License to Build
What are SCMs and how can you use
them to your advantage?
A backyard enterprise evolves
into a licensing force thorugh its innovative products.
By
Ron Hyink
Unless you observe a herd of Herefords
stampeding through city streets, you might not make
the connection between cattle and tall buildings –
except, of course, when you’re talking about
precast concrete. In fact, those two things –
cattle and tall buildings – represent the earliest
and the latest of a steady stream of innovative precast
products that have been bringing home the beef to
Smith-Midland Corp. of Midland, Va., for nearly 45
years.
Rodney Smith, president of Smith-Midland, gives due
credit for the company’s start in 1960 to his
father, David Smith. David was a dairy farmer who
was reaching out for new ways to supplement his income
when he struck upon the idea of cattleguards made
out of concrete.
The cattleguard, which takes advantage of the skittish
nature of cattle that dare not tread over one, has
been a tremendous benefit to farmers and cattlemen
by eliminating the need for a gate and, along with
it, the concern that their livestock may stray off.
With this arrangement, a farmer suddenly becomes exempt
from having to get out of his vehicle, open the gate,
drive up a few feet, then get out again to shut the
gate.
Up until the time David’s idea became the first
milestone for an upstart business dubbed the Smith
Cattleguard Co., dairy farmers and cattlemen were
relegated to making their own cattleguards. “The
only competition was homemade cattleguards made out
of pipes welded together and placed down on the road,”
explains Rodney.
But the homemade varieties require plenty of labor
to build and set in place, and they don’t stand
the test of time. As for the precast concrete cattleguards,
they are delivered to the site and installed, and
they last practically forever. “So our company
was born (with) the introduction of a product that
nobody had used before,” says Rodney. The Smiths
couldn’t have known then that Smith-Midland
Corp., as it was later named, would continue to repeat
its legacy of introducing innovative precast products
and become a successful manufacturer and product licensor.
Reaching
out
David succeeded in developing a product that could
supplement his income, but he had no marketing strategy
in place. “He didn’t really believe in
telling everybody about it. He wanted to let people
find out about it – and that was too slow,”
says Rodney. After six months, Rodney joined in to
help sell them. “I was still on the farm, but
I was selling farm machinery for a living. So we combined
my sales ability with this original product.”
Rodney’s first tactic was to take his grocery
money and buy an advertisement in a popular magazine
serving the cattle industry. Whenever an inquiry came
in, Rodney showed up personally with photographs of
the cattleguards. “And if they were the slightest
bit hesitant because they’d not seen such a
thing before, I would say, ‘I tell you what,
I’ll deliver the product and put it in place
for you, and if you like it you can send me the check,’”
recalls Rodney. “All of a sudden, it changed
into a no-risk proposition, and it was pretty easy
to take orders.” With that bold offer, his closing
rate surged to 90 percent. “And we never had
a farmer who didn’t pay his bill.”
It didn’t take long for the precast cattleguards
to command the attention of cattlemen everywhere.
Soon Rodney was delivering the product to distant
states such as New York, Michigan, Georgia and all
points in between. In fact, the long-distance deliveries
became a big issue such that a critical decision was
looming: Reduce transportation costs by opening more
manufacturing plants in the market areas. But Rodney
took a different route, and that was to offer licenses
for others to build the product.
“So that’s how we got into the licensing
business, because it’s not economical to ship
your products so far that the freight costs more than
the product,” says Rodney. “By licensing
other precasters, we were able to get the product
into states like Texas, Illinois, Kentucky and Florida,
and with local producers and local freight rates.”
Ashley Smith, Rodney’s son and vice president
of sales and marketing, says there was a resistance
among many precasters to take on a license to manufacture
another precaster’s products (see the sidebar
“License to Build”). “I think what
we’re seeing now is second and third generation
precasters are becoming very interested in licensing,”
says Ashley, a veteran employee with the company for
20 years.
Barriers
to success
Cattleguards weren’t the only product keeping
the company going. Continuing its service to the cattle
industry, concrete fencing and heated water troughs
were added to a growing list of product offerings
that gave Smith-Midland some solid footing in the
industry.
Soon the precaster caught the attention of the local
power company, which needed concrete transformer pads.
“Somebody else was making them, but they only
made them when they felt like it,” explains
Rodney. Tapping into the transformer pad business
paid off after a short while. “Then they came
back and told us that they were putting underground
utility vaults in Alexandria, Virginia, and asked
us to make precast concrete utility vaults. That business
has never stopped, and that’s been about 40
years.”
While these few products put Smith-Midland Corp. on
the map, the company was just getting started. A business
doctrine of improving and refining products was beginning
to take shape. Suffice it to say that complacency
was never a part of that doctrine. When Rodney started
looking into the traffic safety barrier market, he
made some improvements on an old theme and developed
the first barrier rugged enough to be rented and reused.
“Customers could call and order 10,000 feet
of barrier, use it until the job was completed and
then send it back,” says Rodney. “They
wouldn’t have to own it, they wouldn’t
have to stockpile it.”
Some 20 years later, those safety barriers, a tongue-in-groove
design, transcended into the proprietary J-J Hooks,
which feature a self-aligning system that allows them
to be installed and removed quickly and to be configured
in tight curving patterns. Since the company started
issuing licenses for the J-J Hooks, precasters in
countries around the world have been making them.
Having traveled to 41 countries to investigate the
precast industry on a global scale, Rodney confidently
proclaims that these have become the largest-selling
proprietary barrier in the world.
No getting
around it
Traffic barriers and other security products have
caught the attention of the U.S. government as well.
Smith-Midland has been the go-to precaster for many
federal contracts involving security dating back several
years, and the post-9/11 world in which we live has
revved up the company’s barrier production.
“A long 20 years before 9/11, we have furnished
concrete barrier to block off the side streets for
the presidential inaugurations, and we worked for
the Secret Service and the Washington, D.C., police
for more than 24 years,” says Rodney.
The company’s most recent big-ticket job involved
traffic barriers at the Republican National Convention
in New York in August. As the NYPD pondered how to
handle the security, it called the Secret Service
who in turn called on Smith-Midland. The company subsequently
delivered 125 tractor-trailer loads of concrete safety
barrier to New York City, enough to totally encircle
Madison Square Garden where the convention was held.
“And when the convention was over, we took the
whole 125 tractor-trailer loads and removed them.”
Matthew Smith, Ashley’s younger brother and
sales manager of the company’s Utility Products
Division, was on site for that demanding project.
“That was big,” he says. Matthew, who
has been with the company for 15 years, explains that
the barrier project was unique in several ways. For
one thing, the barriers had 2-foot-tall fences along
the tops that would serve to contain pedestrian traffic.
Sally ports, or vehicular checkpoints, were also a
part of the security controls. “Anybody who
wanted to get inside Madison Square Garden had to
go through one of these sally ports,” says Matthew.
Several sally ports were placed around the perimeter
of the convention site, and each sally port utilized
two pop-up barriers to control access. As a car approached,
the authorities would check credentials then lower
the first pop-up barrier and motion the car forward,
where the second barrier blocked further access. Once
the vehicle was inside, the first barrier came back
up. “Then they’d be stuck there in the
middle,” says Matthew. The authorities could
then screen the vehicle for explosives before lowering
the second barrier.
The barriers once again proved their effectiveness,
and Smith-Midland once again won the contract for
January’s presidential inauguration. [Not yet
at this point, still pending. Need to check.]
Easi does
it
Continuing the parade of Smith-Midland offerings for
licensing over the years were products such as Sierra
Wall sound walls and privacy fences; Durisol sound-absorbing
concrete used with the Sierra Wall systems; Easi-Set
transportable buildings; Sunspace passive solar homes;
and Slenderwall architectural building panels. To
support its licensees, Smith-Midland also created
Ad Ventures, the company’s marketing arm. Smith-Midland
opened a second precast plant, Smith-Carolina of Reidsville,
N.C., as well.
Like the J-J Hooks, the Easi-Set transportable buildings,
which the company started building in the mid-’70s,
became a big hit. “After we had been licensing
for a number of years and we realized the potential,
we created a separate company called Easi-Set Industries
exclusively for the precast licensing business,”
says Rodney.
The Easi-Set transportable building concept started
out as a modest 10 by 12 building. As Rodney puts
it, a customer could get an instant building without
having to dig footings, lay block, put up wood rafters
and a shingle roof. “All they had to do is make
one phone call and tell us where to put it.”
New designs progressed over the years, and now the
company or its licensees can deliver a precast building
out of stock as large as a 40-foot Clear Span and
up to 200 feet long.
With bigger came better, and Easi-Set buildings now
offer heating and air conditioning, tiled floors,
insulated walls, post-tensioned roofs and floors,
and a variety of exterior finishes.
Up against
the wall
Slenderwall is the most recent product offering the
company has hung its name on – literally. Slenderwall
is an architectural wall panel that hangs on the exterior
of a building. The design combines a 2-inch-thick
precast concrete panel with galvanized or stainless
steel studs and isolates it from the building’s
structural stresses such as high winds, seismic shock,
and expansion and contraction.
Like the Easi-Set genre, the panels come in a variety
of exterior finishes. Smith-Midland has added that
special touch of beauty and style to highly visible
places such as retail and entertainment developments
in Times Square, the New Jersey Institute of Technology
in Newark and the Marriott ExecuStay in New York City.
Rodney says products like these are helping the precast
concrete industry remain competitive. “It’s
pretty exciting because we’re changing the way
people do business,” he says.
As an example, Rodney points out that the Slenderwall
panel system is one-third to one-half the weight of
a conventional competing product. And that plays a
huge role where the soil conditions found in many
cities are not perfect for building foundations, such
as along rivers or coastlines.
“People have told us they had saved enough money
on the pilings that they would have to drive to get
the proper foundation to pay for half of the exterior
wall,” says Rodney. The Slenderwall precast
system allows old buildings to be renovated where
the structure under most current building codes won’t
hold heavy exterior cladding. “And guess what?
The Slenderwall licensees are right in there, where
we would have been left out otherwise.”
What
next?
From the very beginning, Smith-Midland has come up
with new and innovative products, one after the other.
It’s no secret that each of its offerings has
seen success to some degree. What will come next?
Is there something new and innovative on the drawing
board? Absolutely, say the Smiths. After 15 years
of field testing and monitoring by marine engineers
and state Departments of Natural Resources, Beach
Prisms – an Easi-Set shore erosion control product
– will be available soon for licensing.
Whatever product comes through the company’s
production door, it’s sure to come with Smith-Midland’s
personal touch of innovation and more licensing.
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