These days, compost bins and rain barrels are big sellers that are emerging from the back-page ads at Organic Gardening magazine and into upscale suburban developments.
But that wasn't the case five years ago, when Sterling Technologies Inc. began rotational molding them. “People were using them, but back then they were all called 'tree huggers.' And now it's like, 'Oh yeah, composting's kind-of cool,” said Sterling President Greg Cronkhite.
Spotting future trends is a key business strategy at the rotomolder in Lake City, a small town that hugs Lake Erie in the northwest corner of Pennsylvania. Today, compost bins. Tomorrow, another must-have product.
“Just being a pure custom molder, if you don't go after hot markets, you're going to be living in the world of very low margins, and you don't control your own destiny,” Cronkhite said. “What really resurrected our company is the fact that we diversified into hot markets and we chased trends. We tried to find products that are in the early part of that development cycle; they're not at the mature stage yet.”
It can pay off big: Right now, any time you pick up a newspaper's home and garden section, you see a story on rain barrels or compost bins. Sterling molds standard barrels and exotic ones that look like urns and even rocks.
“We probably have half-a-dozen to a dozen markets that we are about to enter into that are at the very beginning of their growth cycle,” he said.
Sterling Technologies has focused on “green” products — as reprocessed resin currently accounts for about one-third of total throughput. It all started back in 2008, when polyethylene topped $1 a pound and natural gas went up. Natural gas is a major expense for rotomolders, since it's used to heat the big ovens that melt the plastic.
Cronkhite said the company began to offer reprocessed resin as a way to reduce costs for customers. Lower cost is still important, he said. But now, for some products, marketing them as “100 percent recycled plastic” is a big selling point.
Sterling Technologies has been molding rain barrels and compost bins for Good Ideas Inc. for five years.
Aggressively courting hot markets and diversification are ways that Sterling Technologies — with three rotomolding machines and 65 employees — can set itself apart from other small rotomolders. Officials are projecting sales of $6.5 million for this fiscal year, which ends Sept. 30 — an increase from $5.5 million last year.
“We look at diversification of industries,” Cronkhite said. “When one industry is down, the other one may be up. I'm really big at looking at five, 10, 15, 20 years down the road and seeing where trends are going, then trying to break into those industries now, so we can get a toe-hold. And when they take off, we're ready to go.”
Sterling Technologies also doesn't mind doing low-volume work.
Lawn and garden is a major market, but the company does molding and assembly for many other sectors, including tanks, material handling, sporting goods, medical, automotive, highway safety, food processing containers and aerospace. Sterling also offers engineering services and help with part design.
Cronkhite explained Sterling Technologies' strategy, and its history, during a mid-July interview in Lake City.
Cronkhite's entire career has been in plastics, and Sterling started out as a by-the-bootstraps rotomolder, with a twist: His expertise and university education is in sales and marketing, not rotational molding technology. After college, he held sales and marketing positions at injection and blow molding firms. Then, in the early 1990s, he became a partner in the ownership group of a Florida custom injection molder, Gemini Plastics Services Inc. (That firm was later sold to Moll Industries Inc.)
“I decided that being one of seven partners is not really what my long-term goal was, so I decided to start looking for other processors,” he said. He considered buying a small injection molding business, but nothing worked out.
The rotational molding bug bit when Cronkhite ran across the owner of a rotomolder who was looking for a partner. Rotational molding intrigued him, and instead he decided to start his own company in 1997.
He visited Ferry Industries Inc. in Ohio, bought a brand-new RS 330 — a pretty big machine — and installed it in an 11,000-square-foot building in Erie, Pa., the hometown of his wife, Jane.
Sterling Technologies had a shiny machine, a factory ... and no customers.
“So here I am. I've never run a rotational molding machine in my life. I have no employees. It was me. And an office,” Cronkhite recalled, shaking his head and chuckling.
He hired an operations guy with some roto experience. Then the startup got its first order, for spine boards used by emergency squads to move patients. The Ferry cranked out 24/7. “So I was sleeping in my office and I had these operators coming in every hour to show me the part. At that point I had four to six employees. They would wake me up, show me the part and I'd go back to sleep for an hour and wait for the next cycle, while they did the secondary operations,” Cronkhite said.
More customers quickly followed. “We've always been very aggressive on the sales and marketing side,” he said. “I was very fortunate to hook up with some very aggressive people also.”
One is Cary Quigley, vice president and general manager. He joined a few years after the company started.
In 2007, Sterling Technologies moved from Erie about 25 miles west, into its current, 96,000-square-foot plant in Lake City. The company moved two rotomolding machines and bought a new one, a Ferry RS280.
When it comes to debt, Cronkhite is conservative: Too much debt can kill a small manufacturer. “The goal was always to be debt-free and operate out of cash flow,” he said.
In rotomolding, a hot and demanding environment, having good production workers is critical. “One of the things that we look for when we hire people is, if they don't have a sense of urgency, they don't make it here,” Cronkhite said.
Quigley said crews work 12-hour shifts, sandwiched in between long weekends. “We pay generally a higher pay scale than a lot of people do, and it's still very difficult to find good employees because there's so much physical labor involved,” he said.