Manufacturers and Products and Manufacturing & Technology

Local manufacturer tops in laundry coin machines

May 14, 2007

It all started with pay toilets. In 1955, James McNutt St. was working for his grandpa's business, Indianapolis-based Nik-O-Lok Co., making, selling and leasing coin-operated rest-room locks. But he wanted to branch out and started an affiliate, Standard Change-Makers Inc., to make change machines for an industry in its infancy--coin laundries.

He licensed a patent for a machine that would dispense five nickels for each quarter a user deposited. More than five decades later, the spin-off has outgrown its one-time parent.

Now, Standard Change-Makers employs 118 people who make 3,500 change machines each year for self-service laundries, self-service car washes and arcades nationwide. Local workers design, build and service change machines, but the company also has three service centers--in Santa Fe Springs, Calif.; Aston, Pa.; and St. Laurent, Quebec.

With total revenue at $11 million a year, industry observers say Standard is the top manufacturer of change machines for laundries. President James McNutt Jr. said revenue has been basically flat.

"Customer service is really where we shine," he said.

McNutt Sr. died last June. Now his namesake and seven siblings co-own the company. Two of McNutt Jr.'s brothers also work at the firm. And the company hasn't forgotten its roots. Its Nik-O-Lok subsidiary still makes bathroom locks, used mostly along the West Coast in fast-food joints in areas with a large homeless population. Nik-O-Lok makes up about 10 percent of the firm's annual revenue.

Niche market

While manufacturers in other fields must battle overseas competitors, the change-machine industry is dominated by the local firm and three domestic competitors. All are privately held companies.

"We're not a high enough volume business to be attractive to the big boys, for overseas competition to invade the market," said McNutt, 52.

With mostly small firms in the business, it's hard to gauge market share, said Wayne Snihur, vice president of Fort Lauderdale-based American Changer Corp., a competitor that employs about 80.

Snihur said while the four main players compete with one another, each seems to be strongest in a particular niche. The Indianapolis firm is No. 1 in the laundry industry, for example, while American Changer controls the vending and arcade sector, he said. Likewise, Ohio-based Hamilton Manufacturing Corp. is strong in self-service car washes, while Michigan-based Rowe International has concentrated on jukeboxes.

McNutt said Standard Change-Makers is known in the business for its middle-of-the-pack pricing, superior quality and exemplary customer service. Another advantage is its decades of experience.

That history has helped the company navigate changes over the years, as it worked to keep up with technological advances like bill scanners and to stay on top of redesigned currency increasingly circulated by the federal government.

Decades ago, he said, change-machine manufacturers wouldn't get to look at redesigned bills until they hit the streets.

"Twenty years ago, they didn't care what we thought," he said.

But government officials have started taking counterfeiting more seriously, calling machine manufacturers in earlier in the process to get advice on how to foil fake bills.

New versions of the $1, $5 and $20 produced early this decade include more markers to detect counterfeits, and the government allowed machine manufacturers to test the bills before they were circulated.

Standard sells most of its machines through distributors, who carry all the equipment needed to get an arcade, car wash or laundry up and running. While larger manufacturers, like Maytag, can demand an exclusive distributorship agreement to sell their equipment, that's not usually the case with the change-machine makers.

"We have an ancillary product--you only need one or two changers per store," McNutt said. "We get hit with competition quite regularly."

Although the industry isn't booming, customers don't want to use swipe cards.

"We may have to talk again in five or 10 years, but as it stands now, people still want it to be a cash-based business," said Wallace, the laundry association executive. Of the nation's approximately 30,000 self-service laundries, only 6 percent offer loadable swipe-card systems.

In fact, Indianapolis laundry owner Alvin Brumley said he got new customers when a nearby competitor switched to a swipe-card system.

"I keep getting customers from there because they don't like using the cards," said Brumley, who owns Al and Donna's Plaza Laundry, 6415 E. Washington St. It has 28 washers, 17 dryers and one Standard change machine.

Though he bought the business only 11 months ago, Brumley said he's already a loyal Standard man because one of the McNutt brothers--Rob, who works in the manufacturing side of the firm--is a drop-off laundry customer and always responds in person to deal with any service questions.

Where to from here? South

James McNutt said Standard wants to beef up its market share in car washes and arcades, but the main source of growth may very well come from Mexico and other countries that are still more cash-based. About a third of Standard's business comes from outside the United States.

Since the mid-1990s, Standard has been working with the Mexican government, making stand-alone kiosks where residents can pay their electric bills.

"They had people standing in line each month [at the electric company offices] to pay their bills in cash," McNutt said.

So Standard designed a bill verifier to scan bills and builds the cabinets, including some drive-through units.

And the company might be making a debut on prime time soon, too. On May 7, a film crew was in town to shoot the making of a dollar changer from start to finish. The footage could be used for the cable television series "How It's Made," which airs on the Discovery Channel and the Science Channel.

McNutt said the Montreal-based production company contacted Standard out of the blue. To get the shots needed, some workers worked late to make parts during the more than 12 hours of filming.

Messages left with the production company weren't returned, but McNutt said producers told him if the footage makes the cut, it will air sometime next year.

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