Welding Engineering Supply Company, Inc.

Sound family succession plan keeps company in charge along the Gulf.

When Jenny McCall became president of welding and industrial, medical and specialty gases distributorship Welding Engineering Supply Company (WESCO) in January 2004, she knew she had big shoes to fill. Her father, Ronald Pierce, had achieved many goals during his 49 years in the gases and welding business. The platform he laid down for his company, that customers must always Expect the Best, is carried out daily in WESCO’s commitment to “premium customer service.”

COMPANY SNAPSHOT
32a_wescologo Welding Engineering
Supply Company, Inc.
Chairman: Ronald C. Pierce, P.E.
President:
Jenny McCall
Founded:
1963
Headquarters: Prichard, Alabama
Store Locations: Pensacola, Florida
Theodore, Alabama
Brewton, Alabama
Moss Point, Mississippi
Employees: 90
2003 Sales: $16.5 million
Web site:
www.wescoweld.com

It was 1955 when the newly certified professional mechanical engineer from Purdue University began working at Lincoln Electric. Over the course of the next 11 years, Ron Pierce worked as a field engineer and sub-office manager, learning the welding business and earning certifications on many processes. In 1966 he bought into WESCO, then a three-year-old company owned by a former Lincoln colleague, Leo Veal. In a self-deprecating tone, Pierce says, “One reason I was brought on was that Leo wasn’t a certified engineer, and he didn’t want to change the name of the company!”

At the time, WESCO focused exclusively on welding and cutting equipment and consumables. The following year, it moved into the gas market, buying cylinders from Air Products, and selling mostly to existing customers. Today, the bulk of WESCO’s business still comes from welding equipment, supplies and service (80%), and a lesser portion from gases (20%).

Pierce’s philosophy is simple: “It all comes down to value-added service. We are driven to be a valuable partner to our customers.” Anyone can offer rock bottom prices on equipment and supplies, but customers learn that price is just a slice of what really matters. “Only about five percent of a welding dollar is in consumable materials,” he explains. “Most of it is in labor and overhead; so if we can show the customer how to really reduce their labor and overhead and be a true partner to them, it’s going to be far more meaningful to buy from us, even if we’re not at the lowest price.”

WESCO’s customers have certainly appreciated Ron Pierce’s approach over the last 41 years. Early on, the company focused on customers who served paper mills, chemical plants and building material companies. WESCO also supplied the Gulf Coast’s marine industry, at one time considered the “giant ship” building capital of the world, when Alabama and its neighboring states built the seas’ largest cargo and tanker ships.

In time, the giant ship business drifted overseas to cheaper production centers, and much of the company’s maintenance and repair business gave way to the development of ever cheaper replacement parts—but WESCO continued to thrive. Grounded in technical know-how, the company found new markets—construction supply houses and metal fabrication companies—and kept a hand in plant maintenance supply and the marine industry, including those customers who built and repaired boats, ships and barges.

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Wesco's 20,000 square foot fill plant was opened in October 2002.

Steeply grounded in advanced technical knowledge, WESCO maintains a complete library of code books, standards, guides, recommended practices and books related to welding and joining at its headquarters in Prichard, Alabama. It has long been the company’s practice to recommend the most cost-effective solutions for customers, while keeping personnel trained in the latest advancements within the industry.

Recently, WESCO added fresh expertise in Sales Manager Craig Jensen and is taking advantage of his extensive background in medical and specialty gases. While making up 20 percent of the company’s total sales, the gas business has increased enough in recent years to spur the construction of a $1.3 million, 20,000 square foot fill plant, which opened in October 2002.

A Model for the Industry
While Ron Pierce’s peers were going out of business in the 70’s, 80’s and 90’s (not a single distributor operating along the Alabama-Mississippi-Florida Gulf Coast in 1974, other than WESCO, remains under the same ownership today), the company was thriving. In 1974, Pierce bought out his partner and became a majority shareholder.

Over the last 12 years, the company doubled its annual sales to $16.5 million, opened four locations in Alabama, Florida and Mississippi, and grew from 60 to 90 employees. The current staff averages nine years with the company, and totals more than 800 man-years of industry experience. Emphasizing its commitment to workers, the company developed an Employee Stock Ownership Program, or ESOP, in 1999; today employees own approximately 19 percent of the company.

While building a highly successful business, Pierce has found time to give much back in the form of association leadership and volunteer work. He served as international president of the American Welding Society in 1997 and 1998, and has been chair of the AWS Foundation Board of Trustees for the last 11 years. He has also won numerous awards and been given many honors, including two to be presented at the AWS Welding Show this April: the AWS Counselor Lifetime Achievement Award, as well as the 2004 AWS William Irrgang Memorial Award, presented to the individual who has done the most to enhance the American Welding Society’s goal of advancing the science and technology of welding over the past five-year period.

With a slew of business triumphs and awards to choose from, just what is Ron Pierce’s proudest achievement during the past 49 years? Coupled with the company’s continued growth and long record of success, Pierce does not hesitate in pointing to his four children, who all work for the company—Regional Manager Jeff Pierce, 46, Director of Marketing Judy Miller, 44, Shipyard Specialist Greg Pierce, 40, and Jenny McCall, 34—and WESCO’s succession plan that saw daughter Jenny assume the presidency in January 2004. Her ascension marked the culmination of a carefully orchestrated five-year process, which highlights the importance of looking to the future while continuing to strive for immediate company goals.

It’s (Almost) Time for a Change

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The main store in Prichard, Alabama

In 1998, Ron Pierce began to consider putting together a plan to safeguard the future of WESCO. He had already formed a trust to provide for his four children; but more than that, he wanted to find the best solution for sustaining the company. While looking for information, Pierce came across succession consultants Gulf Pacific Management Consultants Inc. He interviewed the consultants over the phone, and invited company representatives to visit and make a presentation. This was no small decision—the entire consultation process would cost in the neighborhood of $40,000. The WESCO Executive Board—consisting of the four family members, plus two outside business people—was impressed with the consultants’ thoroughness and enthusiasm, and decided to proceed with the evaluation.

The succession consultants spent several days interviewing all four Pierce siblings, in addition to the company’s other key managers. Clearly, there were three options: train a family member to take over as president, have one of the other managers become president, or look outside the company for succession.

The odds of successful family succession are revealing. A 1997 study by Arthur Andersen/Mass Mutual showed that only one-third of family-owned businesses make it successfully to the next generation. At the same time, four out of five family-owned businesses report a serious interest in remaining a family-owned business.

Family succession often involves a new president who has no prior experience as a business leader. In truth, whether WESCO chose a family or non-family person as president, a comprehensive, gradual transition plan was in order. Customers would need time to gain confidence in the company’s future leader; and this leader would need time to create his or her own particular style within the structure of the company. In the Arthur Andersen/Mass Mutual study, 90 percent of the respondents expected management to stay within the family, though few had taken any steps to develop effective succession, estate or investment strategies. As the consultants would confirm, much work would need to be done in order to assure Pierce and his successors of a successful transition in leadership.

The Consultants Have Spoken
Gulf Pacific submitted a report to the WESCO management team just six weeks after completing its interviews. The 30-page report included a number of recommendations relating to personnel as well as other aspects of the business. And the recommendation for president? Human Resources Director Jenny McCall, Ron Pierce’s youngest daughter.

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Ron Pierce and daughter Jenny McCall took five years to go through the company's succession process.

The consultants’ decision came as a bit of a surprise to WESCO’s future president. “When they came in and recommended me to be president, that was the first time I really started looking into it,” McCall says today. After earning a B.S. in human resources and a brief stint outside the industry, McCall officially joined WESCO in 1992 as a purchasing agent. Despite the title of purchasing agent, she spent half her time working on human resources. As the company grew and personnel regulations became more complex, McCall shed the title of purchasing agent and became WESCO’s first HR director.

While she may not have known it at the time, McCall was preparing herself for a leadership role in the company. From early on, she attended GAWDA and AWS meetings, took various business courses and involved herself in programs through the Chamber of Commerce, Associated Builders and Contractors, and Associated General Contractors. She more recently joined Trend Leaders, a group of 25 independent welding distributors from various parts of the country, who meet regularly to share information impacting their companies.

Earning the recommendation of the consultants, and support from her siblings and father, as well as her “family” at work, McCall was promoted to executive vice president and chief operating officer. But really, her preparation to lead WESCO had only just begun. The consultants emphasized that for McCall to succeed, a number of steps were necessary, both for her and the company as a whole.

The first thing the consultants did after recommending McCall as WESCO’s next president was to make her wait five years. That was the amount of time suggested for the transition process. McCall was going to need three things to succeed: time, experience, and a clear transition framework.

One of the consultant’s recommendations was to form an Executive Committee, consisting of McCall in addition to WESCO’s chief financial officer, operations manager and sales manager; that is, all key company leaders. The team met regularly to focus on operational issues. These meetings enabled McCall to build a sense of what it would be like come January 1, 2004, when she stepped behind the president’s desk, minus one very important mentor.

Transition Forecast: Clear and Sunny
McCall’s participation in educational courses and industry conferences and seminars were a good start, but as she attests, “It’s the hands-on experience that was most valuable.” When asked if she has had any special training since being named incoming president, she affirms, “Every day!” Of course, much of that training has come from her father, who had to strike a balance between nurturing his daughter and keeping WESCO on its course of growth. Certainly there were difficulties along the way, partly due to differing philosophies between father and daughter. McCall states, “I’m a little more aggressive than he is, and I’m more willing to try something new. There were some situations where he gave me a little bit of rope, and we had some close calls.”

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Wesco delivers across Florida Panhandle's three states.

McCall has strong ideas for the future direction of the company. “We’ve really never been involved much in medical gases, and there’s an opportunity for us to grow that side of the business,” she explains. “We’re slowly moving toward the gases, as a whole, being maybe 30 percent of our sales (up from 20), and eventually we’d like to see it 50-50, but that’s going to take a little time.”

A new challenge has been the growing trend towards customers buying solely on price. “We are redirecting our sales force, because times have changed,” explains McCall. “It’s not the way it used to be, when salespeople would walk in and customers handed them a purchase order because of friendship.” WESCO now does more sales training than ever before, and has hired a new breed of salespeople over the last three years. “The new salespeople are younger, they’re energetic, they’re hungry,” McCall explains, “Our veterans realize that they must knock on customers’ doors and really sell WESCO, in terms of what WESCO can do for them, as opposed to what the product can do for them.”

Transition Time
WESCO is seeing the emergence of a strong leader. And that’s all the more reason to make succession a gradual, multi-year process. The succession consultants emphasized that with McCall’s different style and new ideas for growth, the staff needed an adjustment period prior to the changeover. The consultants evaluated every key employee, and administered multiple questionnaires regarding both personal and department goals. In addition to determining whether employees were positioned properly, the process helped “tighten the WESCO ship,” and the subsequent reports encouraged the company to draw a sharper focus on its core goals and structure. “They didn’t just come in and say who should run the place,” McCall explains. “They helped us focus on the goals of each department, and the company as a whole. They thoroughly evaluated who would be a good executive vice president, who would be a good operations manager or a good sales manager. ”

McCall also needed to cultivate relationships with a customer base developed over the company’s history. The gradual transition process allowed her the time needed to build her own strong customer relationships with the customers who maintained a connection to her father.

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Ron Pierce (center) has much to be proud of in his long career. His greatest pride stands alongside him at Welding Engineering Supply Company's head-quarters: (from left) Greg Pierce, Jenny McCall, Judy Miller and Jeff Pierce.

Finding Success in Succession
Family succession, though not always the easiest of processes, can carry many valuable rewards. A certain pride shines through when a salesperson presents a company brochure with his own last name on it, or when a driver delivers a cradle of cylinders to a customer his father hustled to obtain 40 years before.

The proper transfer of control to a child, sibling or relative—or to a new leader from outside the family—requires a carefully constructed succession plan, one best formed with the help of outside experts. While not inexpensive to undertake, a well-prepared plan can make all the difference to a company’s sustenance. By looking into the organization’s many corners, and playing all the angles involved in leadership succession, a distributor may find that with some effort and a touch of expert advice, the best can happen.

Today, WESCO’s president of three months, Jenny McCall, points to a 41-year history of deep commitment, pride and dedication to serving the needs of customers with advanced technical solutions. McCall, along with her sister Judy and brothers Jeff and Greg, learned early to Expect the Best from the man who exemplified it, their father. Serving now as chairman of the board, Ron Pierce confidently says, “There’s no limit on what we can accomplish. I believe we can create our own destiny.”

Big shoes to fill, you bet. Welding Engineering Supply Company enters its fourth decade of premium service to welding and industrial, medical and specialty gases customers with big dreams and highly qualified and skilled people to fill them. Continue to Expect the Best.

Gases and Welding Distributors Association