Industry: Consumer & Lifestyle
Products: Retractable gear attachment systems
Producing a high quality product in the US, two entrepreneurs are meeting the challenges of competing in a global economy and competition from overseas manufacturing.
Hammerhead Industries and Gear Keeper products were born from two General Motors engineers looking for a better way to attach and protect their equipment while SCUBA diving. Co-founders John Salentine and Ken Collin tried a basic key retractor to hold their flashlights and gear, but it needed substantially more engineering to make it work properly and to last in salt water and sand.
"We got the product going before 1995," says Salentine. "We linked up with a distributor and put their brand on it. At that time, we operated out of our garage, and around the second year into it, we decided we’ve had to turn this into a real business or someone’s going to copy us." At that point, Salentine and Collin quit their engineering jobs and incorporated Hammerhead Industries for the purpose of designing and building Gear Keeper.
As often happens, the company’s initial plans changed along the way. "We had a plan of buying the distributor we were working with, but that didn’t work out," says Salentine. "We had to decide if we were going to be a SCUBA accessories company or a retractor manufacturer.” They decided and the latter. “We took Gear Keeper to the diving industry and other markets we thought were gear intensive, like fly fishing and firefighting. It’s now grown into applications for the military, law enforcement, trucking, and industrial safety industries that use tools while working at great heights. Our focus was on manufacturing retractors with a high-duty cycle or for use in severe environments." Hammerhead now sells its products under its own Gear Keeper brand, as well as a number of other rebranded names.
Collin handles the engineering and manufacturing side of the company, and Salentine concentrates on sales, marketing, and finance. While the focus has moved a bit from sporting markets and toward industrial and professional areas, they say it’s their goal to remain a specialty product. "We’re not looking at building one variety and selling a million of them," says Salentine. "We’re looking at building a couple of hundred different varieties and selling a hundred thousand of each."
Hammerhead assembles it products with 90 to 95 percent of its parts sourced in the U.S. The work is a mixture of hands-on and automated assembly. Salentine says he’s looking at adding more automation in the future but finds it difficult due to labor cost increases. "As the government wants to increase minimum wages, costs increase. We sell in California, the U.S., and in Europe, so we’re competing globally," says Salentine. "Asia isn’t raising its minimum wage, neither is Mexico. So we’re forced to look at how we compete not only as a U.S. manufacturer but as a California manufacturer in a global market."
Gear Keeper sells through dealer and distributor networks, although that varies with the particular industry. "In some cases, Hammerhead directly distributes on its own, but normally we don’t sell to end users," says Salentine. With the product now in a variety of industries, the company enjoys a steady demand, despite seasonal and year-to-year ups and downs. Salentine admits, however, that they are careful to control their growth plans to keep the cash flow stable.
Along with higher quality, the individual development and engineering of each of its specialized products are what sets Hammerhead apart from its competitors. "We get with industry professionals, ask them what problems they have with their gear, then go out and develop a product for that," says Salentine. "Some customers see an overseas copy of our product that might be cheaper. Unfortunately they are using the wrong materials (for durability), but we have the knowledge of what makes our product last in extreme environments. It’s easy to sell price, but for certain things, people want quality."
Needs: Diversity across industries: Salentine says the company feels the need to keep designing and developing new products to balance between the needs of various industries while finding ways to maintain competitive pricing in the face of the rising costs of doing business.
Challenges: "The biggest challenge is that California doesn’t care about us business owners," says Salentine. "We have politicians who have never run a company, never hired people, never created jobs, and yet they’re telling me how I need to do that. The minimum wage increases at such an accelerated rate, that it is a huge concern." Salentine notes the possibility of reduced benefits, health care, vacations, and 401K plans as a result of impending wage increase requirements.
Opportunities: New markets. According to Salentine, the industrial safety industry is expanding with the need for attaching tools for workers at elevated heights, and the company is working toward new developments in that market.