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Right Stuff Equipment

by Eric Peterson on May 6, 2019, 09:41 am MDT

www.rightstuffequipment.com

Denver

Founded: 2006

Privately owned

Employees: 22

Industry: Industrial & Equipment

Products: Packaging automation and integration

CEO Kevin Weber is riding a wave of growth automating packaging for natural foods, cannabis, and craft brewing.

Right Stuff Equipment started out as a value-added distributor, but the company now offers integration and other services and manufactures its own catalog of machines.

"We're a combination house of engineering, sales, service, and fabrication," says Weber. "We build machines. We work with OEMs where we sell their equipment. We integrate complete lines with our partners' and our own branded equipment. We build third-party machines in our own fabrication shop."

Weber started the business after working in the corn wet-milling industry in Chicago. He moved to Colorado in 2001. "It was a clean break because I wanted to get out West," he says.

He started Right Stuff with used equipment from his previous employer; his co-founder, Daryl Brown, retired in 2008. "The idea was we were going to create a full-service, cradle-to-grave representation company," says Weber.

Right Stuff pivoted from sales and service to manufacturing just before the company hit the decade mark. "In order to scale the business beyond the Four Corners states geography, we needed to build more things where we could get national distribution," says Weber.

It follows that Right Stuff made a pair of acquisitions in 2015: A.E. Randles, a manufacturer of tray forming equipment in Tucson, Arizona, and the IP for Sharp Packaging's vertical form-filled bagging line.

Right Stuff gave A.E. Randles' tray formers a much-needed update before taking them back to market with them in 2016. "We made them faster, better, and safer," says Weber. "The redesign of the A.E. Randles line has been a big plus. . . . It's now a very current machine."

And the equipment has a built-in customer base, with 1,200 A.E. Randles machines sold, but Weber says the technology had gotten a bit stagnant. "Quite a few Fortune 100 companies have come back into the fold and are now acquiring equipment machines again," he says.

The case of customer packaging in the conference room includes containers for everything from beer and to probiotic drinks canned wine to CBD tinctures. Hanging nearby are notes of gratitude from several clients in the natural foods business, among other industries.

"Virtually everything we do is consumable," says Weber.  "It's food, it's beverage, it's nutraceutical, it's pharmaceutical, and now we're adding THC and CBD to that."

He estimates that food projects are 60 percent of sales, beverage is 20 percent, and pharmaceutical, nutraceutical, CBD, and THC projects account for the remaining 20 percent.

Weber highlights integration and Right Stuff Equipment-branded products as the big growth areas. The company builds panels in-house, programs SolidWorks, and has a machine shop and small lab to test materials that will be packaged by Right Stuff's machines and systems.

"We're vertically integrated," says Weber. "We're trying to act like a big company until we become a big company."

Singular Right Stuff machines cost $5,000 to $300,000, while custom integrated systems typically run $100,000 to $1.5 million.

Catalog equipment includes the Voyager, a vertical bag filler/sealer; the CP1 Filler, a counter-pressure filling system for beer and other carbonated beverages; a line of bucket elevators, unscrambling tables, and other material-handling machines; and tray formers, largely for the food industry.

The buying decisions often come down to math: Is it better to invest $300,000 in automation or continue to pay several employees $17 an hour to affix labels or fill boxes?

"Most people are really looking for a payback period," says Weber, calling 2.5 years "the threshold" and 18 months a no-brainer.

He adds, "The really big picture is: What is international labor looking like? Labor in China is getting more expensive, labor in some of the other Third World countries is getting more expensive."

That drives manufacturing back to the U.S., where labor is likewise at a premium as of spring 2019.

"People will look at it through different lenses," Weber says of automation buyers. Some are looking at QA or minimizing product loss, others want to boost capacity, and others are looking to cut labor costs. Sometimes, it's an assist to HR. "The hiring process is a challenge these days," he says.

Along with the introduction of Right Stuff-branded products, the company has moved into robotics. To this end, Right Stuff is a Fanuc Authorized System Integrator and works with a long list of OEM partners. "A lot of our business now has gone to that higher degree of engineering solutions, meaning integration and robotics," says Weber.

The 2015 acquisitions have boosted non-regional business to about 40 percent of sales. After growing at a 10 percent annual clip in recent years, Right Stuff Equipment is on track for a more than 50 percent uptick in 2019, Weber says.

Challenges: "Making sure we balance our bandwidth and our capacity with the growth opportunities," says Weber. "It's understanding where the constraints are and hiring qualified people to fill those constraints before they become a problem."

He adds, "Honestly, the other challenge is making sure our SOPs are dialed in and the software systems are capable of handling the changing workload."

Opportunities: Highlighting natural and organic foods as "a constant" for Right Stuff Equipment, Weber says integrated systems are on the rise, versus customers looking for a singular machine. "This is a natural progression," he says. Customers "realize they are making more money by making more volume."

"CBD and THC are rapidly growing parts of our business," says Weber. Right Stuff started serving the cannabis industry in its infancy in 2012. "The industry was used to adding labor to a task," he adds. That came to a halt as many cannabis companies started investing in automation circa 2017; Right Stuff has built filling lines for tinctures, flower, and even softgels.

A new, Right Stuff-branded CBD filler is just now coming to market. "We've got a line of people who want this system," says Weber, forecasting 300 percent growth in CBD-related business for Right Stuff in 2019. "It's going to be such a massive industry. It's going to be like craft beer."

Needs: Weber says the company needs "the right people with the right knowledge base." Right Stuff is currently looking to fill a number of positions ranging from assembly to sales. Weber says he expects the employee count to hit 30 by the end of 2019.

"Colorado is not a manufacturing-intensive state, so there is not a huge reservoir of people with previous experience in the industry that we're in specifically that from," he notes. "It's very unlike Chicago or Minneapolis or New Jersey."

Because of that dynamic, Right Stuff typically trains new hires for six to nine months before they are fully up to speed.  "We've got a great group of people here," Weber adds. "It's important to note that, because we're careful about who we hire."

Space is another need. The company's 21,000-square-foot facility on the north side of Denver is adequate, but Weber says he'd like a separate, dedicated building for factory acceptance tests. "We're looking at options for additional space," he says.

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