Hotstart heats up again after dip in sales
Natural-gas market rebound leads to ramp up in hiringJuly 6th, 2017
After two years of declining sales, activity is heating up in a big way at Hotstart Inc.
The Spokane Valley-based maker of engine heating equipment is seeing a 30 percent increase in revenue so far this year and is hiring more employees to handle the additional demand, says Hotstart CEO Terry Judge.
Meantime, Judge says, the company is adding manufacturing capabilities in Germany, where it only has a sales presence currently, in an effort to compete more effectively in Europe.
“We’re having a really strong year, really strong growth,” he says. “We’re struggling to keep our overtime down and to get our workforce ramped up.”
With sales up by nearly a third, the 75-year-old company, which is headquartered in a 140,000-square-foot facility at 5723 E. Alki, is making up ground lost during the past two years. Its annual revenues dipped to $39.1 million last year, down from $49 million in 2015 and $59 million the previous year.
It currently employs a total of 170 people, with plans to hire 10 more in the next few weeks, Judge says. That’s up from 150 last year, but remains below its peak employment of about 210 workers in 2014, he says. The company still is looking to fill positions for electrical engineers, product engineers, and assemblers, among others.
Judge attributes the increase in revenues to a snapback in the natural-gas compressor station market for Hotstart. With the price of natural gas rising from lows experienced during the past two years, more natural-gas companies are investing in improvements to established pipelines and building new ones.
“When the price of natural gas and oil was so low, it didn’t make sense for them to make investments,” he says. “Now that the prices are up a little bit, it makes sense for them to invest a little bit.”
In terms of sales activity, the natural gas and oil customer segment currently rivals the company’s activity in sales to heavy equipment manufacturers. Caterpillar Inc. is its largest customer, Judge says. Others include Cummins, Kohler, Paccar, Kenworth, Komatsu, and Rolls Royce.
Sales in that sector are more stable than the natural-gas market and typically have flat or slow growth, he says.
While domestic sales have picked up this year, Hotstart’s biggest potential for growth is in international markets, Judge says. The company opened an office in Siegburg, Germany, eight years ago and another in Tokyo six years ago.
“That business is able to grow faster than our domestic business because we’re still like the new kids on the block over there,” he says.
With offices in Spokane, Germany, and Japan, the company adequately can serve customers in each time zone, Judge says.
The company has begun developing manufacturing and assembly capabilities in Germany so that it can make some of its larger, more complex products there. Those operations are scheduled to be up and running by next April, Judge says.
He says the expansion should help the company compete on price more effectively in the European markets.
“Some of our products are lightweight and compact, and to ship from Spokane over there, we can still be cost competitive. When you get into larger, heavier, bulkier systems, that adds to the shipping cost quite a bit. It’s harder for us to compete with companies that are based right there in Europe.”
In addition to looking to expand its international presence, Hotstart has started what Judge refers to as a dedicated strategic effort to grow into new and diverse fields. In some instances already, its engine heating technology is being employed in others ways; for example, some microbreweries are using Hotstart heating systems in the brewing process, he says.
“We have so much capability with our engineering and testing and manufacturing,” Judge says. “Where else can we bring those capabilities in completely different markets?”
One specific area in which Hotstart is looking to expand is in energy storage capabilities related to renewable energy sources. While the technology is different from its current products for power generators, it’s similar in that it’s working with on-site power supplies.
“It’s close to what we’re doing,” he says. “We understand the concepts.”
Hotstart was founded in Spokane in 1942 as Kimberlin Manufacturing when former school bus driver Wayne Kimberlin developed an engine block heater so that school buses would start easier on cold winter days. He partnered with Stanley Power, who owned a print shop at the time, and Power bought him out and changed the company’s name to Kim Hotstart Inc. in 1944. Judge says members of the Power family still own the company, which simplified its name to Hotstart Inc. in 2009.
“In one sense, what we do is the same. It’s a different product, but the same concept,” Judge says. “But gosh, if that’s all we did over 75 years, we wouldn’t have lasted 75 years.”