Business Week - Gimme Shelter, And Make It Snappy
How NASCAR helped Allied Steel Buildings boost sales of its low-cost warehouses and garages
Business Week Magazine 4-24-2006 –Splashing a logo on the hood of a NASCAR racer is something big companies have been doing for years. But the rear panels of driver Dave Blaney's car show off the blue-and-black logo of Allied Steel Buildings, a Fort Lauderdale outfit most race fans have never heard of. This year, Allied will be an associate sponsor for Blaney and his teammates, paying $1.4 million to get its name on vehicles in several NASCAR circuits.
That's a hefty spend for a business which, along with other creative tactics, have helped transform Allied from a small player into a national brand. In August, the first month of Allied's sponsorship, sales rose 40%. Revenues jumped to $32.5 million in 2005, up from $15.7 million in 2004.
Not bad for a company that was started by Michael Lassner, 32, and Charles Kowalski, 43, who were salesmen for a steel-buildings company when they received one day's notice that it was going under. "The worst thing at that moment happened to us, but it became the best thing," says Lassner. Their former employer, says Kowalski, "could not see what we could see."
Kowalski and Lassner envisioned the market for steel buildings extending beyond the garages and warehouses that are the mainstay of the $3 billion industry. As Lassner says, they wanted "a steel building on every corner" -- large warehouses, retail stores, power plants, and churches.
To make buying a steel building easier, Lassner and Kowalski became a one-stop shop, handling design, order and delivery of steel, and even finding contractors to assemble the buildings.
Price and speed are their two strongest selling points. So-called pre-engineered buildings run about 50% less than traditional construction. A two-car garage from Allied costs about $5,000, a recent contract for an electricity plant came in at $170,000, and the company's average sale is $30,000. Dennis Stoneman, pastor of the First Baptist Church in Burley, Idaho, bought an Allied building in 2003 as his congregation's new church. "[It] was delivered on time, and it went up very quickly," Stoneman says. The church is fronted by a wooden entry, giving it a traditional look.
Lassner hopes to best his competitors through superior customer service. Generally, that means getting buildings delivered on time. But in 2004, when spiking demand in China sent steel prices doubling, customer service suddenly meant being able to withstand global supply shocks. The partners scrambled to rework $3 million in outstanding contracts, eating as much of the increase as they could. "When we did the math, we knew we would be broke, but we would still have our company and customers," says Lassner. As Allied grows, he's better able to negotiate better prices from its suppliers.
To sustain that growth, the partners are searching for new ways to reach customers, becoming the first in their industry to sell through hardware stores. Last year, Allied began putting its displays in 360 Canadian building-supply stores, trying to appeal to homeowners and small contractors. This spring, Allied will place its software in about 20 of the stores owned by national hardware chain 84 Lumber, allowing shop clerks to print out price quotes and preliminary plans. That's just one more way Lassner and Kowalski hope to benefit by thinking outside the steel box.
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