Mate Finds a Way to Survive, Thrive

This is a story about survival.

This is a story about two men who started a dump trailer manufacturing company 25 years ago, rode Houston's construction boom, recoiled as the area was hit by a recession so severe that some businessmen chose suicide as the only way out, and then regrouped and found a new way of doing business.

This is a story about Jerry Collins and Paul McWilliams, and the company they created-Mate Inc.

It's alive and well. Why is it still around, when it just as easily could have curled up in the fetal position and taken a permanent siesta? Collins doesn't have an elaborate explanation. It's easier to produce trailers than to analyze the ebb and flow of a complicated history.

"Just keep working hard," Collins says. "I know that doesn't overcome everything. But I guess that's the only thing I'd attribute it to."

Collins is standing on the sidewalk near the red-brick office on Mate's eight-acre spread, located in the northwest corridor of Houston's urban sprawl. He is talking about production. He says Mate manufactures 10 to 12 trailers a month. He says that's all the company wants to manufacture.

His mind is clicking back to February 1982, when Mate's plant was in the third of its five locations. The economy had bottomed out. The interest rate had skyrocketed to 25%, and Mate had gone through 200 repossessions.

"We had a fenced-in place, and you couldn't look in any direction and not see trailers, either new or used," he says. "Everywhere."

His eyes scan the property. He sees 26 trailers acquired in trade. "And," he adds, "this is a lot for me now."

He shakes his head.

"Once you've been through that, you are very reluctant to pump 'er up again," he says, "because there's always a coming-down time."

From 476 to 35 Trailers He says that when you're driven by quantity, "you've got to do it. You've got the people. You've got the overhead. The numbers have got to go, whether the demand's there or not, or you're losing more money. I've been there."

The tone of his voice tells the terror. The numbers are even more graphic. In 1979, Mate manufactured 476 trailers, its most productive year ever. Three years later, 35 trailers came out of Mate's plant.

What happened? Houston's boom was tied directly to the oil business. And for a long time, business was good. The average price nationwide of diesel went from 65.2 cents per gallon in 1978 to 88.2 in 1979 to 122.1 in 1980 to 135.3 in 1981. In that period, Houston's population was growing by 10,000 per month. Between 1975 and 1980, the city's population tripled.(Please turn page)

That growth spearheaded the construction of roads. Those roads required sand and gravel. And something had to haul that sand and gravel. Trucks, pulling end dump trailers, performed 85 percent of the hauling. Mate couldn't have produced enough trailers to meet the demand. Collins and McWilliams couldn't drive anywhere without seeing a Mate trailer. "There goes my supper and house note," Collins used to think.

"I remember one Saturday we delivered 26 new trailers in one day," he says. "One day. We could turn them out. Back then, if you just had it, people would take it. Price was secondary.

"The feeling back then was, 'We're young, and man, this thing's always going to be on an upward trend.' You never consider that the bottom could fall straight out of it. And if it did come down, maybe it'd come down a little. If you bought something, it was, 'Oh, we can make the payments.' You never thought about it being a problem."

The business philosophy, Collins says, could be distilled to this: "Just get bigger. Do more. Try to get all the business. Sky's the limit. Whatever you can make, you can get rid of. Sell it and make a profit."

From Boom to Bust Sand and gravel hauling in Texas, which peaked at 50.5 million metric tons in 1978, steadily declined (46.2 million in 1979, 40.5 million in 1980) and then plateaued (41.7 million in 1981, 41.3 million in 1982).

Nationwide, the production of dump trailers declined from 10,819 in 1979 to 4,513 in 1982. Although specific numbers are not available for Texas manufacturing, the trauma was even more acute in Houston and the Gulf Coast region of Texas, where the oil boom had gone bust.

To those in Houston, the boom seemed to come to a screeching halt almost overnight.

"It did a 180-degree turn virtually in a two- or three-month period," says Universal Truck Sales owner Dan Boone, who at that time was a Freightliner dealer who did a large volume of business with sand and gravel haulers. "All that housing and construction came to a virtual halt. The occupancy rate in downtown Houston was 50 or 60 percent. There wasn't any new construction."

Boone says the sand and gravel business was down by as much as 40%, and Class 6-8 truck sales plummeted by as much as 70%. He says all of the Houston-area dealerships changed hands.

"I was born and raised in this industry," Boone says. "My father was a truck dealer from '56 on in San Antonio. We never saw anything this severe. We saw several recessions, but this was literally a depression, when you drop 60 or 70 percent of your sales for two or three years running.

"I'm sure Jerry had his woes just like everybody else did. There were adjustments. There were a lot of people that retired. The old timers just got out of the business," says Boone.

Collins and McWilliams-then 32 and 48 respectively-weren't ready for that, even though it was as if they had been deposited in a hole by their very own bottom dump trailers.

"At that point, it was sort of day to day," Collins says. "But there was never any doubt that we'd make it. It was always positive, that somehow we were all gonna get through it."

The Economics of Cutting Cost To get through it, Mate faced the most vexing double whammy in the business world: It cut capacity and changed its marketing focus.

When the market need for the manufactured good declines, cutting capacity levels allows the company to carry less overhead and fixed cost. Unfortunately, it is difficult to exit long-term supply contracts and real estate holdings on a short-term whim. In some cases, there are substantial penalties for the conciliation of a supplier's contract or a property lease agreement. Moreover, in the case of physical plant ownership, if product demand is down, chances are good that demand for production facilities will be weakened also.

"Cutting cost takes on a new meaning during a recession or in times of a good economy but with strong oversupply," says Welcome Wilson Jr, a business economist for R O Financial Partners, a capital banking group specializing in helping firms downsize during unfavorable market conditions.

"When the demand horizon shifts and there is less need for the product your company manufactures, then you are manufacturing in a condition of over capacity," says Wilson. "It's not easy to bring manufacturing levels back into equilibrium with the demand for your product. There is a lot of pain involved in laying-off employees, not buying product from vendors, or tearing up old supplier relationships because your firm needs a less costly substitute to their product."

Wilson says some businesses can still run profitably if they are able to bring their total cost per manufactured item back into relationship with the new, lower number of items manufactured.

"If you feel that your industry is headed for a downturn or that overcapacity is starting to be a problem, then take steps that will place you in a better position when the situation changes," says Wilson. "For example, if your lease is coming up for renewal, try to negotiate an exit clause. Obviously don't buy equipment that is only economical to run, based on manufacturing more widgets. Go into overtime budgeting and try not to hire production workers."

Wilson adds, "Remember that your total overall cost of the operation is divided by the number of widgets you manufacture. A large factory and additional land for latter expansion made sense while producing 10,000 widgets. It would not make sense to carry these costs when producing 1,000 widgets." If the company attempts to carry the same cost structure while decreasing the number of units produced, the total cost-per-unit will increase.

In Mate's case, not only was demand down for its trailers, which forced Mate to pay a higher cost-per-unit produced, but the company also had to find a new market. At its peak, Mate was selling 90 percent of its trailers to Texas customers, primarily in the Gulf Coast region. Now what?

Finding a New Market Mate had to adapt. Over the course of the next decade, Mate spread its tentacles to the northeast, from Arkansas into Missouri, Illinois, Iowa, and Kansas, selling to companies that haul agricultural commodities and bulk building materials. In recent years, orders have come from Maine, Connecticut, and Puerto Rico. Collins has never shipped a trailer to Hawaii, but he knows Mate is there because he has had calls from people there who needed parts.

"Finding a new market that you hadn't been selling to can help the manufacturing firm keep its numbers up," says Wilson. "However, it will be hard to enter that arena since some company is probably already servicing that need.

"If you can find a new market for your product, it's usually because there has been increased demand from a geographic area not served by your company, or there is product substitution going on." (Please turn page)

Wilson warns that relying on this type of growth can be dangerous. "To get your product into a new industry or a geographic area you are not already serving is tricky. It means someone there isn't serving that need, or your company might not have marketed its product as fully as it could have before the shift in demand." Wilson advises that if a demand shift is forecast for your industry, start breaking new ground to get your product in front of a larger market.

Mate recently started advertising in American Trucker magazine and has started a web site that has gotten a few nibbles.

The transformation has been startling. By the end of 1999, Mate had executed a complete reversal. Only 13% of its trailers were staying in Texas.

Collins downplays the notion of a grand marketing switch: "People buy dump trailers on the spur of the moment because they've got to haul a little bit more material. They'll buy trucks and never order trailers. So when they get the truck in, they just start calling everybody. 'You got it? OK.' If you don't, they just go on to the next one."

Collins does the selling. McWilliams, who was an aeronautical engineer, does the manufacturing.

In the beginning, Mate had a modest plant less than 10 miles from the present location. It was so small that employees built new trailers by day and then hauled them out at night to make room for repair work.

Fifth Location Now, in their fifth location, they have 20,000 sq ft for manufacturing, 15,000 for repair, and 5,000 for administrative headquarters.

"When we were looking for a plant facility to purchase, we were fortunate to find this real estate," Collins says.

The repair building is designed to handle two side-by-side trailers. A six-ton bridge crane serves the repair shop.

"This building is perfect for what we do here," Collins says. "It has an area that we can use to fabricate the pieces needed for trailer repair work that is separate from the area where we perform the actual rebuilding of the trailer, but is still under one roof."

Trailer Repair a Key Mate also repairs other manufacturers' trailers that are brought to its shop. "We have built a good reputation for trailer repair work," Collins says. "We can rebuild a trailer from the ground up, if we need to."

For frame straightening, Mate has a Kansas jack system, along with numerous stationary anchor points in the cement floor. The company repairs quite a few hoists and tailgates.

"We see damage from different things, but hoist and tailgates just naturally get a lot of wear and stress placed on them," Collins says. "This is especially true when you look at the trailers that are used in the asphalt-hauling operations."

Describing other benefits of the repair facility, he says: "We can do refurbishing work on some of the trailers that we take in on trade. Should the repair side slow down for some reason, that allows us to keep our four technicians working."

Two six- and eight-ton-capacity bridge cranes service the manufacturing floor. The cranes provide the lifting capacity to maneuver the lengthy extruded aluminum rails and floor pieces.

"We are able to utilize part of the manufacturing floor as a storage and staging area for our full-length alu-minum parts," says Collins. "This really saves a lot of time during the manufacturing process since we don't have to store this stuff in another warehouse and sort through it to find what we want."

The trailer-building process starts with the selection of materials according to the build-out schedule that is coordinated every week with the production foreman. At this stage, all the needed brake and shear processes are executed and the pieces placed in a staging area for the specific model of trailer being manufactured. Mate has a Century shear machine with a 12' width capacity that can shear to 1/2". Mate does not use anything past 3/8" aluminum.

The company builds frameless, semiframeless, and the full-frame style of end dump, along with bottom dump trailers. Frameless is used for a wide variety of needs, but primarily in applications where weight is the number one consideration, Collins says.

Still, there is a steady and growing market for the semiframeless because it offers a weight reduction over the full-frame model and some of the stability characteristics that the full frame incorporates, he says. The frameless has an advantage in weight savings, but it is not always suitable for applications where the trailer would be dumping into a moving asphalt spreader. This type of application may be better suited for a full-frame trailer.

"Our bottom dump trailer has really been a success," says Collins. "It is popular for road-work applications and in agricultural areas where trailers dump into hopper-style loading systems. Our success in growing our geographic market has made it possible for us to manufacture the bottom dump trailer in a cost-effective way."

The typical trailer manufactured by Mate is an end dump style. Mate uses a full-length aluminum piece to start assembly of the floor. The standard floor is constructed with .250" Hi-Temp aluminum 5454-H35 alloy.

"Tare weight is generally the most popular consideration that our buyers have," says Collins. "The .250" floor piece along with the 4" aluminum crossmember placed every 15" provides a good deal of flooring strength to the assembly."

Mate welds 4" U-shaped trough supports on 15" centers that will become the underside of the aluminum floor piece. A welding fixture makes the floor-assembly process simplified work for the technician. The sub-frame and frame side rails are attached to the floor. Mate uses an 18" deep steel I-beam with a 6" x 1/2" flange. Collins explains that for the frameless model, the combined weight is dispersed over cross-frame members that are attached to the trailer floor. This provides more of a chassis effect for weight distribution.

The floor is then turned over to the "floor side up, landing gear down" side, and the lower aluminum side-rail extrusions are added to the floor assembly. Collins says the lower-side longitudinal pieces are important because they add rigidity to the trailer. Running full length down the floor, these extrusions help to anchor both the rear side post and the front nose-radius of the trailer.

Trailer Takes Shape Once the lower-side longitudinal pieces are TIG-welded into place, the floor is moved by bridge crane to the assembly area where the sides, front-radius, and tailgate are installed.

The sides are constructed of .140" Hi-Temp aluminum 5454-H32 alloy. The side wall thickness can be made heavier; however, Collins says that isn't necessary except under unusual circumstances.

While the floor is being assembled, the two side walls are being constructed on the other side of the plant. While the sides are being attached to the trailer, the tailgate and front bulkhead radius are being built.

Mate uses an extruded U-shaped vertical stiffener that is added to the side wall during its assembly. Once both wallsare assembled, they are fitted onto the floor piece.

With sidewalls attached to the flooring assembly, the trailer starts to take shape. Inner-radius longitudinals - made of .199" aluminum 6061-T6 alloy - are added to the interior of the trailer body. The front-radius bulkhead, made of .250" Hi-Temp aluminum 5454-H32 alloy with a 3 1/2" by 5/8" 6062-T6 banding alloy, is put into place.

The hoist box is constructed from the same heavy aluminum alloy as the front bulkhead. Collins says there is substantial floor and nose gusseting because of the high stress that this area takes. The floor attachment point is constructed of U-shaped channels of 6061-T6 aluminum ordered especially for this attachment purpose.

Tailgates are then installed and tested for correct fit and smooth operation. The tailgates are made by putting .156" Hi-Temp 5454-H32 aluminum on one side of a 3" steel channel frame. The air-operated latching system and heavy-duty gate hangers are built in.

Flexibility in Axles The trailer is lifted by bridge crane to the suspension- and axle-installation area.

"We use a combination of suspension-axle systems for our trailers," Collins says. "Customers want flexibility in this area, and we have been able to provide that for them."

Mate uses both Hutch and Hendrickson suspensions - Hutch for single-point or four-spring mounting and Hendrickson HT-300 for air suspension.

Meritor axles are installed on most trailers. Mate utilizes the Meritor TB-8671-LH model with unitized hubs. The axles carry WABCO antilock brakes sitting on Bridgestone 11R24.5 tall rubber.

But the story with Mate is not necessarily how the trailers are manufactured or that they're even manufactured at all. The story is how Collins and McWilliams regained their footing during a tumultuous time, and what they learned from it.

They have 26 employees - four in repair, 15 in production, two in driving, and the rest in the office. Collins likes that number.

"We've tried to keep the same employees," he says. "We don't gear up when things are that good. We try to keep things level, so we keep good trained employees."

Collins says both he and McWilliams are "conservative." They're not into gearing up. He says he's shied away from hiring salesmen because "it always seems like when they leave, they leave a string of bad deals for you to clean up."

Mate doesn't have any Herculean goals for trailer production. Not now. Not after what they've been through.

"When you've geared down during something like that, you just don't want to ever do it again," Collins says. "It probably costs you in the long run because you might lose customers."

But they're in business. And business is good enough.

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