Business Spotlight: Dempster Industries Inc.

Ohio entrepreneur Wallace Davis says he has always set out to carve his own path, and he's counting on the wind to get him there.

In July, Davis purchased Dempster Industries Inc. in Beatrice, Neb., for a cool $3 million. His goal: to bring the once-thriving, 130-year-old wind turbine company and its Springfield distribution center into the 21st century.

"What I saw was a company with a lot of good products and brands that were selling in a shrinking market," he says. "I saw an opportunity to revive that."

Davis, a University of Michigan graduate who has more than 20 years experience in the automotive, aerospace and hotel industries, heard about the opportunity to purchase Dempster Industries more than a year ago. At the time, he was working as plant manager for Cooper Industries, a Houston-based tool company with sales of $50 million annually.

The Dempster portfolio rested on Davis' credenza for nine months before he considered buying it from previous owner Donald Clark. A quick trip to Nebraska, and Springfield confirmed Davis' instincts about the company.

"It was an opportunity to take a company on the brink of going out of business and turn it around," he says.

Dempster Industries was founded as a windmill manufacturer in 1878 by Charles Dempster. During World War II, the plant produced more than 1.5 million 90-millimeter ammunition shells. Through the years, it developed hundreds of machines for the water and agricultural industries, and in 1994, it developed the AlleyCat Trailer used for sorting and hauling recyclable solid waste. Today, the Nebraska plant continues to manufacture windmills, water well pumps, fertilizer spreaders and recycling trailers and has annual sales around $4.5 million.

In the past few years, the company's revenues dwindled, and Davis says he'd like to see a turnaround. He's expanding the sales and marketing team, developing new products and improving customer service.

"When I started, the 240,000-square-foot manufacturing facility had a lot of automation and downtime with about 25 employees," Davis said. "They didn't have business to fill up the plant, and in their heyday they had 500 to 600 employees. I envision building that up again."

One approach is creating a renewable energy division, in partnership with Windation Energy Systems in Menlo Park, Calif., to produce wind turbines for residential, commercial and agricultural use. The turbines look like heating and cooling equipment seen on commercial rooftops. The 64-square-foot appliances are 10 feet high and produce 5 kilowatts of energy. Although they can't power an entire building, they can offset a significant portion of the energy needed. They cost between $40,000 and $50,000, and depending on the wind resource, the machine can produce a payback within five years, Davis said.

"The company had been very stagnant for the last 20 years," said John Weichel, vice president of manufacturing, who has been with Dempster Industries for 10 years. "Wallace has come in and assembled a team of salesmen and a marketing director, and we've been busy. Sixty days ago, I was looking for work for my guys and today I am putting them on overtime. We went from nothing to just swamped."

Dempster Industries has a 10,000-square-foot facility in Springfield that stores and distributes water pumps, agricultural machinery and recycling trailers. Davis plans to expand the scope of the Springfield location - led by Operations Manager Reggie Rice - to include sales and service of Dempster products, in addition to manufacturing.

His current challenge is acquiring the cash flow necessary to build the business, particularly in today's tight economic climate.

"You need a lot of cash to grow a business," Davis said. "Our projection over the next two years is to double sales. That is very aggressive, but we think it's also a very conservative number."

Davis lives in Centerville, Ohio, with his family and divides his time between the plant in Beatrice, Neb., and the Springfield distribution center. He and his family plan to move to Kansas City to facilitate travel between the two locations.

"I think with the industry experience the new management team brings, Dempster Industries has positioned themselves for sustainable growth," said Davis' banker, Michael Garner, assistant vice president of UMB Bank in Springfield. "Wallace is a great guy, and he brings a lot of energy to the business."[[In-content Ad]]