Doing Things the Demco Way
For a business to stay profitable and innovative through 10 or even 20 years of economic peaks and valleys is no small task. To do so for nearly 50 years, as Boyden, Iowa-based Demco has done, is truly impressive.
According to Ken Streff, Demco’s vice president of sales and marketing, the company has succeeded through a combination of innovation and institutional flexibility while maintaining a dedication to its core business principals.
Streff says those traits have served the company well since its inception in the 1950s as an Allis Chalmers farm equipment dealership. Not one to be limited to just retailing, founder Robert Dethmers showed an innovative streak from the outset, improving farm equipment ranging from liquid fertilizer delivery systems for corn planters to an auxiliary hand PTO clutch for the WC-series Allis Chalmers tractors.
Over time, Dethmers Implement (as it was then called) needed to choose between being a manufacturer or being a retail business, and Dethmers in 1964 chose manufacturing.
Demco makes all of its towing accessories at its 350,000-square-foot facility in Boyden, Iowa. The company takes great pride in producing making its products in the U.S.A.
“Until the early ‘80s, Demco was really only an agricultural company,” says Streff. “Around that time, though, there was a significant economic downturn and the company was suffering badly. The company’s leadership purchased from a local inventor the rights to what came to be the Kar Kaddy (the first tow dolly for motorhomes to market) around that time, and it breathed new life into the company.”
Diversification Saves the Day
Demco’s first major expansion into the RV market – its first such expansion into any market outside of agricultural products – was the company’s first major lesson in weathering an economic maelstrom: Diversification provides valuable shelter from the storm.
“The overall lesson we learned was that diversification was of the utmost importance,” Streff says. “Without that move into the RV market, we may very well not be here today. I don’t think it’s an overstatement to say that decision saved this company.”
According to Streff, the Kar Kaddy offers a number of patented features, including an “auto steer” capability that allows it to track with the motorhome, which makes cornering more manageable because the Kar Kaddy system is able to steer up to 15 degrees. The tow dolly also offers a unique “offset” spindle mount that provides it with lower ground clearance, which is helpful in loading or unloading vehicles. Additionally, the Kar Kaddy also comes standard with a hydraulic surge brake system complete with a patented composite master cylinder specifically designed to keep moisture out of the brake system.
Streff says that since the Kar Kaddy’s launch it has become ubiquitous enough to have its name used interchangeably with the term tow dolly, much as consumers refer to any facial tissue as Kleenex.
“The Kar Kaddy is a Demco staple to the industry,” he says. “While we have many competitors in the tow dolly business, many customers will often refer to their tow dolly as a Kar Kaddy regardless of the brand name.”
Demco’s Victory series tow bars feature a unique system that allow each tow bar leg to be operated independently, which results in an easier hook-up process with the towed vehicle.
The innovation didn’t stop with a single successful product, as Demco has since launched its Glide Ride, a suspension fifth wheel hitch to replace stock pin boxes, and its Victory Series tow bars. Notably, the Victory Series tow bars feature a unique system in which each tow bar leg can be operated independently, which results in an easier hook-up process with the towing motorhome. The tow bars also feature a release locking system that makes it very easy to unlatch the tow bar leg, even when there is pressure on the tow bar resulting from conditions such as uneven ground conditions.
A focus on continuing product development has served Demco well. Although Streff declines to divulge the exact amount RV-related products contribute to the company’s overall revenues, he does acknowledge it is substantial.
Reliance on Core Values & Family Culture
As Demco grew considerably over the years – it now operates a 350,000-square-foot facility and employs about 300 people – it found it could not succeed on innovation and market expansion alone. What was needed to maintain its rate of growth, says Streff, was something that separated it from its many competitors: A strong dedication to the family-oriented culture the company has emphasized since its inception.
Ken Streff, Demco’s vice president of sales and marketing, credits diversification with breathing new life into the company. Demco got its start in 1950s selling and later manufacturing agricultural equipment, but has since expanded its business into making towing accessories and doing commercial printing.
“While there are many competitors to Demco in the RV marketplace, what helps to set us apart are our true business values,” says Streff. “We still offer a live receptionist to answer the phone and direct your call accordingly. We have warranty policies in place, but many customers say they are allowed the opportunity to speak openly and honestly with us about their situation, and then our customer service representatives are empowered to do the right thing by the situation. This is not an open book to every situation, but rather a common sense approach to serve our customers based on the situation.”
That common sense approach allows Demco to offer something that is too often lacking in today’s business environment: A personal touch and dedication to providing good customer service.
“Like anyone else, we make mistakes every single day, but we believe in our people and believe in empowering them to make decisions and apply our corporate culture in dealing directly with our customers,” says Streff, who notes that Demco draws employees almost exclusively from within a 40-mile radius of Boyden – no small feat considering that Demco’s work force is almost half the population of Boyden.
“We believe that our employees are the backbone of the company,” he says. “Our people – from all aspects of our company – are what provide the true value of our company. They are family. In a way, when we hire someone, we respect the fact that we’re also hiring their entire family, and we have a commitment to that entire family.”
Streff adds that the company takes a great deal of pride in manufacturing quality products in Boyden. “Our products are built in the heartland to show our commitment to our community and our co-workers,” he says.
Much like the community around Boyden, Streff says Demco is guided by Christian values and counts those values as a driving factor in making the business successful.
“Demco lives to a strong Christian culture and encourages us to reflect these Christian values in our daily lives,” says Streff. “Today our business stationary still displays the same values as we have for many years: In God We Trust.
“I cannot tell you the number of times that customers will call or write to us about how Demco is a great partner to work with as a result of our personalized service,” he adds. “Our word is who we are, and if a Demco customer service representative commits to a customer then Demco will support that position.”
Demco’s leadership team is pictured wearing the company’s distinctive red shirts. Pictured are, front row (left-to-right): Bob Koerselman, president; Kevin TenHaken, executive vice president; and Chris Tostenrud, general manager. Back row (left-to-right): Mark Nilles, printing manager; Ted Riepma, credit manager; Jason Terhark, controller; Dave Cain, vice president of plant operations; and Streff. Pictured inset: CEO Jim Koerselman.
Those underlying values, says Streff, continue beyond the Demco walls to the company’s interactions with its partner organizations as well.
“At the end of the business transaction, you can be rest assured you are working with a true partner in Demco,” he adds. “We are committed to our retail customers, retail dealers, distributor partners and OEM partners. Each of these partners is a key ingredient in making the Demco family what we are today.”
Of course, many companies today talk about the importance of meeting the expectations of customers and business partners, but Streff says Demco’s actions back up its talk. He notes that in May the company received its ISO 9001 designation, an internationally recognized quality management system that ensures finished products meet the highest standards. Demco is audited on a yearly basis to make sure it is in compliance with those regulations.
“These guidelines are for ‘all’ aspects of the company,” Streff notes, “from customer feedback, to warranty registration, to engineering design criteria, to shop order scheduling, to shop floor flow, to fabrication processes, welding processes, painting process, packaging process, to shipping the product. The customers can rest assured that each product coming through Demco follows a strict guideline to ensure the quality – every time.”
Adding Products & Focused on the Future
Demco’s commitment to diversification and its long-standing values and corporate culture have all contributed to the company’s strong position within the RV market. As other manufacturers in the market retrenched during the Great Recession, business for the Demco RV product category has been strong.
Demco’s Kar Kaddy product is popular with RVers in part because of its “auto steer” function, which allows it to better track the towing motorhome. It also features a hydraulic surge brake system.
“During the RV down cycle in 2009, Demco remained aggressive by adding staff to support the RV division while at the same time we introduced a new line of tow bars – the Victory Series – to our product offering,” says Streff. “We did this during the difficult times in the industry to show our support and commitment to our distributors, dealers and retail customers. This aggressive approach during the challenging times in the industry has been supporting our sales in a positive direction.
Streff also notes that Demco’s non-RV departments proved valuable in providing the diversification necessary to continually invest in the RV market during the market contractions of 2009.
“There is no doubt that diversification sheltered us from a lot of that downturn, but we suffered just like almost everyone else,” he says. “That diversification allowed us to maintain a healthy balance sheet through it all, and in turn we were aggressive in adding both staff and new product lines. That made us more visible to our customer base, even while many of our competitors were cutting trade shows, sales calls and advertising.”
While Demco is primarily known in the RV industry for its towing accessories, the company also has a large commercial printing business, which it uses to produce its own catalogs and also those of major distributors. Demco’s web press can print catalogs exceeding 400 pages in quantities of 40,000 or more.
Among Demco’s more notable non-RV divisions is a large, full-scale professional printing division employing about 30 people and located within the company’s sprawling facilities. Demco has its own web press capable of producing large catalogs numbering 400 pages or more and in mass quantities of 40,000 or more, which the company uses to produces its own catalogs and also those of RV distributors and many other outside companies. Demco also has sheet-fed presses for lower-quantity applications.
“The printing division really was born out of necessity,” Streff says. “We found ourselves waiting on outside printers and essentially decided we never wanted to do that again, so we created the printing capabilities in-house. We’re really spoiled to have that resource available to us, and now are printing catalogs for everyone from Bell to NTP and Arrow Distributing, among many others, and also doing a lot of direct mail, stationary and other similar work.”
From machining components to assembly, manufacturing, printing associated manuals and promotional materials and even to the transportation services that deliver its products across the company, Demco is now very much vertically integrated.
“We strive to be completely self-supporting and self-sufficient whenever possible,” Streff says. “That has been and continues to be our goal.”
Also a vital part of Demco’s mission: To continue to manufacture quality products here in the U.S.A. Says Streff, “We are committed to manufacturing our products in America for the support of our co-workers and their families.”