by Luke Jones
Posted 6/24/2013 12:00 am
Updated 5 months ago
To survive in the ever-evolving, multibillion-dollar laser industry, small manufacturers like Laser Tools Inc. of Little Rock need to get creative to grow sales.
Founder and owner Joe Wortsmith started Laser Tools in Little Rock in 1992. In the last decade worldwide laser sales have risen from $5 billion to $8 billion, with a brief dip in the last few years due to the recession. Laser Tools sells between $1.5 million and $2 million in products each year.
Laser Tools builds its lasers for industrial, commercial, mining, aerospace and surveying projects. Its products are certified for use in coal mining and other dangerous settings.
Being marketed to industrial companies, Laser Tools’ products tend to be heavy-duty. One laser that Wortsmith demonstrated was used in digging underwater passages for construction projects like the Panama Canal, and it can be dropped 10 feet onto solid concrete without being damaged.
Specific types of products involve high-intensity green light lasers, 90-degree beam benders, tri-beam prism systems, beam spreaders and other parts. All of these are used for practices like leveling, alignment, calibrating and so forth. They are designed and constructed in-house at the Laser Tools machine shop in Little Rock.
Laser Tools’ client base, Wortsmith said, provides a margin healthy enough for the company to maintain 10 to 15 employees comfortably, and the company actually added a few positions this year.
One Frontier? Space
Nicolas Mayerhoeffer, Laser Tools’ head of marketing, said one of his goals is to increase the company’s sales to $5 million or higher within the next several years. One of his challenges is that growth in the industries the company supplies is fairly slow. According to Laser Focus World, a publication that reports on the photonics industry, the types of clients Laser Tools serve make up about a quarter of the total industry. In 2011, sales in that area worldwide were $2.78 billion and rose to $2.94 billion in 2012. They are expected to stay at about $3 billion this year.
Mayerhoeffer said the company will need to start looking at other markets where revenue has greater growth potential.
“As a marketing person, I have to find other means of using our tools,” Mayerhoeffer said, noting that using lasers in secure data relays for the space industry is one possibility.
“As far as new industries go, space is a big one,” he said. “NASA has a big project — and not only NASA, but a lot of private companies — with mining asteroids, and of course, they want to have lasers for distance and measurements. That’s something Laser Tools, we hope, can have an impact on.”
Mayerhoeffer also has the task of continuing to market the company to potential clients in its existing markets, which he said is not very easy.
“It’s difficult to be sexy in the laser industry,” he said. “People just see a math formula and say, ‘What is he talking about?’ But we have to learn how.”
Lasers might be revered as the stuff of adventurous science-fantasy, but on Earth they tend to look like chunks of metal and glass or, at worst, a collection of mathematical equations.
So Wortsmith and Mayerhoeffer have endeavored to make Laser Tools stand out in the laser crowd. Tactics range from the orthodox to the unorthodox: When meeting with clients, Wortsmith always brings along a few bottles of his barbecue sauce.
“Joe came up with the barbecue sauce,” Mayerhoeffer said. “People remember, hey, that’s the guy with the barbecue sauce. It’s a recurring thing.”
But the job gets more difficult with international clients. Laser Tools has clients in several countries including, most recently, Russia. The barbecue approach is effective stateside, but not always with companies overseas.
That’s one reason why Mayerhoeffer launched the company’s new website, LaserToolsCo.com, and accompanying social media pages.
Filling a Niche
Meanwhile, the company must compete for clients with other laser companies. Fortunately, its market in Arkansas is mostly niche.
Laser Tools focuses its efforts on marketing and creating specialized devices on-demand for specialized needs. It carries its products all the way from the design stage to the retail stage. Its clients vary from individual customers to companies including Caterpillar, Ford, Entergy Corp., Lockheed Martin, NASA and the U.S. military.
“Everything here is about the perception of value,” Wortsmith said. “We don’t invent products until people ask for their application. Unlike many other people who do it the other way around — cost-up — we start from the perception of value-down. It’s an inverse relationship. That’s the driving reason of success for this company.”
To contrast, Power Technology Inc. of Alexander, which has multimillion-dollar revenue and was founded in 1969, serves the original equipment manufacturing market exclusively.
“We serve OEM customers,” said Walter Burgess, Power Technology’s operations manager, “basically factories that build and repeat the same product over and over again. That could be a range of two to three per year or up to hundreds or thousands a year. We don’t sell to individual people — that’s not the product we manufacture.”
OEM clients represent some of Laser Tools’ business, but not all. Another manufacturer, AGL Lasers of Jacksonville, has revenue of about $6 million per year and is similar to Laser Tools in that it performs design, manufacturing and sales. But Jennifer Fairchild, the company’s site manager, said AGL isn’t in direct competition with Laser Tools simply due to serving a different industry. AGL sells laser leveling devices to the construction industry, but differs in that its products aren’t used in hazardous environments.
Finally, Wortsmith strives to differentiate Laser Tools with a work model that emphasizes training employees in all aspects of the company’s business, making sure they are adequately compensated and rewarding them for continuing training.
For this reason, Mayerhoeffer said, finding workers to perform the company’s rather specialized duties hasn’t been too tough.
“Today in Arkansas we can find very good people to work with, no problem, as long as we want to train them,” he said. “We teach and train each other. Part of the training that everyone gets when they come on board is how to build a laser.”
“Early on, we determined that in order to be successful, I needed to get the smartest people around me,” Wortsmith said. “How do you keep them?”
One element of employee retention was decent pay. Wortsmith says he keeps top-level management pay level at a level proportionate with the rest of the business.
“Everyone here is gainfully employed,” he said. “As long as we can maintain that and stay in the black, I don’t need a bigger boat.”
Another part is the aforementioned training, and furthering that by rewarding employees for continuing the training on their own time. The company provides quarterly bonuses based what value the workers can bring to the company. Employees can take classes in a related field, for example, and the bonus will go up.
“Everybody is able to do the job of other people when they’re missing,” Mayerhoeffer said. “In a big corporation, you’d never see that.”
Christy York, the company’s accounting manager, said she gets to work with clients and has helped out in the machine shop. Adjusting to the company’s emphasis on learning multiple skills was difficult, she said, but the end result was rewarding.
“I’m not stuck at the accounting desk,” she said. “It helps a lot with morale and the comfort level of the company. It’s totally different than anywhere else I’ve worked.”