Managing rapid growth a challenge at EnviroTech

Managing rapid growtha challenge at EnviroTech

Helen Taylor

Business Report Staff Writer
GREELEY- Roger Knopf is hitting the brakes.
The president of EnviroTech Services Inc. says that after eight years of rapid growth, it˜s time to slow things down to ensure that customer service doesn˜t suffer and company employees feel as few growing pains as possible.
EnviroTech manufactures, sells and distributes dust control, road-base-stabilization and deicing products. With 10 products on the market and more in development, the small Greeley-based company has beaten the odds. EnviroTech has challenged industry giants such as Dow Chemical Co. and Cargill Corp. and established a national presence.
But growth has come at such a quick pace that Knopf says the company must now manage its expansion and still stay competitive.
Located on about three acres at the eastern side of Greeley near Kersey, company headquarters consists of a few single-story buildings, an expansive dirt lot and several huge, white storage tanks. Fifteen or so people work at this site; 10 more work out of Denver, Colorado Springs, and Fort Collins, and the company has distributorships around the country.
Most of the products EnviroTech sells contain magnesium chloride, an environmentally safe, noncorrosive, liquid that effectively controls dust and melts ice and snow. Magnesium chloride, along with good timing, good business sense and a little luck has helped turn EnviroTech into a $9 million company.
In joint partnership with his former employer, Centennial Ag Supply Co., Knopf started EnviroTech in 1989. Two years prior, Centennial Ag, a chemical fertilizer company also based in Greeley, started doing commercial work with Dow Chemical, putting down a product to control dust on dirt roads.
When the company got too busy to continue the work, Knopf took it over under the new name. With a small investment, one employee, one truck and one tank, he managed to keep the company in the black from the start.
At the same time, Knopf said, counties were phasing out the use of oil to control dust due to the high carcinogen factor and federal legislation calling for a ban on the use of waste oil on roads, so EnviroTech was able to bid for county contracts using magnesium chloride. Before long, the company had its own distributorship for the product with Great Salt Lake Minerals Corp..
"We were the little guy on the block, but we kept going out to promote the product and eventually got an agreement to represent the product in the marketplace," Knopf said. "Tonnage kept coming up, and Great Salt Lake suggested that since we were doing well here, we should branch out into other states. Now we distribute throughout Colorado and in 12 other states."
The company grew as counties and states were adding unpaved roads to accommodate their growth, and new products for road stabilization and repair, as well as dust control, expanded the market.
However, success was stymied by a few issues, Knopf recalled.
"Selling dust control is like selling air conditioning," he said. "It˜s nice to have, but it takes money out of your budget. However, if it becomes cost-effective — if there˜s some return — people are more apt to buy it."
Results of a two-year study on several different dust-control products conducted by Colorado State University gave Knopf the proof of cost-effectiveness he needed. The study showed that without dust-control products, a new road base was needed every three or four years, but with dust control, roads could last nine to 11 years.
Another concern was that although the company did well during the summer months, winters were slow, and money was lost.
"We were never very profitable, and we couldn˜t get good employees because we couldn˜t provide year-round work," Knopf said.
"So we educated ourselves on what was happening around the country, including the use of liquid magnesium chloride as a deicer, and then demonstrated the product to potential clients."
Some clients were easier to convince than others. Knopf said that a demo in Thornton backfired because people thought the city was nuts for putting what looked like water on icy roads. Although the city was pleased with the results, they received so many calls that they didn˜t follow up on the test, Knopf said.
As more cities experimented with magnesium chloride, another dilemma arose: Cities didn˜t have the equipment to apply the liquid product.
"The only spreaders of that sort cost $25,000," Knopf said. "So we designed and built a slide-in liquid spreader we could sell for $6,000 to $7,000 — about what it cost for a salt and sand spreader. We sold nearly two dozen that first year."
Knopf said that the company has phased out building the spreaders, because other companies now manufacture them in the same price range, and he doesn˜t have the manpower to keep production going.
Now EnviroTech has year-round business and a growing service area, but Knopf hasn˜t stopped there. He and his staff continue to research and test new products. One of the newest is Ice-Ban, a noncorrosive, nontoxic byproduct of corn processing. Blended with magnesium chloride, Ice-Ban works at temperatures of 68 degrees below zero, Knopf said, and when used to pretreat roads before a storm or melt snow-and ice, Ice-Ban works better than sand and salt and is more cost-effective.
EnviroTech has sold about 300,000 gallons of the stuff in Colorado, Arizona and Nebraska, and Fort Collins and Aurora are both testing the product.
The city of Fort Collins has used EnviroTech˜s services for several years, said Fort Collins streets supervisor Bruce Juelfs.
"We started using mag chloride over two years ago," he said. "It worked, but wasn˜t quite as effective as we would have liked. So when EnviroTech introduced us to IceSlicer, we thought we˜d try that. We had great success with that product, and switched the whole city over to it. Then we started hearing about Ice-Ban. We asked EnviroTech about it, and we˜ve had tremendous results with it so far.
Juelfs said that the city has cut the amount of sand it uses annually from 5,000 tons to 886 tons due to EnviroTech˜s products and services.
"EnviroTech has always been very aggressive about staying on the cutting edge," Juelfs said. "They stand behind their products and do a good job for their customers."
EnviroTech˜s good reputation is reflected in a 93 percent growth rate last year and another 55 percent jump this year. Things weren˜t always so rosy however. Knopf recalled that when Dow Chemical invited the young company into the dust-control business, it was with the understanding that if the company grew too big, Dow would acquire it.
That scenario was avoided by teaming up with Great Salt Lake Mineral, Knopf said, but still, competition was stiff. The small company tried to sell on service but was forced to compete on price until they simply couldn˜t go any lower.
"Finally, we took a stance," Knopf said. "We lost some business, but many customers came back for our superior service."
Now the challenge is not to slip up on the service that got them where they are.
"As we grow, we have to be 100 percent honest with our customers, or we˜ll lose them," Knopf said. "You can˜t be totally sold on your products. You have to be humble and always look for something better.
"Right now education is key," Knopf added, "With our experience, we can recommend the best product for a particular area˜s conditions, not based on what we can make from them but on how we can build a long-term relationship.
"We want to bring in more people, educate them and get them working around the country under our philosophy."
Knopf said that potential investors have come knocking, but for now, he plans to keep the company private.
Right now, I want to do a good job for the employees, take care of our customers and stay profitable," he said.Lesson learnedThe challenge: Ensure that rapid growth doesn˜t damage customer service and avoid additional growing pains.The solution: Slow down growth until the company is better able to handle it while preserving service.

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