Family Business Challenge II

In the May 2009 issue of GAWDA Edge, we asked two generations from five different GAWDA-member companies what advice they would give to peers about working with family in a family-owned business. This month, we posed a business problem to our family teams to see if there were differences between how these Young Executives and their top-level parents would resolve it. Here is what they said. 

A customer tells you that business is slow and he needs a price decrease. 

Ken Linnenbringer, President, & Todd Linnenbringer, Vice President
Delta Gases (Maryland Heights, MO)

Family  Challenge: Delta Gases

Todd: I would go back and look at the numbers; maybe give a 10% discount if we had enough mark-up in the product. I would work with him however I could; there’s no doubt about that. That’s our philosophy around here. We will work with anybody.

Ken: I take every customer individually, and if he’s good pay, and everything’s positive, I’ll work with him. If he’s slow pay, I’ll put the brakes on a little bit and say, “Listen, we have to keep the rates at what they are because the economy is slow for us, too.”  

Amar Kapur, President and CEO, & Jay Kapur, General Manager
AIM Welding Supply (Auburn, MA)

Family Challenge:  AIM Welding Supply

Jay: I don’t feel giving a unilateral price decrease without some kind of commitment by the customer is warranted. It’s more important to have a long-term business model than short-term profitability. We offer volume rebates if certain levels of business are met. Total volume may be less because he’s slow, but the rebate option is still there.

Amar: We let the customer know we are bound by what our suppliers give us as a pricing structure and we have a certain mark-up. We can improve in service or in other ways, or find solutions that will reduce his cost—not in a price reduction, but in process improvement or perhaps substituting a lower-priced product. 

Marvin Lampton, Chairman and CEO, & Doug Lampton, Vice President
Lampton Welding Supply Company (Wichita, KS)

Family  Challenge: Lampton Welding Supply

Doug: We’d offer to look at his whole operation to see if there was somewhere we could help him save in total costs versus bottom-line dollars, and not just try and reduce the costs of our products.

Marvin: We experience this all the time. Usually we sit down with the customer and explain the value-added services we provide and that the price is fair for the value the customer receives. We seldom yield on that particular topic. 

Robert Garner, President, & Tracey Akers, Human Resources Director
Oz-Arc/Gas Equipment & Supply (Cape Girardeau, MO)

Family  Challenge: Ozarc Gas

Tracey: If we have a strong relationship with him, we’ll likely try and work with him. But sometimes it’s not about pricing or the cheapest rate. Quality of service also makes up part of the big picture in sales.

Robert: It depends on his volume and the margins you already have with that customer. If it’s a small machine shop, our price structure is such that it’s not practical to offer a price reduction. With somebody bigger, we look at the product mix, and if there’s an area where we can adjust the price, we will certainly try and do so.

Bob Thornton Jr., President, & Andrew Thornton, Branch Manager
South Jersey Welding Supply (Vineland, NJ)

Family  Challenge: South Jersey Welding Supply Andrew: I would point out the good points of all the service we provide. I’d explain that business is slow for us as well and try and work with the customer to hold his pricing where it is. Maybe I could work with him on payment terms, but I would try to avoid lowering price.

Robert: It would depend on the size and profitability of the account. Bigger customers can be a lot more demanding, and in that case you might try and do something for him. There are other cases where you would come back and say this is the sales and service we offer you and there’s a lot more than just the price involved.

Gases and Welding Distributors Association