Barricade Builder Returns to Origins : Security: Delta Scientific fortified installations worldwide against attacks. It overcame a collapsed market with its parking-lot products.
Delta Scientific Corp. in Valencia used to be the U.S. government’s biggest supplier of anti-terrorist barricades, such as super-reinforced steel barriers designed to pop out of the ground and stop an oncoming suicide bomber in his tracks.
But by 1988 most U.S. embassies and other vulnerable government installations had been fortified against terrorist attacks. Also, international terrorism has been gradually declining, from 456 incidents in 1988 to 307 last year, according to the RAND think tank in Santa Monica.
The result: Delta’s primary market collapsed--counterterrorist barricades had made up more than 80% of its sales in its fiscal year that ended June 30, 1988--and the company lost $250,000 the next year, its first loss since it was founded in 1974.
Delta had no choice but to diversify, so it went back to its less-glamorous roots in the parking-lot business, where it had made a name for itself in the early 1980s manufacturing parking-lot spikes (those familiar blades that puncture tires of vehicles entering or exiting the wrong way).
But this time it has a new product: parking kiosks.
“We got off our butts and went after some alternative-type products,” said Delta’s president and founder, Harry D. Dickinson, 64, who keeps on his desk a piston and severed crankshaft from a truck that slammed into one of Delta’s barricades in a test run.
“We had a lot of good will because we still made the spike units,” he said. “So when we came out with the kiosks, the same people that bought the spikes bought the cashier units,” or kiosks.
Today, kiosks and other equipment for commercial customers make up 70% to 80% of Delta’s sales, he said. By contrast, in fiscal 1987 nearly 90% of Delta’s products were sold to the government.
“So it’s completely flipped,” Dickinson said.
The shift has paid off. Delta, which is owned by Dickinson and his wife, Margaret, is again profitable and expects record sales of $10 million in the current fiscal year ending next June. Sales last year came close to the company’s previous record of $9.5 million, set in fiscal 1988, he said.
Since 1986, the company has doubled its number of employees, from 53 to more than 100. It outgrew its Burbank manufacturing plant and in 1988 moved into a 52,000-square-foot facility it built in Valencia.
Besides kiosks, the company makes parking gates (the kind with the wooden arms that lift up to let vehicles through), electronic vehicle detectors (example: wire cables that trigger a parking-lot ticket dispenser when driven over), and a variety of smaller electronic devices.
Meanwhile, the company keeps in close touch with its global network of customers through offices in London, Frankfurt and Fairfax, Va.
It’s an impressive comeback for a company that saw sales nearly cut in half, to $5 million, in fiscal 1989 after its barricade sales plunged to a paltry 15% of its business from 80% a year earlier.
“The demand for the suicide-bomber barricades wilted,” Dickinson said. “It just suddenly one day disappeared. We filled up all the holes, is what it boiled down to.”
Indeed, by 1988 Delta had furnished the anti-terrorist systems for more than 1,100 sites, including the Central Intelligence Agency’s headquarters in Langley, Va., the U.S. Supreme Court building, the Pentagon and embassies from Munich to Manila, Buenos Aires to Beirut and Kuwait City to Casablanca.
According to the State Department, more than 200 of the nation’s 257 embassies, consulates, missions and other diplomatic offices have been retrofitted with anti-terrorist barricades, most of them manufactured by Delta. Only two other companies, both on the East Coast, are qualified to make the barricades to government standards.
“The reason you don’t see as much activity on these things anymore from the procurement standpoint is because they have worked,” said a State Department official who asked not to be identified. “They have served their purpose and they continue to serve their purpose.”
Dickinson said he knew of no terrorist attacks on installations that have been fortified with Delta’s barricades.
Despite the drop in government contracts, Delta has kept a foothold in the barricade business. The devices made up 25% to 30% of the company’s sales during fiscal 1991, but the focus has shifted from government users to commercial customers who mainly use the equipment to prevent theft, Dickinson said.
For example, a Macy’s department store recently installed one of Delta’s vehicle barricades--the same kind used by embassies and military bases to stop suicide bombers--to prevent thieves from driving off with merchandise-laden trucks parked overnight in the store’s loading dock. The hydraulically operated barricades are lowered in the morning to let the trucks leave after they have been unloaded.
A similar system was put in place at a Pasadena pharmaceuticals manufacturer, which Dickinson declined to name for security reasons, to thwart thefts of prescription narcotics.
“We went after a broader market with a broader market line,” Dickinson said. “We came out with a ‘people’s price’ for counterterrorist equipment.”
Wholesale prices of Delta products, which are sold almost exclusively to distributors, range from $100 for a simple vehicle detector to about $25,000 for the biggest anti-vehicle barricades, Dickinson said.
So-called cable-crash beams, essentially fortified parking gates that can withstand the impact of a moving vehicle, are among the most popular items for commercial customers and cost about $2,000, he said.
Delta’s biggest project currently is a huge two-part gate for a Federal Reserve Bank cash-handling facility in Newark, N.J. The gate is so big--one part alone weighs 26,000 pounds--that it won’t fit into Delta’s construction warehouse and will have to be completed outside the building, Dickinson said.
“I like to say it’s the biggest gate ever built,” Dickinson said.
Delta’s transition to the commercial market has not been without difficulty, however.
The company’s main competitor for the Southern California kiosk market, a firm called B.I.G. Enterprises in South El Monte, sued Delta in late 1989 after Dickinson hired away its sales manager, Burlin Harris. B.I.G. claimed Delta was trying to steal its customers (in a separate lawsuit it accused Harris of handing over B.I.G.'s customer list to Delta), but Delta countered that its kiosk customers were the same ones that had been buying its spike units for many years, according to Dickinson.
The B.I.G. suits and two countersuits filed by Delta and Harris were dropped by mutual consent early last year. B.I.G. President Preston King could not be reached for comment.
With some of the competition’s best talent now working for him, Dickinson has been able to secure a sizable chunk of the parking kiosk market. Based on reports from customers, he estimates about 80% of parking kiosks sold in Southern California are made by Delta, while nationwide Delta’s share of the kiosk market is about 20%. In the Midwest and East, Delta competes with kiosk makers such as Parkut International in Mt. Clemens, Mich., PortaKing in Earth City, Mo., and Mardan Industries in Orlando, Fla.
In its just-ended fiscal year, Delta sold 320 parking kiosks and it expects next year’s sales to increase 30% to more than 400 units, sales manager Harris said. Locations that use Delta’s kiosks include Los Angeles International Airport, Rodeo Parking Garage in Beverly Hills, Ghirardelli Square in San Francisco, Kaiser Permanente Medical Center facilities and Universal Studios.
“We are very satisfied” with the kiosks, said Miguel Oliver, director of central support services for Kaiser Permanente in Southern California, which recently installed four Delta kiosks in its parking lots.
Oliver has been doing business with Dickinson since the late 1970s, when Kaiser bought its parking-lot spikes from Delta. Why did he turn to Delta for parking kiosks?
“Dickinson is the old-fashioned kind of person to do business with,” Oliver said. “He sticks to what he promises and he delivers what we expect.”
Meanwhile, sales of parking-lot spikes have continued to grow, accounting for 10% to 15% of sales last year, Dickinson said. Some of the biggest customers are car-rental agencies hoping to stem a rash of car thefts: Spikes that block parking-lot exits are electronically lowered only after an attendant checks the customer’s rental contract, Dickinson said.
But gross profit margins on items such as parking kiosks are only about 20% compared to 40% on the barricades, Dickinson said. The parking devices are also more labor intensive, and as a result Delta’s payroll expenses have grown by nearly 70% in the last three years, he said.
“We took a very nice profit” on the barricades,” Dickinson said. “You can’t do that when you have a guy down the street in a cottage industry selling parking kiosks.”