By Eric Peterson | Mar 20, 2019
Industry: Consumer & Lifestyle
Products: Body jewelry
Lorenz first got involved in body piercing listening to the Sex Pistols and Black Flag. "It was really born out of punk rock music and having my nose pierced in 1984," he says.
He worked in the commercial diving business for a few years before starting Industrial Strength Body Jewelry. "I literally took some stainless steel anchor chain locking wire and wound it up on a socket and that's how I made my first hoops," says Lorenz. "It just snowballed from there. I started out making body jewelry in my bedroom."
To start, Lorenz outfitted his shop with a lathe, grinding wheel, and other tools, and often made special modifications to off-the-shelf products to suit. "Most of it was from Home Depot," he says. "I bootstrapped it, reinvesting the money."
The operation moved from Lorenz's bedroom in Escondido to a spare room to a 600-square-foot space in a warehouse before the business relocated to Richmond in the Bay Area in 1995.
In 2007, Industrial Strength returned south and set up shop 20 miles from where it all started. "I was able to buy a 28,000-square-foot building in Carlsbad, California," says Lorenz.
Along the way, the company invested in automation, starting with CNC lathes in 1997 and Swiss-style screw machines a year later. "By late '99, I bought two new Citizen screw machines," he says, resulting in "massive productivity compared to our old ways."
By 2017, Industrial Strength replaced its stock of 20-year-old machines with cutting-edge new ones. "Our primary machine is manufactured by Tornos," says Lorenz. Industrial Strength now has 14 of the Swiss company's screw machines to go with nine new high-precision CNC mills and several CNC lathes, "the same machines used in medical manufacturing and aerospace manufacturing," he notes.
Efficiency is key because the operation is deceivingly complex, says Lorenz. "Our product range is about 6,000 components we manufacture exclusively for our own product line. We don't manufacture for anyone else, never have."
The jewelry is made from "implant-grade” stainless steel and titanium. The company pioneered jewelry made with 6al-7nb titanium used in medical implements by manufacturers in the European Union in 2017. "We're still the only body jewelry manufacturer in the entire world using this material," says Lorenz.
"We've always been able to maintain the highest quality," says Lorenz, citing mirror-like polished surfaces and Swarovski crystals. "We're the only body jewelry company, I think, in the United States that can put their name [Swarovski] on our products. That's a big deal."
The operation encompasses machining as well as finishing, stone-setting, laser welding, and hand polishing. The machine shop has a staff af 12 employees, and a bigger team handles stone-setting and polishing.
"We're wholesale only, and only sell to professional body-piercing shops," says Lorenz. About 90 percent of sales are domestic, and the remainder goes to accounts in Canada, Europe, Australia, and Mexico.
The company"has grown and contracted multiple times based on the economy," says Lorenz. Industrial Strength had 105 employees in Richmond in 2006, but only about 15 made the move with Lorenz to Carlsbad, including "the Ponce clan”: five sisters who have been with the company for more than 20 years.
Sales dipped after 9/11 but rebounded for a "banner year" in 2006, before starting to fall off in 2008. "It stayed on a downward trajectory until about 2012," says Lorenz.
Then demand took off and the company grew to 135 employees. But with the rapid expansion came a parallel increase workers' compensation claims. "The uptick started in 2012. We started having massive workers’ compensation problems that almost bankrupted us."
In 2012, claims were a "reasonable $65,000 a year," he says. By 2015, they hit $400,000. "It literally decimated all of our profitability."
Lorenz subsequently initiated a "multi-pronged" approach to right the ship. He changed workers’ compensation carriers to USI and fostered a cultural shift with everything from improved ergonomics and HVAC infrastructure to more paid time off and regular safety meetings. "If there are any issues, they report them so they don't become problems," he says. "It's become a really tight group."
Another noteworthy prong was more automation; Industrial Strength came up with a proprietary innovation to integrate robotics into manufacturing processes. "We pull from standard industrial robot arms. The secret to that is your infrastructure around a robot cell. . . . We're our own robotics integrator. We don't use an outside integrator."
But going big on innovation "was a double-edged sword," says Lorenz. The pro: a 300 to 400 percent increase in productivity for 25 percent of the cost. "When a cell's paid for, there is no cost," says Lorenz.
The con: layoffs, which Lorenz says may have contributed to the increase in workers’ compensation claims. "We had to get rid of half our staff as quickly as we could, which took about 18 months."
The strategy worked. "Last year, 2018, was the first year the claims started dropping off," says Lorenz, citing a more than 50 percent decline for the year to about $190,000. "We're starting to see the light at the end of the tunnel," he says. "Fortunately, I've been able to maintain stellar credit."
Lorenz notes that the company's top year for sales was 2015, but it wasn't profitable. "We actually lost money," he says. "We're now at 67 employees. We are profitable and growing.
With the operational streamlining came a corresponding winnowing of the customer base from about 3,000 shops to 1,500. "The body-piercing industry has really grown massively," says Lorenz. "The demand got so large for my company, we had to stop taking on new accounts and go through our order history and close dead accounts."
"Any day of the week, there are probably 1,500 shops that want to carry our products," he adds. "We've let some come back and we've been very careful. We don't want a bunch of shops in the same city."
Quality is still king at Industrial Strength. "I have a lot of pride in our products," says Lorenz. "I started when I was 22, In April, I turn 50. It's not that I don't have the energy. . . . I'm learning to do more with less and lean on technology."
Challenges: Installing a cloud-based ERP system from Sage. "Implementing new software that's organizing everything we do," says Lorenz, from production scheduling to invoicing.
With 6,000 components utilized in 250,000 possible configurations, it's no small task. "It's really a complex web."
Opportunities: Gold jewelry. Industrial Strength got out of gold when prices skyrocketed in 2006, but is getting back into it in 2019. "We just invested about $150,000 into state-of-the-art gold casting equipment," says Lorenz.
Needs: Labor. "We just started re-hiring in assembly and polishing and stone-setting," says Lorenz, anticipating five to eight new hires. "It's a balance," he adds. "We are $1 million behind in orders right now. We need more time."