United Effort

Sep 9, 2010

Once complementary but soon to be competing, two diesel businesses in Phoenix decided to combine forces to serve an expanded market as a one-stop shop.

Under one umbrella, Strictly Diesel and Sinister Diesel (formerly ITP Diesel), owned by Nate Brekken and Dennis Schroeder, respectively, now cover the entire diesel spectrum, from basic vehicle service, repair and maintenance to complete aftermarket upgrades.

Founded in 2005, Strictly Diesel provides diesel engine and vehicle repair and diagnostics by ASE-certified technicians. In addition to complete power train repairs, Brekken, a Ford Senior Master Technician with years of experience in the diesel repair business, says he performed limited modification and aftermarket performance work, specializing in Ford Power stroke 7.3- and 6.0-liter, 6.6-liter Chevrolet Duramax and Dodge Cummins 5.9-liter and 6.7-liter applications.

But when it came to parts, “I bought from Dennis.”

Meanwhile, Schroeder started Sinister Diesel in 2001 as a manufacturer of specialized Power Stroke diesel performance aftermarket products and reseller of other high-quality aftermarket products.

“I started as a reseller,” he says. “Now, I do more manufacturing of parts for the Ford Power Stroke.” He specializes in custom fuel system components for the 7.3- and 6.0-liter Ford: pumps, pressure regulators-or, as he puts it, “everything from the fuel tank to the motor.”

As a one-man operation, Schroeder says he wasn’t equipped to do installations, so he directed customers to Brekken.

“We sent a lot of work back and forth,” he says. “Nate and I have built a friendship and mutual respect over the last several years. We’ve referred business to each other, worked on projects together and helped each other’s businesses grow.”

Ultimately, they decided to grow together. Although initially there wasn’t a lot of overlap in the services they provided, Schroeder says they both realized they were “heading in the direction that would put us in competition soon. This partnership offers us the opportunity to work together to further our respective areas of the business, learn and grow from each other’s experiences and expertise, and take our new business to the next level.”

Marriage of Convenience

Facing challenges during a tough economy, increasing competition and limitations prohibiting expansion of their growing businesses, Brekken and Schroeder began talking about a partnership in October 2009.

“We spent months discussing it,” Schroeder recalls. “We wanted to make sure we covered everything-”no stone unturned.”

With two successful businesses-and established reputations-on the line, the two entrepreneurs were careful in their considerations and thorough in their preparations.

“There was a lot to think about with the merger,” Schroeder says. “We have established reputations, so we didn’t want to rush into it.”

Instead, they examined every possibility. A similar work ethic and compatible personalities paved the way for the “marriage” of the two companies. Recognizing the correlation of business partnership to matrimony while they were merging checking accounts and wading through legal red tape, the two joked about a “pre-nup.”

All jokes aside, there were numerous logistics and plans to consider. The two business owners recently underscored their association by moving into a new 15,000-square-foot state-of-the-art facility with extra bays for completing maintenance and repair work, additional parking for customer convenience and more space to store parts and for new product development. In addition, a larger showroom provides more product display space and a more comfortable waiting area.

Customer convenience helps business. The new shop they selected is only a mile from Sinister Diesel’s former headquarters and about seven miles from Strictly Diesel’s previous location.

Pointing out that the new location was a good move for Brekken and little change for himself, Schroeder says, “Nate was on the northeast end of town. Now we’re in the north-central part of town, so it’s easier to get to.”

With nearby highway access, it’s even more convenient for customers, and a central location is important, considering that Brekken’s target market is local and fleet business.

It’s Complicated

Although they officially formed a new company, not everything is changing. Each owner is an expert in his sphere and retains control of his domain.

“I let Nate set service prices,” Schroeder offers as example. “I don’t question that.” Similarly, he keeps his finger on the pulse of Internet pricing and manages the aftermarket parts. “I want to make a profit, but I need to keep us in the market.”

As in many modern marriages, each partner is keeping his original business name. Schroeder says the owners will use different names for different marketing. Under the Strictly Diesel umbrella, they will continue to cater to the local market for repair work, while Sinister Diesel will maintain its focus on aftermarket products, predominantly through Internet sales.

“My target market is mostly out of state,” Schroeder elaborates, adding that 95 percent of his business out of state is mail order.

The benefit of uniting comes from shared contacts, complementary skill sets and the opportunity to develop and expand.

“We plan to do more of what we’ve been doing separately,” Schroeder says. “Our biggest opportunity is being under the same roof. We used to consult each other anyway; now we’re able to confer about new products and processes. I can manufacture parts I wouldn’t have done before because Nate may be working on vehicles I don’t specialize in. We can play off each other’s talents.”

For example, Brekken is currently installing Cummins engines in a pair of Ford trucks. The Cummins conversions are popular, Brekken says, and he found a vendor that supplies most of the pieces to make the Cummins work in a Ford body.

However, in the desert climate of Arizona, getting the air conditioner to work properly with the different engine and body controls has been a challenge. “There aren’t a lot of answers out there. Apparently, most of the people working on these conversions don’t have our heat to deal with,” says Brekken.

In situations like that, it pays to have Schroeder’s expertise exclusively available.

“There are only a couple parts out there,” Schroeder speculates, “so we have to figure out how to make it work.”

Through Sinister, Schroeder provides custom parts, often created from his simple CAD drawings. It’s an advantage over the local competition, Brekken acknowledges. Ultimately, the collaboration benefits Schroeder’s side of the business, too.

“If we determine a need for a part and if we can make it affordable, it could be a new product. Maybe we’d make more and sell them online.”

Honeymoon Period

Whether he designs new parts or continues to manufacture best sellers, Schroeder believes that by blending the best both diesel companies have to offer, his business will grow.

Having established a strong reputation with the Ford Power Stroke community and modestly noting that his products are some of the most popular and well-known online, Schroeder handles the Internet for the merged businesses.

“I plan to revamp the website for Nate,” he envisions. “We’ll emphasize service and maintenance, detail equipment and services…”

He’ll also cross-promote, with links tying the sites together. It’s one example of how the union benefits each individual business.

“We are gaining exposure and strength online,” Brekken explains, “by adding significant aftermarket product offerings and sales opportunities, increasing the development and manufacturing capabilities, and expanding our aftermarket sales expertise through this partnership.”

Also, in a weak economy, one side may temporarily carry the other.

“One advantage of the repair business is that people will spend money to fix their trucks,” Schroeder details. When money is tight, “the repair business will remain a necessity, even if the hot rod business slows down.”

He says the marketing department is looking for other opportunities to bring in business, such as running service specials. “We’re lucky because Nate has a good reputation and most of his customers followed the move.”

In a strong economy, each side can help the other grow-but not too fast.

“A big cause of failure is rushing and growing too fast,” Schroeder cautions. “I want control. There’s no such thing as fast money. We want steady, managed growth.”

One month after the merger, things are going well.

“We’re above and beyond where we were before,” Brekken says.

However, with more room to spread out at the new facility, productivity has improved so much that he hasn’t needed to add to his staff of five full-time employees.

Schroeder laughs as he refers to his “learning experience” of adding one employee, but says before they hire any additional technicians, they’ll need more equipment. Meanwhile, they’re trying to serve the customers who patiently waited through the merger and move.

As Brekken says, the heat and severity of Arizona’s desert climate keep them busy-”too busy so far to even stage a grand opening.

“We’ll have [it] later in the year, when the weather breaks,” Schroeder promises.

Until then, Strictly Diesel and Sinister Diesel look forward to settling into their new home and providing quality products, customer service and support as they explore new opportunities created by their business merger.

“We are excited about the possibilities presented by combining forces,” Brekken says.