Harmony Enterprises, a 75-employee manufacturer of high-tech trash compactors and recycling equipment, is tucked into the southeastern corner of Minnesota.
But the family-owned company, which projects $13 million in sales this year, claims a sales territory that spans the globe.
“We like a 40 percent international exposure,” said CEO Steve Cremer. “It helped when the United States economy was down. And now Europe is soft and we’re picking up in the U.S.”
Cremer plans to double sales to $25 million over the next five years. He’s a veritable poster child for Gov. Mark Dayton’s 2012 initiative to double Minnesota exports by 2017 — especially from small companies.
Harmony got off to an inauspicious start as an exporter.
Cremer, 57, is a CPA who graduated from Harmony High. For a decade he worked at oil and chemical companies in Texas before returning in 1988 to help his dad run Harmony Enterprises. One day in 1989, Cremer walked into the office to find an unsolicited fax from a Taiwan company that needed a cardboard baler for recycling.
Cremer contacted the Minnesota Trade Office, the export-assistance arm of state government, to see if the company was real. It was, and within a year Harmony had sold balers to customers in Taiwan, South Korea and Japan who wanted to economically collect and compact cardboard, metal and plastic for resale to recyclers.
“I realized that growing internationally was a way to accelerate growth of the company,” Cremer said.
And Minnesota companies should export more to accelerate economic and job growth, according to a 2010 Brookings Institution study. It found that Twin Cities companies exported $17.6 billion worth of goods and services annually, ranking 14th among U.S. metropolitan areas. And those exports support 117,000 jobs.
However, the region hasn’t capitalized on its full potential. Brookings ranked the Twin Cities only 67th among the 100 largest U.S. metropolitan areas for export growth.
Last week, state officials reported that Minnesota exports grew by less than 1 percent to $5.1 billion in the fourth quarter of 2012, compared to the year earlier. Dayton will need a lot more sales from the likes of Harmony Enterprises and fast-growing manufacturers such as Proto Labs, an Internet-enabled creator of production molds and short-run specialty-parts orders. Proto Labs generated a quarter of its $125 million in sales from international orders last year.
Overall, foreign sales account for about 7.5 percent of Minnesota’s economic output.
In the case of Harmony Enterprises, Steve Reidel, a veteran Minnesota trade officer, said Cremer has “been very smart about building and maintaining relationships with distributors and partners all over the world. He’s invested the time and effort to visit the markets and studied the local conditions. Harmony’s success is an example of how a small company can use an export strategy to grow.”
Harmony Enterprises was started in 1962 by a half-dozen civic leaders who wanted to diversify from the local farm economy. It was a struggling maker of portable ice-fishing houses and camping equipment. By 1970, as local governments struggled with dwindling landfill space and angry neighbors who opposed making landfills bigger, Harmony made its first cardboard baler for a grocer.
Today Harmony sells 45 different models of trash compactors and balers that crush, flatten and store everything from cardboard to aluminum to steel. They can also handle tires and plastic. Prices for the machines range from $5,000 to $75,000.
Harmony Enterprises last year installed about 300 “SmartPack” automatic trash compactors at Atlanta’s Hartsfield International Airport for around $1.5 million. Those machines include wireless sensors that automatically open the lid when it senses a person is tossing in a wrapper or coffee cup. The sensors also alert custodial staff when they are nearly full.
“They used to have trash cans at every gate that would be emptied every hour,” Cremer said. “With our SmartPack, some need to be emptied only once a day. The door opens. No dirty hands. No trash spilling out of an overflowing container. They can pay for it out of plastic bag savings alone in five years.”
Next-generation Harmony Enterprises compactors also can be found at Israel’s Ben Gurion Airport in Tel Aviv, the airport in Osaka, Japan, and the food court at the Louvre museum in Paris.
In 2011, Harmony Enterprises acquired Cypress Environmental, its independent distributor in France, for about $1 million and established a 10-person sales-and-service office. Harmony wanted new accounts to better serve European operations of several of its big North American bottling customers in Europe.
“About a year and a half ago we got a call from [automaker] Renault, and they wanted a big horizontal cardboard baler at a factory in Morocco,” Cremer said. “We made a $100,000 sale. We’re pitching them now in France and another location in Morocco. All the auto parts come in cardboard boxes.”
In the Caribbean, Harmony Enterprises has sold several $75,000 balers that collect and compress tons of plastic bottles for sale to recyclers.
Cremer is fond of one deeply discounted sale he made to a nonprofit agency in Haiti. The country is buried in plastic bottles in the aftermath of its devastating earthquake and water-supply problems. In its first year of operation, that machine generated $400,000 in payments to individuals who brought plastic bottles to redemption centers.
“We’ve changed a lot strategically over the last 10 years from just making equipment and trying to sell it ... to trying to find solutions for different businesses,” Cremer said. And then there’s the $7,500 spent-tire baler Harmony sells to tire dealers around the globe that allows them to safely bale and store old tires, and automatically signal the recycler to come and get them when a truckload is ready to go.
Cremer, who provides profit-sharing on top of a wages-and-benefits package, quips that veteran factory workers no longer tease him about foreign business-development “vacations.”
They know that $4 in every $10 in sales come from overseas.
“Our production workers can tell you the specifications for wiring equipment all over the world,” Cremer said.