Sound business practices: Diversification helps Westone weather recession

Westone Laboratories may not be a household name in its own backyard, but it’s certainly made a name for itself elsewhere.

The Colorado Springs company makes earpieces and other products to protect and enhance hearing, from custom-fit molds for hearing aids to specialized earplugs for swimmers, hunters and motorcycle riders. Though its greatest presence is in the hearing health care industry, it has branched out with music and military products lines.

The hearing health care market has great potential for growth as the massive baby boomer generation ages, said Lynn Kehler, Wes-tone’s president and CEO. “But we thought many years ago, let’s sort of hedge our bets and start getting into some other businesses.”

And that diversification, Kehler said, has helped the company weather the brutal economic downtown.

Though Westone has had to do some belt-tightening, Kehler said there have been no layoffs. The company has about 225 employees in Colorado Springs and about 25 at a lab in Kalamazoo, Mich.

“Our sales have gone up every year even in this recession,” Kehler said. Though he declined to be more precise, he said annual sales are in “the $25 million to $50 million bracket.”

Those are big numbers for a home-grown business that began in Ron and Mickey Morgan’s log cabin near Divide in 1959. Ron Morgan was a hearing aid salesman who, wanting to offer customers a better-quality earpiece, began experimenting with making ear molds at the kitchen table. Son Randy ran the company for 20 years; Kehler, who joined the company as chief financial officer in 2001, became CEO after Randy Morgan’s death in 2006. The company remains family-owned.

“It’s really one of the big names in the hearing industry,” said Karl Strom, editor of Hearing Review, a monthly trade magazine.

In Hearing Review’s annual survey of companies, “Westone consistently comes out, if not on top, in the top three all the time,” Strom said. “I think that’s a reflection of their dedication, their long standing in the industry and how they do business.”

And while Westone has seen many changes over 50-plus years, how it does business is one thing that hasn’t changed, Kehler said.

“The company was founded on some very strong religious principles, and we’ve kind of adopted forever the Golden Rule as our service philosophy,” he said. “That’s how we like to treat people, and that comes from the founders.”

Mike Kazmierski, president and CEO of the Colorado Springs Regional Economic Development Corp., calls Westone a “real gem” in the area.

“Companies like Westone make up the very backbone of our business community,” he said. “They are a quiet company that has been doing great things day in and day out for over 50 years.”

Locally, Westone remains under the radar of most people, Kehler said. But that “quiet company” has been making some noise lately, especially with its fast-growing music-products division. Westone’s in-ear monitors have been used by acts as varied as Brad Paisley and Lee Ann Womack, Nine Inch Nails and Flyleaf, the company says.

In-ear monitors protect musicians’ hearing while allowing them to hear only what they want to hear in their sound mix.

“I was backstage with Englebert Humperdinck, of all people, talking to his monitor engineer,” said Kris Cartwright, head of Westone’s marketing. “Englebert has a 16-piece band, eight backup singers, but the only thing he takes in his mix is high-hat (cymbal), piano and his voice. He performs the best when the other instruments are blocked out.”

Westone got into the music business when Cartwright and brother Karl, both long-time employees and fellow music lovers, started tinkering with putting speakers into custom earpieces in the early 1990s. Early customers for Westone’s in-ear monitors included Def Leppard and Rush.

The company typically works with a musician’s monitoring engineers rather than the musician directly; an audiologist will take an impression of the artist’s ear and send it to Westone to craft a custom-fit earpiece.

“We sure find out when someone big comes in,” Kehler said. “‘Oh look, there’s so and so’s ear wax.’"

The Cartwright brothers are members of a “silent” Westone band that plays at trade shows to promote the in-ear monitor technology; they play electric instruments, and the only way to hear them is through the monitors.

The music division has spawned a personal-listening line; it was more a case, however, of audiophiles finding Westone rather than the company seeking them out.

“In the mid-2000s, we noticed, gosh, there’s a lot of people buying our stuff for iPods,” Kehler said. So the company worked on a sleeker design and more-consumer-friendly packaging, and in late 2008 introduced its first high-end personal-listening headphones — the Westone 3, which sells for about $400.

Westone touts the headphones as “the perfect choice for the most demanding audiophile or music lover.”

“People buy these things like crazy to listen to their iPods,” Kehler said. “They spend twice the amount or three times the amount they spend on their iPod.”

The reason, he said, is quite simple: “They sound really good.”

Westone is working to increase market awareness of its personal-listening line; the average person has heard of Bose and other big names, but not Westone, Kehler acknowledged. One way to spread that word is through social media such as Twitter and Facebook, he said.

“We find that the personal-listening crowd tends to be a demographic of 20 to 40-plus years, and that demographic is very active on social media,” Kehler said. “It’s the best way to find them.”

As it spreads the word, the company with humble roots in the mountains of Colorado is developing a growing global presence; in June, for example, Kehler and others from Westone traveled to Tokyo to promote some new audio products.

Westone is also working to grow its military product line, which began when Westone partnered with the Air Force Research Laboratory to develop an earpiece for F-22 pilots.

“The aircraft was so loud that the pilots couldn’t hear communications from the ground,” Kehler said. “So we worked with the Air Force Research Lab to develop an earpiece that would do two things: protect hearing and provide better communications from the ground.”

The resulting Attenuating Custom Communications Earpiece System, or ACCES, went to market about five years ago.

“It’s still a relatively small business for us,” Kehler said of the military division. “We think it has really great potential.”
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WESTONE AT A GLANCE

(Pronouned wes-tone)
WHAT IT DOES: A manufacturer of mostly custom earpieces and earplugs. Three main divisions: hearing health care, music and military.
LOCATION: 2235 Executive Circle in Colorado Springs. Also has a hearing health care lab in Kalamazoo, Mich.
EMPLOYEES: 225 in the Springs, 25 in Michigan.
WEBSITE: westone.com

A MUSICAL WHO’S WHO

Some of the top names in the music industry have used Westone’s in-ear musicians’ monitors and hearing protection, including:

• Aerosmith

• Bare Naked Ladies

• Chicago

• Celine Dion

• The Fray

• The Jonas Brothers

• Lady Antebellum

• Madonna

• Oak Ridge Boys

• Pussycat Dolls

• Rascal Flatts

• Bruce Springsteen

• Shania Twain

• Keith Urban

• Whitesnake

• ZZ Top

For a full list:

www.westone.com/music/artist-list