Rockville tooling and manufacturing

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RTMCase_Spring20211.pdf

ROCKVILLE TOOLING AND MANUFACTURING, INC.

The Firm

Rockville Tooling and Manufacturing, Inc. (RTM) was founded in 1982 as a small job shop specializing in

precision tools. In 1995 it was purchased by the Swedish firm, Sandvik Mining and Construction, to produce larger

drills intended for use in construction, excavation, and related markets. As a subsidiary of Sandvik, RTM

prospered and secured several unique patents. In 2005, it was spun off and became completely independent.

In 2018, the firm reported annual sales revenue of $400 million and employed 100 people. It was one the larger

firms in its industry and considered a thought-leader. It exported 35% of its production to over 20 countries found

in the continents of Africa, Asia, Central America, Europe, and South America. RTM’s technical group assured

product lines were as complete and modern as possible. RTM’s success was virtually uninterrupted.

The single exception, from management’s point of view, was the “Hydro-Hammer.”

The Hydro-Hammer

In 2014 RTM began commercialization of the Hydro-Hammer, the first “silent” jackhammer. Whereas all existing

jackhammers operated at about 140 decibels (close to the limit of human tolerance), the Hydro-Hammer produced

only 70 decibels, a level at which people could converse nearby without raising their voices. The conception of the

drill was completely new: unlike the normal pneumatic drill, this one worked hydraulically using a small quantity

of oil. The engine was so effective that it required a motor of only 6 horsepower; standard drills need 12 to 18

horsepower.

The price of one Hydro-Hammer was $2,000 compared to $500 for a pneumatic drill. And while a single

pneumatic drill cost $500, it had to be connected to a compressor costing $7,500 or more (in standard use, several

drills were connected to a single compressor). The Hydro-Hammer was a self-contained unit, which sold in two

possible formats: a single drill for $2,000 or a pair of drills for $3,600.

RTM had always been aware that when it sold a standard jackhammer it also was selling a noise that was

obnoxious to the public at large. With its new Hydro-Hammer it hoped to open a brand-new market, assuring

commercial success by filling a need. Sales were expected to be about 300 machines a year.

Marketing the Hydro-Hammer

The marketing effort began when RTM sent a letter explaining the Hydro-Hammer and its benefits to county

administrators and directors of municipal services, using a mailing list that RTM had purchased from a well-known

mailing list producer. The new machine was talked about in trade magazines and had some radio exposure due to a

National Public Radio report on jackhammer noise. All this publicity resulted in not a single sale or even an

inquiry. Each of the firm’s 15 salespeople was given a Hydro-Hammer for demonstration purposes. Those who

witnessed the demonstrations expressed interest in the machine, but no sales resulted. Thinking that the cost was a

deterring factor, RTM established an installment purchase plan, and even considered leasing the machine. Neither

of these plans met with any success. The firm launched a costly advertising campaign in the trade press. And

whenever RTM personnel came across an article, blog, or website on noise pollution, descriptive brochures on the

Hydro-Hammer were sent/emailed to the author/organization.

In 2018, after four years of marketing efforts, RTM had sold 223 Hydro-Hammers, and only 42 in the US. The

response of potential customers had remained the same: “It’s an excellent machine. It’s very interesting. We’ll

consider buying one when we need to.”