A Conversation with Marty Brown, CEO of Colite International

By Alan Cooper
January 21, 2013

 

MidlandsBiz:
What is your core business?

Marty Brown:
Colite manufactures high quality, brand identity sign programs for large Fortune 100 corporations, mostly retail, who have a global presence.  Our end products include building signage, monuments, pylons, lettersets, and our own patented Signature LEDs letters that we put on signs. We offer our clients a project management process that includes design, prototyping, engineering, packaging, installation, permitting warranty, and even maintenance.  We pride ourselves on superior service, production, and engineering. 

MidlandsBiz:
What are your major market segments?

Marty Brown:
We have four major markets: financial, hospitality, retail, and corporate. 

MidlandsBiz:
Give a brief history of Colite.

Marty Brown:
The company has been around in Columbia, South Carolina since 1947.  

Pete and I grew up in the sign business working at Colite when it was owned by our father and his partners.  After running the business for a few decades, they sold it in 1990.  Unfortunately, the new owners went out of business, so Pete and I restarted the business.  In 1992, we purchased the equipment, set up a rental agreement for the facility, and started rebuilding the company.  We have grown the business from $2m a year to over $20M a year. Our cumulative revenue for all these years is now approaching $300 million and we have exported products made in South Carolina to well over 100 countries.

MidlandsBiz:
Who are your customers?

Marty Brown:
From the early stages of the company, our goal was to be a high quality supplier to top line global brands.  We work with companies such as Limited Brands (Victoria Secret), Holiday Inn (one of our top clients), Cartier, Dell Computers, IBM, and Texas Instruments. In 2008, we started doing business with Holiday Inn and for four years in a row, they were our largest client.  To have a big client like that stick with you through the recession is incredible. 

 

Working with top line companies is exciting, but it’s also a bit nerve wracking because when it comes to design, materials, specifications, colors – every one of our clients is different and very  demanding when it comes to protecting their brands.  The bottom line is that you don’t make excuses with these types of clients.  You have to gear your entire organization towards meeting expectations of quality. 

If you are able to deliver on quality, then companies will reward you with repeat business.   Over the years, we have always had a good mix of repeat and new business.  60% of our business is repeat business.  In 2013, our two top clients are new clients.  New business is also critical to our success at building the business.   

MidlandsBiz:
When do companies need signs? 

Marty Brown:
Not all of our clients are busy with signage every year.  Our orders increase whenever our clients are expanding their locations or are involved in a merger or an acquisition.   In recent years, merger activity has increased, so there has been a subsequent increase in demand for re-branded signage. Corporate spinoffs are also a big driver of our business. 

MidlandsBiz:
Give an industry analysis of the sign business?  What is the competitive landscape like?

Marty Brown:
On the domestic side, there is quite a bit of competition.  There are some very large sign companies scattered around the United States that we compete with. 

On the international side, we have a lot of competitors in Europe; not so many in Asia, and the ones that do operate in Asia generally do not sell into the North American market.  When we look at a potential order for one of our large, multi-national clients such as Cartier, IBM, or Dell, there is not the level of International competition that you might think. 

The market is somewhat fragmented – and companies will often use different suppliers in each of Asia, Europe and the United States.  One of our key value propositions is that we offer companies a single, supplier for all of their signage needs.  Colite can deliver product literally around the world.   Our corporate and retail orders in the global marketplace are growing steadily. 

MidlandsBiz:
What are the challenges that you face in building a company from a 2M to $20M a year?

Marty Brown:
Besides the facility, the biggest challenge is getting the internal team right. There are a lot of steps in the process of making a sign.  We have project managers, designers, AutoCad operators, production supervisors, purchasing agents etc.  You have to build a team that can grow with the company and who have the skill sets to be able to deliver on our promise of making top quality, highly customized products.  It’s not all machine driven; employees have to have a lot of skill and dedication….

MidlandsBiz:
Where do you manufacture the signs?

Marty Brown:
We have manufacturing partners or centers around the world, but our main manufacturing operation is right here in Columbia, South Carolina.  Five years ago, our manufacturing operations were located in West Columbia.  Based on several years of increasing sales, we started exploring the possibility of moving into a larger facility, and in 2008, we moved into our new facility in the SCRA Research Park.  

MidlandsBiz:
2008?  Wow, that must have been an interesting time to move into a new facility?

Marty Brown:
Entering into the recession, we were at $22M in sales, we had just moved into this new building and we were cranking along.  Our sales remained high though to the end of 2009, then it hit, virtually overnight, some of our retail clients like Claires and Zales Jewelers just stopped ordering.  We figured that the worst case scenario would be a decline to $18M in sales.  In the end, our sales ended up dropping 30% from $22M to $16M.  In this new facility, we couldn’t make money at $16M. 

MidlandsBiz:
What did you do?

Marty Brown:
So, we had to make some tough, good decisions about right-sizing this facility, cutting our overhead and head count in order to break-even at $16M.  I’m sure a lot of other companies had to go through this process during the recession, but it’s not easy.  You just have to face it and find a way to ensure that the organization survives. 
 
Our focus shifted more to what it takes to make money, to be profitable, and not just growing the top line of the business. We were forced to become more efficient.  We calculated that in a 30 day building process, a sign stayed in the plant for five days.   Twenty-five days was spent in design, pre-production, purchasing, set-up etc.  We realized that was not a good model.  We streamlined our entire manufacturing process. We are using our suppliers around the world more efficiently
so that we do not have to grow our costs here in the United States. We eliminated positions that were not creating value and created new ones that did add value.  As a result, Colite is now able to generate the same revenue with ½ the number of hours in the plant and our revenue per hour in production has increased substantially.

Skip ahead to 2013, we are seeing some top line growth in the company and predict that our sales will return to the $22M level.  The key difference is … now our operating margins are much better. 

MidlandsBiz:
So, in some ways, the recession was a good thing?

Marty Brown:
Well, yes, a good thing – but in a bad way.  Don’t get me wrong, 2010 was a very, very bad year for us. 

Even though the timing was not great for moving into a larger facility, it was still the right decision.  We have a lean production facility now with high quality people and great equipment so we can manufacture top quality products right here in the US. We are definitely looking to take advantage of some nice opportunities out there. 

MidlandsBiz:
Why do you choose to continue manufacturing in the United States?  Why not move all manufacturing overseas?  Would that not be cheaper?    

Marty Brown:
Many of our internal activities such as where to manufacture the product are driven by the client’s needs.  Many of the signs that we manufacture are very large, so it just does not make sense to ship the final product from an overseas market such as China. 

Another factor is that many of our orders are time sensitive. Often, we only have four weeks to produce the sign, so there is not enough time to ship the product from China or Germany.  Scheduling and logistics often necessitate that we do all of the work in the US.  Signs are frequently the last decision that is made on a major project.  The building is built, the roads are paved – but the signage comes in at the eleventh hour.  But if the client needs the signs up on specific day when they are doing the ribbon cutting on the new building – we have to be ready. 

MidlandsBiz:
What are the biggest challenges that you face in this industry?

Marty Brown:
The service side of the business is critical.  All of our customers demand that their products look good and that they are delivered on time.  People don’t’ realize the effort that you have to put in to get permission to put up signs in the malls, or on the streets or on buildings.  There are so many challenges out there, that in comparison, it makes the actual sign production process simple.  Every single township, every state, even districts within a town, might have different codes.  Even here in Columbia, Forest Acres is different from Richland County, and Richland County is different from Camden.   But, that is part of the service that we offer.  If it was easy, everyone would be doing it.  On the international market, it’s even 10 times more complicated.

MidlandsBiz:
What is your education and background? What are your roles in the company?

Marty Brown:
Pete and I both went to Notre Dame.  As far as being involved in the day to day running of the business, I am more on the sales and customer side of the business; Pete runs the operations, production, engineering, and the organizational side.  It’s been a good split.  I travel a lot to Europe and Asia so it’s great to not have to worry about what is going on here in South Carolina because I know we are a great team.

 
MidlandsBiz:
Is this a capital intensive industry?

Marty Brown:
It is capital intensive.  There is a lot of expensive equipment that you need to have to be competitive and efficient in this business. Pete and I are comfortable with our investment here, but it is a significant amount.

MidlandsBiz:
How well is this region doing at workforce development?

Marty Brown:
We work through the tech schools to look for talented people.   We have very competitive wages, but we struggle to find local high skilled production labor.  We do a lot of hands on fabrication, a job that is not for everybody.  It would be nice to have a deeper pool of talent here locally. 

MidlandsBiz:
What role do you see Colite plays in the local community?

Marty Brown:
I see our first role as that of an employer of 85 local employees.  Our first priority is to make sure that we remain profitable and that we continue to work on improving our balance sheet.  Keeping the company healthy is our main goal right now. 

Over the years, Colite has supported many local charities: HomeWorks, Families Helping Families, The American Heart Association, and local schools-St. Joseph and Cardinal Newman. Pete is also on the Board at Providence Hospital and is the Chairman of the Jobs Economic Development Board (JEDA).

MidlandsBiz:
Talk about your goals for the future.

Marty Brown:
Our main area of opportunity is in the international market.  We have sales people in Europe, Asia, Latin America, and we are looking to put people in other emerging markets.  We are well positioned to grow in Asia, Africa, and the Middle East.  There is less competition in each of these markets, and less sophisticated suppliers.  Global companies come to rely heavily on companies that they can count on, ones that can deliver a very sophisticated product.  When those companies grow into those markets, we hope to be able to fill that void.

$25M in annual sales is definitely within reach.  $30M might be a stretch, but possible.  But again, we are definitely not looking for top line growth at low margins.  Some of our competitors are out there going after big box retail and they bid projects at very low margins.  It’s just not sustainable. 

The amount of business that you are doing has to be manageable.  That is the key.  We do not want to set unrealistic goals.  We have hopefully learned from our mistakes and are doing the right things to grow the business in the long-term.  Our primary goal is to become a very good, profitable, lean organization.  We have gone through some tough times over the past four years, but this has forced us to focus on what is most important – building up a great team internally.