By Mike Vieira | Jun 26, 2018
Tile and pavers
Industry: Built Environment
Products: Ceramic and concrete tile and pavers
Arto Alajian learned the art of designing and handcrafting in his father's shoe factory in Egypt, and grew to appreciate the style and architecture of the Middle East.
World events eventually led him to California where he and his wife founded ARTO Brick in 1966. The business of making custom ceramics and brickwork for flooring and wall veneer started in their garage as a sideline, but quickly became a success. Today, his sons, Vod and Armen, continue to carry on and expand the business their father started.
"In the early days, everybody helped out in the family business, even my dad's father," says Vod Alajian, ARTO's operations manager. "They would make products all winter long. Then, in the summer, they would do the installations."
After the realization that a narrower focus made good business sense, Vod and Armen decided the company should focus on manufacturing. Today, ARTO sells directly to large clients in certain industries, but the bulk of retail sales remains through its distributor and dealer network. "We feel we are one of the last companies that supports distributors," says Alajian. "Our company grew with distributors and today, we have more than 500 across the country. But in the tile industry, and many manufacturing industries, the marketplace has changed to direct sales. Part of our story is that we're actually trying to make distributors successful by helping them open online stores.”
Known for its Middle Eastern designs, the company sources all its raw materials in California. "Today, a large majority of our products are made from scratch," says Alajian. "Little by little, this year and last year, we started adding third-party products. We're working with different importers and our distribution network so we're able to plug in products for a new market share and increased margins for us."
"Our general niche is 'rustic elegance' for flooring and wall veneers," he says. "These products we're bringing in are in the same area as those we manufacture, but in the future it won't necessarily be that way. We're in a fashion industry. Tile is a fashion, and as trends change, our product line changes."
The manufacturing work at ARTO requires a certain degree of skill. "It's quite labor-intensive," says Alajian. "I refer to our workers as artisans. Not everybody can do it. You have to have good hands and good physical ability. Many times in manufacturing, quality control is very specific, and even automated, but artisans here are telling you what's beautiful and what's not. The type of workers that stay here are those that love what they do, and want to be part of a team."
The artisan products are what set the company apart from its competitors. "A lot comes down to our versatility," says Alajian. "I can make you one custom piece, or I can make you a hundred thousand custom pieces. We have flexibility in production for small runs and large runs. Many factories don't even accept small runs. Many times we're knocking off imported products because they have to bring in containers and have to buy a lot of one product, and in our case, we can provide mass-customization."
Alajian describes "steady growth" for ARTO, and notes, "There are some impacts from world events, but most of these products are going into luxury markets. Through upturns and downturns, that market is pretty stable. We found that marketing during downturns in more impactful because many companies downsize their marketing budgets, and that's a perfect time to increase your marketing budget. If everybody is downsizing their displays and brochures, it's a great time for your marketing tools to get more attention."
Challenges: "Even though we've been around for a while, we're still at a foundational stage," says Alajian. "It depends on who starts a company. If you have an artist start a company, it's all about the product, so our accounting and infrastructure areas need to be developed. We now have a good team in place on that, and once I get more control of my data, it's going to be much easier for us to continue to expand."
Opportunities: "We're continuing to enable our distributors in expanding online sales, and we're looking at more third-party products and more automation to increase our revenue," says Alajian. "One thing we do here is always be innovative with production. We try to keep our competitors on their toes by constantly putting out new products. It's fun and part of our culture, and, at the same time, it's good in the marketplace."
Needs: Alajian says he battles to meet the constant flows of new state regulations as the company grows larger. "Foreign companies do not have the same regulatory hurdles as a California company, or the high living costs for workers," he explains.