VM asked executives at several of the Top Labs to share their outlook on the current business climate for labs. They cited a variety of factors that are impacting wholesalers, including Congressional gridlock, health care regulations and difficulty hiring qualified employees.

VM: What are the biggest business challenges facing wholesale labs today?

“It is very difficult to find optical talent with strong motivated work ethics. Lab training programs are rare and most learning occurs on the job. The staff we have is excellent and hard to replace. It’s especially difficult to find data entry, phone room, optical techs and tinting staff. Where the equipment is highly automated and complicated, the work force needs are even more severe.
—Ralph Cotran, co-owner, US Optical

“Hiring quality workers and retaining them. Let’s face it, the workforce of today isn’t the same as even a few years ago. Workers aren’t as reliable and expect more liberties at work. We are going to devote some time and energy on finding a solution to maintain our level of service with this generation of workers.”
—Mike Tamerius, owner, Precision Optical Group

“The largest challenge is planning capital equipment expenditures and the tax ramifications of such purchases. The largest obstacle is the federal government. Due to the indecision in Congress, section 179 depreciation rules have not been decided for 2015. In 2014, the rule was enacted during the second week of December. Without knowing the specifics of this tax law for 2015, it can mean the difference of taxable income that is $600,000 with the same rules as last year, or up to $1,600,000 with the current amounts. Therefore, it’s extremely difficult to plan for future expansion.
—Bill Heffner, owner, FEA Industries

“The wholesale lab industry is facing two major challenges in today’s market. The reality is that virtually all lens products, whether it is coatings, treatments or designs, utilize effectively the same technology. Independent labs like Identity Optical are able to offer the same technology as the big name labs, generally at less expensive price points and with better customer service, but have to work to educate the consumer on the value of the independent lab products, and show them that we produce some of the best lens products in the business.

Second, the co-managed care system used by many vision benefits companies prevents many labs from even competing for much of the lens production business. Because vision benefits companies are effectively forcing their insureds to purchase lenses from labs owned by those same vision benefits companies, competition is being removed from the industry, resulting in many labs going out of business.
—Peter Kimerling, national sales director, Identity Optical

“Health care and unstable business environments created by government agencies that regulate the health care market.”
—Barney Dougher, CEO, Hoya Vision Care

What are the most significant growth opportunities for labs?

“Multiple pairs due to stronger awareness of eyeglasses to the public as the market ages and develops due to functional eye awareness opportunities. These include products such as blue light, polarized and near activity lenses.”
—Barney Dougher

“The best growth opportunity is, and has been for the past few years, free-form. This can greatly reduce the cost of goods and inventory cash requirements for a lab. Thus, it becomes much easier to produce a better product at a lower cost with quicker turn-around.”
—Bill Heffner

“The opportunity for an independent lab is to differentiate yourself from the ‘me too’ pack. That means providing ECPs with the fastest turnaround, endless choices and flexibility, and be extremely easy to work with. You’ve got to go the extra step...I pick up the phone daily and work with ECPs to resolve their challenges.”
—Ralph Cotran

“Providing excellent customer service and lower price points. If you can provide a small lab feel and personalization with competitive pricing you will grow your business. As the larger corporate labs are looking for offshore sources to produce the products at lower price points the independent lab needs to focus on cost cutting and customer service.”
—Mike Tamerius

“Offering unparallelled customer service presents the best opportunity for new business acquisition. We consider our accounts not as customers, but as partners, where we have a symbiotic relationship dependent upon mutual success.”
—Peter Kimerling

Over the past 12 months, what steps has your lab taken to remain competitive?

“We have continued to invest in more automation and process controls. The digital lens process gives the lab a great opportunity to streamline production and control the quality of the end product. We have focused on cutting costs from our production which in turn has allowed us to remain competitive in pricing.”
—Mike Tamerius

“We’ve invested $24 million to build the first fully automated complete free-form lab in the country.
—Barney Dougher

“We utilize the best digital lens production and finishing equipment, and have cultivated a close relationship with Carl Zeiss Vision in order to establish specialized products, such as our blue Titanium AR coating. But the best investment we have made is in our people. We take active steps to develop our employees, and provide them with a foundational understanding of optics and optical production.”
—Peter Kimerling

“We have added more space including an additional 6000 square feet in a building next door. We have looked for niche optical products. We purchased a third MEI edger and a sixth free-form generator. We added a robotic deblocker and a robotic taper, and have ordered an additional free-form marking machine. And our staff is up to 130 people, which really helps our turnaround time.”
—Ralph Cotran

“Partnering with other labs. As the cost of equipment gets prohibitive, it’s difficult for smaller labs to be able to expand their infrastructure. This is where it can be beneficial for them to partner with larger labs that have the capital resources to keep up to date. We are able to brand free-form lenses to their specifications, making it possible for them to have their own private label lens with no equipment costs.”
—Bill Heffner