When in doubt, diversify

By Staff -- Industrial Distribution, 9/1/2000

When a market bottoms out for a distributor's customer base, it usually means a mad scramble to find another target audience, or a going out of business sale. For Richard A. Milroy Jr., president of Portland, Oreg.-based R.A.M. Enterprise, Inc., it meant neither.

Milroy started his business in 1991, and began servicing the hard-rock mining industry in 1992. But when the prices on just about all precious metals decreased a few years ago-and stubbornly hovered around their all-time low-a change of focus became necessary.

For this conveyor belt distributor, the strategy was simple: immediately begin diversifying his company's offerings-but not in terms of new products. Instead, he made R.A.M. Enterprise even more valuable by helping customers keep their operations running.

"Many mining companies have consolidated their work forces. When major projects and down days occur, they call us in for support," Milroy explains. "We go in there and handle structural fabrication and welding, chute lining work, rebuilding of the crushers and pumps, and pipe fitting work, to name a few." Essentially, R.A.M. Enterprise becomes an extension of its customer's work force for two or three days at time.

In addition to adding more value to its offerings, R.A.M. also turned its sights to the aggregate and non-precious metals markets, such as limestone mining properties. "The products used in these industries are different than what we were carrying, so our inventory changed accordingly," he says. "We're expanding into new product lines to capture a broader market than we previously concentrated on."

For example, R.A.M, which employs 36 people and has a branch location in Elko, Nev., recently became a distributor for Phoenix AG conveyor belt in 11 western states. And while Milroy won't disclose company revenues, he says R.A.M. has grown at a 12 percent clip annually-pretty good for a company that was founded with some borrowed cash and his parents' home as collateral. "I started the business by buying three truckloads of used conveyor belting and selling them to distributors and end consumers," recalls Milroy. "In 1991, I hired my first employee-my brother David."

By 1992, R.A.M. Enterprise had become the master distributor for Goodyear Tire and Rubber Co., covering northern Nevada. Then, in 1995, the diversification began when the firm's process maintenance division (PMD) was formed to provide maintenance support for the mining industry.

Cleating Resources, another R.A.M. Enterprise division, was launched by Jim Bresnahan to broaden the customer base. The division fabricates quality cleated rubber and PVC conveyor belting for the agricultural food processing, recycling waste management, forest products, construction and mining industries. "We basically serve three different markets under one company umbrella," says Milroy.

Through it all, Milroy says his homegrown company is different from its competitors in that it provides complete solutions for customers. He explains that most competitors are either in the conveyor belt service industry-focused primarily on conveyor belt splicing-or they're fabricating companies that handle maintenance support. "Very seldom do you find that you have a company that does both."