At Home in Las Vegas

Xtreme blazes the trail as an equipment maker in the Entertainment Capital of the World.

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Manufacturing isn't the first thing that comes to mind when talking about Las Vegas. Tourism and gaming are the city's major employers, with gaming directly responsible for 24% of the area's jobs.

It's difficult to ignore the city's success. Las Vegas was a remote desert oasis when Montana's William Andrews Clark created a railroad town there in 1905 to support the San Pedro, Los Angeles and Salt Lake line (Clark's railroad would shave 663 miles off the route between a seaport and his wealthy mines in Montana). Legalized gambling put the city on the tourism map in 1931, and the ribbon cutting for the first megaresort casino in 1989 ushered in an era when slot machines were only part of the Vegas experience.

Nearly 40 million people visit Las Vegas annually, and more than 6 million of those attend trade shows. Many stay there. Las Vegas is one of the fastest growing cities in the country with nearly 7,000 new residents moving to the valley each month. The metropolitan area's population should exceed 2 million by 2010.

Las Vegas may not be known for manufacturing, but it is an important city for mobile off-highway equipment businesses. Tourism-sector projects under way total more than $25 billion. The city has also become a destination for engineers and end-users due to the expositions located there.

Hometown pride

Of all the machinery displayed at shows, such as the annual World of Concrete or the triennial ConExpo-Con/Agg, only the bright orange and green Xtreme-branded telehandlers are manufactured in The Entertainment Capital of the World.

Xtreme Mfg. LLC was founded and is owned by Don Ahern, president and CEO of Ahern Rentals, the manufacturer's largest single customer. Xtreme telehandlers are also sold to individual contractors. Sales to the latter group have been climbing.

Development work began in secrecy seven years ago when the odds on the telehandler market were not good. It was Lee Kramer, now Xtreme Mfg.'s Las Vegas-based vice president of engineering, who was hired to open Ahern's skunk works in 2000. A former engineer for then-defunct lift manufacturer UpRight, Kramer was living in Fresno, CA, at the time. One of the biggest challenges for his Fresno Engineering and Design (FED) group, Kramer says, was convincing suppliers to get involved with the development of a new rough-terrain forklift.

"I had to convince them this was different," says Kramer, "and that I understood what was happening in the market. We had a completely different way to sell the equipment." The link to Don Ahern was kept silent.

Xtreme had a rare opportunity for a new manufacturer — with Ahern it was guaranteed a strong customer and a proven distribution network. Founded in Las Vegas in 1953 by Don Ahern's parents, Ahern Rentals is the largest independently-owned rental business in the country. With 41 primary locations, it is one of the leading equipment rental firms in the Southwest.

After extensive field testing of 14 prototype units, production started in fall 2003 with model XRM945. In 2004 two more models were added. Offering new models to meet customer demand was relatively easy due to the design and the use of common components, intended to make stocking parts easier for rental customers.

In mid 2004, production was moved to a new 24,000 sq. ft. facility west of downtown Las Vegas, next door to Ahern's main rental operation.

Today the line of Las Vegas-built telehandlers includes the XRM842, XRM1045, XRM1245 and XRM1254. In early 2007 Xtreme introduced the XRM1267 telehandler, which has a lift height of 67 ft., reach of 53 ft. and capacity of 12,000 lbs.

Las Vegas, NV 89106

One of Xtreme's most unique corporate features is its location. Very little of this type of manufacturing is performed in Nevada.

Skilled labor shortages are an industry-wide problem, but in Nevada's largest city it is exacerbated by the fact that Las Vegas' No. 1 employer and biggest draw is the entertainment industry.

Frightened by the temporary drop in tourism following 9/11, Las Vegas Mayor Oscar Goodman has been working to diversify the city's economy. Don Ahern is also involved with local politics and works to show the importance of bringing manufacturing and distribution capabilities to Las Vegas.

In many respects Las Vegas' business climate looks like a good hand. It is one of the country's least expensive major cities based on taxes. It is free of natural disasters such as tornadoes and hurricanes. Summers can be warm but winters are sunny. Interstate 15 offers a straight shot to California markets.

Looking closer at the cards, however, manufacturers that set up shop in Las Vegas face pioneer-like challenges. For Xtreme, the labor pool seems to run dry at hiring time. "Trying to find that small segment of the workforce we need to build equipment is challenging," says Kramer. "The mentality of Vegas is entertainment, not manufacturing."

People move to Las Vegas for a variety of different reasons. Kramer's hope is some of them will bring some manufacturing experience with them. Convincing new hires with families to move to "Sin City" is not always easy.

Then there's the distance between Xtreme and its suppliers. With little in the way of a local supply base, buying major components from the Midwest involves a lot of money in freight. Bad weather can significantly delay important shipments.

Component suppliers

The telehandlers built in Las Vegas are designed by five in-house engineers. Working with years of experience running an equipment rental business, the goal is a tough machine that can be easily and safely used (the operator gets 360-degree visibility) as well as maintained.

Kramer often works with Xtreme's fluid power distributors for engineering assistance for hydraulics systems.

Kawasaki, HAWE, Sauer-Danfoss and HYDAC components are used throughout the range of Las Vegas built machines. Xtreme works directly with drivetrain manufacturers, sourcing Dana or Carraro depending on the size of the machine.

On the big XRM1267, a center-mounted 130 hp Perkins engine provides power to a three-speed power shift Dana transmission and axles. HAWE Hydraulics provides the full-pressure mechanical-over-hydraulic boom control valve, specified for its reliability and precise control.

Xtreme currently assembles its machines in Las Vegas. Major component fabrication (such as with the boom) is done by a vendor in California using Xtreme's jigs and specifications.

The machines are assembled on a rolling assembly line into which sub-assembly lines for the cab, axle, hydraulic components and powertrain connect.

A plan is under way to build a significantly larger plant to the west of the current factory, which will increase product capabilities. Much of the fabrication work will then be robotic.

Regional bonanza

Take a ride along the Las Vegas Strip in the top of one of Citizens Area Transit's double decker buses and start counting Xtreme telehandlers. With Las Vegas construction projects humming 24 hours a day, some of Xtreme's (and Ahern's) busiest customers are a couple miles from corporate headquarters.

Thanks to its proximity to end-users, and a busy Ahern Rentals shop, Kramer's team knows exactly what's happening with machines in the field. He also has the opportunity to inspect machines when they return to the Ahern shop for maintenance (such as when one of the first machines arrived for routine maintenance with 6,500 hours on the meter).

Ahern has a rental office on the grounds of the massive MGM Mirage CityCenter, a $7 billion project on Las Vegas Boulevard, and Xtreme often gets calls from contractors on the grounds wondering what they can or cannot do with the machines. "Not a week goes by when we aren't involved directly with the product in the field," says Kramer.

Understanding the value of being seen by 40 million Las Vegas tourists, in the first couple of years Xtreme and Ahern worked to populate the region with the machines. Word about the brightly colored machines spread throughout the country.

More than 120 Ahern Rentals salesmen can offer Xtreme machines (along with dozens of other brands of equipment), and Xtreme has two dedicated salesmen working territories in the United States.

"The two are working strategic areas in the country," says Elesha Rasmuson, who started with Ahern Rentals 12 years ago and is now Xtreme's vice president of administration/sales. "Our marketing plan is different from other manufacturers because we have a built-in relationship with Ahern Rentals and Xtreme."

At the end of 2006, Ahern Rentals had 16,800 high-reach units of all different types and brands in its fleet nationwide. "We're not trying to take the rental business away from established manufacturers," says Kramer. "Ahern rents or sells units based on the customer's requirements. If another brand makes more sense, that's what they will sell. If we can capture the upper 5% of the telehandler market, we'll be successful in what we set out to do."