Speaking of design, how did your move to the Moshannon Valley Regional Park in Philipsburg work out for you and your team of 55-plus? I understand that you’ve really invested at every stage in this from-scratch and totally modern development. The move was executed about as efficiently as we could have hoped. It was an incredible undertaking to move the entire production facility, as well as cleaning up and rehabbing some of our old rented facility. We were able to mobilize almost our whole staff to tackle the projects and many hands make light work. Our plant manager Pat Hanlon and production supervisor Paul Craig did an incredible job organizing and managing everyone. All-in-all we had the entire task completed and were making covers in the new facility in about one week. Was it sheer growth that motivated the move, Ethan? “The decision to build our own facility was partially motivated by growth and partially motivated by our desire to provide our employees with a completely different work environment experience.” The decision to build our own facility was partially motivated by growth and partially motivated by our desire to provide our employees with a completely different work environment experience. DiamondBack sets annual goals for four different bottom lines. ‘Financial’ is of course one, but we also target initiatives under our ‘environmental bottom line,’ by which we mean both the environment in which we work as well as our impact. We also set goals for ‘internal/employee impact’ and ‘social/ customer impact.’ The new facility was motivated by goals in all four of these categories. Financially speaking, we simply needed more efficiency and capacity. We’ve been one of the fastest growing companies for many years now and we needed the ability to ship more product in shorter time frames. Environmentally, we wanted to completely change the work conditions for our employees. Our old facility was dark, with low ceilings, lots of walls, and very little air flow. It felt like an old manufacturing building – because it was. Our new facility has 30-foot ceilings, windows for natural light and no partitions on the production floor. When we open up the giant roll up receiving doors, it almost feels like you’re working outdoors.
warehouse distributor customers who would sell to truck accessory dealers, who then in turn would sell and service the retail customer at locations around the US and Canada. From 2003-2007, the company grew quickly using this model however, the financial margins afforded by the model did not produce any profit. Over this time, outside investment was needed to grow and the company brought in money from friends and family – as well as investments from the Ben Franklin Technology Partners, the Garber Fund from PSU, and occasionally traditional bank financing. In 2008, the company had secured a direct relationship with General Motors to provide the locking truck cover for the HUMMER pickup truck. Additionally, the company had just obtained national distribution through multiple distributors and had strong sales with commercial fleet vehicles. Then the financial crisis of 2008-2009 hit the industry. During the recession, truck sales fell by over 50 percent in three years and the industry suffered near catastrophic change. DiamondBack watched as all the pillars of its current business model cracked and eventually fell apart. As we realized that declining truck sales would decrease our unit sales growth potential, we pivoted away from the industry standard model of distribution to a more direct approach to sales. This was a business model that Matt and I – as well as key employees – preferred to pursue for the long term. From 2009-2011, the company moved completely away from national distributors – who were, historically, our biggest customers – and sold directly to dealers and retail customers. From 2012-2015, we successfully navigated this ‘channel pivot’ and today we obtain around 70 percent of our business directly from retail customers. The ‘direct to consumer’ business model has allowed DiamondBack to build lasting relationships with our customers while producing sustainable financial margins.
From the ‘internal/employee impact’ side, we designed elements like a giant break room with large TVs, a couch and an industrial kitchen. The space is designed for employees to reserve it for personal parties if they want. And lastly, from ‘social/ customer impact’ side, we focused on developing elements that would allow us to host customers and show them the process of making the covers. We have large windows from the second-floor office out over the production floor. All-in-all, the decision to build was motivated more by other factors than by growth. We could have gone to multiple shifts in our last building and saved tons of money in the short term. But we believe this new building communicates to employees and customers, our desire to build a company that matches our products in terms of quality and durability. But your growth is impressive nonetheless and growth has to start somewhere, right? How did it all come together for Diamondback Truck Covers?
That’s true. We’re growing steadily at, I’d say, more than 23 percent every year since the recession. “DiamondBack truck covers are in a constant state of evolution because we’re always seeking ways to make improvements on an already great, steady product.” It all started when Matt and I were engineering students at Penn State University back in 2002. We conceived everything as part of an assignment. The original product, around which the company was built, was a truck cover that would seal and lock the bed of a pickup truck, while also providing the ability to haul on top. In May 2003, DiamondBack was incorporated, and we began redesigning and refining our product. Starting out, the company pursued a business model used by almost every other manufacturer in the industry. This model included developing large
SPOTLIGHT ON BUSINESS MAGAZINE • OCTOBER 2019
77 OCTOBER 2019 • SPOTLIGHT ON BUSINESS MAGAZINE
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