MANUFACTURING by Jean Gruss | Editor/Lee-Collier
Sarlo Power Mowers has slashed through Florida grass for decades. It's not afraid of cheap Chinese replicas.
Tony Sarlo isn't particularly worried about the Chinese.
He's traveled to China and the cost advantages of manufacturing there don't overwhelmingly outweigh the cost of doing it in the U.S.
Just ask the U.S. toy companies.
Sarlo is president of Sarlo Power Mowers, a Fort Myers-based manufacturer of grass mowers. Sarlo, 48, is the third generation to lead his company, which manufactures and sells commercial mowers to the landscaping industry and government agencies.
How does a company like Sarlo stay in business when a flood of cheap imports threatens to overwhelm it?
Credit men in stripes. A significant customer is the Florida Department of Corrections, which puts prisoners to work mowing the grass around prisons and along the roadways. Sarlo's big-wheel commercial mowers are particularly sought-after for their rugged reliability. "There's plenty of grass to cut and lots of labor," Sarlo says.
Now, Sarlo is broadening his reach to other prison systems around the Southeast. And he's exploring the use of alternative fuels such as biodiesel from jatropha, a hardy plant that can grow virtually anywhere and whose seeds can be used to fuel any diesel motor.
Although Ace Hardware Stores carry the Sarlo brand, the mowers aren't priced competitively for retail sales. Sarlo mowers start at $599 and most retail walk-behind mowers cost between $159 and $299. "We take ourselves out of the retail arena," Sarlo says.
It's not that the company hasn't tried to venture into other areas. For example, it recently partnered with motor manufacturer Briggs & Stratton to sell hand-held trimmers in the U.S., Europe, Australia and Mexico. But that effort ended because sales didn't meet lofty expectations. Sarlo is reluctant to reveal financial results, but says his priority now is to find "a couple million [dollars] in sales" to replace the lost revenues from the trimmer deal.
Sometimes, your best ideas for expansion come from an existing customer. Sarlo had sold mowers to the Florida Department of Corrections for years but didn't think about building on that experience to sell to other prison systems outside the state. "The home run I was looking for was in my own backyard," Sarlo says.
Briggs & Stratton partner
Sarlo Power Mowers has been in business 72 years and is the oldest continuous Briggs & Stratton engine customer. Tony Sarlo's grandfather, Anthony Sarlo, was an Italian immigrant who settled in Fort Myers. The first mower he built ran on a washing-machine engine.
About 60% of Sarlo's business is manufacturing mowers and 40% is a local sales and service operation. Of the manufacturing, about three-quarters of the sales are for commercial users such as the prisons and 25% are sold in retail stores such as Ace Hardware stores around the country.
To boost sales and grow the manufacturing operation, Sarlo was thrilled when Briggs & Stratton executives proposed a deal a few years ago to develop a line of hand-held grass trimmers. The engine maker wanted to expand into the small-engine arena, with a goal of eventually selling 250,000 a year.
Briggs & Stratton selected Sarlo and another company, Husqvarna, to manufacture the trimmers.
Sarlo focused on a network of distributors to the commercial market while Husqvarna's line was sold directly to consumers at Sears, the retail giant.
But Sarlo sold 40,000 trimmers since 2003 and sales at Sears were below expectations. Briggs & Stratton delivered the bad news last year that they would stop making the trimmer engines. "Now I have to replace those sales," Sarlo says.
Despite the engine maker's decision, Sarlo says the effort was worthwhile because he made contacts with numerous Briggs & Stratton distributors in the U.S. and overseas. He recently hired a veteran distributor from that company as a purchasing agent. "That's a networking kind of advantage," Sarlo says.
As it turns out, Sarlo realized that he could build on his existing business selling mowers to Florida's prison system. The Florida Department of Corrections had been Sarlo's customer for years.
With prisoners increasingly being put to work outside jails to perform jobs such as mowing grass, there's an opportunity to expand outside Florida, Sarlo says.
The challenge is that every state has different requirements for becoming a vendor. "Find out how every state works; that's the groundwork we're doing," says Sarlo, who hopes to expand to five states next year.
Meanwhile, Sarlo has been pushing the use of diesel engines to help the prisons save money. A more rugged diesel engine lasts 10 times longer than a gasoline engine and is more fuel-efficient. In a recent test for the Florida Department of Corrections, the agency saved $55,000 in fuel over a two-year period by switching 50 mowers to diesel power.
Sarlo is also applying for a grant to explore ways to grow Jatropha and use the oil from the plant's seed to fuel mowers' diesel engines. "They'll supply the land and we'll supply the crop," Sarlo says. It's a hot issue now as the cost of fossil fuels rise. The plan is to conduct a three-year demonstration project that would involve developing small-scale refineries. The government grants could total as much as $2.5 million.
"We've got to find our niche and see how to expand it," Sarlo explains. "A door has opened."
Florida's business challenges
Of course, running a manufacturing company in Florida is not easy. "Getting qualified people has been getting so difficult it's not funny," Sarlo says.
That's part of the reason Sarlo will be buying more parts in China and shifting more to assembly work in Fort Myers. Already, bearings and pulleys come from China. "Tool makers are a dying breed," Sarlo says.
Sarlo has 16 employees. Eight of them work at a 40,000-square-foot manufacturing plant in Fort Myers and make about 4,000 mowers a year. They also make about 8,000 trimmers a year, though that will go away when it's finished using up the remaining 15,000 Briggs & Stratton small engines it has on hand.
Shifting the entire manufacturing operation to China is not in the cards. Sarlo estimates that, after calculating the transportation and inventory costs, the savings amount to about 17%. "There's not a race to get out there," Sarlo says.
But the cost of doing business in Florida keeps rising. Health care costs double every year, for example. And the cost of land in Lee County is so high that any expansion plans have to be studied carefully.
Sarlo has financed its operations internally and some debt it took on 10 years ago is nearly paid off. The Sarlo family owns 100% of the company. Tony Sarlo's son, Mark, is the fourth generation involved in the business and he runs the manufacturing plant.
But Tony Sarlo is clearly a hands-on manager. "I start every day at the plant," says Sarlo, who concedes he's more comfortable there than he is trying to make sales.
What is Jatropha?
Jatropha is a drought-resistant tree that can grow in almost any condition, including sandy and saline soils. It bears an inedible seed that is packed with oil that can be used to fuel diesel engines without extensive refinement.
Oil companies have taken note. For example, oil giant BP in June formed a joint venture with U.K.-based D1 Oils to spend $160 million to develop large-scale jatropha plantations in India, southern Africa and southeast Asia. It will then process the seeds of the plant into biodiesel fuel.
Company: Sarlo Power Mowers
Key: You may not have to look far to see the next opportunity.