Distributors Offer 10 Ways To Beat The Business Slump

It seems that things got really bad in a hurry for American business, including the gases and welding industry. Economists, though, point to December 2007 as the beginning of this current downturn, and here we are, 24 months later. Battle weary. Eager for it to end. Ready to move on. Wiser. Much wiser.

Readers who grew up during the cold war will remember watching television or listening to the radio when the program was interrupted by the words: “This is a test. This station is conducting a test of the Emergency Broadcast System.” A high-pitched siren would sound for a few seconds. Fortunately, we never heard the announcer come on and say, “This is not a test.”

As we come to the end of a year described as one of the worst economically since World War II, and the end of a decade full of challenges, it's become clear that this is NOT a test. In a not-too-distant future, if our projections are correct and our risks are right, we'll be looking back and talking about the lessons we learned. The following pages contain a preview of those lessons, and the strategies taken to get that knowledge.

This is definitely not a test. We've been here before. We're good at this. And we will get through it.

1. EXPAND YOUR MARKETS
When all the low-hanging fruit is taken, there's only one thing to do...move forward. Distributors are branching into new geographic areas and taking on new lines, often unrelated to their gases and welding business.

Gary Kennedy Chairman and CEO Red Ball Oxygen (Shreveport, LA)

“Acquisitions made in the past year-and-a-half put us into new markets, and we'll be focusing heavily on the Dallas/Fort Worth Metroplex. We're putting in a new central fill plant in the Metroplex, as well as looking at a major investment in real estate and pumps and tanks. We just finished a liquid hydrogen installation in Shreveport that will reduce our costs and increase our capabilities. Our number one challenge is to view everything through the customers' eyes and to remember to focus on their true needs—reducing costs and adding value. We're helping our customer partners build three power plants, and we are sitting on the largest natural gas deposit in the history of the United States. There is a lot of drilling going on and there are a lot of pipelines in the region. Our markets are doing fine.”

FORECAST: Up 12%
LESSON: Cash talks. Everything else walks.

Myles P. Dempsey Jr., President, Tech Air (Danbury, CT)

“As an ESOP, Tech Air's employees own half the company, and they understand what drives profitability. Currently there is a salary freeze, and the quarterly bonus program did not pay out until the 3rd Quarter because we didn't hit the numbers until then. It's time to get back on a growth track, and we're positioning ourselves to move forward. We're targeting some niche markets, i.e., cryo-biological, and will expand in the New York City area. We also look to expand our reach to markets in the upstate New York region.”

FORECAST: Same
LESSON: Get employees onboard and help them understand the nature of the current economy, the challenges and the economics of the business.

“About 90% of our business is specialty gas sales. Companies running plants using spec gas are not buying new instrumentation, and sales have been affected. So we are expanding into select markets and branching out beyond our normal distribution area. There are so many big companies buying from big companies, and the poor guy down the line using the product—the most important part of the quality equation—is often forgotten. When companies entrench in a survival mode, quality is pushed aside. We will not forget quality.”

FORECAST: Up. No number
LESSON: It's hard to get your head chopped off if you don't stick your neck out on fly-by-night business.

Bo Martin, CEO Middlesex Gases & Technologies(Everett, MA)

“We are fortunate in the Boston marketplace in that our focus has been the biotech and pharmaceutical industries, which have not been hit as hard as the manufacturing sector. We're converting a microbulk truck from nitrogen to argon in the 1st Quarter. The argon capability is new for us. We will expand geographically as we continue to look for acquisitions.”

FORECAST: Up 3-5%; 5-10% if it's a good year
LESSON: Always have a game plan for a worst case scenario.

“It's dead as a doornail here in the middle of oil and gas country, and while we're still showing a profit, growth is out the window until the economy turns around. I can't keep customers from going under, so I will be pursuing new business outside of Oklahoma. Sales in agricultural, hospital and medical gas markets are there, and we're waiting for oil and gas to come back.”

FORECAST: Same
LESSON: Button down and weather it.

Dave Ungru, President, Koehler Welding Supply (Madison, IN)

“We're a single source supplier, selling everything from toilet paper to robots. We're dabbling in the dry ice business, but I'm not convinced it's going to work out because of the time element. We hired an additional salesperson to work a different area. He has opened nine new accounts in three months.”

FORECAST: Up 10-15%  
LESSON: You can do more with less.

“Since the economy started going down, we added two salespeople to expand our reach in current markets and beyond. I think it will be two years before we get back to the numbers of 2008."

FORECAST: Slight increase
LESSON: I learned a lesson, but don't want to share it.

2. FOCUS ON TRAINING
Training employees and customers is a productive method for filling up slow periods. Educated employees know the products better and how to sell and service customers more effectively. Educated customers know you have their best interests in mind.

Patrick Wilke, President, Sierra Welding Supply (Sparks, NV)

“One of the best things we can do now is improve the existing skills of employees. Due to attrition, our team is down by three, and all employees have been cross-trained to do multiple jobs. Last year we lost some of our biggest customers because of a move toward national accounts,
but on the other hand, we've gotten business from people who dislike the lack of service from larger companies. It takes a lot of energy and time to grow a business, and I am looking for a new niche that will help maintain sales on an even keel.”

FORECAST: No change
LESSON: We became lax because things were going so well, then realized we should have streamlined the company a long time ago.

“Despite the fact that markets are shrinking in Florida, we recently opened a new branch. It's a small shop, but it's forced us to really concentrate on customer service and training. Employees are being trained to be problem solvers, full-service providers. Everyone is getting the whole gambit of training: equipment, gases, consumables—just like I did to build the business. Training has become so important that we're also adding a new service for customers. We're connecting with local community colleges to help train the instructors who are learning how to teach at trade schools. We do some training, and we help them establish their class syllabi and formats. These instructors work in the area, and their students will eventually work in the area. We're establishing a new source of customers.”

FORECAST: No change
LESSON: To get the most productivity from employees, lead by example.

Brent Laing, Owner Industrial Source (Eugene, OR)

“I've enrolled younger employees in sales training classes, some in Carnegie, some in Sandler Sales, and I'm eager to see which is better. In 2009, I had to reduce staff by 10%, and now the challenge is to keep up with the workload with fewer people. I'm working on incentive programs to reward those who perform well under adversity, now that I have five guys doing the work that used to be done by seven or eight. In October, we broke ground on a new fill plant and store in Portland, which I hope will be up and running by midyear. I'm optimistic and would like to bring on one or two production people once the plant is running. We are also growing our medical gas business and focusing on gas sales.”

FORECAST: Up less than 5%
LESSON: We need to do a better job of analyzing a request about the need for another employee and ask how that employee will generate profit for the company, directly or indirectly.

1. Accounts receivables/cash flow 2. Increasing sales 3. National accounts 4. Improving efficiencies 5. Competitive price cuts 6. Government regulations 7. Feeling powerless 8. Keeping employees motivated 9. Management issues 10. Staying lean Source: 2010 Business Forecast, Welding & Gases Today

Amber Chisamore Vice President, Four Corners Welding & Gas Supply (Gallup, NM)

“Everyone's hungry. Competition is really fierce and getting more fierce. We are helping our employees be the best they can be, teaching them how to deal with the competition. Sales training and market awareness training will be in full force.”

FORECAST: Up 5%
LESSON: Don't be too optimistic. Pay attention to the experts

3. PURCHASE MORE INVENTORY
After customers postponed purchases for the better part of a year, distributors with available inventory when the tide turns may have a leg up.

Vern Lewis, President Vern Lewis Welding Supply (Phoenix, AZ)

“Anyone buying is looking for a big discount, and new equipment is not selling. We're buying up equipment from bankrupt companies and reselling this used equipment. There is a good market for it. In 2009, we cut inventory and will continue to stock only what we need. We have our eyes open for products that are out of the ordinary.”

FORECAST: Flat
LESSON: Seeing where employees are not taking as good care of customers as we thought we trained them to shows up in a slow economy, because customers have time to complain.

“Businesses do strange things in a recession, like slash their inventories. When someone walks into our store to find what he is looking for, because he can't find it at the store he used to buy it from, we have to believe that sometimes it really is best not to change anything. We are improving internal communications and are investing $40,000 in computer software and PCs. We're asking our salespeople to get out there more and do what it takes to get it done.”

FORECAST: Up 5%
LESSON: A recession is a terrible thing to waste.

Jim Cusick Jr. President, Industrial Welding Supply (Sayreville, NJ)

“We take care of small to medium-sized customers who like dealing with people who know what they're talking about. We upgraded our rental equipment, and we're improving our cylinder situation. We will be replacing five trucks, adding inventory and expanding the repair and rental business.”

FORECAST: Up 8%
LESSON: Don't be afraid to collect your money.

“We stock what customers regularly need. We order and quickly get what we don't have in stock, along with special orders. Service is still very important, and knowledge is equally important.”

FORECAST: Up
LESSON: Pay attention to everything. Watch inventory.

4. PUMP UP SALES TACTICS
It's more than knocking on a few more doors. It's about selling smartly and aggressively. It's about finding customers where none existed. It's about revising strategies. Distributors are pulling out all the stops to make sales in 2010.

Steve Christoph President, Superior Welding Supply Co. (Waterloo, IA)

“Salespeople are getting out to knock on more doors and see people. We will replace sales and service employees who were lost due to retirement. We will offer new technology and new welding equipment. Our plans for a new spec gas addition are delayed until 2011.”

FORECAST: Up 2%
LESSON: Get out and knock on doors.

Marvin E. Rodgers III, President Alliance Welding Supplies (San Jose, CA)

“Ten small customers, instead of one large customer, is our target. Our sales guys are going out and making cold calls, focused on calling on the companies that are not the 'glory companies.' Our total customer base has increased, adding about 100 customers, even as our sales have slipped. So as those small customers get a little bit healthier themselves, we anticipate they will pull our overall sales up.

With 20,000 cylinders in our fleet, we would like to add two salespeople and two delivery drivers. A challenge is finding the young guys to replace our aging sales force. There are not many independent distributors in our region, and the experienced salespeople coming from the majors are not getting developed in the same way the independents used to develop people. So we are training in-house to make sure new hires have the right stuff.”

FORECAST: Up 12%
LESSON: Don't hunker down. Be aggressive and control your own destiny

Scott Griskavich President, Badger Welding Supplies (Madison, WI)

“We're targeting new customers and expanding our efforts in R&D, gases and food processing. We'll purchase three or four new trucks to replace our aging truck fleet.”

FORECAST: Flat
LESSON: Don't assume the good times will last forever. Be prepared.

David G. Houser President, Houser Welding Supply Company (Somerville, NJ)

”We are more aggressively pursuing sales and putting more emphasis on faster responses to our customers and on excellent customer service.”

FORECAST: Same as '09
LESSON: Run a tight ship.

5. IMPROVE INTERNAL PROCESSES AND PROCEDURES
A streamlined and efficient distributorship is one that can respond most quickly to end-user needs, a critical skill as business will begin to come back throughout 2010.

“A slowdown is a good time to re-examine the day-to-day operations to make sure we're as efficient as possible, not “accidentally” doing things right, but making sure things are being done correctly and with a purpose. We'll keep hammering away at efficiencies, including making sure we're stocking the right products, not over-stocking, not under-stocking so we're making extra deliveries. We're also working with vendors to maximize purchasing efficiencies. Instead of purchasing once every three days from a vendor, perhaps we can do it once a week to cut down the cycle time on how many POs we cut and how many times we have to do receiving.”

FORECAST: Up 5-8%
LESSON: Never take your prosperity for granted.

David Melo President, Melo's Gas & Gear (Bakersfield, CA)

"We’ve seen 20% increases every year since our
founding 10 years ago. 2009 was the first year we were down and the first year we really had to look hard at how
we were doing things. We are working on our processes to make sure we are running efficiently, especially our pumping and routing. A challenge we are facing in California is the number of restrictions placed on delivery vehicles. It seems that inspection fees and fines have become a source of revenue for the state, and without experience, many of the new inspectors hired by the government are nitpicking.”

FORECAST: Flat
LESSON: Stay lean, mean and efficient.

1. It is possible to do more work with fewer employees. 2. Keep a close eye on the cash. 3. Be lean, mean and efficient. 4. Scrutinize every dollar spent. 5. Go the extra mile for the customer. 6. Some overtime can be eliminated. 7. Don't allow your company to get fat. 8. Don't wait to collect payment. 9 .Manage all assets better. 10. When business turns south, react quickly. Source: 2010 Business Forecast, Welding & Gases Today

Brad Peterson President Mississippi Welders Supply (Winona, MN)

“We're making our IT system more efficient, faster and better. We continue to invest in trucks, cylinders and tanks, but the most important investment we will make is in our people—in their pay and benefits, in training and caring for them. We have to speak up about how things really are in our businesses, so that government hears us and takes notice.”

FORECAST: Up 2%
LESSON: Sometimes a customer doesn't go forward with a proposal not because it's a bad idea or our competition has a better idea; they just might be stretched too thin.

Brian Weber, Vice President, Island Supply Welding Co. (Grand Island, NE)

“In 2009 we were a little lax on the cost centers. A branch may have been labor heavy, but we hung with it because we thought things would turn around. Now I act more quickly to fix those kinds of situations, and I'm examining things we can do better within the organization to reduce costs. For instance, I'm not a big fan of the post office with its rates continually going up. There has to be a more cost-saving way to get invoices into customers' hands. That includes not only the cost of postage, but the labor to stuff the envelopes. My goal is to find that way, as well as other things we can do better.”

FORECAST: Up 4%
LESSON: Act quickly when something needs fixing.

“We're mapping every customer's location in order to reduce the number of miles driven. Routing software will determine the best route to drive the fewest miles, thus saving on fuel. We're working smarter and harder, putting in longer hours, extending terms and rolling back price increases. Hopefully they'll be loyal to us in return. We are looking more closely at customer's stability, and we're scrutinizing new customers very carefully to make sure they're not switching because they owe a competitor money and can't pay. We also let employees know what the health of the business is. By keeping them informed, they are more agreeable to belt tightening.”

FORECAST: Same
LESSON: We let some customers get behind more than they should have. I've learned to pay close attention to accounts receivables.

Bo Shaw Jr. President, Shaw Oxygen Company (Monroe, LA)

“The national account program is a challenge. A local account gets a note from its national purchasing department that they now have a contract with a major distributor. So I lose them. In some cases, my prices are lower than the national pricing, but it's out of the local purchasing agent's authority. So we are operating as lean as we can, but still keeping enough resources to efficiently serve customers. I've joined a buyers' group, and I'm purchasing from suppliers as cheaply as possible. I want early payment discounts. We respond to any and all demands the customer has, even if it entails things we don't currently serve that customer.”

FORECAST: Level to down 5-10%
LESSON: Join a buying group for extra discounts you wouldn't get by yourself.

6. MAKE IT EASY FOR CUSTOMERS TO FIND YOU
Customers may not be buying now, but they will spend money again. Distributors are working to remain in their field of vision, and many are choosing to increase marketing budgets with increased print and online advertising efforts.

Pete Matarese President, Liberty Supply (Leominster, MA)

“As we explore a possible branch to the west and north, we are advertising in those areas and monitoring the results. The smaller customer usually needs the service that an independent can provide and they are seeking us out. That smaller company is also more likely to pay bills more promptly than a larger corporation. We are planning on capital equipment investments of $100,000. We plan to fill more of our own product, and we will also purchase some new vehicles.”

FORECAST: Up 10-15%
LESSON: Don't take your business for granted. It's easy to lose a customer if he feels that he can get a better price elsewhere when there is no close relationship.

Pat Garten President, Sutton-Garten Company (Indianapolis, IN)

“As larger competitors cut back their number of employees, we've stayed closer to our customers in order
to secure the bond when things turn around. We are providing them with more service to further our relationship with them. We expanded training classes and now offer more welding classes. We have also quadrupled our capacity for producing dry ice, installed a propane pumping system and are expanding bulk CO2 delivery. A technology upgrade will allow us to e-mail invoices, thereby saving on postage and paper costs.”

FORECAST: Up 10%
LESSON: It's important to have good people.

Darren Bradley President, Spectrum Gas Products (Costa Mesa, CA)

“Until recently, all of our business was based on word-of-mouth advertising. We've had success with direct mail. We started shipping cylinders overseas and are offering custom medical gas installations on ambulances and military projects. While our medical customers like the pricing that a larger competitor can offer, they are not happy when calling in to a call center. We hope to move our facility from three units in an industrial complex to one free-standing building with a large yard. We'll explore that option in the future when commercial real estate prices drop.”

FORECAST: 15% increase
LESSON: Invest back into the business so that when things are slow, you will be OK.

7. OFFER NEW PRODUCTS AND SERVICES
If customers aren't buying what you're selling, try selling them something else! It's not that simple, of course, but diversification is a popular strategy in this environment. Drop-offs in one line can be offset by sales in another and help boost the bottom line.

Dave Teator President, Ravena Welding Supply (Ravena, NY)

“I'm always looking for new products. I think the clothing line will be big. There are some really neat garments now available with interesting colors, graphics and logos. I'm working on developing an online store where the customer can virtually walk up aisle after aisle and see the displays. Don't be afraid to backorder product. If a customer needs it today, use overnight air. If a customer wants it drop shipped to their house, drop ship it. If they want it on the back dock after hours, put it back there. Go the extra mile. It's not necessary to put the whole line in the store, but make sure the customer knows you can get what he needs.”

FORECAST: Level
LESSON: Stay committed and don't be afraid to be flexible.

1. Cut overtime. 2. Route trucks to save fuel. 3. Do more with less. 4. Slash inventory. 5. Collect receivables. 6. Join a buying group. 7. Reduce staff. 8. Negotiate better prices from suppliers. 9. Be efficient. 10. Scrutinize every dollar spent.

Tommy Hagan President, Logan Hagan Welding Supply (Statesboro, GA)

“Flexibility is very important. I purchased some trucks that did the required job very well. When the market changed, the dynamics of how we're selling, who we're selling to, and how we're making deliveries changed. I will bring on new products outside of the gases and welding umbrella. Here in the Southeast there is a lot of sunshine, and sooner or later we're going to capitalize on solar energy. I'm looking into alternative energy generation. Thin film production for photo-electric generation is starting to take place. We have a showroom to display the panels and we have enough knowledge of how they work, so when the product's available, we can move in that direction. We are working hard on training employees in new technologies. Sooner or later, that training will pay dividends. Every employee is a salesperson, and each of us is multitasking.”

FORECAST: Up 20%
LESSON: Be flexible.

Curtis Towne President & CEO Depke Welding Supplies (Danville, IL)

“We want more breadth in what we bring to the marketplace, so we're picking up some new products in the safety and janitorial lines. We're giving a big push to propane. Internal improvements will add efficiencies, from filling cylinders to streamlining invoicing. I'm trying to keep employees' heads in the game. It's tough to keep people motivated, focused and ontask. I also make sure I'm not allowing all the negative things that are happening in the economy to affect how I'm coming across to employees and customers.”

FORECAST: Up 10%
LESSON: Be careful and conservative and pay attention to what the economists are forecasting.

Gene Lynch II President, Lynox Welding Supply (Presque Isle, ME)

“Regulations from the Environmental Protection Agency and the Department of Environmental Protection are forcing customers to clean up their water. Growth will come from the sale of pressure washers, water recyclers, environmental cleaning products. We've taken on a line of radiant heaters that we'll sell to the same customers as welding and cleaning supplies.”

FORECAST: Up to 5%
LESSON: Don't allow yourself to get fat.

“2009 numbers were down about 18% because of the situation in the oil fields, and I'd like to see our sales up 25-30%. To make those numbers, we're adding product lines, things like hand tools, safety supplies and accessory lines. There's a challenge, though, in adding products while trying to stay lean.”

FORECAST: Up 25-30%
LESSON: Tighten your buckles and hold on.

Rosendo Gonzalez President, Hereford Welding Supply (Hereford, TX)

“We're always adding new products from small lines like hand cleaner, etc. We had two home-run years back to back because of two ethanol plants being built in the area. There were 400 welders in town at one time, and that's not very common for this area. This helped us develop a good cushion, and we stay-ed very lean in our spending.”

FORECAST: Same
LESSON: Operate lean.

MAPI’s 10 Indicators to Watch 1. Manufacturing production growth is expected to decline 11.3% in 2009 before rebounding to 4.6% growth in 2010 and 6% growth in 2011. 2. Production in non-high-tech industries is expected to decline by 11.3% in 2009 before increasing by 2.3% in 2010 and by 5% in 2011. 3. High-tech industrial production is expected to rebound to 15.9% growth in 2010 and by a healthy 17.5% growth in 2011. 4. Industrial equipment expenditures will decline by a severe 22.7% in 2009 and rebound by 3.5% in 2010, before a significant turnaround of 22.6% growth in 2011.  5. The expenditure category for inflation-adjusted investment in equipment and software will decrease by 17.2% in 2009, before experiencing 9.1% growth in 2010 and 15.2% growth in 2011.  6. Inflation-adjusted expenditures for information processing equipment are expected to fall by 6.5% in 2009 before rising by 6.9% in 2010 and by 7.8% in 2011. 7. There will be little change in the employment outlook. Unemployment will average 9.2% in 2009, 10% in 2010 and 9.1% in 2011. 8. Spending on non-residential structures is expected to retrench over the next two years, declining by 18.3% in 2009 and by an additional 16% in 2010, before seeing growth of 1.1% in 2011.  9. Imports are expected to decline by 14.5% in 2009, to increase by 8.3% in 2010 and to further increase by 6.3% in 2011. 10. The price per barrel of imported crude oil is expected to average $59.10 in 2009 before heading upward to $69.80 per barrel in 2010, and to $73.50 per barrel in 2011. While high by historical standards, this still compares favorably to the average $92.30 price per barrel in 2008.   This information was excerpted from the Quarterly Economic Forecast of The Machinery and Allied Products Institute (MAPI), which can be found on the Web at www.mapi.net. You can find a more detailed summary at www.WeldingandGasesToday.org.

Christine Scherrer President, Superior Welding Supply Inc., New Jersey (Pennsauken, NJ)

“In addition to focusing on equipment resale, we have some new items to offer customers while we're waiting for the economy to turn. I don't believe it's anything we have any control over. When everybody else starts picking up, we'll follow. It's going to come down to the stimulus money and people's confidence.”

FORECAST: Up 20%
LESSON: Be patient.

Jim Wooldridge Owner, Pacific CA Systems (Yakima, WA)

“Looking back, it's a hard thing to say that we turned down work when the economy was good. In retrospect, this is an area I would manage more closely. I'd also lease trucks instead of buying them. For example, I have some semis I'd like to sell, but right now no one is buying semis, so I'm paying on an asset that is not producing income. It's hard being a business owner and having the economy dictate what you can and can't do. We're adding a machine for removing CO2 from the apple shed that we'll market to the ag business.”

FORECAST: Level
LESSON: Manage growth better.

8. GET THE RIGHT PEOPLE IN THE RIGHT SEATS
Employees are the engine of your business. They have a big part to play in its success, and in its failure. They are your biggest and best investment.

Bill Visintainer President, Atlas Welding Supply Co. (Tuscaloosa, AL)

“We harvested the low-hanging fruit in our existing market and will pursue expansion into a contiguous geographical market. Our area of focus for our existing goegraphy will be medical and specialty gases. We added people with the right work ethic, values and core intelligence to be able to understand and be effective in the medical and spec gas markets. We'll continue to put new challenges out there, raise the bar and make sure everyone understands what the expectations are. This is a growth business and we need to pursue our strategies and objectives. It really doesn't matter what other people are doing as long as we are executing a plan.”

FORECAST: Up 15%
LESSON: To support our growth in '08 and '09, we spent significant capital for assets that require five to seven years mobilization to get our required return. To feel comfortable with the capital spending, we had to get proficient in signing long-term contracts with our customers.

“When profits are down, it's necessary to make changes to keep costs in line with profits. I reduced staff in 2009 and may have to do it again. We're in a hunker-down-and-survive mode, working hard to do what needs to be done to get the team headed in the right direction.”

FORECAST: Level
LESSON: When profits are down, make changes to keep costs in line.

Ron Adkins President, Valley Welders Supply (Billings, MT)

“I make sure employees understand their part in the company, as we get through this downturn. Sales positions will be added as we take advantage of marketing plans being proposed by our equipment suppliers. An investment of $2 million will result in new facilities at four locations, and upgrades of several stores.”

FORECAST: Up
LESSON: Look at operations more regularly, and make sure to validate and justify everything.

“Our strongest markets, those representing the shipbuilding industry, are down. Despite the slow economy, however, we continue to invest in the future. A new store is under construction in southwestern Virginia. We've expanded our main gas filling facility in Chester, to include a specialty gas filling and analyzing laboratory. This latter action, along with the addition of a specialty gas sales representative, will allow us greater independence and a more competitive stance in the spec gas market. Through the course of 2009, we have expanded and renovated several of our showrooms, repaired buildings and built a sizeable propane filling/storage facility at our Richmond store. In order to keep our workforce intact and productive, we have had several re-assignments, while not hiring new faces. We will continue to be alert for opportunities, continue to train our employees and seek more diversity in our customer base.”

FORECAST: Same
LESSON: Control with technology and the information at your fingertips. Scrutinize all spending.

9. LEAD WITH A STRONG BATTLE PLAN
Working the numbers, motivating employees, making the hard decisions. Leadership never rests, never takes a step back, and always is ready to make the right move.

Mike DeDomenico Chairman and CEO, NUCO2 (Stuart, FL)

“Our primary product is bulk CO2 for the fountain business, and we've been very fortunate to have a non-cyclical customer base of national chains. People are spending less money on food right now, but that hasn't hurt us. In some ways, it's helped, because folks are shifting to more economical ways to eat. We've been expanding our draft beer offering through the supply of nitrogen generators, which we couple up with CO2 to create an onsite beer mix. Our focus on productivity is a competitive strength. We're using new routing technology and introducing an enterprise resource planning system. It's not just day-to-day productivity, it's technology and process-driven technology. We are paying close attention to service and to talent.”

FORECAST: Up 10%+
LESSON: You can't sit back for a moment and allow yourself to think you have your costs managed in an acceptable fashion. You can always improve from the standpoint of productivity.

“A salesperson was added to provide more sales support, but our main emphasis is on not making any mistakes. When business was good, we were more likely to replace equipment that did not need immediate replacement.”

Kevin McEniry, CEO Nexair (Memphis, TN)

“We continue to look at acquisitions and are examining capital equipment investments that will increase our efficiencies and productivity. For example, we purchased a high-speed fill system for high pressure cylinders, a liquid platform and a liquid hydrogen system. We are also focusing on employee development. I don't think that we should rely on our existing customers' recovery to drive our revenue. This is not the time to hunker down. Management must be transparent and that means that there are times when we need to explain the realities of current economic conditions. We did a lot of hard work on employee reduction. Our total employee count is down by 20%. A substantial number of employees were offered early retirement packages; others were pure layoffs.”

FORECAST: Slightly better
LESSON: During a strong economy, prepare for an eventual downturn by investing in employees and in the company. As business softens, react quickly.

1. Knock on more doors. 2. Expand markets. 3. Diversify products. 4. Add sales staff. 5. Open a new location. 6. Collect receivables. 7. Burn the midnight oil. 8. Stay close to the customer. 9. Be aggressive and in control. 10. Get serious about advertising.

“We will be aggressive in the field and seek out new sales opportunities, all while keeping a watchful eye on the bottom line. As receivables softened, we've had to watch our cash flow.”

FORECAST: Up 5%
LESSON: Make sure your management practices are the best you can do.

“There is no magic wand to make things better. We just have to be smart. The key is to not overspend or make plans that we cannot maintain. We are watching every dollar and beating the bushes until things start picking up.”

FORECAST: Same
LESSON: Don't do anything stupid.

“We're doing more work with mid-sized companies. They are easier to work with and are paying invoices more quickly. We started cultivating dentists' and doctors' offices with medical oxygen, nitrous oxide and nitrogen. I will do a better job of checking the backing of a company. I was into whatever it takes to make the customer happy, and not so much about what makes the company run well. The customer's important, but there has to be a balance. I will focus more on the company and not just the customer.”

FORECAST: Level to slight increase.
LESSON: Be cautious and closely watch expenses.

10. SELL THE ADDED VALUE OF DISTRIBUTION
It's up to distributors to let customers know all that distributors can offer them. In doing so, it may prevent customers from going to other sources, such as online competitors and low-cost suppliers who offer nothing more. Each sale saved is a plus for the bottom line.

Charles Mundt President, Church Towne Gas & Welding Supply (Cochranton, PA)

“When the price of propane hit the floor in 2008, we had an opportunity to sell propane. Many of our competitors were holding the line on propane pricing. They didn't reduce the cost of propane for their customers, and we caught them standing. When the price is up, everybody is afraid to raise their price, and I guarantee that the boys at the gasoline station are not afraid to raise their price. But we in the welding supply business are afraid to lose customers. We're nervous that our customers will go shopping on us. And they do. So there is an advantage for the small distributor. The big boys are not going to lower their prices. They're going to keep raising them. I just follow their lead.”

FORECAST: Up 20-25%
LESSON: Surcharges are better than raising prices. I didn't want that to be true. But it is.

“There are always new developments in the use of medical gas and equipment in the home healthcare industry, and since your health doesn't take a recession, medical gases is one area that doesn't decline. With 25% of our business in medical gases, we're hoping to build a larger facility in 2011 that will hold a larger fill plant and showroom. I think small business has great opportunities during these times, better than some large corporations. We still do business on a personal basis, and customers don't go through multiple layers before finding someone with the authority to make a change.”

FORECAST: Up 10-15%
LESSON: If acquiring an account requires purchasing assets, which could cut to your cash flow, it may not be good business to take on.

John Gasque, Vice President-Sales Young Welding Supply (Sheffield, AL)

“We are constantly competing against businesses cutting prices to get customers. And sometimes we have to cut our own price just to maintain a customer. It's cut-throat, and loyalty is not what it used to be. Many people are looking for price and don't care about service. But we still care about it and strive to give the best possible service we can. Sometimes, it does make a difference.”

FORECAST: Same
LESSON: Write your politicians a letter. All of them. Every day.

Britt Wuest President, Bishop Welding Supply (Bishop, CA)

“It's business as usual. We provide the best customer service we can, and we are still having fun. Our customers are farmers and ranchers, and 40% of our sales are walk-in customers. I don't see any challenges on the horizon.”

FORECAST: Level
LESSON: Control your debt.

“We started to see an upswing in October as industry started to pick up again. I've noticed a lot of competitors looking for new business, and they're low-balling prices. We are counteracting this by out-working and out-servicing the competition.”

FORECAST: Up over 10%
LESSON: I can do away with much overtime.

Brian Dawes President, James C. Dawes Company (Martins Ferry, OH)

“For the first five months of 2009, we were heading in the same direction as everyone else was as far as decreasing sales. Then a competitor was acquired by another company, and a lot of their customers started calling and walking in our door. The year turned out to be a record one. We put in a propane pumping facility, purchased cylinders, enlarged our delivery area and in 2010 will double the size of our 5,000-sq.-ft. facility. We're looking at getting into 20 lb. gas grill propane. People used to tell me that being in business for yourself is a lot of fun, but I never saw it that way, until now, and depending on how hard I work and how mad our competitors make their customers, our sales are going to be up another 10-15%.”

FORECAST: Up 10-15%
LESSON: You can spend half of your waking hours worrying about what your competitors are doing. Just worry about what you're doing.

The down side of any downturn is the long hours, sleepless nights and endless budget adjustments to make less do more. The up side? The knowledge that one day it will be behind us—that we survived it and came out the other side leaner, meaner and wiser for the experience. It's all about strategy: assessing the realities, applying business knowhow and making the lessons of the “new normal” work for us.

The downturn will end, and GAWDA members will be more than ready when it does.