Looking for growth and diversification, contract manufacturer Dalsin Industries has launched a new, high-end line of wood-fired grills.
For decades, family-owned Dalsin Industries of Bloomington prospered by providing custom contract manufacturing and engineering services for its clients. But the company longed to make its own line of products, too, and it chose an unlikely niche: high-end barbecue grills.
The Memphis Wood Fire Grills lineup was launched in 2009 from a subsidiary, Hearthland Products, as part of the owners' long-term vision for diversifying the business and their desire to begin making products in-house, said Gary Fruth, CEO and president of both Dalsin and its subsidiary.
"For us to get a piece of our business and future revenue stream coming from a product that we control where the manufacturing can be done was of great interest to us," Fruth said.
It also was a response in part to a number of occasions in recent years when Dalsin had helped develop an outside customer's product and fine-tune the manufacturing process only to see the manufacturing go overseas, typically to China, said Bob Borgerding, Hearthland's general manager and a longtime Dalsin employee.
"We still want to absolutely continue with the contract manufacturing and job shop business that we have," Borgerding said. "But we wanted to also build a little bit more of a stable foundation for future growth as well."
For most of its 66-year history, the company has specialized in fabricating, forming, bending, stamping, punching and more recently laser cutting and robotically welding sheet metal into components and products for other companies.
The new line of grills Dalsin is making offer almost as much versatility, with Hearthland touting them as 3-in-1 outdoor cooking centers that expand the kitchen to your deck or patio. They can sear steaks at 650 degrees, slow-smoke a brisket or ribs or serve as a convection oven that bakes pies, cookies and pizzas or roasts a Thanksgiving turkey.
The top-end grill retails for $2,200 and is available locally at Kitchen Window in Minneapolis, from the Williams-Sonoma catalog and website and from more than 90 dealers nationally.
The Dalsin subsidiary also produces Hearthland Pellet Stoves for home heating, which, like the grills, burn natural hardwood pellets and feature digital controls that allow users to set the temperature at which they would like the device to operate.
The early results appear positive, with Hearthland's sales this year projected to reach $2.5 million to $3 million. That would more than double last year's $1.2 million in sales, according to Fruth and Borgerding.
Dalsin's 2010 revenue was above the more than $20 million the company reported when featured here in 2007 Dalsin, which had 85 employees in 2007, now is up to 115. The total now includes half a dozen who work for Hearthland, which also has a dozen independent sales reps. Fruth said he expected the company to hire perhaps 25 more people this year.
While other companies pulled back, Dalsin's owners continued their long-held practice of investing in technology even during the recession, Fruth said. The company, which has 140,000-square-feet of manufacturing space after a 2007 expansion, brings in automation wherever possible to remain competitive, and practices lean and total quality management.
"Our core business has afforded us an opportunity to expand and grow," said Fruth, whose focus with Dalsin is on serving a number of key, large customers with significant growth potential. But making its own products has made sense and been a learning experience for the company, said Mark Spriggs, associate professor and chair of the entrepreneurship department at the University of St. Thomas' Opus College of Business. Spriggs is one of two outside members of Dalsin's board of directors.
"It was a good choice for them," Spriggs said. "They have the expertise to do that. They're never going to be a low-cost manufacturer. Their niche is to make a really good product."
The grills burn natural hardwood pellets instead of charcoal or gas. A digital temperature control system lets users set the temperature in the same way they would on an indoor oven. The system continuously measures the grill temperature and adds fuel to maintain the temperature setting. Double steel walls and sealed construction help retain heat and maintain temperature while dual fans circulate heat evenly for convection cooking.
Memphis Wood Fire Grills also have earned critical acclaim. They won "best in show'' and "best in category'' awards last year at the National Hearth, Patio and Barbecue Expo and first place in the International Barbecue Awards in Germany.
International sales, driven by dealers who have found the grills online, are ahead of schedule, Borgerding said. Besides Germany, Hearthland has dealers in Austria, Switzerland and elsewhere in Europe, and is in discussion with dealers in other countries there as well as in Australia and New Zealand.
A team competing in the American Royal Barbecue Contest last fall in Kansas City took third place using a Memphis Wood Fire Grill, which has begun to proliferate on the competitive barbecue circuit.
"The temperature control is just amazing," said Joe Beland, head cook of the TippyCanoe BBQ Crew, who lives in Iowa, just south of Austin, Minn. Beland cooks his team's chicken in a Memphis grill.
"Plug it in, set the temperature you want and it will take care of itself. You can't say that too often in barbecue; everything is variable. That's where they have the competition beat," he said.
Doug Huemoeller, owner of Kitchen Window, said he has gotten positive feedback from Memphis grill customers.
"They love the convenience, they love the flavor," Huemoeller said. "It makes the grill approachable for even the non-griller.''
The expert says: John Stavig, director of the Gary S. Holmes Center for Entrepreneurship at the University of Minnesota's Carlson School of Management, said Dalsin Industries appeared to have wisely and effectively begun to diversify into higher-value products. The move also brings new challenges and costs, such as developing marketing expertise and a distribution network and positioning and promoting the product effectively.
"Their current product line has some unique features, but they'll need to stay ahead of the lower-cost imitators for their retail products while maintaining a reasonable overall cost structure to provide affordable contract manufacturing," Stavig said.