The producer of many marine stainless-steel products has weathered the storm and increased sales
At a time when many companies have cut costs and reorganized as a way to survive, stainless-steel-product manufacturer Dive N Dog has outgrown its facilities because of soaring sales. As of August, sales were up 20 percent for 2010 over those of 2009 in the same eight-month period, and the company is forecasting a total increase in sales of 50 percent in 2010 over 2009.
And 2011 is expected to show continued "double-digit growth" as a result of the addition of several new customers and the implementation of several new projects, according to Scott Rowles, the company president. Dive N Dog saw impressive growth in 2009 - sales were up 200 percent and up "just shy of 100 percent" in 2008, Rowles notes. The privately held company does not release revenue figures.
Based in Naples, Fla., Dive N Dog in 2009 shipped approximately 300,000 units across its spectrum of more than 400 marine and non-marine products. "The balance between marine and non-marine industries has helped us keep growing," Rowles says. "We started looking outside the marine industry before the current downturn, which turned out to be a good move."
The owners have expanded manufacturing and offices, adding a distribution facility near the 5,000-square-foot facility in Naples, tripling the company's footprint, Rowles says. "We didn't have enough space for storage and movement of stock products, and we have also greatly expanded our production in the U.S. into larger products in non-marine industries, which requires more space," he says.
Eventually, the new facility - about 10 minutes away from the main office - will be equipped with solar panels mounted on the roof, says Melissa Cahill, marketing director. And existing and new manufacturing facilities also will be equipped with a water reclamation system to recycle water used in the manufacturing process.
"There aren't a lot of ways to become greener in stainless-steel manufacturing, but in these two areas we could go green, and we decided to do so mainly because it's a way for us to give back and to help the environment," Cahill says.
The company also is shifting the bulk of its overseas fabrication operations from China to a yet-undecided location in Central America to reduce shipping and labor costs. The move will decrease turnaround time from when an order is placed to its final delivery, improving cash flow, Rowles says. He hopes the shift to Central America will occur in the next two years, although the company will maintain a manufacturing presence in China. Rowles says oversight the company can provide at the closer location will immediately pay dividends.
"Efficiency will increase overall because we will go from a manufacturing facility managed on the other side of the globe with 18-hour flights to a facility in the next time zone with two-hour flights and on-site U.S.-based/educated management and quality-control personnel," Rowles says.
Among the stainless-steel products Dive N Dog manufactures are boarding ladders, grab rails, cleats, rod holders, anchor rollers and vents for boatbuilders and other segments of the marine industry. It is an original equipment manufacturer for about 30 companies - Sundance, Ribcraft, Nautica International, Maverick, Island Packet and AB Inflatables among them - and it does custom stainless-steel fabrication work. CNC milling, machining, bending and electro-polishing of stainless steel are some of its capabilities.
In addition, Dive N Dog - with about 85 employees in the United States, China and Vietnam - manufactures automotive aftermarket parts, such as aluminum cold-air intakes, stainless mufflers and headers. It also makes industrial parts for other industries, including companies serving the renewable-energy industry and heavy-equipment manufacturing.
Rowles says about 60 percent of sales are from the marine industry and about 40 percent are from non-marine industries. Rowles attributes the company's rapid growth since 2007 to the diversification of the business and to its ability to cut costs for customers - through the use of advanced robotics technology and streamlining production, for example.
Rowles says most customers have seen price reductions of 10 to 30 percent on orders placed for 2010. The company is essentially passing on the savings it has realized through more efficient manufacturing, he says, and additional cost reductions for its products will occur when more savings are realized after overseas fabrication operations are moved to Central America. Labor costs in China have increased by 50 percent in the last three years. That means labor costs in Central America are now about 50 percent lower than those in China, he says.
"The increased labor costs in China aren't the key motivation for the shift to Central America," Rowles says. "The key motivation is shortened product delivery cycle time and shortened cash flow turnaround time. It usually takes about six weeks to ship a product from China, but from Central America it's about one week."
Nicaragua and Costa Rica are the two countries Rowles is considering. Each has good Pacific harbors. "The country we favor more at this time in terms of location and access to transportation is Nicaragua," he says.
Dive N Dog may seem an odd name for a stainless-steel manufacturing company, but it derives from the way the business got its start. In 2001, Rowles had recently closed a start-up software consulting company, bought a 47-foot catamaran and sailed it from the Caribbean to Australia, where he lived aboard with his two Labrador retrievers. Every time the dogs went for a swim, getting them back into the boat was a hassle.
As the saying goes, necessity is the mother of invention.
Rowles designed a ladder with wide stairs and a platform that enabled the dogs to board the boat without assistance. Thinking that other boaters could benefit from the device, he bought PVC tubing from a plumbing store and set about refining the design.
"I didn't know engineering software and I didn't have an engineering background, so the easiest way to make a three-dimensional shape was to buy the PVC tubes and design the ladder that way," Rowles says.
When Rowles returned to his home in Naples, he bought a telescoping ladder from a marine supply store, cut it apart and worked with a stainless-steel fabricator to make a prototype ladder based on the PVC tubing he'd put together in Australia. When the prototype was done, he brought it to the Miami boat show and the response to the product was positive, resulting in the company's first distribution deal.
Rowles, 39, and his father, Kerry, who is still actively involved in the company, invested $1 million to get the business going, starting in 2003, and for the next four years cash flow was negative as expenditures for marketing and other services exceeded gross revenue. Dive N Dog turned a profit for the first time in 2007, Rowles says.
"We never stopped marketing, even when we were losing money," he says. "What turned things around was our success in adding multiple retailers and distributors and OEM."
Initially, Rowles approached contract stainless-steel fabricators to make three versions of the ladder and the company's first three products: the Boarding Staircase, Folding Stair Platform and Ladder Platform. However, quality was low and costs were high, eating into profits and making it difficult to get distributors. "The price point was just too high," Rowles says. "That first year we sold about 100 units."
Rowles and his father turned to making the ladder in-house, acquiring manufacturing and warehouse space, offices and machinery in 2004. "We did extensive research on the machinery. Most of what we bought was fully automated," Rowles says.
Regardless of the obstacles, he and other members of the family continued to grow the business, adding new products every year, many of their own design. Increasing the number of products and product categories provided a solid foundation for the company. Success came one step at a time, Rowles says.
"Scott and Kerry realized that there was a need for new and innovative stainless-steel products and that opportunities existed to expand beyond that first ladder," Cahill says. "The product line kept growing."
This article originally appeared in the September 2010 issue.