Five Questions for Paul Darley, President and CEO of W.S. Darley

Chris Mc Loone

CM: How is the fire industry doing right now? Can we say that we've finally turned the corner?

PD: According to FAMA statistics, new orders for fire apparatus have seen an increase recently. The first quarter of 2013 showed that new orders were up about 25 percent when compared to the first quarters of 2011 and 2012. New orders were up five percent compared to the last quarter of 2012. If this trend were to continue, annualized sales would be up 40 percent over 2012. This is a big "IF," as I don't think the trend will continue. The numbers are skewed because of some large, nonmunicipal orders in the first quarter.

Although I can't say the market has finally turned the corner, this is some positive news. In 2012, the United States municipal market was still down more than 40 percent when compared to its height in 2008 when the market peaked at more than 5,000 trucks. The market was flat compared to 2011. Historically, there have been more large municipal orders, and these have slowed over the past five years. Based on this, we are starting to see some pent-up demand, particularly with larger cities. This is tempered by a reduction in AFG grant funding and a lower percentage of awards being made for fire apparatus.

Look, no one wants to see a rebound in apparatus and equipment sales more than the manufacturers, but it's too early to tell if the market is back. Statistics from the League of Cities Annual Report show that municipalities are far from being out of the financial crisis. Fire departments' budgets are no longer sacred cows when it comes to municipal spending cuts. Once the dust settles in a few years, I predict we'll probably see the market settle into a "new normal" market of 4,250 to 4,500 new fire apparatus per year.

CM: What is the biggest issue in the fire service, and how is Darley helping to address it?

PD: I don't know of a person in the industry who wouldn't quickly point to the budgets crisis as the biggest issue for career departments. This is at a time when most departments are being asked to do more with less. Fire departments really need to rethink their approach and reinvent themselves.

Darley is keenly focused on this industry need. On the pump side, we have been working closely with fire apparatus manufacturers during the past few years to help them introduce unique and competitively priced multipurpose vehicles by offering them "Pump System Solutions" that address the true needs of today's fire service. These pump systems allow the manufacturer to offer one vehicle that can serve a variety of department needs, rather than just having to devote a specialized vehicle for rescue, pumping, or hazmat.

We are focusing on lower-cost equipment such as competitively priced, high-quality Darley branded bunker gear, nozzles, adapters, and so on. We also have a variety of financing options available.

For volunteer departments, recruitment and training are pressing long-term issues. We are designing our products to be easy to operate while being high-tech, which appeals to today's new volunteer recruits.

CM: To you, what is the most important product Darley produces?

PD: Under our diversification strategy, we've cast a wide net and launched a lot of innovative new products over the past few years-everything from pumps to equipment, polyurethane bodies, compressed air foam systems (CAFS), water purification, and drones. At our core, we're still a pump manufacturer. I would say that they're all important, but I grew up on the pump side of our business and continue to migrate mostly to this area where I know the industry players well and understand market needs. It comes very natural to me personally.

We've recently introduced a new 3,500-gallon-per-minute (gpm) pump that has been highly successful. It is the highest flow pump available on the market. Our CAFS product line is always evolving-we set a world record in China, pumping CAFS higher than 330 meters in a high-rise situation. Our water purification products address humanitarian needs, and our Stinger drone is cutting edge technology for homeland security, fire departments, and defense applications.

Our new defense division has seen exciting growth. I really enjoy working with military personnel-they're such admirable people. Our defense team now includes more than 25 recently hired veterans who are hard-working, focused, and understand the mission. Someday, I hope I can become proficient in understanding their lingo and have this market come as naturally to me as the fire side does.

CM: What's next for Darley? What's in the pipeline?

PD: I can't tell you everything, but I can share that we are continuing to invest heavily in research and development with new products in the areas of CAFS, ultra high pressure, and electronics. We're going to continue to grow in lateral markets, both geographically and in new industries, where we can leverage our strengths in engineering and marketing.

During the past several years, we made a couple of acquisitions, and we're continuing to look closely at other synergistic targets where one plus one equals three. You will continue to see us make acquisitions, but only when it's accretive.

CM: What keeps you up at night?

PD: I actually sleep pretty well at night-just ask my wife Heidi, who has about had it with my snoring. Like most of our employees, I am incredibly passionate about what I do. I pop up out of bed like a piece of toast in the morning and can't wait to get to work. This love of the business and industry was instilled in me by my father at young age. All of our family members share this passion.

I'm hell bent on growing the business so that we pass a strong and diverse business onto the next generation of Darley family members. I am getting to the point where succession planning comes to my mind a lot. Our generation had a unique succession plan. Our executive team, consisting of my brother Peter Darley and my cousins Jeff Darley and James Long, run the business in what family business books call a "cousin consortium." We all have unique strengths and complement one another well. Most major decisions are reached as a team and then presented to our board of directors. Our board includes a four-star general who served as chief of staff for the United States Army, a former chief of staff to President George H.W. Bush, a recently retired FEMA regional director, and even a Harvard business professor. Once major decisions are reached, they have been vetted by some of the brightest people I have ever known. This results in confidence in our decisions and a good night's sleep.

Although I plan to hopefully stay active in the business for the next 25 years (God willing), we plan to work closely with the next generation to ensure that they all work together as closely as we do. We're blessed with a lot of hard-working, intelligent fourth-generation family members, and our generation will ultimately be judged by how well the next generation takes the reigns and works together with our customers', employees', and stockholders' best interests at heart.