PLYMOUTH — The housing crash devastated firms in construction — site developers, home builders, carpenters, electricians — but the seismic waves went far beyond that epicenter.
Kim Pelletier, president of Truck Builders of Connecticut, moved to Connecticut in 1982 and was a mechanic for land-clearing firms during the recession in 1990 and 1991. He thought he knew what to expect this time.
In 2007, there were 28 people working at the firms he co-owns, in excavating, rock crushing, but mostly in assembling dump trucks or trucks with cranes on the back. At the busiest time of year, there would be 25 new trucks in the yard — so full, they'd have to park across the street. "We ran two shifts trying to keep up."
"There was work," Pelletier said. "Money was cheap."
And then, the bottom fell out. New emissions standards made new heavy equipment cost $180,000 rather than $130,000. Gas went up to $4 and $4.50 a gallon for the first time, and the operators didn't have fuel surcharges in their contracts. And, of course, the demand for new houses dried up.
"We filed over $7 million in gross revenues in 2007," Pelletier recounted in his trailer office, a nameless gray cat lolling on his paper-covered desk. That year, the company put 186 dump trucks together from scratch.
In 2008, revenues were $850,000. They assembled just six new trucks.
Pelletier wound down his own excavation service and his rock-crushing business, selling his equipment.
Before the recession, he'd done a little bit of refurbishment work, where an equipment owner keeps the original cab and engine and chassis with its six wheels, but overhauls the rest of the body.
Now he had to find as much of that work as he could, to support what employees he had left.
Refurbishing the body of the truck, as opposed to buying new, saves about $100,000. Pelletier said his work will last 15 years, and if the rest of the truck wears out, it can be moved to a new chassis.
"A lot of towns can't afford new trucks. The cash flow issue applies to everybody, right down the line."
About 75 percent of this repair work is for commercial companies, and the rest is municipal, but Pelletier is working on expanding that segment. "They pay their bills," he said wryly.
From 2009 to 2012, a number of their longtime commercial customers closed. Even the firms that survived, "You still couldn't collect what was owed to you," he said. Now he's changed his payment schedule, to get more money up front.
He said the commercial repair work has grown faster so far.
In 2013, Truck Builders had $1,425,000 in gross receipts, but that still wasn't enough to break even, five years in to the recovery. He thinks he'll cross back into the black in 2014.
In his scramble for new sources of revenue, Pelletier started thinking about how to solve a longtime problem for municipalities. Many of the salt-spreading plow trucks have a conveyor belt that sends salt to an opening just in front of one of the rear wheels. The trucks are rear-wheel drive, and having salt there, instead of just falling off the back, helps them get through on snowy roads.
But that conveyor belt system was very prone to rust, for obvious reasons.
"You could wash it, but you couldn't really see it," Pelletier said. "They all had the same salt trapping areas. That created rot issues, structure failures."
Maintenance shops at the towns wanted to be able to take off the conveyor belt, but Pelletier thought they were so heavy and large, that wasn't practical, except at the end of the season. But what if the conveyor system stayed down when the truck bucket tipped up?
Pelletier, with collaboration from Simsbury and Woodbridge, the first two customers, has now created such a truck. In his Noreaster Fabrications subsidiary, he is making dump truck/plow truck bodies from sheet metal. That company accounted for between 20 percent and 30 percent of revenues in 2013, its first production year.
Before he launched the product, Pelletier thought "if we did six the first year, I'd be happy, and we did 10 the first production year."
Currently, the shop is building two trucks, and two more are on order.
March marked the start of the second production year. He'd like to get 15 trucks made, but he said since municipal budgets come out in July, he can't say whether he's on track to hit that goal. "It's all going to be dependent on the budgets."
All government buyers — the state highway department and towns — buy at least 150 of these bodies a year, he estimated.
It only takes two weeks to build the unit, but it takes 90 to 120 days to assemble the truck. With six employees at Noreaster and four at Truck Builders, plus the two partners, he could build 10 bodies at once.
"Woodbridge was very patient with us," he said, since refining the design meant slower delivery than he originally expected.
Warren Connors, operations manager for the town of Woodbridge, said the first Noreaster Fabrications plow truck has operated one season.
"If you can minimize the repair effort, ultimately you're going to have a product that's going to have more longevity," Connors said. "So far, that goal is being obtained."
Connors said the town has ordered a second truck of this design. "From the driver's perspective, it's probably the best truck we have in the fleet," he said. And even though it's a customized design, it's cost competitive with assembly packages that use off-the-shelf components, he said.
Pelletier missed the low bid for six trucks in New Haven by $1,500, but he said as word spreads, he could take market share if the bid specifications require a hinge design that allows access to the conveyor belt. He's the only one in the state with the option right now.
Pelletier doesn't know if there's the danger of copy cats, as he hasn't patented his designs.
"We probably spent $15,000 just researching possibly applying for patents. I don't see that as a viable option at this time."
But he said he'd be happy to sell his fabrications to other firms that assemble plow trucks in the state.
State funding was critical in launching Noreaster Fabrications, he said. Pelletier does not have a relationship with banks for lines of credit, and, given that he hasn't turned a profit in five years, even if he had, he would not have been likely to get a loan.
The state Department of Economic Development lent the firm $287,500, and provided a $100,000 grant, too.
Noreaster hired 12 assemblers, six of whom were unemployed before joining the company, and had salaries subsidized by the state through the STEP UP program over their first months. There is no school for this kind of work, so on-the–job training is extensive. Only five of the workers stayed on.
"That's a very tough field to find the people that have an interest in doing the work the way it needs to be done," Pelletier said.
"Between STEP UP and DECD, that's what really fueled us to get these bodies to manufacturing now," he said. "If it wasn't for them, there's no way we would've gotten this off the ground."