Small Paint Firm Pours Effort Into Innovation
Small family businesses tend to get a lot of lip-service reverence from politicians, urban officials and the like. But away from the rhetoric, life has become increasingly difficult for the little guy in the super-competitive global economy.
And yet size is not the whole story, either. Sometimes, the small and brave can seize the day.
Take Smiland Paint Co., a family-owned enterprise based in Alhambra that registers about $40 million in annual sales.
The company got its start in 1966, when its late founder, Bronko Smiland, a onetime running back for the old Cleveland Rams, bought a paint-manufacturing operation that dated to the early part of the century. Smiland prospered by supplying independent paint and hardware stores throughout Southern California as the population exploded and houses sprang up across the region.
Bronko’s sons, Robert and William, took the company to its zenith in the 1990s when Smiland Paint won the right to be the regional supplier to the ubiquitous Home Depot Inc. chain. By 1999, sales had reached $80 million a year. Smiland Paint was ready to take on financing from billionaire Ron Burkle’s Yucaipa Cos., acquire other firms and make itself into a company with national reach.
Then the roof fell in.
Home Depot canceled its contract with Smiland and other regional suppliers and switched to a big international paint purveyor, Imperial Chemical Industries of England. Employee rolls were cut from 300 to 100 as sales plummeted 70%. Those who stayed, managers and all, had to swallow steep pay cuts. Plans for financing and expansion were replaced by questions about the company’s very survival -- something still not assured today.
Even now, “we’re losing customers,” says Bob Smiland, president, referring to the independent paint and hardware stores that are going under in the face of competition from giants such as Home Depot and Lowe’s Cos., as well as retail outlets owned by major paint manufacturers including Sherwin-Williams Co.
Yet Smiland is not about to concede that his family company can’t hack it against the Goliaths.
On the contrary, he’s looking to new opportunities. In 2001, at the depth of the firm’s troubles, Smiland invested in and formed a partnership with MicroBlend Technologies, an Arizona start-up that invented a way to produce paint instantly from five vats of components. The MicroBlend method allows a store to make its own paint -- in any formulation from flat to semigloss and from the lowest-priced to premium grades -- through a computerized mixing and delivery process that can be kept in the back room of even a small paint store.
Until now, retailers have had to stock up on as many as 800 types of paint to cover all the various grades and finishes. The MicroBlend system reduces that to a mere handful, according to Smiland. The potential inventory cost savings, he maintains, can run from hundreds of thousands to millions of dollars per store. “This will revolutionize the business,” he says.
Even allowing for some hyperbole, experts in the $60-billion-a-year worldwide paint industry -- $21 billion in the United States -- are impressed.
“This technology can do for paint what the one-hour photo process did for picture development,” says Mike Matthews, editor of Paint Dealer magazine, the industry bible at 23,000 circulation, who has seen the MicroBlend technology up close. “Every grocery store can make paint. Mobile shops can be set up in parking lots.”
The MicroBlend method is the brainchild of Danny McClain, a Phoenix paint store owner who says he was trained in theoretical physics. McClain contends that he didn’t sell his invention to a larger company because he feared that one of the big firms might have paid him a little bit of money -- and then shelved the invention to preserve the status quo.
Smiland Paint, in contrast, not only invested $1.5 million in hard cash but also contributed what Smiland terms “incalculable amounts of effort” to bring the invention along.
In February, Smiland introduced MicroBlend at a big paint show in Las Vegas to good response. “We’re gaining one new store a week for the system,” Smiland says, predicting that he’ll crack one of the big-box retailers, such as Costco Wholesale Corp., by Thanksgiving.
Big dreams, of course, are not uncommon for small businesses. But Smiland Paint has proved itself over time.
In the 1980s, William Smiland led a legal battle with the South Coast Air Quality Management District on behalf of all paint companies to be allowed to manufacture in Southern California.
A decade ago, Smiland Paint began shipping its products to China. It now generates about $4 million in annual revenue from that country and plans to tap the market even more in coming years. The key: Bob Smiland recognized early on that he could take advantage of the mostly empty containers that head back to China from the ports of Los Angeles and Long Beach.
By getting discount rates on these empty vessels, “I can ship paint to China at 19 cents a gallon” while it costs 50 cents a gallon to ship to San Francisco, he notes.
Even during what the firm calls the “dark years” from 2000 to 2002, Smiland Paint hustled. It signed a major new customer, a 180-store Midwestern home improvement chain called Menards.
If nothing else, Smiland’s vision is large.
The company continues to talk with friends and companies in the hopes of financing an expansion. Yet Smiland stresses that he is not open to selling the firm. “We’re going to ride this thing a long way up,” he declares, vowing that Smiland Paint will boast sales of $500 million a year by 2006 -- more than a tenfold increase from the present level.
Maybe because life is so hard for small companies, they are the ones that so often come up with the real innovations. And that’s not just lip service.
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James Flanigan can be reached at jim.flanigan@latimes.com.
