There have been plenty of media reports detailing the struggle in the auto industry today due to the tough economic climate. We haven’t heard much, however, about how this situation is impacting niche suppliers and the performance sector. What are you seeing out there right now?
I’ve been through recessions and bumps in the road because I’ve been around for a while, but I’ve been through nothing like this. When this bubble finally popped, it popped big and hard, with IndyMac Bank going out first in July (2008) that started the meltdown. We had never seen everything come to a stop before, and that’s just what it did. We’ve never seen anything like it.
However, we are in the aftermarket, we’re not tied to OEMs. A lot of people assume if you are tied at all to the automotive business you’ve got to be in the doldrums, but that doesn’t mean that we are. Discretionary dollars are used to buy our products, and when those go away which started with the high price of fuel back in 2007 it affects us. This is probably the biggest thing we’ve ever gone through and a lot of other people are in the same boat.
We, fortunately, have a lot of great new products that were unveiled at the SEMA show, starting with the new supercharger system [the E-Force Supercharger system for 2005-’09 Ford Mustangs]. We started shipping a few weeks ago and are still shipping backorders. We really feel that this is going to be a home run. We’re expanding it to other cars and models so we’re very excited about that and the other new products we had at the show. We came in with a large booth full of new stuff and that’s what it takes to keep the excitement up and start selling product to get out of this situation.
Right now we are waiting for spring to finally break back East. That’s important to us. In 2008, we had a late spring, and that just narrows your selling time. You lose it and never get it back. So we’re watching with baited breath to see what the weather is going to do, and of course we have no control over that. When you see the 50-55 degree weather back East people get excited. When they see spring emerge and they’ve got that project car sitting in the garage, they get excited. A lot of people have the money but they’re sitting back waiting to see what happens. When they’ve got the money, they just can’t wait any longer. They’ve got to go out and buy some parts. We saw that recently with some 70 degree weather and everybody reported that they had a definite spike in their business. These are the things that we watch but we’re prepared.
How does Edelbrock plan to stay ahead of the curve when it comes to this economic crisis?
You’ve got to do your advertising and pull your product through. You can’t put yourself in a cocoon and wait for it to blow over. You’ve got to be out there in it. That’s always been our game plan in the past and we’re continuing that now. We have to watch our expenses, so we’re being more selective about what we do, but we’re still advertising in print publications and on TV and also doing lot of website work that we do on our own. [You’ve got to] keep that excitement out there. It’s very, very important.
Any thoughts/comments on the recent news about Crane Cams’ closure and plans to be sold at auction?
I’m very sorry to hear that they had to lock the doors, however, I can understand it. There’s a lot going on with the banks not cooperating like they should in my opinion. It’s tough out there. Unless you’ve had new products and kept up with it, it’s going to hurt you. I’ve known Crane for years, they’ve always been involved with us and we do need them in the fold. Hopefully someone will step in and put it back together.
Many suppliers today have moved manufacturing and other operations offshore in order to remain competitive. Why does Edelbrock feel it is important to continue investing in the U.S.?
Our big thing here is “Made in the USA.” We’ve been doing this ever since other manufacturers started going to China. We had people pick our top 10 products and go out and copy them but they couldn’t put the name on it. We really worked hard getting our name to where it stands today and we think it’s right at the top. We’ve really pushed this “Made in the USA.” I was just at Keystone’s show in Meadowlands, N.J., and I couldn’t believe the amount of people who came up to me and said “Thank you for being ‘Made in the USA’.” I’ve had people come up to me with tears in their eyes.
I think it comes down to whether you are making generic parts or you have a name. When you are making generic parts you are just another fish in the pond. You have to go where it’s the cheapest, but you still have to have quality. When you have your name on it, and it’s your brand name, it’s you. Nobody else can do that, and I think it’s important to make every effort you can to stay in the USA.
Despite today’s challenges Edelbrock remains successful. Tell us more about the recent expansion of Edelbrock’s foundry in California and what will be produced there. What benefits do you receive from expanding the foundry?
Part of our mission to stay “Made in the USA” was the expansion of our permanent mold foundry. When you look at the economy it was probably expanded at the wrong time, but nobody knew that was going to happen. But we did it because of competition from overseas. Their foundries are all permanent mold over there because of the weather conditions and with the green sand mold they get a lot of moisture in it and that causes a poor casting. China has problems with that anyway, when it comes to aluminum product. We make product for an outside customer called New York Brake, which makes the brake systems for the subway and the railroad cars, and they switched over in the last four or five years from cast iron to aluminum. They have a cast iron foundry in China, where they tried aluminum and ended up pulling all the aluminum work back to the U.S. and now we do the work for them.
We expanded the foundry because of that. We also put in a $150 million heat treat system here in Southern California. The only businesses here that were heat treaters were ones that have been around for many many years. In fact, one company we used did my father’s heat treating business back in the late ’50s and ’60s. Obviously, it wasn’t the most modern efficient equipment and you don’t know when someone is going to come in and tell you that you can’t do that anymore. So, we decided to put the heat treat facility in with the permanent mold foundry and we are now completely self-contained, which is very important to us. And, again it’s “Made in the USA.” Taking that step with the foundry was really our opportunity to make our pledge to America, and instead of going to China, keeping it here.
Did this expansion add any jobs or additional shifts?
It did. It added some jobs but when the [economic] slowdown happened we had to scale back because the parts we are making there are our parts cylinder heads these are discretionary dollars. It’s high dollars for cylinder heads. Right now we’re taking a reading on what’s going on out there with these types of products and we’ll go from there. It hasn’t picked up as fast as we would have thought.
However, with New York Brake for instance, we have four new jobs from them right now and we’ll be putting those parts into production shortly. When we built the first foundry we had our whole production line of green sand castings. Once we got the new foundry up and running we transferred that work from the old foundry to the new one and we immediately had a lot of volume to do. This one is a little different — we have to work it up the ladder.
Motorsports has suffered some cutbacks recently, as several automakers and suppliers have ended sponsorship deals in order to cut costs in light of current economic troubles. Edelbrock maintains a strong history with NASCAR. Why is this partnership valuable to you and what benefits do you receive as a result?
We really enjoy NASCAR, always have. We’ve been with them since the mid-70s and they are very very good people to work with. It’s very important for us to be involved with NASCAR, not just with the decal on the car but to be involved with the racing teams. We make a lot of racing manifolds for them. We’re the only independent manifold manufacturer in NASCAR for the Sprint Cup series, the Nationwide series and the Camping World truck series and we learn a lot working with them. We thinking racing is important and the exposure that the decal on the front fender, and the excitement that it brings, is great.
What are your thoughts on the ‘green’ initiatives that we hear so much about in the industry today? Is there a place for the performance market here?
Much of our product is mileage-sensitive. I’ve got a ’57 Chevrolet that was customized by Posies [Posies Rod and Customs] in Pennsylvania. It’s got a 383 with a 400 horsepower small block in it. It’s got our latest model of fuel injection on it. The mileage on the highway is 23/24. Mileage around town is 16/17. I can run regular gas in this engine and I don’t lose any horsepower, torque or mileage. That’s because our fuel injection, and our whole package put together, will do this.
I had a guy come up to me at one of the shows last year. He said, “Vic, when are you going to start promoting mileage? Remember what you did in the late ’70s for the last gas crisis?” And I said, “You know, thank you for reminding me!” So, we do talk about that and the fact that people who use our equipment are going to run a cleaner car. That helped us through both the ’73 and ’78 gas crisis we weren’t just strictly hot rodders anymore.
Our new Supercharger system is getting emissions approved right now. It will get the same or better mileage than before, plus a lot of horsepower and performance to go with it. There are things we can do, especially for older cars, to make for a cleaner atmosphere.
That’s great. Any closing comments?
I’m still very much excited about this business and I’ve been at it a long, long time. I’m probably more excited than I was when I really began in this business, after my father passed away in 1962. There’s a love affair with the automobile that is really great in this country, and it’s going to be with us for a very long time.