Paul Darley, President and CEO of industry giant W.S. Darley, shares his views on the evolution and future of the fire equipment industry
W.S. Darley is one of the world’s leading fire equipment manufacturers, with over 100 years of experience and innovation. In an exclusive interview with International Fire Buyer, the company’s President & CEO, Paul Darley, explains the ethos of the company, and shares his thoughts on the current state of the fire industry in the US and internationally.
Give us a brief overview of the company’s history
My grandfather started the company in 1908 and began selling fire-fighting equipment all over America. In 1926 he decided he wanted to build his own fire truck. Back in those days all the major fire truck manufacturers in the US built their own cab and chassis and sold their trucks for $3500 to $5000. My grandfather introduced a fire truck for $690 on a very basic Ford Model-T chassis. It completely disrupted the market, and a few years later all those truck manufacturers went to the pump manufacturers and said, “let’s cut Darley off from being able to buy a pump.” They were successful in that, and my grandfather was left with the choice between pulling out of the industry and making his own pump. He hired the chief engineer from one of the pump companies, who agreed to work for him so long as he could continue building pumps in northern Wisconsin. It was 350 miles from my grandfather’s headquarters in Chicago, but he saw the potential. The lumber industry had just left the area, and left behind a good surplus of craftsmen, so my grandfather took the plunge. By World War Two the company was building fire pumps and trucks for the US military. At the end of the war, this equipment was left all over the world and became the springboard for our international business. Today, our international business accounts for about 50% of the company’s activity. We have a significant presence in any place where they follow US standards – China, Australia, New Zealand, South Africa, parts of the Middle East. In UK-influenced areas, such as Hong Kong, we’re not so big.
It seems clear that quite a large part of the company’s ethos is to focus on the customer. How do you go about providing the best for every one of your clients?
First off, we make sure to listen to the customer. Our top three core values are integrity, customer focus and relationships based on respect. Everything we do is focused on the customers. If you look at most business models nowadays, then companies either need to be a low-cost producer, an innovator or they need to be customer-focused. I personally think you need to be all three of those things. In our particular case, being a family business, the client focus comes very naturally to us. It’s really what we focus on
in all of our markets; we listen to the customer, we communicate, we’re respectful, we do what we say we’re going to do – we under-promise and over-deliver. This has helped us build long-term relationships with our customers by finding out what their needs are – be it a quick delivery, a specialised pump or whatever – and then we cater to those needs.
Have you been seeing any particular trends in terms of what your customers are specifying recently?
Absolutely. Over the years we’ve seen a rise in CAFS (Compressed Air Foam Systems). The British Navy invented CAFS
in the 1930s and Darley resurrected that technology in the late ‘70s. We were the first in the whole fire industry to do so, and today we’re the clear market leader in CAFS. That certainly represented a paradigm change, coupled with the use of Class-A foam. The second big trend, certainly over here in America, is multi-purpose vehicles. With budgets being cut, Fire Departments can no longer afford to designate a truck to be just a pumper, or just a tanker; they’ve got to be a tanker, a pumper, a rescue vehicle. Multi-purpose vehicles are the biggest paradigm shift taking place right now.
In 2011, you mentioned that the US fire market was down about 50%. Have you seen any rebound on domestic figures at all, or do Darley still have to look internationally for growth?
As a company, we’ve tripled our sales in the last ten years and doubled them in the last four. We have grown in the United States, but the domestic market as a whole has not. The overall truck market remains pretty flat. Last year, in fact, it was exactly flat. 2012 remained down roughly 42% compared to 2008, and we’re not seeing any resurgence this year as yet. Most economists don’t see the municipal market improving until about 2017, and then we’ll settle into a new normal. The US fire market was at about 6000 vehicles a year before the recession, whereas last year it was at about 3500 vehicles. Once everything sorts itself out and we find the new normal, we’ll probably be looking at about 4300-4500 new vehicles per year. As a result of that, Darley and most of the other truck building companies are all looking to export markets for growth, as well as other lateral markets. We’re really looking to reinvent ourselves at the moment: We were just awarded an $80 million pump contract from the US Department of Defense for fuel transfer pumps, we’ve launched new water purification products, a line of drones, a residential fire sprinkler company, and we’re in talks about acquiring another company. If US companies are looking to grow in the domestic market, they’re going to have to do it either by getting a larger market share – taking business away from their competitors, because the market is going to remain flat – or by looking to export to markets internationally or develop new products for new and existing customers. Last month I attended Fire China in Beijing, and noticed that there were a number of new fire truck manufacturers from America, most of whom would never have even thought about the Chinese market in years gone by.
Despite that, the European market hasn’t traditionally been one that you have specifically targeted. Is that just because of differing standards, and can you see it changing in the future?
Europe is a very competitive market, with most of the fire truck builders making their own pumps. While Eastern Europe holds some good possibilities, We are better off looking at the Middle East, parts of Africa, places like that. We’ve just landed a major order for 35 fire trucks, equipment and training from Nigeria. We’re going to where the water’s blue, where there aren’t as many competitors swimming around.
In your recent interview with Forbes, you mentioned how you have five-year and ten-year plans for growing the company, and how you are looking to get the company from a $150 million company to a $500 million one. How’s that going, and is diversifying into other markets and countries helping you do that?
Defence is clearly the area where most of our growth is coming from. What we do, as a pump manufacturer, and a technology company is make products that can be used ideally for both defence and fire and emergency situations, such as our recent order from the US Marine Corps for refuelling pumps. We took our technology as a fire pump manufacturer and adapted it for that use. We’ve landed another very large contract where we are one of only four companies that equips all the fire-fighting needs of all the soldiers in the US military, and we’ve been able to leverage that position to get special operations contracts for the military as well. Our plan is to bring that defence business to the international stage, in a similar way to how we expanded the original fire business.
You’ve mentioned new markets, and in particular drones. Are the drones you produce purely for defence purposes, or have they got other applications as well?
Indeed they do! The New Zealand fire service just recently bought some of our drones, so they’re very versatile. They’ve been designed for fire-fighters as well as other more traditional applications. The drones come standard with a high-def camera, and can also be equipped with chemical and biological detection equipment as well as thermal detection. You could use them for anything from surveillance of a fire-fighting situation, to a wildfire situation, search and rescue, to defence applications.
In the 15 years that you’ve been President of the company, how have you seen the industry evolve?
For me, the biggest change has been how the fire industry is adapting technology from other industries. We’re also seeing a shift in the role of the Fire Department. In the past, all over the world, they’ve always been so traditional and unwilling to look at and accept new technology. Now they’re starting to take a look at things they would never have looked at before. Companies are now being ‘need-driven’ more than ‘tradition-driven’, so to speak. A lot of that is being forced on them due to budget constraints and a changing environment overall. If you look at, at least historically, the United States, 50 years ago a fire truck would be leaving the station and reporting to a fire roughly 40% of the time. Nowadays, it’s only about 4%
of the time. It doesn’t really make sense to tie up 80% of your fleet when those vehicles are only going to be effective on 4% of runs. The trend towards multi-purpose vehicles that I mentioned earlier means that you can now carry HAZMAT equipment or EMT equipment to respond to EMS calls, which now account for about 50% of calls. In developing countries, they are looking for the ability to have water purification equipment added to a vehicle to be able to support the local communities in the wake of a natural disaster or, as they’re doing in South Africa at the moment, being able to visit rural townships and offer clean and safe drinking water, which will create goodwill between the Fire Departments and the local populations. Just as we as a company are very customer-focused, so too are today’s Fire Departments. There have been a lot of very high-profile fire chiefs in America who have spoken at length about the importance for Fire Departments to keep their customer service at the forefront of their minds. Every call is an opportunity to create goodwill amongst the community. Multi-purpose vehicles are currently dominating the American market, and where a small town may in the past have had a pumper, a rescue vehicle and a tanker, they now just have one vehicle to do all those jobs. There’s been a de-emphasis on the pump side of things (although they can still carry an enormous amount of water), and you’re now seeing pumps packaged away cleverly so that there’s more space for other equipment that the vehicles now have to carry.
I also think we’ll continue to see, on the international front in particular, advancements in electronics. The improvements have been more impressive internationally than they have in the United States, at least in recent years. We offer some very high-tech control panels that can run all of the valves and engine functions from one little box, and yet many of our customers still prefer to physically pull a lever and watch a pressure gauge go up and fight fires in a traditional way. I do think that this is going to change, especially once this new generation that has grown up with iPhones and iPads and things get into the Fire Departments. Their whole life, they’ve been brought up on electronic devices and it’s noticeable that high-tech pump panels in particular have caught on elsewhere, especially in Europe, before they’ve caught on in America. I think we’ll continue to see a lot more development there in years to come.
What do you see as the biggest challenges for Darley in terms of getting the company to where you want to be in the next five years?
Every company has to continue to reinvent itself – at Darley, as soon as we launch a new product, we’re straight away working on the next one, and it’s being properly market-researched. It might be a product that everyone’s asking for, or it might be one that the market doesn’t know it needs but that we’ve recognised as being important for the industry. Going forward, it’s going to be introducing new products into lateral markets, such as emergency water purification or drones, both of which are rapidly growing markets. We’re not the company today that we were 15 years ago, and in 15 years from now, we’re not going to be the same company that we are today. As a family business, we have a clear succession line, and have to make sure that the next generation of Darleys is prepared to carry the torch and uphold the company name for the benefit of our customers. Our international business, especially, is all based on relationships, and we’re not going to improve them by sitting behind a desk in Chicago! You’ve got to go out and meet people, wherever they are, to build that trust and relationship. We’re going to have to stay very closely attuned to the needs and wants of our customers. At the same time, we’re going to have to keep an eye on the newest growth markets and adapt our current technology to new industries.
