K-CO Products Looks to the Future

By Wanda Lenoir

Getting K-CO Products settled in a new location has kept the company’s owner, David Karrisch, even busier than usual. Operating a successful business helps him understand the importance of sharing information, networking, and supporting an innovative business community. In this conversation with our editor, David discusses his entrepreneurial journey’s challenges and high points.

Why is the company’s commitment to hiring Veterans?
A huge part of our success at K-CO has been making our products in the USA. To do that, we needed consistent and quality assembly. Starting with the little Big Shot nozzle back in 2011, we began working through a VA program that provided transitional work opportunities for disabled Veterans. We discovered that the training, discipline, and focus characteristics typical of a military veteran were exactly the skillset we needed. But the other side of it was that we were able to help disabled veterans earn income when finding other paid employment might be difficult or perhaps virtually impossible. The fit was perfect, and we have never looked back! It is a true ‘win/win.’

How did you start Monkey Hook, the original business?
We started Monkey Hook back in 2005. The item was a simple wire-formed picture hook. The idea started when I purchased a new home and needed to hang pictures. When I went to the local hardware store, I saw a unique product under another name that was being discontinued, but it intrigued me and struck me as both innovative and effective. I bought all the items the store had since I thought they were the most amazing things since the strike-anywhere match.  Six years later, we moved back to Southern California. I looked for a similar product to the one I had purchased previously but was unable to locate it online or in a store.

After doing some research, I learned the patent for the picture hook I purchased had expired several years earlier. I made a couple of design changes applied a disruptive brand name and created a package. Initially, my lovely wife Kelly and our four kids spent nights and weekends putting the hooks into packages in the family room. But when Ace Hardware gave me the very first opportunity to reach 2,500 Ace retailers, I needed a better solution than my family.

One of our members was familiar with Elwyn of California, a 501c-3 dedicated to employing adults with a range of disabilities. We worked out a deal with Elwyn to enable 125 of their disabled clients to fill our blisters with Monkey Hooks for the next 17 years! They were like a family to us. In 2022, Elwyn closed that facility. I then sold my original company to my #1 customer, The Hillman Group. That was over 100 million hooks later.

Why did K-CO relocate from California to Tennessee in 2023?
My facility’s lease in Irvine came up for renewal after 7 years. I had the option to renew, but my rate went from $1.05/ft to $1.95/ft., an increase of over 85%. We scoured Orange County’s industrial space but there was literally nothing with the mix (office vs. warehouse) that would work. And even so, the rates were similar. So, this is what forced our hand.

We said that if we ‘had’ to move, we’d go somewhere where my wife and I could see ourselves retiring. We considered Nashville Tennessee because my youngest daughter had just gotten a job there. After a couple of trips, we found a great home and a brand-new industrial space.  It all just fell into place. Not to say that it was an easy move! We moved the household and the company on the same day! This was a major challenge because there was a lot of work to do in both locations.

The move cost far more than expected and the set-up at the new distribution facility had some moments in terms of equipment installation. The warehouse racking cost had doubled since I bought new in 2016, but I had a great team in California, and they dismantled all my racking and organized it. We were able to get all of it on one single truck, along with a couple of machines and ship it to Tennessee for $5,000. Then one of my wife’s cousins came up from San Antonio and we installed all the racking ourselves. And I had fun doing it! We had built up inventory before we left and kept our customers informed about our expected downtime during the transition. In the end, we were only down for one week and never missed shipping an order complete and on time!

Have any of your employees relocate with the company?
Thankfully, six of our warehouse employees came with us. None of the Veterans though. All were entrenched in California and were unable to make the move, though we offered. That was probably the biggest risk in the move – – whether we’d be able to recruit enough disabled Veterans to make the whole thing work. We started with a VA contract which bore fruit. Then, I discovered that Zip Recruiter and Indeed both had features on their resume database to be able to select Veteran resumes in the filter. That made the job a lot easier. We added seven great Veterans, with disabilities between 50-100% and they are 20 years younger than our California group. Between the local VA and using these resume databases, it was a Godsend for sure.

What is the biggest advantage of manufacturing in America?
For K-CO, the advantage has been proximity to the supply chain, as well as selecting the right contract manufacturers. We employed a super-local strategy, which means finding the best suppliers as close as possible to our assembly facilities. The benefits are speed, overall cost, and the ability to build an ongoing relationship with the supplier based on face-to-face meetings, which includes any needed troubleshooting. The ability to troubleshoot an issue in person saves time and money. In contrast to sourcing overseas, where we would pay 50% of the cost when the order is placed, and the other 50% at the time of shipment.

In this case, we tie up our working capital for weeks or even months before we can assemble and ship finished goods to our customers, not to mention the premium shipping costs and customs processes, which always add extra time. Then, we wait another 8 weeks before we get paid. We essentially end up ‘investing’ working capital at a loss, and only to recover some of that loss when we are finally paid by the customer.  In all, it is economically very inefficient. Alternatively, by sourcing in the USA, we provide suppliers with a blanket purchase order for 12 months along with a firm release schedule. This gives our suppliers the advantage of building our demand into their production schedules well in advance, and results in the delivery of our parts when we need them and not before. Yet another advantage of Made in the USA is that we avoid supply chain disruptions on imported parts, such as were seen during the pandemic. While others waited weeks to get their shipments through the ports, we never missed a beat. Although this may have been a unique time in terms of supply chain, we can’t rule out similar or even bigger issues on imported products based on the geopolitical climate, especially with China.

Does seasonality factor into the manufacturing process?
The most difficult thing is forecasting / production of a seasonal item which is growing. Our hose nozzle (Little Big Shot) is a Spring / Summer item from a consumer purchase standpoint. While our shipments occur year-round, the bulk of our volume is shipped in the winter/spring. We begin producing the hose nozzle in November, reaching our production peak in January / February.  We pretty much end production in June, having built up enough inventory to cover us through calendar year-end. If we only had the hose nozzle business, we’d need to downsize our warehouse staff for 4-5 months. Thankfully, we have a toilet plunger (PRO Power Super Plunger) which is contra-seasonal to the hose nozzle. The peak of the consumer purchase season (yep, there is a season for plungers!) is Fall/Winter, better known as football season. The data is real, but the reasons are only anecdotal: Pizza, Chicken Wings, Chili, Nachos, etc. for tailgating). While the plunger seasonality is not as extreme, this line of business offers K-CO a cash-flow benefit and keeps our Veterans working year-round as they move from nozzle to plunger assembly. Our goal has been twofold when it comes to Veteran assemblers: 1) to keep our current staff working year-round, and 2) to add additional Veterans to the team as our volume in both product areas grows.

What if any effect have inflationary factors had on K-CO?
This is a key issue for not only us but all manufacturers. Material cost such as machinable brass, and various plastic materials operates within a global supply/demand marketplace where prices can vary daily. In recent years, worldwide demand has increased for these materials. In addition, supply in some cases has been disrupted (especially plastics) with hurricanes damaging plastics facilities in the Southeastern US. The result is that we are paying higher prices for commodities. The brass parts for our hose nozzle, for example, have increased nearly 50% over the past 13 years. Our ability to pass these costs through to our retail partners is not a simple or straightforward process. While our customers key in on the cost changes, there are many other factors such as inflation driven by gas prices, insurance, regulation, labor, and transportation, all of which factor into our cost, and are in addition to material cost changes which are often the smallest component of our overall cost. It is an ongoing challenge to try to maintain profitability goals under these circumstances.

Discuss the role of research and development in bringing products to market.
We are always looking at consumer trends, which may point out the way for new items. Fortunately, K-CO can take advantage of certain trends that fit our capabilities. One such trend that is exploding is in the environmental arena which we are planning to target in the Spring of 2025. That trend is a massive increase in consumer awareness around toxicity related to chemicals, food products, and vent the air we breathe. Toxins exist everywhere, and in places only now being exposed. Much of the produce we buy in grocery stores is coated with a petroleum-based substance which, while designed to keep produce fresh, can also be toxic. Toxicity causes health issues. This is one reason why organic gardening is a major growth area. As consumers’ knowledge about toxins and the subsequent health impact increases, the market demand for products that support organic growth also increases. K-CO is introducing an all-natural, botanical, non-toxic line of products under the brand Plant Love™ as a surfactant that can resolve infestation of exoskeletal bugs such as aphids, mealybugs, even ants, and other diseases affecting fruits, citrus, vegetables, and ornamentals. The key ingredient is a USDA Bio-Preferred botanical concentrated soap. In addition to this benefit, it also provides nutrients to the plant which increases yield. We are introducing a 4-item line under Plant Love™ which includes 3 RTU (Ready to use) items for 1) Delicate fruits / Veg, 2) Hearty plants like Corn, Nut Trees, and Citrus, 3) Flowers, Roses, and ornamentals.  The 4^th item is a concentrate which can be applied with a hose-end sprayer for applying to large areas or diluted per instructions into spray bottles. This line is K-CO’s first venture into a ‘consumable’ product area, and we are very excited about it.

What advice would you give to new manufacturers about networking and building connections?
I cannot count how many times networking and relationship building has come into play in our overall efforts to grow our business, whether expanding distribution of existing items, finding product improvements, new item opportunities (Plant Love™ was the result of networking!), or finding new retail segments for our business.  My advice for both budding entrepreneurs and seasoned manufacturers is to find people you trust in your network and supply chain, get to know them, and create opportunities for ideas you might not have thought of to come forward. A true relationship with the right people is the environment where this takes place.

What is the most important thing you want retailers to know about K-CO Products?
K-CO is not a large program-type supplier. We bring innovative products to market that meet 3 key criteria, a 3-legged stool if you will:

1) they have outstanding retail potential and perform at the top tier of their respective categories, in some cases by being a bit “disruptive” within the competitive set.

2) I also want any new product we offer to not only compete well on the shelf, and to build category profit, but also to generate impulse / incremental sales for the retailer. Retailers today have at least one thing in common. They want products that can drive an impulse purchase and increase the transaction size. With only so many ways to grow as a retailer in the digital age, taking advantage of the existing store traffic, they already must generate greater sales by making innovative products available to their customers is the key.

3) The key for the manufacturer/distributor is to make sure the “innovative” products they bring forward can be delivered in a retail environment which means that these products compete favorably in high-volume, high household-penetration categories. The most innovative product in the world won’t succeed at retail if there is no real volume potential. For K-CO, there is a 4^th element that has become a key part of both our identity and our success: we want everything we bring to market to be able to be manufactured in the USA and to be assembled by Disabled US Veterans. In this way, we can share our success with men and women who have served our country in the military.  In my view, we cannot ever do enough to support them.

Have any of your employees relocate with the company?
Thankfully, six of our warehouse employees came with us. None of the Veterans though. All were entrenched in California and were unable to make the move, though we offered. That was probably the biggest risk in the move – – whether we’d be able to recruit enough disabled Veterans to make the whole thing work. We started with a VA contract which bore fruit. Then, I discovered that Zip Recruiter and Indeed both had features on their resume database to be able to select Veteran resumes in the filter. That made the job a lot easier. We added seven great Veterans, with disabilities between 50-100% and they are 20 years younger than our California group. Between the local VA and using these resume databases, it was a Godsend for sure.

What is the biggest advantage of manufacturing in America?
For K-CO, the advantage has been proximity to the supply chain, as well as selecting the right contract manufacturers. We employed a super-local strategy, which means finding the best suppliers as close as possible to our assembly facilities. The benefits are speed, overall cost, and the ability to build an ongoing relationship with the supplier based on face-to-face meetings, which includes any needed troubleshooting. The ability to troubleshoot an issue in person saves time and money. In contrast to sourcing overseas, where we would pay 50% of the cost when the order is placed, and the other 50% at the time of shipment.

In this case, we tie up our working capital for weeks or even months before we can assemble and ship finished goods to our customers, not to mention the premium shipping costs and customs processes, which always add extra time. Then, we wait another 8 weeks before we get paid. We essentially end up ‘investing’ working capital at a loss, and only to recover some of that loss when we are finally paid by the customer.  In all, it is economically very inefficient. Alternatively, by sourcing in the USA, we provide suppliers with a blanket purchase order for 12 months along with a firm release schedule. This gives our suppliers the advantage of building our demand into their production schedules well in advance, and results in the delivery of our parts when we need them and not before. Yet another advantage of Made in the USA is that we avoid supply chain disruptions on imported parts, such as were seen during the pandemic. While others waited weeks to get their shipments through the ports, we never missed a beat. Although this may have been a unique time in terms of supply chain, we can’t rule out similar or even bigger issues on imported products based on the geopolitical climate, especially with China.

Does seasonality factor into the manufacturing process?
The most difficult thing is forecasting / production of a seasonal item which is growing. Our hose nozzle (Little Big Shot) is a Spring / Summer item from a consumer purchase standpoint. While our shipments occur year-round, the bulk of our volume is shipped in the winter/spring. We begin producing the hose nozzle in November, reaching our production peak in January / February.  We pretty much end production in June, having built up enough inventory to cover us through calendar year-end. If we only had the hose nozzle business, we’d need to downsize our warehouse staff for 4-5 months. Thankfully, we have a toilet plunger (PRO Power Super Plunger) which is contra-seasonal to the hose nozzle. The peak of the consumer purchase season (yep, there is a season for plungers!) is Fall/Winter, better known as football season. The data is real, but the reasons are only anecdotal: Pizza, Chicken Wings, Chili, Nachos, etc. for tailgating). While the plunger seasonality is not as extreme, this line of business offers K-CO a cash-flow benefit and keeps our Veterans working year-round as they move from nozzle to plunger assembly. Our goal has been twofold when it comes to Veteran assemblers: 1) to keep our current staff working year-round, and 2) to add additional Veterans to the team as our volume in both product areas grows.