Cruiser defending its sales link to the auto industry

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Cruiser Accessories President of Sales Todd Spencer and Vice President of Finance Shannon Hause have fought to defend their market share of the license plate frame industry.

Framed: Cruiser Accessories President of Sales Todd Spencer and Vice President of Finance Shannon Hause have fought to defend their market share of the license plate frame industry.

Cruiser Accessories, a Monument-based company that sells chrome license plate frames, has sued and been sued.

It has dissolved partnerships, bought out former employees and was nearly sold a few years back.

But, through the saga and the court battles, Cruiser has remained king of the license plate frame business, edging out the competition with its 54.9 percent market share.

Not even the sluggish economy is holding this company down. Last year, Cruiser Accessories’ revenue was $8 million — up 14 percent over 2009.

“We’ve carved out a little niche market in designer license plate frames,” said Todd Spencer, Cruiser’s president. “When the economy goes south, people aren’t buying new cars, but they will spend $20 for a chrome frame.”

Twenty-five years ago, Paul Spencer, Todd’s father, and his former business partner came up with the idea of securing a chain to ply wood and making a frame for an auto license plate. Spencer, a zinc die caster, created the frame mold and sales for the California-based company took off across the country.

Shortly after the launch of the company, the partners squared off in court over whether one partner could sell the company and who owned the patent rights. A judge ruled they each had rights — the company split.

Paul Spencer moved his company, Cruiser Accessories, to Colorado in 1996. At the time he was making the frames himself at the 12,000 square-foot Monument warehouse. But cheaper knockoffs and increasing demand for product drove the company to go with a manufacturer in China for its die cast zinc, stainless steel and laser cut stainless steel frames.

Now, the company has 100 frame designs — from the original chain frame to palm trees, to barbed wire.

The frames come into Monument, where they are packaged and moved out to 21,000 U.S. automotive aftermarket stores including Advance Auto Parts, AutoZone and Pep Boys. The company also sells its frames to stores in Canada and Mexico.

“Throughout the years, we just focused on license plate frames,” Spencer said. “So, we are the only company in the automotive aftermarket, which focuses so much energy on license plate fames as a category.”

The business of making and selling license plate frames is more complex than it might appear.

There are changing state laws that regulate how much of a license plate can be covered by a frame; there are competitors making cheaper knockoffs; and there is the volatile market that has auto stores merging and the available shelf space in retail stores shrinking.

Last year, Cruiser spent more than $100,000 to re-engineer its frames to meet new state standards — states including Arizona forbid frames to cover the state’s name at the top or bottom of the license plate, said Shannon Hause, Cruiser’s vice president and head of finance.

At the same time, the company spent money fighting Bell Automotive Products’ knockoff of its top seller, the “Diamondesque” — a rhinestone studded frame that reeled in $1.8 million in retail sales in 2010.

“After 20-plus years of getting knocked off all the time, we just decided that was enough,” Hause said.

Cruiser Accessories filed suit in Colorado District Court in Denver in October 2010 against Bell for intellectual property and patent violation. The case was dismissed in April and a gentlemen’s agreement was made, Spencer said.

“The competition has agreed to make the necessary changes without admitting fault,” Spencer said. “It didn’t go to court — I don’t see it going to court.”

Cruiser Accessories was dealt a blow in 2008 when one of its biggest customers, CSK Auto Corp., which owns about 1,500 auto parts stores, merged with O’Reilly’s Automotive, which also owns about 1,500 stores. O’Reilly’s went with a competitor for its license plate frames and Cruiser was out of the conglomerate’s 3,000 stores.

“It will affect our sales, but we are desperately peddling in alternative markets — two steps forward one step back — but, we think the net result will be a hair above 2010 revenue,” Spencer said.

It means he has to hustle. Spencer, who has been running the business from behind the scenes, is hitting the road, making sales calls again. It’s his personal mission to befriend the competition, keep them close, he said.

“I’m comfortable in sales,” he said. “I have the experience and I can make the decisions on the fly.”

After a quarter of a century in business, Spencer is ready for the next chapter in the license plate frame business. Last month, the day O’Reilly Automotive put some competing license plate frames on sale, Todd Spencer bought a half dozen from the Monument store. He will closely examine them, see if he’s been copied, and then plot his next move.

“So, we are a big-little company,” he said. “Big enough to play hardball with the big boys.”