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Change as business strategy

February 1st, 2020 / By: / Feature, Perspective

After jumping from the food industry to truck tarps, David Callahan targets customers who value quality and innovation over price.  

by Jill C. Lafferty

Local competitors are trying to go cheaper and cheaper, while we’re trying to do more and more quality,” says David Callahan, owner of Granite State Cover & Canvas Inc., based in Plaistow, N.H. “It’s been a good challenge to educate our customers that our product is more expensive because it has different features that will make it last longer. I always equate it into thirds: a third of the people want the best quality that’s going to last the longest, a third want the cheapest product—forget about quality—and there’s a third in the middle we’ve got to educate. We’re not going to get a lot of the bottom third, but we get 100 percent of the top third and probably a significant chunk of the middle third because we can educate them as to why
we do things the way we do.”

Granite State Cover & Canvas manufactures truck tarps and installs a variety of truck tarp systems, offering custom solutions for clients in a range of hauling industries. But when Callahan purchased the company in 2007, he was the one who needed to be educated. His background was in the food industry, not specialty fabrics. He was experienced, however, in sales and customer service, and had previously owned and then sold a business.

“When I sold [the food business], I had to stay with the company as a consultant for five years,” he says. “After the five-year period was up, I was looking to buy another business in the food industry. I’d been courting an owner and to make a long story short, at the eleventh hour he said, ‘I’m not selling.’ So after months of due diligence and lawyers and accountants, I went there for one final meeting and came out of there completely depressed. It was a dead deal.”

Callahan called a consultant he had been working with to share the bad news, and the consultant responded by asking to meet him at another business whose owner was interested in selling.

“I asked, ‘What does he do?’ and the consultant said, ‘He’s in the trucking business.’ I said, ‘What do I know about the trucking business?’”

As it turned out, Callahan and the seller of Granite State Cover & Canvas had a few mutual acquaintances. For the seller, finding a buyer he could trust was key—the seller owned the industrial park where the business was located and would be the new owner’s landlord. The seller was also planning to buy a business that would supply mesh materials to Granite State Cover & Canvas, so the two would be doing business with each other.

“Our acquaintances vouched for us to each other and got us talking,” Callahan says. “It looked like a good business for me and I looked like a good buyer for him.” 

Learning curve

For the first year, Callahan was an absentee owner while he fulfilled other contractual obligations. Once he was free to devote all of his time to the business, he began learning it from the ground up.

“I basically went out on the floor and learned how to sew, learned what we are making,” he says. “I went on the road and learned about our competition and our customers. It’s been a growth process. It probably took me a good four to five years before I was comfortable with every aspect of our business.”

While Callahan grew into the new business, the truck tarp industry was changing. In the past, it was common for haulers to simply throw a tarp over a trailer and attach it with bungee cords while walking over the load. Regulations prohibit such unsafe practices today, leading truck cover systems to become more automated—and more expensive. 

A driver shortage and liability issues have also driven demand for automation. Callahan’s customers need reliable, automated cover systems so their drivers can perform less time-consuming labor and their mechanics can focus on other maintenance areas, he says.

“We represent 13 different brands of tarping systems, and a lot of times we innovate, taking some of one brand and some of another and mixing them together to give customers exactly what they need for their particular purposes,” Callahan says. 

Moving on

After taking a hit at the start of the recession in 2009, Granite State Cover & Canvas has grown consistently, to the point that several years ago, it needed a new facility. In the original location, the company had grown physically by spreading out to multiple buildings within the industrial park—a less-than-ideal solution, especially in winter. Callahan estimates that the company was operating about 35 percent over capacity for its space, and it was tempting to move quickly into any building that would be an improvement. 

“I’d say two or three of the locations we were tempted to move into were not as good as the one we ended up finding,” Callahan says. “So patience is a virtue in that process. We finally found a spot that worked perfectly for us and for growth. We’ve been here almost three years and we’ve grown 10–15 percent, and we still have room to grow.”

As part of the relocation process, Callahan engaged two consultants, which proved valuable even when they had a difference of opinion. For example, one consultant favored leasing rather than buying a building so the company could reserve capital for growth. The other favored purchasing a building over leasing because the company would own the facility regardless of what happened to the business. 

“Because we got a bigger facility than we were hoping to get, we ended up going with leasing because it was so big that I couldn’t afford to buy it, and the advice of keeping the capital to invest in growing the business after we moved was solid,” Callahan says. “But I think if we had found a smaller building, the other philosophy would have worked. I had [both consultants] together at times, and they would argue the pros and cons. If you go with only what you are thinking, sometimes you are not considering all the different options.”

The other temptation he avoided was to immediately expand into multiple new product categories after the move. Taking an incremental approach allows his team to become efficient and increase its profit margin in one category at a time before adding another new product line, he says.

A circle of experts

Callahan says that, besides sales, his biggest business strength is his ability to know where he is deficient. In contrast to owners who see everyone outside the business as “the enemy,” Callahan seeks out suppliers, consultants and professionals in areas such as insurance and accounting, in addition to leaning on the expertise of his key employees—and even, at times, competitors. He’s not shy about asking for help. 

“That is something my previous industry and previous boss taught me,” he says. “There are friendly competitors and there are not-so-friendly competitors. I talk openly and honestly with a lot of my competitors about the issues we are having.”

Through the Industrial Fabrics Association International (IFAI), he’s made contacts with valued suppliers, competitors and other industry professionals with whom he consults. “I have no knowledge of what sailmakers do and how they do it,” he says. “But you know what? Some of the practices they use are similar to what we do, and we can learn from that.”

Callahan recalls attending an IFAI Expo when he was having problems with a thread supplier. As he walked toward the convention center, he struck up a conversation with someone walking in the same direction who happened to represent another thread vendor. Through discussions at the show, Callahan found that his new connection could offer him both a quality upgrade and production efficiencies. 

“Confide in and converse with your suppliers,” he advises. “Open your eyes as much as possible and bring in as big a circle of people you can consult with as possible.”

And just as Callahan seeks to partner with suppliers and other industry professionals so that Granite State Cover & Canvas can offer better products, he wants his customers to see him as their business partner and provide him real-world feedback.

“I think [our success] is basically due to our ability to innovate and change, like a chameleon,” he says. “We are open to innovation. We’re open to taking chances.” 

 Jill C. Lafferty is associate editor of Specialty Fabrics Review and senior editor of InTents.


David Callahan,OWNER
Granite State Cover & Canvas Inc.
Plaistow, N.H.
www.granitestatecover.com
IFAI MEMBER SINCE 2015
MOST VALUED BENEFIT: Access to industry resources


SIDEBAR: Q&A

After having moved your operation, what advice do you have for companies that are contemplating moving their production facilities?

Whatever timetable you think it is going to take, double it. However much money you think it is going to cost, double it. There’s just so much that is unforeseen. I estimated exactly what I thought it would be and then we added 50 percent to make sure we were covered, and we had grossly underestimated. It was probably 100 percent more than we thought it was going to be. We were hoping that with the 50 percent increase we would come in at what we thought originally, and we’d have wiggle room for a little bit of overage, but we underestimated. 


SIDEBAR: Snapshot

Perfect fit

Granite State Cover & Canvas Inc. excels at finding the perfect custom solutions for its clients who want maximum hauling capacity on their trailers but often need to fit into tight or unusual spaces. One such customer hauls trash off an island and needs the vehicle to fit on a ferry. Another customer has a facility with 9-foot-high openings, but uses trailers that are typically 10 feet tall, with a tarp system adding 6–12 inches to that. “He’s got to get a custom-made trailer, but he wants to make it as high as possible because of course he wants as much capacity as possible,” says Granite State Cover & Canvas owner David Callahan. “We did a combination of parts from three different suppliers, making him a system that was as low as he needed but could do the job that he needed.”