Fiscal Fitness

Distributors and suppliers offer tips to attack the down economy and become financially healthy.

The last several months have been unprecedented for many in the gases and welding industry, as sales revenues have dried up and cash flow has slowed to a trickle. Some of America’s largest companies have been bailed out by the federal government, and time will tell if those companies are able to recover. GAWDA members, on the other hand, aren’t waiting around for handouts. Below, several members—both distributors and suppliers—discuss the innovative and, in many cases, radical steps they’ve taken to remain competitive in this tough economic environment. The going has been tough, but GAWDA members are tough, too. Read on to learn how they’ve been able to stimulate sales.

Earlbeck Gets the Credit
“In January, we decided to become an AWS-accredited test facility. It was not on the schedule for this year, but we figured we should do it now while the government is dumping money into infrastructure. As a company, we historically have not been good at appealing to contractors; by taking this step, we can attract a new area of contractor customers.

Students can use Earlbeck Gases & Technologies' individual testing cells to earn credit toward certification. President Jim Earlbeck estimates they will add 10-15% to the company's testing business.
Students can use Earlbeck Gases & Technologies’ individual testing cells to earn credit toward certification. President Jim Earlbeck estimates they will add 10-15% to the company’s testing business.

“It has been a massive undertaking—we produced a 35-page quality control manual, met with an AWS auditor who’s making sure we’re doing the right things, and worked with the state of Maryland to get the word out that we are now able to provide this service. It has been very labor-intensive, and isn’t something we would typically do.

“We think this accreditation has the potential to increase our testing business by 10 percent to 15 percent. Also, it’s aimed at a higher-priced market, so our profit is higher on each transaction. So it’s very much a standalone profit center. Plus, we can mine the new acquaintances we make to help grow our core business. We can pass information on to the sales force and project managers and try to bring ourselves more gas and hardgoods business.”

Jim Earlbeck, President
Earlbeck Gases & Technologies
(Baltimore, MD)

 

A switch to computer-printed invoices rather than two-part, pre-printed ones has helped Corp Brothers President Whip Seaman greatly reduce postage and printing costs.
A switch to computer-printed invoices rather than two-part, pre-printed ones has helped Corp Brothers President Whip Seaman greatly reduce postage and printing costs.

Stamping Out Postage Costs at Corp Brothers
“We’ve always tried to stay computer-literate and in front of the curve technology-wise. We’re always looking at what we can do better, quicker and cheaper, which certainly is helpful for a small company like ours. For instance, we were already planning to put in a whole document imaging system that would allow us to e-mail or fax invoices rather than spending 44 cents to mail them. We accelerated that installation timetable to save us some money sooner. As a result, we’ve been able to scale back what we mail out. If people don’t need a statement, we don’t send it.

“We got rid of our pre-printed invoices. We pay scads of money for two-part paper and all that comes with it. Now, we print everything on white paper through the computer, using a system that can take the data and print the statements very quickly. Beyond the paper and ink savings, the goal has been to focus in on postage, which is going nowhere but up.

“Another example of how we use technology is our dry ice sales. More people want it in nuggets, which come in one sort of container. We need to put it into another kind of container to deliver it. We’re looking at some tools that will lift barrels very efficiently. It’s another thing that’s a small investment, but those little things add up.

“We put an additional salesperson on the road within the last year and a half, and that has started to bear some fruit. There are opportunities out there if you’re willing to put in the effort.”

Whip Seaman, President-Treasurer
Corp Brothers
(Providence, RI)

 

AWISCO Vice President of Operations Felim O'Malley (left) conducts a “customer needs” survey with a customer. Results were collected in person as well as by mail and e-mail.
AWISCO Vice President of Operations Felim O’Malley (left) conducts a “customer needs” survey with a customer. Results were collected in person as well as by mail and e-mail.

AWISCO Surveys the Field
“At AWISCO, we’ve looked at the downtime as a period to examine other opportunities for growth.

“We’ve always spent a lot of time and effort focusing on what our customers are looking for. But about four months ago, we distributed an improved customer survey—our “customer needs” survey—via handouts, mail and e-mail. Typically, we’ve asked customers to rate our performance, but this time we asked 20 questions about what makes a good distributor. We asked them questions like: Are there specific items that we don’t stock that they would like to purchase together, such as drills and drill bits? Is it time for us to stock nuts and bolts for our customers?

“We found that, in these times, customers are taking the time to reflect on their processes. For years, our salespeople have tried to help people change their ways to save them time and money, but customers often keep doing things the way they’ve always been done. Now, they’re willing to sit with our salespeople and make a plan.

“We’ve gotten a response rate about 30 percent higher than for our typical customer satisfaction survey, so it’s definitely been a success. The next step is to put all the responses together, analyze the results and determine what changes to make. Regardless of what we find, it’s been an eye-opener for us and is absolutely something we will continue to do in the future.”

Felim O’Malley, Vice President of Operations
AWISCO
(Maspeth, NY)

 

Executive Vice President Sandy Gobrish has searched high and low to eliminate inefficiencies in all aspects of business at Butler Gas Products.
Executive Vice President Sandy Gobrish has searched high and low to eliminate inefficiencies in all aspects of business at Butler Gas Products.
 

Eliminating Waste at Butler Gas
“Around the beginning of the year, we hired a Kaizen consultant to teach us the process of continuous improvement. He comes in two or three days each month—and will do so for 18 months—to train us. When he comes in, our executive vice president, Sandy Gobrish, basically shuts down her normal job and works with him full time to look at things and chart them. Sandy and the consultant become the ‘waste busters.’ We’re flow-charting all of our processes, quantifying the waste and measuring the improvement, so we can actually see ourselves get better.

“The first area to show improvement has been the order process, where we’ve streamlined the way we take an order. We’ve made it consistent and we now have a best practice that everyone in our company copies to eliminate all the wasteful steps and get the order perfect. Previously, we had specialized ways to take different types of orders. A welding order was taken differently than a specialty gas order, which was taken differently than an industrial gas order. Now we’ve streamlined the process.

“Every time we identify an area that can be improved, the consultant facilitates a meeting to help us create a new process. The idea is to learn how to take all the waste out of the company. We have started to re-examine everything we’re doing internally. In the first four months, we’ve already seen our expenses shrink, which is definitely exciting in these goofy times.”

Jack Butler, President
Butler Gas Products Company
(McKees Rocks, PA)

 

President Sheron Carter (l) and Technician Jim Hudson have seen an uptick in used equipment maintenance work at Independent Welder Repair.
President Sheron Carter (l) and Technician Jim Hudson have seen an uptick in used equipment maintenance work at Independent Welder Repair.

Independent Welder Repair Reduces Overhead
“We don’t sell gases; our core business is welding equipment repair. In down times, when people can’t buy new, they repair what they have. So that has been going well for us. When we get equipment in, we’re trying to see if we can upgrade the customer in any way. For instance, if they send in an engine drive, we’ll see if we can do the service work on the engine itself—things like oil and filter changes. We try to bill a nice invoice without gouging them.

“We’re also very focused on the back end and reducing overhead. When we’re fully staffed, we have seven people. Right now, we have two technicians and two salespeople working part time with reduced hours. We’re also closely monitoring our inventory and not buying items we don’t need. Our suppliers are doing a good job getting our parts to us quickly, so we’ve reduced inventories on fast-moving parts because the availability is good right now. With our overhead being less, we’re making more money.”

Sheron Carter, President
Independent Welder Repair
(Jacksonville, FL)

 

Keen Compressed Gas Company President Bryan Keen updated the company's Web site and provided employees with laptops and BlackBerrys to increase efficiency.
Keen Compressed Gas Company President Bryan Keen updated the company’s Web site and provided employees with laptops and BlackBerrys to increase efficiency.

Technology Is Key for Keen
“Keeping up with technology is a must. We are redesigning our Web site and providing employees with tools such as laptops and BlackBerrys. When customers make a request, if we can e-mail them something right away as opposed to having to call back to the office or mail them a credit application or a proposal, it’s a lot more professional and we’re trying to strike while the opportunity is hot.

“The Web site is something we’ve had to do. People are looking for information in different ways, and looking for it faster. It’s more of an instant gratification. If I want something now, I’ll be more inclined to use the supplier who can get the information this afternoon as opposed to the one who can get it in two days. I think a Web site is an instant representation of your company. If you don’t make a good first impression, then you’re fighting uphill.”

Bryan Keen, President
Keen Compressed Gas Company
(Wilmington, DE)

 

Operations Manager John Bone sells custom-made welding trucks to consumers as an additional revenue stream for Vern Lewis Welding Supply.
Operations Manager John Bone sells custom-made welding trucks to consumers as an additional revenue stream for Vern Lewis Welding Supply.

Vern Lewis Goes Outside the Box
“We have always specialized in used equipment. We currently have about 60 pieces of used equipment for sale; we also solicit used equipment. With the tight economy, people are asking for nice secondhand equipment, which is something that didn’t happen as much a year ago.

“We are also doing more business in Mexico. We have Spanish-speaking personnel who can work with a couple of exporters at the border, who then resell equipment south of the border. It’s a bit touch-and-go because the dollar-to-peso ratio fluctuates so rapidly, but the strategy is something out of the ordinary.

“On the product end, we’re buying more items out of our usual selection. In this tight economy, we’ll buy just about anything. We recently bought out a glass and shower door warehouse and liquidated the contents of the warehouse. We made a very generous return on our dollar. We’re also building welding trucks. We can buy nice vehicles at a fleet sale right now for very little money, because there’s a surplus of idle trucks. We buy the truck, mount the equipment on it and sell it as a package. We can customize it to a point, such as matching a diesel truck to a diesel welder, but it’s a standard package so far. We’ve sold four of those this year.”

John Bone, Operations Manager
Vern Lewis Welding Supply
(Phoenix, AZ)

 

Since hiring a Kaizen consultant to makeover its warehouse (before, above, and after, bottom), Cee Kay Supply has cleaned up its work space and increased warehouse productivity.
Since hiring a Kaizen consultant to makeover its warehouse (before, above, and after, bottom), Cee Kay Supply has cleaned up its work space and increased warehouse productivity.

Lean Is A-OK at Cee Kay
“We have turned our focus at Cee Kay Supply internally since 2009 began. The buzzword is Lean distribution. We’re evaluating all of our processes, and we’ve hired a consultant who’s helping us learn the Lean tools and 5S methodology to make ourselves a more efficient company. 5S is a Japanese technique focused on organizing the workplace. Roughly translated, 5S stands for sort, set in order, shine, standardize and sustain. To make ourselves more organized, we are redesigning our central warehouse with product flow as the number one priority.

“Another example is looking at the way we route our trucks for bulk delivery. Are we utilizing the most efficient routes to deliver product to the properly sized tanks when they are at their optimal fill level? We look at a couple of things to help us do this. How often are we hitting the tanks? Do we have the correct sizing? Are we hitting them before they are at their 30 percent fill level? If so, why? Do we have customers without telemetry? Why? These types of questions are the basis of our initiatives.

“If we achieve all our goals, we expect a 30 percent reduction in our bulk deliveries based on greater efficiencies. As for the warehouse, we measured where we were and we hope the redesign will allow us to fill more tickets per man hour. We expect to see measurable results within six months.

Read More Online

Other money-making and money-saving opportunities for distributors may result from provisions in the Obama Administration’s stimulus bill, the American Recovery and Reinvestment Act of 2009, that passed into law earlier this year. Read Marcus Renwick’s breakdown of the bill as it relates to our industry in Welding & Gases Today Online at www.WeldingAndGasesToday.org.

 

“Hiring a consultant to lead us through the Lean process was in the plans when business was going strong in mid-2008. We could have canceled the project with business slowing down and a tightening of expenses, but we decided that there is no better time. These initiatives take quite a bit of manpower, and, right now, our people have the time. We’re creating the springboard so we’ll be a more efficient company when things come back, and we’ll be able to handle added growth without having to add personnel.”

Ned Lane, President
Cee Kay Supply
(St. Louis, MO)

 

Supplier Fitness Tips

“We are focused on good business practices, attention to customer service and making sure distributors are supplied with as many support materials as possible. We have enhanced our research and development operations, resulting in new packaging, among other improvements.”

- Michael Trueba Jr., president, MPT Industries

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“As raw material prices overseas drop more significantly, we have been able to lower prices at a faster rate than in the past. We have been running bimonthly specials, something we have not done consistently.”

- Mark Williams, vice president of marketing, John Tillman Co.

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“To help distributors, we’ve increased our co-op programs. We have raised co-op funding above national standards, and we’ve also implemented a volume-based co-op incentive program.”

- Shannon Fanning, vice president, Mathey Dearman

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“We are joining distributors on sales calls to help them better support end-users. We are supporting educational institutions and sponsoring competitions and the training of welders new to the industry.”

- Ryan Hertel, director of business development, Phoenix International

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“Customer intimacy is more important now. We have restructured to have local account managers—who have typically called on companies directly—call on distributor sales managers backed up by Linde inside sales.”

- Jim Lisiecki, distributor program manager, Linde

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“Lincoln started a ‘Choose your Reward’ promotion, whereby we incentivized certain products with $50 to $125 gift cards from places like Best Buy, Outback Steakhouse and American Express. Those were rewarded to the end-user when they purchased through a distributor.”

- Jim Appledorn, U.S. distributor sales manager, The Lincoln Electric Company

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“We are working on pull-through initiatives to the distributor such as our ‘Good News Promotion,’ which is an e-mail/fax blast. Also, we have sped up our e-commerce turnaround time to better support our distributors.”

- Joe Brancato, marketing director, R3 Safety

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“Instead of having 100- or 1,000-piece order minimums on stock sandpaper items, distributors can now order packs of 25 to keep their costs down. We are offering electronic ordering to quicken the ordering process and reduce the transaction cost.”

- Kurt Johannes, manager of national accounts, Norton Abrasives

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“We are expanding our reach in the job placement realm to include relocations. We’re working with a great number of laid-off auto workers to be certified or re-certified as welders to be placed back into the workforce. The available jobs are dictating the placement services we provide.”

- Marty Baker, manager of library services,
Hobart Institute of Welding Technology

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“We are revamping our Web site, complete with educational material, product spotlights and videos. We are also focused on increasing order turnaround times, even offering same-day shipping in many cases.”

- Patrick Dougal, vice president of sales and marketing,
H&M Pipe Beveling Machine Company Inc.

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“Instead of laying people off, we are hiring. In anticipation of tough times, we added three new technical people to our roster to work more closely with distributors and provide them with more technical support.”

- Mike Tecklinburg, national sales manager, Select-Arc

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“We are producing product to stock as opposed to fill orders. This allows us to improve the turnaround time for distributors, including some same-day shipments. We are also offering some drop shipments, allowing dealers a wider product offering without the overhead.”

- Paco Perez, vice president of sales, MK Products

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“We are educating customers on looking for higher-productivity products and teaching them how such products save financially in the long run. We are rewarding distributor sales reps for selling our products and passing rebates onto the end-user to help bring total costs down.”

- Grahame Savage, vice president of marketing and sales, Maxal Inc.

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“We always send lots of blast e-mails, and now we are sending out more than normal for new products and follow-ups. The goal is to keep our name in front of people, so we are sending e-mails monthly. It takes about a day to put them together.”

- Doug Morton, vice president of sales, Eleet Cryogenics

 

Gases and Welding Distributors Association