Spokanes Alloy Trailers Inc., which says its one of the two largest remaining full-line manufacturers of over-the-road truck trailers in the Western U.S., is trying to steer back into profitability after trimming its financial load.


Weighted down over the last couple of years by a flat national market for truck trailers, hiring woes, and other destabilizing factors, the company recently discontinued about half of its trailer lines and consolidated all of its production into space it leases in the Spokane Business & Industrial Park. It also has cut its work force to about 175 peopleless than half the nearly 450 it employed three years ago.


Basically, weve downsized. Weve stabilized our work force and are going to start back up, hopefully, in a more positive direction, says J. Kingsley Novell, the companys chairman. They call it re-engineering, and its all driven by the bottom line. Theres no emotion in it.


Novell stepped down as the companys CEO in April and said he plans to retire now that he has just completed a term as president of the national Truck Trailer Manufacturers Association (TTMA).


He retains, however, a controlling interest in Alloy, which he owns with his brother, Kerry Novell, and Sales Manager Dick Peirone, and doesnt have any immediate plans to relinquish his position as the companys chairman.


Novell says he has been planning to step down as Alloys CEO for quite awhile, and the timing of the step had nothing to do with the companys recent financial struggles. Ive just reached the point where its not as much fun anymore, he says. Alloy has put out feelers for a new CEO, he says, adding that he would prefer to have someone who would have an equity interest in the company.


The possibility of a sale of the company also exists. Novell says he has been approached recently by several companies that are interested in buying Alloys assets, and one of them has indicated it plans to submit a letter of intent. He declines to identify the prospective suitors, except to say that they include a couple of large, publicly traded companies.


Alloy, which was founded here 37 years ago, hasnt been profitable for about 18 months, Novell says. Last fall, it brought in John Wiencken, an internationally known re-engineering consultant, to help revamp the company, and Wiencken now is its acting administrator, Novell says.


Were about 95 percent done with what we set out to do about nine months ago, he says. I feel very comfortable with the management team thats in there (Wiencken, Peirone, and Kerry Novell). The profitability should return very rapidly now that weve dropped certain trailer lines, which were unprofitable.


Alloys recent financial difficulties represent a sharp departure from just three years ago, when the national trailer business was booming and the Spokane company was expanding its operation and seeking to boost its production to 20 trailers a day, or $75 million worth of trailers annually. One of its more noteworthy transactions in 1995 was the purchase of a chief regional competitor, Comet Trailer Corp., of Selah, Wash., which had been founded in Spokane and later became one of the largest trailer manufacturers in the country.


Since then, however, the market for trailers has softened, due partly to overcapacity, and heightened competition has caused trailer prices to fall, Novell says. Also, expenses have risen, due partly to increased federal regulation, and the low unemployment rate has made it difficult to attract and retain certified welders, he says. Weve been just like a turnstile, last summer particularly, he says.


One event that had a lingering negative effect on Alloys business was the November 1996 ice storm that hammered the Spokane area, Novell says. We were closed 15 days during Ice Storm, and then we couldnt get materials. That was a devastating loss, and since then its been very difficult for us.


Alloys administrative and sales offices and service shop are located in a 105,000-square-foot complex at 3025 S. Geiger Blvd., across the road from Spokanes waste-to-energy plant. The company has consolidated a specialty-trailer manufacturing operation that also had been located there into its main production facility in the big Spokane Valley industrial park, where it leases 168,000 square feet of floor space, Novell says. That move is expected to save the company $60,000 annually just in transportation costs, he says. Also, it has allowed the company to double the size of its service shop at the Geiger facility, he says.


The unprofitable trailer lines that Alloy has dropped accounted for about $30 million in sales annually, Novell says. Eliminating them, however, has allowed the company to jettison about $3 million worth of inventory, along with reducing direct manufacturing expenses, he says.


The discontinued lines include a refrigerated, or reefer, trailer; single- and two-axle commodity trailers for carrying dry freight; and delivery van bodies, he says. The van bodies were an outgrowth of the Comet acquisition.


Alloy is continuing to manufacture wood-chip, or bulk, trailers; solid-waste refuse trailers; specialty van trailers; and all types of flatbed trailers, including one called a cargoliner, or curtain-side flatbed, with load-bearing vinyl side walls that can be drawn back like curtains for easy access.


Novell and his father, John Novell, who had worked for and learned the trailer business from Comets founder, T.C. Brown, founded Alloy, together with Henry Peirone and Frank Pignanelli, in 1961. The company started out with 12 employees and did less than $200,000 worth of business in its first year, Novell recalls. Back then, it was one of three over-the-road trailer manufacturers in Spokane and one of about 300 such companies in the U.S., he says. Now, only about 20 full-line manufacturers remain in the U.S., with Alloy ranking 17th in size among that group, he says.