Article

Metal fx makes its move

After months of study, California enclosure manufacturer Metal fx steps into the kiosk business. To signal its intentions, the company went out and hired one of the industry's more enthusiastic advocates.

August 28, 2004

WILLITS, Calif. -- Four months ago, as a number of established kiosk industry companies were attempting to attract new clients at the in-store interactive section of the GlobalShop retail show and conference in Chicago, another company was asking for just one thing: a chance.

Metal fx, a Willits, Calif.-based enclosure manufacturer that specializes in arcade games and precision sheet metal products, brought a kiosk to the April 18-20 show. But the company was far away from the in-store section. Instead, it was on the other side of the exhibit area, separated by a hallway and several thousand attendees, in the point of purchase section.

The point of purchase section is where Metal fx finds its regular customers, people searching for display units and store fixtures, the products that have been the company's lifeblood since its launch in 1976.

But by showcasing a kiosk among its product offerings, Metal fx was telling its customers to expect more.

"The kiosk manufacturing and assembly processes are very similar, if not exact to, the coin-operated machines we manufacture," said Clint Byrnes, general manager of Metal fx's wood products division.

Having shown that it can build a kiosk, Metal fx has stepped into the kiosk manufacturing business. And the company took a major step in pursuing its kiosk-based goals on Aug. 19 when it hired Ben Wheeler, previously sales manager of kiosk developer Arral Industries Inc., to serve as sales manager, wood products division.

Both Byrnes and Metal fx president Gordon Short said the company was seeking to make a statement that it is serious about kiosks.

"He's been in this industry a few years and knows this industry," Byrnes said of Wheeler. "That kind of expertise and experience is certainly something we were looking for."

"We intend to make a significant sales and marketing investment," in kiosks, Short said. "We asked ourselves `What do we need to do to go further?' and that's why (we hired Wheeler)."

Wheeler joins Metal fx after nearly two years at Arral, where he helped the Ontario, Calif.-based military contractor grow its kiosk business, which was launched in 1994, helping land such clients as Boston Scientific Corp. and Bose Stereo Corp.

But while Arral had proven its ability to develop a solid clientele base, Wheeler said he was looking for a company that could go even further. And he believes he has found it with Metal fx.

"Metal fx brought the economies of scale I've been looking for for years in other companies," Wheeler said. "They work with metal, with wood, and with plastic, and they do it all in house, under the same roof, and lightning fast. Our lead times will be a lot faster; we're talking four to five weeks instead of six to eight."

In fact, Metal fx's GlobalShop kiosk helped convince Wheeler to leave Arral. He approached the company through a common associate, and met with Metal fx during GlobalShop.

"That kiosk was done in about a week-and-a-half turnaround," he said. "We're talking about the engineering, the fabrication, and the integration. That's one of the major points people are looking for in a manufacturing company. People are looking for lead time, the ability to deliver products on time and right. That's not common in this industry (with custom kiosks.)"

Wheeler said he would tap into his relationships with kiosk peripheral suppliers such as trackball producer Happ Controls and touchscreen manufacturer Elo TouchSystems Inc. to jumpstart Metal fx's kiosk division. Byrnes said Wheeler's industry relationships complement the company's core competencies.

"We're really familiar with the components and the manufacturing," he said. "Ben is into sales and has built relationships with suppliers and customers over the years."

Wheeler, who said he was "grateful for the opportunity" Arral gave him, would not comment further on his departure. He will commute weekly between his Southern California home and Willits, a rural community of about 5,600 nestled in the mountains of northern California about 140 miles north of San Francisco.

Wheeler's hiring is part of an ambitious plan to transform Metal fx into a key player in the kiosk industry without losing sight of its core business, Short said.

"We've put together some strong marketing plans," he said. "We're making the people investment and the marketing investment to make it happen. We're bringing in someone who has built his experience on kiosks and has outstanding customer relationships."

Metal fx enters the kiosk market with high expectations for itself. The privately held company, whose majority owner is the Washington state utility company Vista Corp., has generated about $20 million in annual revenues in recent years according to Short.

"The kiosk industry, in my opinion, is an exploding market," said Short, who did not speculate on Metal fx's revenue expectations from its kiosk division.

Wheeler said Metal fx eventually will offer standard enclosure designs along with custom models.

"We'll be willing to do pilots if there is promise for the future," he said. "We're not afraid of doing (rollouts) of ones, of 10s, of 50s."

Byrnes and Short understand that success in the kiosk industry will entail more than hanging out the shingle on the front door. Eventually, the company will have to do more than supply the shell to succeed.

"It's a long process, similar to the coin-operated arcade market," he said of kiosk development planning. "There's software development. There's many kinds of kiosks and you have to decide what your kiosk does -- Is it informational? Does it do this? Does it do that? There's a development process that's time consuming."

Added Short: "Eventually we'll have to be a full-service provider to make the kind of penetration in the market we'd like to make."

Metal fx has already taken one important step in that pursuit -- it has joined the party.