Third Millennium seeks to corral horse trailer market

by Paul Schreiber

SBJ Reporter

pschreiber@sbj.net

Third Millennium Industries Inc. is seeking to capitalize on the high-end horse trailer market through company acquisition and by developing customized manufacturing processes, said Dennis DePriest, president and CEO.

Third Millennium operates locally with eight employees from a 22,000-square-foot production and office facility in Rogersville. It manufactures human living quarters for horse trailers.

Trailer market

Research found an industry niche that was below the radar screen, DePriest said. "It turned out to be this aluminum horse trailer with living quarters market niche," he added. "The more we looked at this, the more we saw that this industry looked very similar to the bass boat industry of 15 to 18 years ago.

"Our target market is the upper third, from a price-point standpoint, of the aluminum horse trailer market. And I believe we can become dominant in that segment of the market," DePriest said, adding that the price range on these trailers runs from about $50,000 up to $150,000. Below $50,000 you're into production trailers, he said.

The production of horse trailers, living quarters, even the retail dealerships selling them, are in an early stage of development, DePriest said, adding that financing, marketing and most manufacturing processes are often fragmented in respect to their operating efficiencies, he added.

"What we're looking to do is to bring some mass customization into this process, so that we can be more efficient at producing a higher-end and more customized unit than what is currently being done in the market," DePriest said.

"The design work needs to be fully transparent between the two manufacturing functionalities (living quarters building and trailer building), so that we can build the trailer completely at the location where it's most efficiently built," he said.

By doing this, "Our engineering estimates are that we can reduce labor at the living quarters manufacturing location by up to 40 percent by fully integrating engineering and design of the two processes, while only increasing labor at the manufacturer of the trailer by 10 percent," DePriest added.

"Our take on this was that this industry is ready for its first consolidation," DePriest said, adding that customized horse trailers are part of a $23 billion annual equine market. "Furthermore, the equine industry is populated, to a large degree, by people who have larger-than-average disposable income."

Buyouts

Making multiple acquisitions is in Third Millennium's future. In August, Third Millennium went public. "What we did was we bought up three of these operating entities, consolidated them into Third Millennium, and then did a reverse merger with Third Millennium into a public company," DePriest said.

Two retail locations Campers World in Tulsa, Okla., and Clear Lake Trailers in Weatherford, Texas, as well as manufacturer Twister Trailer in Ft. Scott, Kan. were Third Millennium's first purchases.

"Third Millennium was a company formed as a holding company to negotiate and make those acquisitions," DePriest said.

Barrett Trailers

The anticipated 2004 first-quarter acquisition of 30-year-old Barrett Trailers Inc., a Purcell, Okla., aluminum trailer manufacturer with 125 employees, will boost Third Millennium's production capabilities.

"We have signed all the definitive acquisition documents and we will close on Barrett Trailers in the first quarter," DePriest said. The acquisition cost cannot be released yet, he added.

Barrett's revenues have been as high as $15 million, said John Hodson, Barrett's chairman and CEO, but added, "this year we'll be in the $12 million range with the economy being down."

Sixty-year-old Hodson, who owns 57 percent of the company against 43 percent owned by employees, said he's selling to begin retirement.

After the Barrett acquisition, Third Millennium will have about 170 employees total, DePriest said.