Voice of the Modern Manufacturing Economy Since 2013

Sensor Solutions

by Eric Peterson on November 7, 2017, 08:07 am MST

www.sensorso.com

Steamboat Springs, Colorado

Founded: 1993

Privately owned

Employees: 15

Industry: Electronics & Aerospace

Products: Magnetic sensors

Founder David Lorenzen competes with massive manufacturers by offering magnetic sensors of all kinds via a modular manufacturing platform.

Lorenzen worked for sensor manufacturers in Illinois and Connecticut before relocating to Colorado for its recreation and lifestyle.

At first, he consulted for sensor companies from Breckenridge, but there was a problem with that: "You do all the work and design a product," Lorenzen says. "Then the company would take it and I was out of a job."

His solution was to go into manufacturing himself: "I decided to start making products out of the second bedroom."

The Internet allowed for a small company in a mountain town to compete. "I could advertise for five or 10 cents a click and have the same appearance as a big company," explains Lorenzen.

The selection has grown over the years to 6,000 different customizable magnetic sensors and switches for a long list of industries, detecting speed, position, and other variables for everything from gear teeth and conveyor belts to solar panels and windmill blades.

Lorenzen moved Sensor Solutions and its five employees to Steamboat in 2005. "Breckenridge started getting a little crowded," he explains. Steamboat's "good schools, safe environment, and cool vibe” won out -- as did an elevation that's about 3,000 feet lower. "It feels more like a year-round place," he says. "It's just a desirable place to be, a slower pace of life."

Sensor Solutions steadily grew to about 20 employees before the economy turned in 2008. Lorenzen cut the staff to 10 and added employees and automation as the market rebounded.

"We replaced [staff] with automation," he says. "What that has allowed to do, instead of getting a lower-pay employee, it allowed me to get somebody on a higher pay scale who works in automation who can afford to live in Steamboat." Lorenzen calls it a "resort-town model."

The model revolves around modular manufacturing that maximizes flexibility. "The modular system we have allows us to use the same instructions for different models," he says. "We thought ahead when we were starting to make it interchangeable."

"We can do a 'same as, except' sensor quite easily," Lorenzen continues. "Most of the manufacturers are going to gear towards one very large customer . . . and try to push that product on every other customer. For us, it's very easy to accommodate changes. And all of the people who I have working for me are very sharp and can handle change."

The flexibility makes for a broad market. Off-road and agricultural equipment are top verticals, and medical is close behind. It's all about making the right solid-state sensor to measure speed, position, and flow.

"We have a very diverse customer base," says Lorenzen, noting that exports represent about 30 percent of sales. The magnetic sensor "is kind of like aluminum -- it's a commodity." Sensor Solutions' products are found in everything from spacecraft to refrigerators and cost anywhere from $3 per unit to $2,000.

"We're 100 percent pull when it comes to our marketing scheme," he notes. "We can sit in a vacuum and invent new products and call everybody on the planet." But Sensor Solutions designs based on customer requests. "They're going to pull a product from us, rather that us pushing a product on them. That's where our innovation fits in: We work on a need."

Growth has been "smooth and steady," says Lorenzen. For his 15-person mountain-town manufacturer that competes with multinational companies, that's exactly where he wants it.

Challenges: "The economy is getting gobbled up into bigger and bigger entities," says Lorenzen. 'When you're dealing with a bigger entity, it's like you're trying to move a giant boulder." The phenomenon makes for business that's "system-driven, instead of people-driven," he says. "Bigger companies are really demanding from a legal standpoint."

Another challenge: "Healthcare has been killing us all, so we've really has to focus more on growth and the bottom line," says Lorenzen. "We're not big enough for a group, and we're in a ski area so rates are ridiculous times two." Sensor Solutions offered health reimbursement accounts (HRAs) before the Affordable Care Act phased them out, and has yet to find a suitable replacement.

Cost of housing is a third hurdle: The median home value in Steamboat Springs is nearly $500,000. "We've had to be creative," says Lorenzen.

Opportunities: "Since we're pull-based, we don't know where are next pull is going to come from," says Lorenzen. That said, he sees potential for some patented technology if oil prices rebound.

The challenge of an increasingly consolidated economy has its advantages: "We have competitors who are absolutely huge," he explains. "As our competitors get gobbled up, they drop customers." That opens up plenty of business for Sensor Solutions: "We pick up the crumbs," says Lorenzen. "We jump onto our modular system and we can have something tooled for them in a calendar week."

Needs: "Good employees are our biggest need," says Lorenzen. "I have nothing but respect for my employees. That's the heart of our success."

He's made a couple of hires in 2017, and is always on the lookout for talent. "Most of the time I'll try to find somebody local," he says. "The people who are here want to be here. They've already decided to make the sacrifice to live in the mountains. . . . We tend to have very active people working for us, and I definitely consider that a plus. When they do come in to work, they're pretty focused on doing a good job."

Another need: the local airport. Lorenzen is a pilot, and he regularly visits clients flying his own plane. "I need the community to support our airport," he says.

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