Cape Truck Accessories Inc.

Dec 3, 2009

In America’s Heartland, pickups are king for many drivers. Used for recreation and work as well as daily transportation, the ultimate do-all vehicle begins as a blank canvas.

Cape Truck Accessories, with locations in Bellevue, Omaha and Lincoln, Neb., has been serving truck owners for their accessory needs since 1968. Owner Jim Ludwig has based his business around pickup accessories for all types, from contractors and other professionals to families and the people who drive them to work every day.

Truck toppers, of course, are a big part of Cape’s sales, but so are running boards, steps and nerf bars, bed rugs and liners both drop-in and spray-on, tonneau covers, contractor racks and more. Capitalizing on the truck accessory market has led Cape Truck Accessories, with annual sales of $2 million, down a path of growth that’s been steady and sure.

Times have been tough in the automotive industry nationwide. Ludwig says Cape has felt the crunch, but after a smidgeon of belt-tightening, the business hasn’t suffered any damage.

“2006 was a more challenging year for us and for the industry as a whole,” he says. “2007 has continued to be a challenge, and we’ve watched costs quite closely to maintain a profit when our business has dropped a notch.”

Ludwig points to fewer sales of new trucks as the reason his particular corner of the industry felt a crunch.

“When the manufacturers aren’t moving as many of those trucks, and they didn’t in 2006, our opportunities are somewhat diminished,” he says. “When those trucks are not coming off dealer lots, we’re not able to put accessories on them. The buyer is a little more cautious today. Anything that causes some uncertainty sometimes makes business more challenging and I think the economy is a little more uncertain.”

Still, customers continue to walk through Cape’s doors, and Ludwig’s not too worried.

“I have to say I’m cautiously optimistic about 2007 in terms of overall sales and getting back on a growth pattern. It may be another difficult year; it’s hard to tell at this point.”

Framework

Ludwig took over the 7,000-square-foot Cape Truck Accessories from his father, Harold, and brother, Jack, when they retired in 1984. Cape got its start in 1968 by manufacturing aluminum truck toppers, but through the late 1980s and into the 1990s Ludwig saw a better direction for the business: retail sales of truck accessories.

“Like many small aluminum manufacturers, it became a smaller and smaller part of our business. We morphed to primarily retail, though we still service wholesale accounts,” Ludwig says. “It seemed to fit who we were and our personnel better at the time. We saw that as actually kind of an opportunity to service the retail side of the business more broadly and we were then better-suited to handle our regular public retail customers than we were to handle wholesale business. It’s pretty cramped margins a lot of times in wholesale, and we felt we had to decide which we wanted to be best at, and retail seemed to suit us better.”

Cape Truck Accessories continued to grow under Ludwig’s direction, and he opened a second store of 4,000 square feet in Omaha in 1992.

“The second store was prompted in large part because the state was building a freeway near our primary store,” he says. “It looked like we would have limited traffic for up to two years, and to survive that situation one strategy was to open up another location.”

They survived, and continued growth prompted Ludwig to add a 3,500-square-foot third location in 1997 in Lincoln.

“Lincoln is the capital city, and a town with a strong economy,” he says. “We were doing business in Lincoln with some other wholesale businesses, and we felt that there was an opportunity there for a retail store.”

With its three locations, Cape Truck Accessories [www.capetrucktoppers.com] now serves customers in most of eastern Nebraska and western Iowa.

“The economy is probably about as stable here as it is anywhere in the United States,” Ludwig says. “There’s no large growth, but we have not had severe drops in our economy and there’s a good, solid, stable employment base. The stability is the key factor of the economy in the area.”

By keeping its locations small and focusing on products that its core customers are most interested in, Cape enjoyed strong growth during the booming years and only minor setbacks recently in a period that’s been tougher on most areas of the automotive industry. Although Ludwig operates three stores, they aren’t large.

“Our stores are somewhat smaller because of our structure, and Nebraska being somewhat geographically spread out in terms of population, it wasn’t practical to have the superstore concept you see in many places,” he says. “We have smaller stores that are a little closer to the customers.”

Ludwig reaches out to those customers with a mix of advertising methods including television, radio and newspaper ads, but luring existing customers back has proven the most effective.

“We believe that the most important communication we do is with current customers,” he says. “We keep them aware of new products and try to be on the top of their list as far as someone they would recommend to do this type of work and someone they use themselves when they need another truck accessory. A lot of times that is through direct mail pieces, with offers or invitations. We might send an invitation out to truck topper customers offering a free checkup, and our most recent was a winterization checkup where we lubricate the lock, check the wiring and lights, locks and clamps. Customers appreciate that and a lot of times while they are in the store they might find something else they want to purchase for the truck.”

Recipe for Success

Ludwig keeps Cape running with savvy inventory control and a close eye on the books, and a program to hire, train and retain top-notch employees.

In an industry known for high turnover, Cape offers tempting perks to the workers who make a long-term commitment. Employees who learn the ropes and work hard for Cape can take advantage of incentives, bonuses and profit sharing, according to Ludwig.

“We offer a fairly full menu of employee benefits with health coverage, profit sharing, liberal vacation accrual and paid holidays,” he says. “We attempt to offer flexible work scheduling and a friendly and positive work environment. In terms of employees, one of the things they enjoy is the ability to work in this industry and work with new trucks and truck accessories. They find it a great kind of work to be in.”

Ludwig begins by seeking candidates who have retail experience, even if it’s not in the automotive world. He says many of his staff members also had experience working with their hands. He trains employees who stay in different aspects of the business, and most of his management staff has come up through the ranks from sales and installation.

“Our desire is to have very knowledgeable, long-term employees,” Ludwig says. “Many companies in this industry experience a higher turnover rate than we do; we were the first company in Nebraska or Iowa to take advantage of the training offered through SEMA and we have ASE certification. We offer employees trips to vendor sites, factory visits and training. We have put probably over a dozen people through Dale Carnegie training and paid for that. I think that’s a philosophy we have that’s different from some people in the industry.”

What Ludwig looks for most in an employee is a little less tangible than experience and knowledge, however.

“The ability to communicate effectively with customers and satisfy the needs of the customer is really key for us,” he says. “Delivering strong customer service is what we believe keeps the door open year to year and so communication skills and teamwork are the kinds of things that we think make that happen.”

Ludwig says Cape Truck Accessories focuses on customer service. A Better Business Bureau member, Ludwig boasts that Cape has never had a customer file an official complaint or take legal action.
Cape keeps its current customers coming back by offering solid service.

“I think the most important thing is consistently strong customer service,” Ludwig says. “We take customer service seriously. We consider a customer who has a problem with a product or something not working to his or her expectations to be an opportunity for us to attempt in a professional way to make that experience an improved one. That’s helped us have a very strong, very loyal customer base over many years.”

Keeping customers coming in the door is only one aspect of business success, however. Ludwig says that while it’s not his favorite task, keeping an eye on the finances is extremely important as well.

“It’s not something that for me is a big source of enjoyment, counting the beans, but somebody’s got to count the beans, and given the challenging business climate of today, having a very close track of inventory and cash flow and knowing exactly what expenses and margins are is key to being successful and also key to just surviving.”

Counting the beans and counting the parts both help Ludwig keep Cape Truck Accessories moving forward. Ludwig stocks easy-to-sell parts on his shelves, and works with vendors for quick turnaround on custom made-to-order pieces.

“You can’t inventory stuff you don’t have a reasonable turnover on or are not going to sell on a regular basis, but on top of that there are products like mud flaps and bedliners and rollup tonneau covers. Those are the kinds of products that customers may decide they want while they are standing in the store. If we have that product in stock, we’re likely to get the sale. We do think that whether it’s a bedliner or tonneau cover or vent shades, we need to have those things in stock at all times. We use a computerized system to track inventory, analyze sales and set stocking history for the right products we expect the marketplace to need.”

Products are Key

Ludwig doesn’t have big plans to turn Cape Truck Accessories into the Wal-Mart of the running-board world, but he does have carefully chosen plans for his next moves-”even if they’re not high-dollar gambits.

“I’m in the later stages of my business career, and I’m not a very aggressive owner,” he says. “It’s very important for us to provide stable and reasonable compensation for the team we have working for us.”

Carefully chosen new products will be the answer to continued growth, Ludwig says-as long as it’s the right product.

“We’re always looking for a new product opportunity that fits within our skill set and is potentially attractive to our customer base; that’s something that’s more challenging today,” he says. “Product offerings continue to grow exponentially in the truck business.”

Over the years, Cape has grown from a small cap manufacturer to a full-fledged accessories outlet. Being open to new product lines and services will help the company continue to survive and thrive, Ludwig notes.

“Years ago, 80 percent of our sales volume was in truck toppers, but today that is less than 40 percent. Much of the growth in our business has been in new areas like bed protection and other new products in the accessory marketplace, like different ways to cover up the truck bed,” he says. “Hitches and hitch accessories have been a growing category, spray-on bedliners are growing. We are continually looking for those kinds of products that fit our profile as a company and potentially are ones that work well for customers.”