Oct. 17, 2005 – BUB takes advantage of Midwest resources

JANESVILLE, Wis.— Dennis Manning is a dyed-in-the-wool California guy, who built his Grass Valley-based BUB Enterprises operation from nothing to more than $12 million in about 27 years. It’s grown quickly from only about $3 million at the turn of the century.
But walk with him through his new manufacturing facility here and he doesn’t hide his new-found appreciation of the Midwest as a manufacturing Mecca.
The 25,000 sq. ft. building located on five acres mirrors his Grass Valley operation, but it’s a lot cheaper to run, and Manning expects it to be more productive because of lower operating costs and higher employee productivity. BUB is a leading manufacturer of exhaust systems for motorcycles and ATVs.
“We’ve found that there is a work ethic here that is damn amazing,” said Manning during a recent interview with Powersports Business. Manning said that BUB received more than 1,700 job applications for only about a dozen job openings at the plant here without ever running an advertisement. “Better than half were really well qualified,” says Manning. “They were people who had worked for big companies and they had education and training. What’s happened here in the Midwest, is that a lot of companies have moved and they’ve left behind a wave of people who want a job, need a job, people who have a work ethic we don’t have in California.”
As an example, Manning points to an incentive program he developed-BUB Bucks-to reward employees for coming to work consistently, for being on time and for putting in a full day. “When I suggested that here,” he says, “they laughed at me. These guys show up at 8 o’clock with their coffee and lunchbox and start to work. And they work until 5 and then they come in the next day. The work ethic is much different here.”
But it’s more than just the quality of the workforce that attracted Manning to Janesville. That workforce costs less than the one in California. For simplicity, Manning pays all BUB employees on the same scale, regardless of where they live and work. That means that workers here receive a premium of about 10% over the prevailing local wage rate, says Manning.
For another thing, related costs are much lower in Wisconsin than in California. Worker’s compensation insurance for Manning’s production employees in Wisconsin is about 7% of wages, much less than the 20% he pays in California. For an office worker, the difference is even greater: Nearly 10 times more in California than in Wisconsin.
The cost of the building is much less, too. Manning paid about $40 per sq. ft. for the Janesville plant; a comparable facility in California, he says, would have cost approximately $120 per sq. ft.
Finally, the move cuts Manning’s shipping costs for tube that he purchases in Pennsylvania. Instead of shipping them from the manufacturer to California for processing, he simply ships them here, about half the distance. Freight costs are one-third of what they would be shipping from Pennsylvania to California, and that’s without shipping the finished product back to Wisconsin for distribution through the Parts Unlimited and Drag Specialties operation located here.
“With the increased cost of diesel fuel,” he says, “I’m looking pretty smart.” It’s worth noting that his plant here is located only a few miles from the Parts/Drag complex, BUB’s primary distributor. That reduces BUB’s shipping costs and speeds up product turnaround.
Interestingly, it was Fred Fox, the founder and chairman of Parts/Drag, who pushed the idea several years ago of manufacturers expanding their production facilities here. Fox set up a 70-acre site adjacent to the Parts/Drag warehouse and offered special payment terms for manufacturers expanding there. There have been no takers.
But Manning thinks that will change. “It makes a lot of sense,” says Manning, “and somebody just had to have the b—s to do it. There will be more; a lot of people have been talking with me about it.”
Manning said he chose to operate independently of the Fox operation because he thinks the distance is good for both operations. “Look,” he says, “I set up this entire enterprise to sell to Parts and Drag, but it’s better this way.”
Chroming is done up the road in Milwaukee area, so that’s no problem.
In addition to the 25,000 sq. ft. of floor space, the facility here also contains a 10,000 sq. ft. second floor storage area accessible by elevator. The five-acre site contains plenty of room for future expansion, too. Manning purchased the plant in March and opened it for operations in August. When fully staffed, the operation here will employ about 30 persons.
The plant here includes two pipe benders and two sophisticated eight-axis welding robots.
It’s clean and attractive, from the room offices and lunchroom to the carpeted worktables in the production area that prevent scratched products.
“You want to work in an environment that you don’t mind being in,” says Manning. “The products you produce will mirror the environment you work in. If we were in a dimly lit building with old machinery, that’s the kind of product you would get. But you can’t do that today; the competition’s too good.”
The California building includes original artwork, some pieces as large as 20 ft. by 5 ft. high.
Manning plans to put up another building in California next year, a 60,000 sq. ft. facility that will replace the existing facility. It should be available next June. “We want to have the creative center in California. We want to do the creative parts, the innovative parts, there and build the tooling there. Then we’ll export it to Wisconsin for production,” says Manning.
In addition to production, BUB’s warranty services will be moved here from California, but administrative services will stay in Grass Valley. BUB employs about 100 persons in California.
Dennis Manning seems to be a man who is content with his situation. “What we’ve done is duplicate the California building, both inside and out, from a vendor standpoint and the BUB standpoint, he says. “Inside and out, this is totally independent of California. What pushed me (to make the move) was… one good earthquake could take out the aftermarket business in California.”
Even though gas prices aren’t expected to decline, Manning doesn’t see a letup in motorcycle parts. “There is some softening,” he says, “but it gives me a chance to take a deep breath. The marketplace is so huge, that if you have a good idea, you’re going to do OK.” psb