FOR SOME COMPANIES, a downturn is something to ride out. For others, it is a chance to thrive.
Despite a slowdown in the trailer market in recent years, Reliance Trailer Manufacturing in Cotati, California, has been making some strategic moves that are expected to make it even stronger.
These moves include acquisitions of other trailer manufacturers and the addition of key management personnel.
The company's most recent acquisition occurred last year when Reliance purchased Sturdy-Weld, a dump body and pup trailer manufacturer in the Seattle suburb of Lynnwood, Washington.
The acquisition of Sturdy-Weld strengthened the presence of Reliance in the Northwest, particularly in the Seattle area, which is the most significant in the region, says Brian Ling, Reliance president.
Reliance and Sturdy-Weld have similar product lines. As such, Reliance was able to transfer manufacturing of the Sturdy-Weld bodies and trailers to existing facilities in Spokane, Washington, and dedicate the Sturdy-Weld location to parts and service functions.
“We wanted a strong sales presence in Seattle,” Ling says. “We had sales people who had been covering the area, but we did not have a physical presence in that market.”
Reliance has approximately 23 employees at the Sturdy-Weld location, including sales, parts, and service personnel. The 15,000-sq-ft facility includes a fully equipped shop and paint department, allowing the company to offer a wide range of trailer and dump body repairs and services.
Another acquisition
The Sturdy-Weld purchase was simply the latest for Reliance. In 1998, Reliance purchased the assets of Alloy Trailer out of bankruptcy, providing the company with a sales and manufacturing base in eastern Washington.
According to Ling, the Alloy case was an example of a good manufacturer of custom trailers getting outside of its niche.
“We had entered the high-production van business,” Ling recalls. “But we couldn't build a premium trailer in a market that doesn't want one.”
Ling uses the term “we” because he was part of Alloy from 1983 to 1984. A brand new college graduate, he went to work for Alloy just as the company was setting up a new plant specifically for large orders of dry-freight vans. Despite the fact that his father owned Reliance, he chose to move to Spokane to learn how someone else built trailers. Alloy put him to work right away to help get the new plant up and running.
“It was like getting a master's degree in trailer manufacturing,” he says.
After getting the plant online, he left the company and started his career at Reliance. Ironically, one of the first things he did after Reliance acquired the assets of Alloy was to shut down the plant that he helped start.
Reliance continues to build trailers in an older plant that Alloy operated in Spokane. It is here that the company produces a variety of low-volume, specialty trailers such as wood-chip trailers, lowbeds, platforms, curtain-side vans, and converter dollies. These niche products have remained profitable, Ling says.
“Under Reliance ownership, we generally have stayed out of the van trailer business,” Ling says. “We still make about 20 high-spec dry-freight vans per year, but we know that we aren't going to be competitive with manufacturers back in the Midwest when it comes to producing large orders of dry-freight vans.”
The two acquisitions have enabled Reliance to achieve two goals: obtain a manufacturing plant in the Northwest and establish a retail presence in the Seattle area.
“So much of our business comes from the aggregate and construction markets,” Ling says. “Construction is very regionally oriented, and you can't really serve this market well if you are more than 500 miles from your customers. Seattle is by far the biggest market in the region. The acquisition of Alloy gave us the regional manufacturing capability we wanted, and we have a retail presence in Seattle with our Sturdy-Weld operation.”
Investing in people
Companies are only as good as the people who work there. Perhaps most important among the investments Reliance has made recently is the recruitment of several key employees to its management staff. Among the recent hires: a chief financial officer, vice-president of sale, and chief operating officer.
Dave Wheatman, hired in April as the chief financial officer, is a CPA with experience at the Ernst and Young office in Chicago. Prior to joining Reliance, he had served as the CFO for the local office (Sonoma County) of a national company.
Bill Russell joined the company as its executive vice-president of sales. He had been the western regional sales manager for Paccar Leasing.
Rod Richardson, the chief operating officer, has 27 years of industry experience, including service with MGM Brakes and group vice-president for Echlin Industries.
Industry issues
As a result of the death of Norm Hutchinson, last year's vice-chairman, Ling is now serving his second consecutive term as chairman of the Truck Trailer Manufacturers Association.
Ling sees tort reform as the single biggest issue facing trailer manufacturers today. He would like to work in cooperation with the American Trucking Associations to provide relief for the industry in this area.
“Politically, there is no hope for California to change its tort reform laws,” he says. “For there to be any tort reform here, it will have to come nationally.”
Lengthy history
Reliance has seen a lot of changes in its history. When Milton Konetsky started the company in 1914, California had few roads. The company's two primary products were small trailers to pull behind Model T Fords and conversions of Model Ts into what now would be considered pickups.
By 1918, the company was manufacturing its own trucks and trailers. Railroads and schooners were the primary way to transport freight in those days, with the trucks used to move rail cars around switching yards.
During World War II, the company was taken over by the federal government to manufacture products needed to fight the war.
The Ling family became associated with Reliance in 1964 when Don Ling, Brian's father, formed Redwood Reliance Sales Company to distribute Reliance trailers in Northern California. Redwood Reliance purchased the assets of Reliance Trailers in 1969, five years after the death of the founder, Milton Konetsky.
While the past two years have been difficult for trailer manufacturers, Reliance has had its eye on the future.
“We are positioned now to be a dominant player in our primary markets in the western United States,” Brian Ling says.