Several industries are showing signs of life in the East: natural gas, fabrication and construction will contribute to an average sales increase of 5.5% for the 71% of distributors forecasting growth. Distributors remain focused on increasing operational efficiencies by making investments in upgraded computer systems, expanded inventory and enhanced employee training.
Charlie Mundt, president of Church Towne Gas & Welding Supply (Cochranton, PA), says that his 2010 sales numbers were up 30% over his 2009 numbers, and he anticipates maintaining those numbers in 2011. Contributing to this level of growth is Mundt’s willingness to stock what his customers need. “It doesn’t matter what the product is. If a customer has the right volume, we’ll stock it for them.” Mundt has some advice when dealing with customers looking for the lowest price: “The Internet provides a research tool for every customer to dig around and find your lowest price. Be prepared with that lowest price when you walk through the door trying to make the sale, because that’s probably what it’s going to sell for.” The company is extending its reach geographically and marketing outside of its normal 40-mile range. Propane volume will be increased, an outside salesperson will be added, and an additional truck will be purchased.
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Pointing to a pickup in sales during the last half of 2010, President Christine Scherrer of Superior Welding Supply (Pennsauken, NJ) is confident in an economic upturn. Increased hardgoods purchasing by customers will contribute to that increase. She says, “Industrial fabrication shops appear to be ramping up their activity.” Scherrer plans to grow Superior’s gases business through the addition of liquid pumping capabilities at its Pennsauken location. This increase in production volume and efficiencies will contribute to a 10% sales increase.
| Only 2% of Distributors expect sales activity to continue to decrease in 2011, at an average decline of 13%. 21% of Distributors expect sales to remain flat and similar to those in 2010. |
In order to maintain 2010 sales numbers and gain market share, Jim Madison, president, Prest-O-Sales & Service (Long Island City, NY), will accelerate direct mail efforts and participate in a more aggressive sales approach. In the face of continued price concession demands by customers, Madison says, “One of the worst things that anyone can do is to cut pricing in order to be more competitive. Aggressive pricing and weak volumes are not a good combination.”
Expecting a modest sales growth of 2-3%, Russel Strate Jr., president of Strate Welding Supply Co. (Buffalo, NY), has contracted with a consultant who is examining every aspect of the company’s operations in order to enhance efficiencies and profitability. The consultant will recommend action steps that will impact Strate’s product mix, sales and marketing efforts, and profit margins. Says Strate, “We are using the consultant to help us look beyond the box we’re in and recognize how we can benefit from change.”
“With the emergence of technology in our area, now is an opportune time to elevate our products and showcase our exceptional team and quality service to prepare the company for future growth,” says Dave Mahoney, president, Noble Gas Solutions, formerly AWESCO (Albany, NY). Expecting increased market share to grow sales by 5-10%, Mahoney says, “We will continue to invest in talented people, business practices and solutions to help take this company and our customers to the next level.”
In anticipation of relatively flat sales, Neil MacKay, vice president & general manager, West Penn Laco (Pittsburgh, PA), continues to remain on the lookout for potential sales talent. If he finds that talent, he could hire as many as two salespeople. “This is a people business,” MacKay says, “and if a salesperson has something to offer, people will buy.” MacKay points out that customers are buying on an as-need basis. “We must maintain the right inventory levels in order to respond appropriately to their needs.”
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At Earlbeck Gases & Technology (Baltimore, MD), 2010 sales were better than expected due to circumstances which are not likely to be repeated in 2011. That said, Jim Earlbeck, president, expects his core business to remain level. “There is business out there if we can demonstrate value,” he says. To demonstrate more value to more potential customers, Earlbeck will seek new opportunities in industry segments not previously explored. He adds, “We must systematically question our customers’ needs, understand those needs and help meet them.” Earlbeck will renovate and expand his training facility to grow the company’s certification business.
As the costs of various commodities have risen, so have Weld World, Inc.’s (Baltimore, MD) selling prices. At the same time, increased pricing pressure brought to bear by an influx of products manufactured offshore has driven the pricing for some machines downward, when compared to costs for the same products five years ago. Nevertheless, Accounts Manager Ethan Adler anticipates a sales growth of 7%. “We are balancing our expenditures with the economic picture and making sure we are not over-staffed.”
For ABCO Welding & Industrial Supply (Waterford, CT) President Michael Ross, a combination of an improved economy, increased pricing and market share growth will result in an overall sales increase of 5-6%. Plans call for upgrades to two or three of the company’s 12 locations. A big part of Ross’ strategy to increase sales is based on shaking up the company’s inventory. “Many of our clients are looking for a one-stop shop, and we will adjust our product line to meet that need.”
The Marcellus Shale as a source of natural gas will provide enough construction and aftermarket opportunities to fuel an increase of 20%, notes Economy Welding & Industrial Supply (Pittsburgh, PA) President Donald Rosenthal. To help support revenue on a par with the revenue the company enjoyed in 2008, Rosenthal will hire an additional salesperson and an administrative person during the 1st Quarter and will move into a new and larger facility in late spring.
An emphasis on the maintenance of proper inventory levels and an adherence to on-time delivery commitments will help command a 10-15% surge in sales numbers as the local construction industry revs up its activity. Bruce Leasure, president, Middlesex Welding Sales Co. (North Brunswick, NJ), says that his two-location operation is constantly looking at ways to reduce operational costs and increase efficiencies. One such way is to replace one service vehicle annually. Says Leasure, “The payoff that comes from increased reliability and decreased maintenance costs helps mitigate the sticker shock that comes with a $70,000 purchase.”
Anticipating a sales growth of 2-3%, Tech Air (Danbury, CT) President Myles Dempsey believes that construction-related markets are likely to see improved revenue numbers. To enhance market penetration, Dempsey is targeting potential customers who have indicated work on large projects. Tech Air continually invests in its ability to provide a high level of service in a more efficient manner. Dempsey explains, “We are investing in our back-end efficiencies by upgrading software that will better support our financial reporting capabilities.
For President Robert Jackson, the key to achieving a projected 3-5% growth at Jackson Welding Supply Company (Rochester, NY) lies in the ability to retain existing customers while targeting new ones, offering the kind of solutions to both that will improve their efficiencies. The company also is looking at ways to improve its own internal processes. “If I can cut expenses 10% and then pass some of that savings on to my customers, there is a stronger possibility they will stay loyal to us.” Jackson will invest in portable and bulk cylinder assets and update the packaging facility.
A pent-up demand that is the result of delayed projects coming to the forefront will help contribute to a 5-7% sales growth, believes Pete Matarese, president of Liberty Supply (Leominster, MA). “Remaining competitive,” he says, “is a combination of several factors, including an uptick in metal fabrication, an increase in troubleshooting and repair business, an always-stocked inventory, and the decision to stay open on Saturdays.” Matarese describes his retail store as four times larger than the nearest competitor. “People come to us because other stores don’t have the product and they want it now. We have a saying in our company: We have it. They don’t.”
On a national front, Praxair Distribution, Inc. (Danbury, CT) can point to distinct differences in its various regions, and according to President John Panikar, there are very distinct differences. “We’re seeing strong activity in our southern region, mostly due to investment in the refining sector. The Marcellus Shale area in the Northeast is seeing some activity. With California as the main driver, things continue to remain weak in the West.” Hardgoods sales, both welding equipment and consumables, are up 5%. The decline in gases has slowed, and Panikar looks for a 2% increase. “We’ll see some growth in 2011, but it will be a couple of years before we get to break even,” he says. Praxair will invest in specialty gases and value-added products and may kick off some acquisitions during the 3rd and 4th Quarters.
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2011 Distributor Business Forecast:
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