Dealers add sales with Ritron’s innovations; MRT interviews Steve Rice

In a field occupied by several much larger players, Ritron manufactures radio communications equipment. It is a privately held company with no debt and annual sales within an estimated range of $15 million to $25 million.

“It is a constant process to find a niche in the marketplace. We try to fill niches with wireless communications solution with unique products or using either traditional or unique distribution channels that haven’t been considered before,” W. Stephen “Steve” Rice said. Rice is president of Ritron, a company founded in 1977 by Bill Rice, his father.

Owned by the elder Rice, Steve Rice and his three sisters, the company has 120 employees, making it large enough to have a design team and a manufacturing facility, yet small enough to make decisions quickly, maneuvering around large competitors.

Bob Wallace has been one of Ritron’s customers almost from the beginning. When it comes to selling radio communications products, Wallace serves factories, manufacturing plants, garden centers, farms and other general business customers—about 60% of his business. The remainder includes public safety customers, not only police and fire departments but also highway and municipal departments.

Wallace and his brother founded Wallace Communications 45 years ago in Xenia, OH, where they employ nine people. Wallace said he takes advantage of specialized products such as Ritron’s Quick Talk voice alert radio and Quick Talk Outpost two-way callbox.

“Ritron’s newest product [the voice alert radio] plays a pre-recorded digital message when it’s activated manually, by contact closure or by sensor,” Wallace said, referring to the voice alert radio. “We’ve used that for schools, hospitals—anything you can think of where that would save manpower.”

Messages can be recorded and changed using the telephone. The Quick Talk voice alert radio could say, “Door No. 10 is open,” or “Respond to the playground,” Wallace said, giving examples.

“It can be any language you want, and the message could be coded if you didn’t want everyone carrying a radio to know what’s going on. The voice alert radio transmits when the frequency is clear and can be programmed to repeat the message a number of times,” he said.

Wallace said that the Outpost two-way call box lets people at fixed locations call workers over a two-way radio system. The call box could be used at an entrance gate to summon a security guard who has to make rounds in addition to supervising the gate operation. It could be used on a golf course to contact the pro shop or security.

“Anyone carrying a portable radio can respond over the call box,” Wallace said. “A standard version can be used where vandalism isn’t likely, and a more rugged version is available for use where someone might try to cause damage.”

The Quick Talk voice alert and Outpost call box radios remain turned off until activated to transmit. Then they stay on for transmitting and receiving for a programmed length of time. Powered by batteries, the units give a warning over the air when the battery charge is low.

“They have an external power option,” Wallace said, “but everyone likes the batteries because they’re often placed where there is no power connection.”

Wallace credited Ritron with helping his company to fill niche markets. He said that Ritron identifies a product need, and dealers then decide whether they can sell it. “Usually we can sell it. The industry just might not have known about the need until Ritron produced the product,” he said.

Aside from specialty products such as the voice alert and call box radios, Wallace said that some of his general business customers use the least expensive Ritron portable radios, and some factories use Ritron repeaters and more expensive products.

“We address all of those markets, and the variety of products that Ritron has basically will address most of them. If you need sophisticated equipment, Ritron products don’t fit some public safety requirements, but their higher-end units fit what is sophisticated for business and industrial use, and they’re adequate for small police and fire departments,” Wallace said.

Meanwhile, Al Werner, president of Diversified Communications Group, Cincinnati, swears by Ritron’s Patriot UHF repeaters, which he uses to serve his airline customers at airports and terminals. Werner started the company nine years ago. Why Ritron?

“The support from the factory has been good. They’re close to us; Cincinnati is 70 miles from Carmel. The repeaters have performed in every application we’ve made. We’ve never inserted one that didn’t perform as advertised. The repeaters are packaged in the right size, with no extra stuff hanging off. We buy two or three a month, and we probably have sold 50 units, mostly to airlines. The repeaters play fine, despite the interference, even at JFK International,” Werner said, quickly summing up what he likes about Ritron repeaters.

Rice said that other radio manufacturing companies, “the big guys,” get a lot of attention, but that Ritron sees other niches for product other than where the crowd might cluster. He said that a lot of Ritron products are unique and non-traditional, and they required a pioneering effort to convince dealers that the market really needed the products.

“But dealers did eventually listen. Job-site radios are one example. That product was first in its class. And we were first with color-dot radios that made using portable radios simpler,” Rice said.

He said that his father gave him some advice when he went to him with a perplexing problem early on in his work at Ritron: “If this was easy, you’d go home tonight, and the guy next to you would be building radios in his garage.”

“I’ve used that advice at Ritron,” Rice said. “You have to buck up, and move on through the problems.”

INTERVIEW WITH STEVE RICE

In February 2001, Don Bishop, MRT’s editorial director, and David Keckler, MRT’s technical editor, interviewed W. Stephen Rice, president of Ritron. Portions of the interview were updated for publication in December 2001.

MRT: How long have you been president of Ritron?

Rice: In December 2000, I was promoted to president. I had served as executive vice president for five years prior. My father, Bill Rice, is chairman and chief executive officer. I’m there for daily operations. MRT: How would you describe Ritron?

Rice: We are a small, high-technology U.S. manufacturing company with a core competency in RF wireless communications products. Our product line is diverse, and so are the markets we serve.

We operate in a market with some pretty big companies. It keeps us on our toes, but it also provides a lot of opportunity for a niche player.

At times, it has been difficult to get an audience while selling something that is out of the ordinary or not the status quo, but with a little perseverance, you can find resellers and dealers who will listen to your story and then begin to sell your product. Early on in the process, we try to cast a vision to our dealers about how the product solves real-world problems using wireless technology. Then, if we’re successful and we get some momentum, we need to soak up feedback from the field about who is using the product and why. This process helps to define the next generation of the product.

It is important to note that our niche wireless products work with virtually any existing radio system. We have all heard that it is easier to keep or to sell to an existing customer than it is to find a new one. Our products allow dealers to re-farm their existing customer base by selling unique wireless products to them that solve special problems and that are compatible with the other radios in their system. I might add that the dealer usually can get better margins, too.

We’ve been successful with this approach and, God willing, we can add to our success in the future.

We were first with low-cost job-site radios, and the color-dot radios originated with us.

We began making low-cost desktop repeaters when other repeaters were file cabinet-sized. That was successful. But with success comes competition, and there are quite a few now. We continue to look for the holes where the competition has decided either not to address or has possibly missed a product or a market solution to a problem.

At the same time, we have to some extent developed mainline product, such as UHF trunking portables. They work with the Passport protocol that allows networking of UHF systems. We’ve approached that marketplace with the idea that there’s a cellular model to the business plan of UHF trunking where you get the system built and then load the system.

UHF system operators need a low-cost subscriber unit to do that. We have a product that is small and that doesn’t have all the bells and whistles that other manufacturers’ products have, but it fits the niche of a low-cost, basic-feature, small, lightweight subscriber unit to allow dealers to go out and get customers from the myriad wireless applications that are out there. We’ve lowered the price and kept a healthy feature set to the product to give dealers a weapon to go out and compete, using UHF trunking.

MRT: What are some new specialty products?

Rice: One is the Outpost two-way radio call box. We offer two models. The basic model retails for about $500, and the Outpost XT model, which features a rugged enclosure, stainless steel faceplate and vandal-resistant push-to-talk button, retails for around $800. It’s not a public safety call box for the highway. It’s designed for industrial and commercial uses, such as in a manufacturing plant, school or chemical plant or where a radio is needed at an entrance gate with no guard on duty. The Outpost gives visitors a way to gain access. Someone can drive up and use the call box to tap into the existing network of two-way radios.

This product taps into applications where dealers either have had to build the product and lose money to keep the customer happy, or had to limit its availability to a small number of sales because it was an expensive one-off. We’ve applied our manufacturing capability to bring cost down and tap into the radio communications infrastructure with a call box.

MRT: Did dealers bring the problem to you?

Rice: To some extent we rely on input from dealers, end-users and our own employees, but a lot of brainstorming is required to come up with a new product using bits and pieces we already developed. The key is to reassemble them to come up with a product that is a winner. With a small company, the process is easier. I pass half of the company in the hall or in the plant once a day. In fact, some of our best ideas come from impromptu meetings in the hallway.

MRT: How’s business?

Rice: We had a flat year in 2000. Until November 2000, we had a good year going over the prior year.

Our 2000 results came out dead even with 1999, where we had forecast 15% growth. We didn’t have a lot of our marketing in place to promote new products. We weren’t hitting on all eight cylinders at that point to compensate for other factors in the economy that have me perplexed, such as all the dot-com money that was lost.

In 2001, we’ve looked to identify products that we’ve been selling without significant marketing. We have expected to be doing more education and promotion to end-users, including pull-through advertising to get our dealers on board. Dealers can fixate on just the commodity mid-tier portable and mobile business and miss other higher-margin opportunities. That’s where we try to show them that our niche radio products really do fit and add value to what they sell and, most importantly, that they add dollars to their bottom line.

MRT: How can you help?

Rice: We want to show dealers how to identify and offer wireless solutions to problems using our niche radio products. But the great thing about it is that these problems exist in practically every radio system that a dealer has sold. Add-on portable and mobile business is great, but it would be even more economical and profitable to go back to those same customers and identify unique applications for other wireless products.

One example is the Outpost call box. It’s a radio, and dealers know radio. It uses the investment that their customers already have made in a radio system. It’s an add-on radio that gives the customer additional utility of their existing radio system, for example, a radio callbox at the front gate for access control.

The dealers’ customers have communications needs that can be filled by products of which some dealers and their customers may not be aware. It takes the good old sales practice of taking the product in, demonstrating it and identifying applications where it will solve problems. We call this “show and sell.” Ritron has done it before with other products, and the Outpost call box offers another opportunity. It keeps getting tougher for a dealer to maintain a territory and customer loyalty. If he can offer a unique product, it represents additional sales. It’s radio technology. Customers appreciate it because they don’t have to scrap their present system to put it to use. It’s cost-effective and seamless, and customers really appreciate that.

Another product is the Quick Talk voice alert radio. If I were to show it to you, you wouldn’t know what it was if it weren’t for the antenna. It’s fantastic from that standpoint because it gives a dealer about 30 seconds of a customer’s undivided attention to explain what it does.

This product uses a synthesized radio transmitter with a digital voice storage chip, and it is looking for a switch, a contact closure, to activate the transmitter. There are switches in every size you can imagine and for every application. You can build them into a pressure mat that a car drives over or that a person steps on. The switch could be a thermostat, a magnetic reed switch on a door or a push-button at the front door. We have identified a tremendous marketplace in the industrial marketplace in plants and factories for this device.

A product that’s been used in that industry for many years is called a machine status indicator. It’s a light stand on a machine. When something happens to that machine, a light flashes. One of the big three automobile manufacturers has converted to using heavy automation in their factories and has reduced the number of employees. It has more automated machinery running without workers. The plants are so big that lights don’t mean anything when there’s no one around to see them. They add Quick Talk voice alert radios to those visual indicators because they need to get the message out to the entire plant.

It’s when a flashing light isn’t enough. Adding a radio device brings greater utility to the investment they’ve already made.

MRT: Do you sell products over the Internet?

Rice: No, not direct, if that’s what you mean. Most of our dealers have Web sites. We have a wide variety of distribution channels. We sell through catalog companies and through two-way radio dealers. Some national accounts require a direct factory sale.

MRT: What percentage of business comes through dealers?

Rice: Dealers account for 50% of our sales. They’re an important group because of their expertise in two-way radio. Simplifying our products helps to make them easier to program, but installation always requires an understanding of two-way radio to get the maximum benefit. Dealers can explain to customers about range and other characteristics of a radio product so there isn’t dissatisfaction after the sale.

MRT: Are you looking for dealers?

Rice: Not directly, we go through manufacturers reps.

MRT: What’s your plan for the dealers as an OEM?

Rice: We want to publicize success stories about dealers who have seen the merit of specialty products such as the Outpost call box and Quick Talk voice alert radio. Some of them have launched their own marketing campaigns to promote these products to existing customers. It’s much less expensive to sell to existing customers than to new customers.

A lot of this product requires value to be added. That’s where the dealer plays into it. For example, the value of the voice alert radio is not just the cost of our product. It’s choosing the right switches to monitor and setting the system up. We have researched myriad places where switches are available. The list is on our Web site, so dealers know where to go for a particular switch.

MRT: So it’s important to price advice, not just products?

Rice: Absolutely. It’s easy for someone to overlook the value of his expertise, especially a dealer who has been in the business for a long time. It’s important to have a reality check: “I’m worth ‘this’ because of what I know.”

MRT: What’s the focus of your product line?

Rice: Our product line is diverse, yet centered on RF, on radio. The radios have taken on many sizes and functions—a wireless remote terminal unit called a Data Flow, for example. That’s a transceiver married to an RTU. It has analog and digital contact closures and an RS-485 connection.

Among other things, it can monitor water tank levels. In the hands of a system integrator, it can be used to solve all kinds of problems at municipalities and manufacturing plants. It’s a little box that can be self-contained and run on batteries. You can bury it in a pipe and monitor earthquakes with seismic detectors. It can detect a vehicle by connecting it with a magnetometer. It fits applications where vehicles are restricted beyond a certain point. The National Park Service, for one, uses them.

Getting dealers to think of themselves as integrators is key to their survival. We’ve been trying for 10 years to bring dealers in to see what we’re doing. We want them to ask their customers more than “How many mobiles and portables do you need?” They should ask to give a demonstration of those other products during the same sales call, and ask about telemetry and about remote sites where their customers need certain data to be monitored remotely. This will help them to capture that business in addition to voice communications. It’s all radio, and they should have the lion’s share of the business.

We can educate dealers about instrumentation. We keep trying new things, plowing new territory to strike a chord with dealers.

MRT: How difficult does it make life for you when consolidation among dealers takes place?

Rice: One of the largest consolidators is Bearcom, and for a long time we were not doing business with them. But we were able to get into their catalog beginning in 2000.

In general, consolidation might be considered a hurdle because of the centralized purchasing that it can bring. In Bearcom’s case, though, it still comes down to selling their individual branches. We were able to communicate our uniqueness to Bearcom’s management in Dallas, but we still need to educate individual branches. That’s where our reps come into play.

Bearcom’s management didn’t tell its branch managers that they couldn’t buy anything else from us besides what’s in the catalog. The national management sees that regional needs differ, and flexibility helps a salesman to tap a particular market.

We also have focused on another aspect of the dealer business, which is infrastructure product for UHF trunking, meaning repeaters. We build several synthesized, high-performance repeaters that are rack-mountable for conventional or trunking applications. We’ve been building them for about two years.

We are coming out with a new repeater model with a much-improved receiver. We call it the Patriot Exciter. It is much more highly tuned for UHF trunking applications. Also, it has the second fastest transmit attack time in the industry, and it is optimized for UHF trunking handshake applications. With that, a dealer gets maximum performance, and a subscriber gets a connect on the first try more often than not, while the improved receiver extends range.

Most UHF trunking systems in place now were originally designed as community repeaters to serve mobile units. To make them suitable for portables, we designed a repeater that works better for thousands of dollars less.

We have focused on this repeater to make it as easy as possible for a dealer to be an integrator. It takes time and money to put a trunking system together.

MRT: How do you position Ritron as a UHF trunking supplier?

Rice: We do some of the work for the dealers and point it out in the marketing effort. One result is that we make it easy to interface to the available trunking controllers. The repeaters have connectors on the back. They’re optimized for certain controllers. Instructions walk dealers through the set-up.

And we worked with controller manufacturers to get us both on the same page. A dealer won’t need to be on one phone to us and another phone to the controller manufacturer. We primarily use Trident Marauder and PassPort controllers and the NTS system where it is plug and play.

MRT: Is there a technology you use in manufacturing that’s noteworthy or that you’re proud of?

Our administration, design, engineering, manufacturing and sales all are handled in our 40,000-square-foot facility in Carmel, IN. We take the process from raw printed circuit boards through surface-mount assembly and testing. Although we still have a few through-hole products with leaded parts. We build it all there; we do not sub out.

We’re under a statistical process control that gathers data about what happens on the manufacturing floor. Ours is a continuous improvement culture. We test 100% of our product.

The process includes a custom “bed of nails” feature. Software that we’ve developed works with a computer, a “bed of nails” and a service monitor to automatically align the radio. If a specification is outside the limit, an operator can adjust it. We’ve gone to electrically PC tuned radios, a design that allows a dealer the ability to more quickly test and adjust the radio to his liking by running our programming software on a PC and connecting a programming cable to the radio. No radio disassembly is required.

MRT: When was Ritron founded?

Rice: We celebrate our 25th anniversary in 2002. My father, Bill Rice, founded the company in 1977. He is a 1954 electrical engineering graduate of Purdue. Upon graduation, he went to work for Hazeltine, a military subcontractor. He led the engineering team that developed the air traffic control transponder for the FAA. The transponder became standard equipment for virtually every type of aircraft, commercial and otherwise. He then became chief engineer for Regency Electronics when it was in Indianapolis, where he worked on further development of the air traffic control transponder and on commercial monitor receivers, the pre-cursor to the modern scanner.

After leaving Regency, he was founder and president of Genave, a name that originally stood for General Aviation Electronics. Genave’s first products were aircraft and radio communications equipment. Then Genave went into narrowband FM land mobile radios marine electronics and amateur radio equipment. My father sold his interest in Genave and started Ritron in 1977.

MRT: When did you begin working at Ritron?

Rice: I don’t think there was a time when I didn’t work part time at either Genave or Ritron. I officially started at Ritron while I was still in college, in 1979. I worked summers, when I would sweep floors, pack radios and then answer the sales phone in the afternoon. MRT: What were the first Ritron products?

Rice: One of the first products was the RT 150, a crystal-controlled, 2W VHF portable radio. It retailed for $298. At the time, portables were selling in the $800 to $1,000 range. The RT 250 created a new paradigm.

In this day and age, a new radio design has three elements: mechanical, electrical and the software. It used to be just electrical and mechanical.

Radio manufacturers struggle with how much functionality to include. There is the almost overwhelming urge to throw it in and let the customer deal with how to use it. That kind of approach could keep a product from getting off the ground.

MRT: You make a variety of UHF and VHF portables, including the famous color dot radios. Do you have plans to offer units for the new Multiple Use Radio Service frequencies?

Rice: We offer three MURS-certified radios. They use all existing channels with no emphasis or on one or the other.

With MURS, we are looking seriously at the marketability of repeaters and telephone interconnect. I will say that our MURS-capable radios can offer that functionality. They also are capable of slow-speed data. But to be frank, those applications have yet to materialize.

MRT: Is the deregulation that converted the MURS channels from licensed business channels to unlicensed general use channels helpful?

Rice: Time will tell. As the new radios and their capabilities reflect, we intend to capitalize on the change in regulation.

MRT: Is it too hard to predict that the demand is going to be there?

Rice: It was the consumer electronics people who wanted the regulatory change and who may see a market. I don’t think they’re right, but I think that’s where the impetus came from. Even so, I think we’re better poised to take advantage of the deregulation than they are.

MRT: How big is the consumer market for what you do?

Rice: For clarification, we do not manufacture consumer electronics. Although we sell our products to the large retailers, they use our products in their stores for operations. But they are large radio users. And applications for radio within the confines of large stores are enormous. For example, our Quick Assist callbox unit can send an alert in the store if a customer comes asking for help.

The wireless intercom-and-desktop base station fits retail applications. Theft of two-way radios is a problem. The stores have to replace them periodically. We don’t necessarily argue with that because it has an upside for us, but in the end, it’s our customer we have to look after. The wireless intercom-and-desktop base station mounts on a wall or bolts to a desk. It won’t go away. There are applications in large stores and industrial facilities for that niche product. At first glance, though, the application may not be readily apparent.

MRT: What else is in the mix for Ritron that we haven’t covered?

Rice: We’re involved in another segment that’s different from land mobile radio dealer marketplace. It’s a quiet, little-known business segment of OEM transceivers with wireless communications proliferating. Other manufacturers want their products to be wireless. We build boxes for that.

Also, Bluetooth is in our product development discussions.

But our business primarily is business and industrial, also with public safety and military customers. Since the events of Sept. 11, we have seen increased interest and sales of our products. Security is naturally at the top of everyone’s list. Wireless communications allows people to be informed and mobilized quickly. This is important no matter what the situation. We are lucky that we manufacture products that not only make people more efficient, but they also save lives.

I am truly grateful for the efforts of our employees and especially our dealers and customers who see the merits of our product.