By DAVID ORLOFF
David Hartman and Ken Murphy started National Equipment and Service Corporation 11 years ago, while sitting in Hartman’s car outside their apartment, sharing a six-pack of Budweiser.
They are now aiming to be the dominant player in the Western region in their end of the loading dock business. They discuss the possibility of selling their Irvine-based company to a big corporation or hitting the high road with an IPO.
They never finished the six-pack though. “I still have one can,” Murphy said.
Hartman, the company’s president, had it framed in glass, then dedicated it to Murphy, the vice-president, at their first Christmas party.
NES installs, repairs and services loading doors and docks for large companies like 3M, International Paper, Price Club, Toshiba, as well as small companies like Ray’s Apparel and Kirk Produce. “Anything that has a dock,” Hartman said.
It’s a gritty business, but one that can only be helped, not supplanted, by new technology. That’s because whether the transaction occurs face-to-face, over the phone or on line, products still have to move onto and off the dock.
Filling a Niche
There are several mom-and pop shops and a few larger companies in the industry, but most of the door and dock work comes from the manufacturers. But Murphy said they usually do not have a large service department, and don’t push the service. “We clean up on the service agreements.”
“There is a lot of competition and mostly on the door end of it.” But they do either door or dock work, Murphy said. “We hit the market hard by doing both.”
NES employs 60 people and had about $40 million in revenue last year. The high revenue-per employee ratio is because NES includes the cost of the equipment being installed along with the service costs.
In addition to the headquarters in Irvine, the company has offices in Phoenix and San Francisco. And NES is looking to push further eastward with a potential new office in Denver.
“Looking back to where we started, and where we thought we’d be, it scares me to think where we’ll be in 10 years. I don’t think we’ve scratched the surface of where we’ll be,” Murphy said.
The duo said a Fortune 500 company is looking to buy NES and they have also had offers to take NES public. “If the right offer comes along, we’ll do it tomorrow,” Hartman said.
But as far as staying around if a sale were to occur, Hartman said, “I never could work for somebody else.”
There are other options on the plate for NES. “We are ripe for franchising. We can go in any city and be profitable in six to nine months,” Hartman said.
Hartman, 37, and Murphy, 35, started NES with $3,000 and helpful parents.
The duo was working together at Rite-Hite, a loading dock and door manufacturer. Murphy was in charge of new construction sales and Hartman was in charge of the company’s national service programs.
They discussed Rite-Hite, its problems and their possibilities, and decided to start their own loading dock and door business. They were not going to compete in the manufacturing sector, but saw a niche on the service end.
Hartman said there were no service-only companies in that industry at that time. The docks were being installed by the service department of the manufacturers, who were more focused on manufacturing and selling. That is also what is distinguishing NES from its competition, Murphy said.
“Ken and I built it out of nothing,” Hartman said. They took their savings and bought some loading dock parts. They used Hartman’s parent’s house as a storage facility,the carport for the bulky products and Dave’s dad’s car trunk for the expensive products.
Dave recalled a phone call he received from his mom when they just started out. A truck and trailer pulled up to his parents’ Long Beach house to drop off a load of parts and the driver asked where the forklift was. The delivery was eventually unloaded sans forklift, by the driver.
The pair put in long hours and were up to their elbows in dirt and grease from the installations. Hartman recalled sending off invoices that had grease on them because he was handling both the service and the sales.
At times the business was tight. “We were scratching our heads on how to pay the phone bill,” Murphy said.
In the Black
But according to Hartman, NES has never been in the red. “We’ve always made money.”
In its first year, NES pulled in $3 million in revenue. The company’s revenue grew 45% in its second year and since has grown by about 25% every year. “We are nailing bigger and bigger companies,” Hartman said.
Hartman said NES is generous to loyal employees. “It’s hard to find good people,” he said.
“We pay our service guys the most in the industry,” Hartman said. “We have service guys making $80,000.”
The duo recently bought a Rolex for a service manager who has been with the company for more than six years, and bought their office manager a new Nissan Maxima.
“I can remember living hand to mouth,” Hartman said. “We always said if we made it, we’d share it.”
NES also rewards loyal customers. It spends about $100,000 a year on tickets to the Lakers, Kings, Golden State Warriors, San Francisco 49ers and other sports events.
“And they are not cheap bleacher seats for the Angels,” Hartman said. “We do that because we appreciate the business.”
Hartman’s dad, Ken “Chief” Hartman, also played a major role in the company’s growth.
“He was there in the beginning,” Murphy said.
Ken Hartman still works 50 hours a week for the company as a field supervisor , without pay.
“He won’t take a penny,” said Hartman. n
