Machine & Welding Supply Company

With 23 locations in the Carolinas, growth is a hallmark of this family business. So is stewardship.

Machine & Welding Supply Company traces its roots back to 1925 when William Aldredge opened a machine shop in Dunn, North Carolina. Now in its fourth generation of family ownership, the company has 23 branch locations and more than 200 employees throughout North Carolina and South Carolina, and has grown to be a major supplier of gases and welding equipment to the metal fabrication, construction, agriculture, beverage, university, research and medical markets.

Lloyd Robinson, who joined his own father in business, sat down with two generations of ownership at Machine & Welding Supply Company: President Emmett Aldredge Jr. and his sons, Vice Presidents Emmett Aldredge III and Christopher Aldredge, to talk about where the company has been and what’s in store for the future.

Planting A Seed
Lloyd: How did Machine & Welding Supply get started?

Emmett Jr: My grandfather, William Aldredge, opened a machine shop in Dunn, North Carolina, in 1925. Over time, he began selling welding rods and gases, and it was really his sons—my dad, Emmett Sr., and my uncle, Raymond—who had the idea to develop the gases and welding supply business more. After they served in Europe during World War II, they came back and bought the machine shop from my grandfather.

Christopher: The brothers continued to run the supply business out of the machine shop until 1954. That’s when Machine & Welding Supply Company was formally established. Machine & Welding Company was the machine shop and Machine & Welding Supply Company was the supply company. They ran concurrently until the early 1990s when we closed the machine shop.

Emmett III: Emmett Sr. passed away in 1972 at 54 years old. Our dad, Emmett Jr., fresh out of college with an MBA, was only 25 years old when he suddenly found himself in charge of the whole business. He’s been in the captain’s chair ever since and has been a strong leader for our company.

Christopher: We had four locations in 1972, and we have 23 now, so obviously our father has guided us through a lot of expansion.

Emmett Jr: I’d been filling cylinders and running around here all my life, and the employees knew me. They had so much respect for my father as a person and as a businessman that they really just gathered me up and said, “You’re his son and we’re with you. We’re going to do whatever it takes.” Our company’s success then, just like today, was due more to the quality of its employees than its leadership.

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Founded in 1925, Machine & Welding Supply Company now has 23 locations throughout North Carolina and South Carolina. Corporate headquarters are located in Dunn, North Carolina.

Lloyd: You were only 25 years old. There must have been a lot of pressure.

Emmett Jr: It was a different time. My granddad, my uncle and my dad had developed this company over all those years, and I knew it was a part of us, part of our family. Quitting was not a consideration. I didn’t know enough about the specifics of the product and of dealing with customers day to day. I didn’t have time to learn AC from DC or anything else. Fortunately, my brother-in-law, Bill Fennell, had been active in the business on the sales side, and I was able to focus on the business side. What I knew was that we had to have money in the bank, and we needed to let the employees do what they knew how to do. So I delegated, and since I didn’t know what I was doing, everyone else did their job and would not let me fail. Learning to build on the skills of employees and how to delegate made things a lot easier as the business got bigger, and it certainly made it easier to let go when my children came into the business.

Lloyd: What is it like to have your two sons working alongside of you?

Emmett Jr: It’s very rewarding. And it’s not just my sons; my nephew, Bill Fennell Jr., is an active leader in the business. Of course, we’re about to get to a point where it’s not so much working beside me as it is them working and me relaxing. So that’s even better. Seriously, though, it’s great. I’m real proud of them.

Lloyd: What would Emmett Sr. say about the company now?

Emmett III: I think my granddad would be very proud that his family was still carrying the torch and has been able to grow the business while retaining the values that he believed in so strongly.

Expansion

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(l-r) Emmett Aldredge Jr., Christopher Aldredge, Bill Fennell Jr. and Emmett Aldredge III represent Machine & Welding Supply Company's third and fourth generations of family ownership.

Lloyd: Since taking over the company in 1972, 19 locations have been added. How many were scratch starts and how many were acquisitions?

Emmett III: Fourteen were acquisitions and five were scratch starts.

Lloyd: On a go-forward basis, what is your growth strategy?

Emmett III: Future growth will likely be through both acquisitions and startups.

Christopher: The word we always use is opportunistic. We will go where the opportunities are.

Lloyd: Describe a good “opportunity.”

Emmett III: The ideal acquisition candidates are those that are underperforming relative to market opportunities. Small market share. Under-capitalized. By adding the right people, capital and resources, we can grow the market share and add value to the company. For scratch starts, the ideal opportunities are in markets dominated by majors and without a strong presence by independent distributors. There is a real market need for the combination of service, technical support and competitive pricing that a strong independent can provide.

Lloyd: Anything on the horizon?

Christopher: We have nothing specific targeted for 2010, but we are ready for any opportunities that do arise.

Lloyd: What is your product mix? How do you go to market?

Christopher: Before the downturn, we were about 60 percent hardgoods, 40 percent gas. We’re currently closer to a 50/50 mix. That includes our beverage CO2 business.

Emmett Jr: We’ve been in the beverage CO2 business all along, but entered the mini-bulk market about 20 years ago when we purchased a small company that was doing mini-bulk sales.

Christopher: When mini-bulk technology started to take off, it caused a lot of people to exit the beverage CO2 business. We decided to embrace that technology, make the investment and start a new division with its own leadership structure. Our footprint there is much larger—Florida, Georgia, North Carolina and South Carolina. It’s not the majority of our business, but it’s growing faster than other segments. It has held up comparatively well during the struggling economy in the last year or so.

Emmett Jr: If you can’t grow internally, you have to figure out another way to go. The beverage CO2 business has been that way for us.

Christopher: It’s been a big part of our company’s diversification, which has been very helpful during a tight economy. For a long time, the core business funded and supported the CO2 business’ growth. It’s nice to see the CO2 business now give a little bit back. There’s been a lot of blood and sweat put into it, and it’s nice to see it doing so well.

Emmett III: An interesting parallel is that the beverage industry is following a similar path of national consolidation as the welding industry. It is difficult for a company like ours to be a one-stop shop for some national accounts, for example, but there are a lot of regional chains and franchisees that are better served by our company than the big guy. In both our beverage and industrial businesses, the key is to be large enough that we can compete on price but small enough that we retain the advantages of being nimble and able to customize offerings to individual customers. But we can’t be so small that we don’t have the capital to compete with larger companies.

Lloyd: Do you see the gas portion of your business increasing?

Emmett III: We look for customer ownership. The core is still arcs-and-sparks metal fabrication, and whatever ratio of hardgoods to gas that customer is using is the ratio we’re going to have.

Lloyd: We also strive for customer ownership. If the customer wants to buy something exotic, we’re going to figure out how sell it to him.

Emmett Jr: Exactly. We’ve seen some majors try to be a little too gas-heavy because of the margins, but they are losing sight of the fact that to get to the gas and to own that customer top to bottom, they’ve also got to provide the other 60 percent of what their spending is, which is hardgoods. It’s really more about owning the customer and taking whatever mix constitutes their spend.

Keeping It Strong

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Jon Bennett, director of cylinder operations, fills medical gas cylinders.

Lloyd: Who spearheads the training role in your organization?

Emmett III: That is the responsibility of two key leaders in our organization, Jeff Johnson, our vice president of sales and marketing, and Tommy Stewart, our vice president of operations. Going forward, it’s going to be more and more incumbent on companies like ours to develop and train people because there just aren’t a lot of young guys available who have the background in the industry.

Christopher: Furthermore, the entry-level positions that we have where people do get an opportunity to learn are challenging, physical jobs. It’s become more difficult to find people willing to roll up their sleeves than it was in previous generations. Is that what you are seeing, Lloyd?

Lloyd: Yes, that’s true. At AWISCO, if you want to grow, you need to start in the warehouse at our headquarters. If you don’t, it’s hard to get anywhere. It’s difficult, though, to find people who will come and start in the warehouse.

Emmett III: The industry is definitely moving away from learning the business from the ground up.

Christopher: Which is the way we learned it. You’re speaking to a couple of guys who were route drivers and took that approach. But it is more difficult to put people on that track today.

Lloyd: Did you learn anything as a route driver that’s helpful to you now?

Christopher: I learned how unique each customer is. I spend most of my time now in operations, and sometimes in operations you can lose sight of the customer. My experience in route sales also gives me a much better appreciation of the challenges our salespeople are dealing with.

Emmett III: When I was on a route truck, we took a lot of pride in trying to sell items off the truck and getting to know our customers. Those relationships between the driver and the customer really do matter, even today. But now the role of the route driver has shifted away a bit from the sales function and is now centered more around the delivery function.

Lloyd: You’re right. Few companies today have drivers that actually carry product or do any sort of selling.

Christopher: Many customers don’t buy the way they did when Emmett III and I were out on our trucks. We used to be able to sell a dozen pair of gloves to a guy on the shop floor and talk them into a new welding hat on the spot. Now they need a purchase order to buy anything.

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In the beverage market for almost 20 years, Machine & Welding Supply Company's CO2 department maintains a fleet of vehicles equipped to transport CO2 in its liquid state across the Carolinas. The company is capitalizing on the restaurant industry's move to switch from standard 50-pound, compressed cylinders to bulk CO2. Dave Baggett fills a delivery truck.

Looking Forward
Lloyd: What do you see for the company in the next five to ten years?

Christopher: We are committed to continuing to grow our business. One challenge going forward is determining where to invest as a company. How do we continue to grow? I think we’ll do that through acquisitions and expansions of current market segments.

Emmett III: We don’t want to lose sight of who we are, which is a business that supports manufacturing and metal fabrication. However, the more we can diversify and find opportunities in various gas segments, the better off we’ll be. We don’t want to be subject to the whims of one industry. It’s a balance.

Christopher: We also have to formally transition the executive level leadership. Dad has indicated that he may be ready to relinquish his title, so that’s one practical thing that has to take place.

Lloyd: Are your employees worried about that?

Emmett Jr: No. By doing it slowly and informally, people already see Emmett and Christopher as leaders. I’ve started to take a month or two here and there to be away from the company. When my sons weren’t able to ask my opinion on something, they just went ahead and did it, and that was really good for them.

Christopher: We’ve had this formal transition of leadership on our checklist for a couple of years but we’ve always seemed to have some excuse to delay it. Finally, Dad just decided to enjoy some well-deserved time off and that has really helped us move the process along.

Emmett Jr: I think it means a tremendous amount to the people in our company to see that there will be stability in the future. One thing my dad instilled in me and that I’ve instilled in my sons is that we are more than owners of the company—we are stewards of the company. My job was never to make money by cashing out. My job was to move Machine & Welding to the next generation. To do that is a thrill.

Emmett III: A lot of people would probably think that a formal transition has already happened and they just missed the memo. We kept thinking we needed a grand strategy and some public proclamation, but we basically just turned around one day and said, “I think we’ve done it.”

Lloyd: For 85 years, Machine & Welding Supply Company has been doing it well. Very well. Congratulations.

Gases and Welding Distributors Association