That's a hefty spend for a business barely three years old, but that gambit, along with other creative tactics, have helped transform Allied from a small player into a national brand. In August, the first month of Allied's sponsorship, sales rose 40%. Revenues jumped to $32.5 million in 2005, up from $15.7 million in 2004.
Not bad for a company that was started on the fly. Michael Lassner, 32, and Charles Kowalski, 43, were salesmen for a steel-buildings company when, in March, 2003, they received one day's notice that it was going under. "The worst thing at that moment happened to us, but it became the best thing," says Lassner. Their former employer, says Kowalski, "could not see what we could see."
Kowalski and Lassner envisioned the market for steel buildings extending beyond the garages and warehouses that are the mainstay of the $3 billion industry. As Lassner says, they wanted "a steel building on every corner" -- large warehouses, retail stores, power plants, and churches.
To make buying a steel building easier, Lassner and Kowalski became a one-stop shop, handling design, order, and delivery of steel, permits, and even finding contractors to assemble the buildings.
Just 30 days after their old company folded, the duo had launched Allied Steel with $27,000 in savings. Lassner and Kowalski describe themselves as a white-collar/blue-collar team. "Mike wears the suit and tie, and I wear the work boots," says Kowalski, a gregarious former roofer who handles sales and design. Lassner, who previously worked at an Internet startup developing video technology, tackles marketing and operations.
They began with a large but targeted promotional effort, placing ads in the business sections of newspapers rather than relying on classifieds. They also advertised on billboards and radio and launched a direct-mail campaign. By 2005, their ad budget was $2 million.
Price and speed are their two strongest selling points. So-called pre-engineered buildings run about 50% less than traditional construction. A two-car garage from Allied costs about $5,000, a recent contract for an electricity plant came in at $170,000, and the company's average sale is $30,000. Dennis Stoneman, pastor of the First Baptist Church in Burley, Idaho, bought an Allied building in 2003 as his congregation's new church. "[It] was delivered on time, and it went up very quickly," Stoneman says. The church is fronted by a wooden entry, giving it a traditional look.
Lassner hopes to best his competitors through superior customer service. Generally, that means getting permits faster and buildings delivered on time. But in 2004, when spiking demand in China sent steel prices doubling, customer service suddenly meant being able to withstand global supply shocks. The partners scrambled to rework $3 million in outstanding contracts, eating as much of the increase as they could. "When we did the math, we knew we would be broke, but we would still have our company and customers," says Lassner. As Allied grows, he's better able to negotiate better prices from his two main suppliers, Nucor (NUE
) and Star Buildings.
To sustain that growth, the partners are searching for new ways to reach customers, becoming the first in their industry to sell through hardware stores. Last year, Allied began putting its displays in 360 Canadian building-supply stores, trying to appeal to homeowners and small contractors. This spring, Allied will place its software in about 20 of the stores owned by national hardware chain 84 Lumber, allowing shop clerks to print out price quotes and preliminary plans. That's just one more way Lassner and Kowalski hope to benefit by thinking outside the steel box. By Coleman Cowan