space, worker training and other community benefits. County Executive Scott Walker vetoed the rules for the land sale, but his veto could still be overturned.
Some real estate professionals say the county rules will discourage developers from building on the land.
"If those restraints are in place, you’re going to see that land sit for a long time," said John Czarnecki, vice president of Brookfield-based Apex Commercial, Inc.
"I hope it doesn’t impede (development), but I know it will, because of basic economic principles," said James Barry III, president of James T. Barry Co. in Milwaukee. "The message the whole fiasco sends to developers and people in the free market is that Milwaukee County is not an entity with whom you want to do business."
Other real estate professionals say the county’s rules for developing the Park East land will slow down, but not stop development.
"I don’t think it’s going to doom it," said Scott Welsh, president of Milwaukee-based Inland Companies. "I just think it will be done at a pace Milwaukee is familiar with, which is slow. I don’t think it’s going to go at the pace it should."
"At some point, it will be a great area," said Ned Purtell, principal of RFP Commercial Inc. of Milwaukee. "The county is not going to be able to kill the market trend. (But) I think you’ll have a better development at the end of the day if you let the private sector take care of it."
When and where will the next office tower be built in downtown Milwaukee?
The downtown office market has a 16 percent vacancy rate, according to the 2005 Real Estate Market Review and Forecast by The Polacheck Co., a CB Richard Ellis Company. However, some real estate brokers and developers say the downtown market for Class A office space is strong, and they speculate another new office tower could be built there soon.
The success of the two newest downtown office buildings is fueling some of the speculation. The 227,000-square-foot 875 East building at 875 E. Wisconsin Ave. and the 205,000-square-foot Cathedral Place building at 555 E. Wells St., were completed in 2003, and both reached capacity or near capacity in 2004, faster than many expected. The success of the new buildings indicates that another new office building in downtown Milwaukee also would be filled up, some real estate professionals say.
However, real estate professionals also say that no downtown office project will break ground without first securing an anchor tenant.
At the same time, Quarles & Brady L.L.P. is considering a move from the 411 East Wisconsin Center into a new building. The law firm currently occupies about 160,000 square feet.
"Any time you get a tenant like Quarles & Brady (looking for space), it’s a unique opportunity for the downtown market," said Bruce Westling, president of NAI MLG Commercial of Brookfield. "You may see a building built around that tenant."
Irgens Development Partners LLC has proposed a high-rise office building for the northwest corner of Water and State streets, called Ovation Plaza, which could lure Quarles & Brady.
"As with any project, we need a find a couple of big tenants to get it to a point we are willing to break ground," said Kristine O’Meara, principal for Irgens Development Partners.
At least four other viable downtown office projects have been proposed, said Steven Palec, senior vice president of the office property group for Polacheck.
"There are a number of developers with sites that might be as good or even better (than Ovation Plaza)," Purtell said. "I think there’s a number of developers chasing (the Quarles & Brady) deal."
Other office users in the marketplace also are considering their options, Palec said.
"There are inquiries out there," he said. "Not a lot, but we’re not a ghost town either. There are toes in the water, but definitely not two feet."
The long-time trend of offices moving out of downtown to the suburbs has slowed, if not stopped, Purtell said.
"I think there are now (businesses) in the suburbs considering the downtown," he said. "I don’t think the floodgates have opened with people stampeding downtown, but people are considering the downtown."
What will happen to the suburban office market?
Even though the newest downtown office buildings filled up quickly in 2004, several real estate professionals say they are concerned about lingering office space vacancies in the suburbs.
As the economy continues to improve, O’Meara said she expects the metro area’s 16 percent office vacancy rate to fall to about eight or nine percent this year. If that occurs, more developers will announce office building projects, she said.
"This year, they will be planning (office projects), and next year, they will start building," O’Meara said.
According to the Polacheck report, office vacancy rates for suburban submarkets are 12 percent for Brookfield/Wauwatosa, 20 percent for West Allis, 17 percent for Brookfield, 15 percent for Waukesha, 16 percent for Menomonee Falls and the far northwest side and 12 percent for Ozaukee County and the north shore. The total suburban office vacancy rate is 15 percent, according to the report.
"The suburbs have been very quiet on office development for the last 12 months," Purtell said. "There is a fair amount of space to lease in the existing buildings. I think there will be some new buildings announced this year. The suburbs have always been the biggest and best growth area, and they will continue to be."
Some bright spots have emerged in the suburban office market.
Northwestern Mutual Life Insurance Co. built a $125 million, 500,000-square-foot office building on South 27th Street in Franklin, GE Healthcare is building an $89 million, 506,000-square-foot building in the Milwaukee County Research Park in Wauwatosa and Whitnall Summit Co. is spending about $45 million to convert the former Allis Chalmers facility in West Allis into an office complex with up to 650,000-square-feet.
"(Summit Place is) single handedly changing that submarket out there," Purtell said. "It’s a very interesting project and it has been very well received by the marketplace."
Will the region finally be able to attract more upscale retail chains?
Crate and Barrel will open a 33,000-square-foot store in 2005 at Mayfair Mall. It will be the first location in the state for the Chicago-based upscale home furnishings retailer. Many Milwaukee-area shoppers want to see even more new upscale stores opening in the area.
A $300 million project will transform Glendale’s Bayshore Mall into a town center concept and is expected to attract new, upscale retailers to the area.
"There’s no shortage of (retailers) that want to be there," Cohen said. "It’s going to be like nothing else we have seen (in the Milwaukee area). It’s going to be terrific."
Construction at Bayshore will continue in 2005 and be completed in 2006.
This year, the first retail component at the 1,500-acre Pabst Farms development at Interstate 94 and Highway 67 in Oconomowoc and the Town of Summit, is expected to be completed. A Pick ‘n Save and other stores are expected to open there this year.
Pabst Farms eventually will have 600,000 to 900,000 square feet of retail space and more than 4 million square feet of office and industrial space.
The Milwaukee area finally appears to be on the verge of attracting some national retailers that have not yet opened stores here, Barry said.
"There is a general consensus that Milwaukee is an under-retailed metro market," he said. "There is room for a lot of retail growth across the board."
Is the market for industrial real estate really on the rebound?
Several real estate professionals say sales and leases of industrial space have picked up in recent months, and they expect that to continue in 2005 as the economy continues to strengthen.
"We’re seeing an increase in activity and have been seeing it for the last six to eight months," Westling said.
For the entire metro Milwaukee area, the industrial vacancy rate is a little over 7 percent, Barry said. He expects the area’s industrial vacancy rate to dip down to about 6 percent this year.
"We’re going to see a pretty good pick-up of activity that we already started to see in the last quarter of last year," Barry said. "The largest amount of activity is still in the sale of small- to medium-sized buildings."
Sales and leases for larger industrial buildings are improving, Barry said. Leases for Class A industrial space have been lagging, but should also improve this year, he said.
The recession hit industrial firms hard in the United States during the last four years. Only the strongest industrial firms were able to withstand the recession, and those that did survive are growing significantly as the economy recovers, said Chad Vande Zande, principal of Grubb & Ellis/Boerke Co.
"A lot of the businesses that survived, before (the recession) they were competing against three guys. Now, it’s two guys," he said. "A lot of my clients have employee shortages, and they’re growing quickly. What we’re seeing from the end of 2004 and into 2005 is a demand for larger 50,000- to 100,000-square-foot users looking to lease buildings. That is something we haven’t seen in our market with any velocity for four years."
Vande Zande also expects leasing activity to pick up for industrial space, which he says should lower vacancies in the marketplace and drive up the value of industrial land, encouraging more development of spec industrial space.
Due to a shortage of sites in the metro area’s industrial parks, more developers will bring forward plans this year to build new industrial parks, Vande Zande said.
The shortage of industrial sites could lead to more infill development in the City of Milwaukee and other older suburbs such as West Milwaukee, Barry said. Outlying areas farther away from the population base are less desirable for industrial sites, he said.
Vande Zande said the hottest suburban areas for industrial development will be Oak Creek, Franklin, New Berlin, Oconomowoc, Menomonee Falls and Germantown.
What other areas will be hot sports for commercial real estate development in 2005?
The I-43 and Highway 60 interchange in Grafton may become a major new retail hub for the metro area. The interchange has already attracted Target, Home Depot, Colder’s and other stores. A Sam’s Club store and a Costco have been proposed for the interchange.
Marcus Corp. has announced plans to build new theater complexes in Sturtevant, East Troy and the Town of Brookfield. The company’s West Point and West Town theaters in Waukesha and the City of Brookfield will eventually be closed.
Wal-Mart has plans to build new Supercenter stores in Germantown, Hartford, Mukwonago and Sheboygan.
Other prime retail locations in 2005 will include Delafield, Pewaukee, the 27th Street corridor between Oak Creek and Franklin and County Line Road in Germantown.
Infobox:
Key projects
Pabst Farms – A $1 billion residential, retail, medical and office planned development at I-94 and Highway 67 in Oconomowoc and the Town of Summitt. Retail development is expected to begin this year, including a new Pick n’ Save store. Aurora Health Care plans to build an $85 million, 88-bed hospital there and a 1.1 million-square-foot, $65 million Roundy’s warehouse was recently completed.
PabstCity – A $395 million proposed redevelopment of the 22-acre former Pabst brewery in downtown Milwaukee into a regional entertainment complex with stores, a 16-screen movie theater, a House of Blues, residences and office space.
Bayshore Mall – A $300 million project to transform the mall into a town center, expanding the retail space from 560,000 square feet to 1.2 million square feet, and adding 180,000 square feet of office space and 200 apartments and condominiums.
GE Healthcare – An $89 million, 506,000-square-foot office building under construction in the Milwaukee County Research Park in Wauwatosa. The building will open in 2006.
Harley-Davidson Museum – A $60 million complex to be built in the Menomonee River Valley at 6th and Canal streets. The project, which will include a museum, a retail store, meeting rooms, banquet space, offices and a restaurant, is not expected to open to the public in 2008. The City of Milwaukee will move its Tracer Yards public works center at the stie to the former Tower Automotive site on the north side of the city by 2006.
Summit Place – A $45 million conversion of former Allis Chalmers complex in West Allis into a 650,000-square-foot office complex.
Pier Wisconsin – A $30 million freshwater exhibition center along Milwaukee’s lakefront will feature the Great Lakes Aquatarium and will be the new home for the Discovery World Museum and the Denis Sullivan schooner. The complex is expected to open later this year.
Milwaukee Public Market – A $10 million project at Water Street and St. Paul Avenue. The market will sell fresh produce year-round and will link downtown Milwaukee with the Historic Third Ward. The market is expected to open later this year.
January 21, 2005, Small Business Times, Milwaukee, WI
MANDI finalists announced
The finalists have been announced for the sixth annual Milwaukee Awards for Neighborhood Development Innovation (MANDI).
The awards honor nonprofit community groups and their partners involved in revitalizing Milwaukee neighborhoods. The awards include five categories.
The MANDI finalists for the “Navigator Award” are: Tom Capp, executive vice president, Gorman and Co.; Jean Leslie, executive director, Milwaukee Habitat for Humanity; and Johnny Moutry Jr., executive director, New Covenant Housing Corp.
The finalists for the “Vision Award” are: Marquette University; Nonprofit Management Fund; and Northern Trust Bank.
The finalists for the “Trailblazer Award” are: the Chronic Nuisance Property Code, a collaboration of the Milwaukee Department of Neighborhood Services and the Milwaukee Police Department; the Fueling Young Minds Collaborative, a collaboration of the Milwaukee Public Schools, The Social Development Commission, the Salvation Army, Hunger Task Force, Impact, and the Harley-Davidson Motor Co.; and the Wisconsin Women’s Business Initiative Corp. Individual Development Account Program.
The finalists for the Freddie Mac “Cornerstone Award” are: the Dominican Center for Women; the Northwest Side Community Development Corp.; and the North Avenue Community Development Corp.
The finalists for the State Farm Insurance and Financial Services “Building Blocks Award” (Large Project are): Fondy Food Market, developed by Hunger Task Force; Highland Gardens, developed by the Housing Authority of the City of Milwaukee and Independence First; and Milwaukee Center for Independence (new facility).
The finalists for the State Farm Insurance and Financial Services “Building Blocks Award” (Small Project) are: Gateway Plaza, developed by New Covenant Housing Corp.; Holton Street Lofts, developed by Wisconsin Preservation Fund; and Urban Ecology Center.
The awards are given by the Milwaukee Local Initiatives Support Corp. (LISC), which catalyzes the development of vibrant, diverse, high quality, sustainable neighborhoods in greater Milwaukee by working with neighborhood organizations and residents.
All of the finalists will be honored and the winner of each award category will be announced at a reception and awards ceremony on Thursday, March 10, at 5 p.m. at the Pfister Hotel in downtown Milwaukee. For more information, call Leo Ries at (414) 273-1815.
January 21, 2005, Small Business Times, Milwaukee, WI
Lighting the Way
Since the 1930s, Everbrite LLC has thrived by manufacturing neon signs for retail clients, ranging from the golden arches of McDonald’s restaurants to Miller Brewing’s product signs in taverns throughout the nation.
In recent years, however, the privately held company committed research and development to create new technologies, new applications and new markets for its lighting products.
That R&D is beginning to pay off.
The engineers and technologists at Everbrite Lighting Technologies are on the cutting edge of product development for light-emitting diodes (LEDs), and the company is launching its new MedLux family of lighting products designed specifically for magnetic resonance imaging (MRI) equipment used in the health care industry.
The MedLux brand is part of Everbrite’s growth strategy, which includes penetrating new markets, developing new technology and applications and increasing revenue by 30 percent in the next two years, said William Fritz, president of Everbrite.
"LED advancement is so rapid that it is going to be a viable alternative at some point in the future," Fritz said. "It has replaced neon in a lot of our products, like channel letters (for outside of a restaurant). The LED technology is moving so rapidly that whatever you have now could be obsolete in six months. This company has made a tremendous investment in technology for many years. That is why we have the technology center. We are always looking for new techniques, new technology that we can either apply to our customers or to new markets."
The company’s recent launch of the new brand included the introduction of the MedLux GPI graphic panel illuminator. Everbrite will launch its second MedLux product, the MedLux RLD recessed LED down-light, in the first quarter of this year.
Everbrite Lighting Technologies is a division of Everbrite LLC, located at 4949 S. 110th St., Greenfield. Recently, the firm, owned by Judith Wamser, was named the top diversity-owned Wisconsin business by DiversityBusiness.com.
Everbrite Lighting Technologies has been researching and developing applications using LED technology for seven years, said Michael Mondloch, vice president of technology for Everbrite.
The MedLux product launch marked Everbrite’s penetration into the health care market using top-of-the-line LED technology. All of the new products developed for the health care industry will fall under the MedLux brand name, said Jeff Gatzow, product manager for Everbrite Lighting Technologies.
Everbrite considers the MedLux GPI to be a breakthrough in patient comfort lighting for MRI environments because LEDs require little maintenance and do not interfere with an MRI scan, Mondloch said.
The average LED has a lifetime of 100,000 hours, equaling more than 10 years of continuous use. The LED requires no maintenance, contains no mercury, projects minimal ultraviolet and infrared emissions and is easy to install with a plug-in connection.
"While LEDs have a lot of advantages, it is still an expensive way to produce light," Mondloch said. "We have been looking to develop applications for both our traditional business and in new markets and applications that need low- temperature operation or a long life."
Patient comfort lighting is typically found in dentist offices and cancer centers. The graphic panels replace 2-foot by 2-foot ceiling tiles above a patient bed and depict soothing graphics, such as clouds, that are illuminated by a light box installed in the ceiling above the panel.
Everbrite created light boxes using LEDs instead of the typical fluorescent light, which interferes with an MRI by producing artifacts or ghosting on scanned images, Mondloch said.
Everbrite had developed the LED light boxes but was researching different applications of the technology when an artist spoke with Mondloch about light boxes for her artwork. Some of her artwork was going to be used as a graphic panel for patient comforting in an MRI environment, Mondloch said.
That’s when Mondloch realized Everbrite could market to the health care industry.
"She had mentioned that some of the traditional light box technology does not work well in the MRI environment because the light interferes with the MRI scanner," Mondloch said. "I immediately thought LEDs would be an excellent answer, because LEDs cannot interfere with the magnet, and magnets cannot interfere with LEDs."
Before LED graphic panels were introduced, many hospitals did not install patient comfort lighting in MRI suites, said Diane Kelly, director of radiology for Hennepin County Medical Center, Minneapolis. Hennepin was one of the first medical centers to purchase the technology and has had MedLux GPIs installed since February.
Dr. Chip Truwit, chief of radiology for Hennepin, spoke with Everbrite about LED technology, and after testing the light box, he installed the MedLux series for added patient comfort.
"Before, we only had can lighting that we would turn down for patient comfort," Kelly said. "Patients like the graphic panels because it is something soothing for them to look at when preparing to enter the scanner."
Most MRI suites use incandescent lighting, or regular light bulbs, to light the room, Mondloch said, which can fail prematurely from the magnetic current constantly passing through the filament.
"Part of the realization was through the artist, but subsequently we were working on a graphic panel for the University of San Francisco (Medical Center), and the university asked if we could use LED for both panels and for down-lights, because his light bulbs were burning out prematurely," Mondloch said. "We calculated the cost of light bulbs with the cost to close the MRI suite to change the light bulbs, and I realized that (medical providers) could benefit from LED."
The MedLux RLD product will allow for ceiling-based down-lights to replace incandescent lighting fixtures, Mondloch said.
Everbrite executives said MedLux RLD light fixtures are priced independently with each customer’s order.
Everbrite will reach its corporate growth goal by gaining a larger slice of the volume of the work its existing customers do, going after new customers in the same markets, taking new technologies to new markets and leveraging its strengths in areas such as Neon Central, a division that sells licensed retail products, LED lighting and the medical industry, Fritz said.
"We have been very aggressive in some of our large national accounts like the Yum! Brands and McDonald’s because we are their prime supplier," Fritz said. "Overall (with franchises), there are a lot of approved suppliers, and it is basically your service and capabilities that make the difference when they choose to buy from you."
Everbrite’s focus is serving its customers, meeting their requirements and introducing new and superior products to them, Fritz said.
"Customer demands have gone up, and the amount of information they get from the field has gone down, so they expect you to turn products around as fast as possible," Fritz said. "The people who can do that the best are going to get the lion’s share of the business."
Everbrite has jumped into the LED marketplace because the firm’s executives want to be the first in line with new products, Fritz said.
Everbrite provides LED products to other markets, including navigation lights for the marine industry, scoreboards for sports venues, gas pricers for the petroleum industry and LED and liquid crystal display (LCD) order confirmation screens, menu systems and channel lettering for the food industry, Fritz said.
The Everbrite Lighting Technologies technology center is equipped with a certified UL (Underwriters Laboratories, Inc.) test lab for product compliance and public safety standards. Everbrite can take products in the research and development stage through full testing and certification for any environment, including indoor, outdoor, freezer and MRI environments, Mondloch said.
"Another advantage of LED is that it performs well in cold environments, where fluorescent lights dim and have to be packaged in special insulation tubes," Mondloch said. "Everbrite has developed an LED lighting system for freezer displays called Luma-Light that we have already placed in ice cream cake displays at some Culver’s restaurants."
The Luma-Light is expected to be introduced to the market in the second or third quarter of this year, Gatzow said.
"In a few years, I think LED technology will be very cost-effective for all kinds of applications," Mondloch said.
Everbrite Lighting Technologies also is researching and working with OLED, an organic light emitting diode made from more common materials.
When LED is more affordable, Everbrite will be on the forefront of product development, Mondloch said.
"The synergy and the capability that (Everbrite has) allows us to bring a new product to a new market fairly rapidly," Mondloch said. "It is good for displays, good for lighting, and we are excited about things coming down the pipe in LED technology."
Everbrite LLC
Industry: Lighting technology
Founded: 1927
Corporate headquarters: 4949 S. 110th St., Greenfield
Domestic production plants: Elkhorn, Greenfield, Pardeeville and South Milwaukee, Wis.; Garden Grove, Calif; Mt. Vernon, Ill.; Atlanta, Ga.; Chanute, Kan.; Buena Vista, Va.
Overseas operations: London, England (displays and sales); Dublin, Ireland (indoor signs, neon signs and sales); Amsterdam, The Netherlands (design center, sales); and China (injection molding and small assembly work).
Leadership team: Judith Wamser, owner; and William Fritz, president
Employees: 875
Annual revenues: $107 million
Web site: www.everbrite.com
January 7, 2005, Small Business Times, Milwaukee, WI
Engineering a corporate turnaround
In today’s global marketplace, strategic decisions about outsourcing, marketing and new product innovation can make or break a small Wisconsin manufacturer. Just ask Don Frantz. Frantz founded DuraSafe Lock Inc. in 2000, when he decided he wanted to sell a product line made by his first successful business venture, Frantz Machine Products Inc. of New Berlin.
However, Frantz quickly realized it was the wrong time to start a second company, because his lock manufacturing competition was outsourcing production to nations with cheaper labor costs, enabling them to sell their products for $5 less than his American-made product.
Then came the 2001 recession.
“It was impossible for us to continue with where we were and be successful at it,” recalled Cathy Kraatz, Frantz’s daughter and marketing manager for DuraSafe.
Frantz decided to partner with a manufacturer in China to save his company, and at the same time he attempted to design and develop different types of locks that his larger competitors were not producing.
“When we found that there was so much competition with the locks we were manufacturing at the time, we went to the drawing board and came up with some new innovative products that nobody had,” Kraatz said.
The launch of three new products within the last year has not only enabled DuraSafe to be noticed in the market, but it enabled the company to win a national award for innovation. Most importantly, the new locks have helped the company increase its sales by 200 percent.
Frantz’s strategy of selective outsourcing, marketing and new product innovation is paying off with a remarkable corporate turnaround for Durasafe.
“These three new products have completely carried the company to the next level, and with the attention we are getting from all over the world with our patented products, the company has completely turned around,” Kraatz said.
DuraSafe first bought the distribution rights and launched a product developed in Australia called the Couple-Mate last fall. The Couple-Mate is a winged guide that enables boaters to align their trailer hitch with their hitch ball in half the time.
“People have a hard time seeing where they are going when backing up their trailer, so this helps them guide the coupler directly over the ball. It has been a really good seller for us,” Kraatz said.
The Couple-Mate, although not DuraSafe’s own invention, fits well within the line of problem-solving products DuraSafe wants to be known for, Kraatz said.
In March and June, DuraSafe introduced its two new patented products, a line of Marine Electronics Locks to secure fish-finders, depth-finders and global positioning systems (GPS) on the deck of a boat, and the T-Rex Transom Saver with Prop Lock, a combination transom saver and propeller lock.
Frantz and Kraatz have even changed their mindset about locks, from planning ways to beat the competition at their own game to planning their next consumer-friendly invention.
“We create products that we know customers have a need for,” Kraatz said. “For instance, their GPS or fish-finders are getting stolen, or their propellers are getting stolen. We like to come up with problem-solvers, and people are taking notice. When they invest in an expensive propeller, they want to ensure that it is not stolen from them.”
The T-Rex, a combination transom saver and propeller lock, was actually suggested to DuraSafe by a dealer. According to Kraatz, the dealer mentioned that propellers can cost up to $800 and are stolen frequently.
Instead of adding an extra lock to a trailer or boat, DuraSafe came up with a two-in-one solution that is easy to use and costs between $59 and $69.
Kraatz said most consumers who tow their boats already have a transom saver to protect the outboard motor and to stabilize the transom while the trailer is towed. By adding a propeller lock to the typical transom saver, DuraSafe is providing consumers with insurance against theft of both the propeller and the transom.
DuraSafe’s most popular product is the Marine Electronics Lock. The company has sold 15,000 electronics locks since March. They retail at $14.99 to $16.99 per lock.
“The Marine Electronics Lock is a worldwide patent pending product that replaces one factory knob on either side of an electronics unit such as fish-finders, GPS units or very high frequency (VHF) radios,” Kraatz said. “You screw it in like you would the factory knob, turn the key, and it spins freely in the locked position.”
“Every time the fish-finder customers go to a marina, they have to take all of their equipment off of the boat deck, tuck it down in the galley, lock it up. Sooner or later, the plug is going to wear out from constantly taking it in and out,” Frantz said. “That is why the electronics lock is so popular, because it is what consumers are looking for.”
DuraSafe is in the final stages of development for electronics locks for VHF radios, which Frantz suspects will become a top seller because of radio requirements for boaters.
With all of DuraSafe’s recent success, Frantz and Kraatz are now able to plan for the future growth of the company and are finally making a profit.
“Business is a lot different for us now than in the past because everyone wants our products,” Kraatz said. “In the past, we were competing with existing products, trying to get the business while offering nothing new. The distributors already had similar products, so why should they change? Now, these new products are getting our foot in the door.”
Frantz and Kraatz saw the marine industry’s reaction to their products firsthand when they attended their first trade show. The Marine Aftermarket Accessories Trade Show (MAATS), an annual event presented by the National Marine Manufacturers Association (NMMA), was held in Las Vegas in July.
Frantz said he did not walk out of any meeting at the show without a buyer purchasing something. Many took at least three products made by DuraSafe, he said.
The NMMA awarded DuraSafe with the 2004 Product Innovation Award for the Couple-Mate self-aligning trailer hitch guide. The Marine Electronics Locks line has been featured in seven trade magazines.
“We learned a lot from the MAATS show and have had such great feedback from that show that we will definitely be there next year,” Kraatz said. “We will not concentrate on the marine industry, but it has consumed so much of our time that it is the direction we are currently going. There is so much potential outside the U.S. that we have no idea how much the business can grow.”
Frantz said the fact that to compete in the lock industry means that he must outsource his production still bothers him, but it is a necessary evil to enable him to stay in business.
Although they would rather sell American-made products, Frantz and Kraatz said because the competition is outsourcing to save money on production, the price difference would deter consumers from choosing DuraSafe over a competitor’s brands.
“There was somewhat of a price difference for products being made in the U.S. vs. outsourcing and importing them,” Kraatz said. “Basically, when we got to market, we found that if we couldn’t meet or beat the price, there was really no interest, regardless if it was made in the U.S.”
If the outsourcing trend is reversed in the future by tax breaks and other incentives for companies to keep their manufacturing operations in the United States, Frantz said he would consider starting up the machines at Frantz Machine again.
Until that equation changes, American manufacturers will continue outsourcing their production to China to reduce their costs for production, employee wages, health care insurance and environmental compliance, Frantz said.
For now, Frantz instead is focused on next year’s MAATS event, where DuraSafe has already signed up and doubled its booth space.
“We already have four new ideas. Three are patent-able,” Frantz said. “It is hard to say if we can continue to keep up with innovative ideas and produce an innovative product, but that is our goal. We want to keep inventing or coming up with something that is not out there, or something that is out there, only we are going to make it better or lockable.”
Frantz and Kraatz currently have three other employees at DuraSafe who help with product development, testing and design.
DuraSafe operates within the Frantz Machine building at 1785 N. Johnson Road in New Berlin, but Frantz said he is in negotiation for 2,500 square feet of additional warehouse space nearby.
He wants DuraSafe to have its own location, which may be sooner than either Frantz or Kraatz could have expected a couple of years ago.
“Every day, there is great news,” Kraatz said. “When we started in 2000 as a lock business, we hit a wall when we realized we couldn’t make our products in the U.S. or at Frantz Machine. Now, with our new products, we have had interest from France, Italy, New Zealand, England. We have already shipped to Australia and just received a call from distributors in Canada and South Africa.”
Frantz said he decided to make locks because the receiver locks for trailers were something his machine shop could easily produce on the side and would allow DuraSafe to be a separate company.
Since innovation became the answer to DuraSafe’s shortcomings, convenience and peace-of-mind for his customers are now Frantz’s top priorities.
“If you can stop products from being stolen from consumers, especially when they are on vacation, that is a problem-solver in itself, and it is helping the person,” Frantz said. “If you get your fish-finder stolen, it ruins your fishing trip, or even worse your boat or trailer, or your propeller.”
The success of the new products also is increasing sales for the receiver locks that DuraSafe originally tried to sell to distributors. Kraatz said the rust-resistant stainless steel receiver locks that DuraSafe produces are becoming more popular because of their ability to cross over from the boating industry to the automobile and towing industry.
When the company maximizes its potential in the marine industry, Frantz hopes to create locks for other applications. DuraSafe already has a motorcycle lock line with locks for helmets, jackets and wheel discs.
“We are basically targeting the marine, hunting, fishing and automotive industries,” Frantz said. “But we can branch out. I mean, we can make a lock that locks anything. We have the research and development capabilities at Frantz Machine. Show us what you want locked, and we will lock it.”
DuraSafe Locks Inc.
Location: 1785 S. Johnson Rd., New Berlin
founded: 2000
OWNERS: Don Frantz, president
web site: www.durasafelocks.com
AWARD: 2004 National Marine Manufacturers Association (NMMA) Product Innovation Award for DuraSafe’s Couple-Mate Self-Aligning Trailer Hitch Guide
