Bossard: Customer, Not Competition, Drives Business

John Wolz

�We don�t look left and right at the competition,� CEO Heinrich Bossard explained the strategy of Bossard Holding AG. �We look at the customer. We are thinking of what the customer needs.�
The customer orientation is what makes Bossard ask the question, �How can you help customers become more competitive with fasteners?�
Bossard � better known as Henry rather than Heinrich � who is part of the sixth generation in the family business, talked mostly about the future during a FIN interview at the Zug, Switzerland, headquarters.
The Bossard family can trace the name back to 1450 and the family business to 1789 in silk importing.
Importing and exporting came easily to the Bossards, because the Swiss have always had to rely on trade, and they are multilingual, Henry Bossard noted.
Bossard Group considers 1831 the founding date of the hardware business. They know from handwritten records and letters dated from 1828 to 1832 that were found in family furniture.
Initially the Bossard family was in the hardware business, supplying the professional trades with tools, screws, wires and bolts.
After World War II Henry Bossard�s father, Walter Bossard, and uncle, Carl Bossard, expanded the local hardware business to a regional supplier of fittings, fasteners and steel. The steel business was later spun off because of the special skills required.
The next generation has expanded further. Young Henry Bossard headed to the U.S. for an education and to seek a broader worldview. �There have to be solutions to problems we have,� he recalled thinking. �I couldn�t believe we were the first to have these problems.�
In the 1980s the Bossard Group was increasingly supplying to other countries and developing an international network.
�We began to receive orders from America,� Bossard said, recalling the seven-foot-long telexes. �Hey, these Americans must be lacking something we have.�
What the U.S. needed was small numbers of replacement parts for metric machinery. And Americans were paying more for freight for a few fasteners than for the actual part.
Bossard quickly saw the opportunity. �Why pay 100% for shipping? This void will be filled by someone. Why not we do it?�
So Bossard opened in Danbury, CT, with a goal of selling at an annual $5 million rate within five years.
�We surpassed it in 18 months,� Bossard smiled.
That also was an early version of Bossard �going to the customers.� The textile machine industry brought Bossard to South Carolina, and soon the company was shipping up to 10 metric tons by air per week to the U.S.
Subsequently, Bossard has expanded to a global company with 1,300 employees with European, U.S. and Asia/Pacific divisions. Encouraged by multinational customers, Bossard now boasts a 140% annual growth rate in India and 66% in China.
The international moves are easy for Henry Bossard. He was headed for Harvard University when he had to postpone his education after an uncle died. He eventually did go the U.S. for an education and has subsequently visited all 50 states.
But wherever the Bossard Group goes, it will fit in the customer-oriented strategy. �Today you don�t go for markets, you go for customers,� Bossard explained the growth.
The corporate vision states, �We want to be the best and most successful fastener house in the world.�
Henry Bossard points out that it doesn�t say the �biggest.�
The growth will be anywhere in the world. �Where do our customers need us?� is the question, not where does Bossard Group want to expand, he said. Bossard would like it if customers took them to more areas of the Southern Hemisphere, he mentioned.
Countering the Price Squeeze
Many fastener manufacturers are being pressured by customers to reduce prices. Bossard�s answer is to point out how little difference the price of a fastener makes.
Bossard traces the fastener prices in a $250 Briggs & Stratton motor down to $3.40, or 1.36% of the sales price. A 10% discount in the fastener price yields only a 0.13% difference in sales price.
�Wasting time in freight is more expensive than the fastener,� Bossard points out.
Bossard�s goal is to cut the more significant costs. �The fastener might be only 15% of the cost. That means 85% is in procurement, control, warehousing, internal transport, preassembly, assembly preparation, assembly, etc.,� he observed.
Bossard worked with a hot water heater manufacturer to reduce 11 fasteners requiring five drives to four fasteners and one drive.
Bossard likes to point out how the company has cut costs. Bossard, which acquired Iowa Industrial Products in 2000, helped John Deere turn over a former small parts warehouse to new tractor production.
Bossard�s advice is to �save the gigantic costs,� instead of shaving pennies off the price of a fastener.
That�s why Bossard isn�t looking for just fastener orders. �We don�t want people to walk in and ask for fasteners,� Bossard said.
He would rather talk about quality than number of customers, because part of serving a customer is selling a quality level that saves money in the long run. �You can save more with better products,� he said in reference to corrosion-resistant fasteners, protection against loosening and assembly-oriented design.
That applies to the way the company operates too, Bossard said. He proudly notes that Bossard Group has rarely been sued by customers or former employees.
The annual report features a circle of yellow, smiling
�Happy Faces� to illustrate the �Happy Bossard� philosophy. �Happy employees� lead to better performance, which leads to happy customers and suppliers and thus to more success.
Industry Future
Bossard sees China as a �strong source� of fasteners as quality becomes more consistent. �Now Taiwan is investing in China,� he noted.
Other potential sources are Eastern Europe and India.
Wherever the new source, Bossard said it is strategic to take time in accepting a supplier.
�We try to avoid returns. First we visit, we audit, we tell them the changes we need, test orders, provide test equipment before we close the contract. False deliveries are inefficient.�
Bossard withdrew from the Grade 8 nuts market for three years due to quality problems, he noted.
Bossard predicts there will be more fastener industry consolidation in the coming five years and �the development of niche players. We will see the passing away of midsize guys. They have to consider where they want to go.�
Some customers won�t deal with suppliers that have under $100 million in sales, he noted.
�There will be more integration of the supply chain, more services for less money, and you will have to be efficient enough to provide what customers want.�
Fastener suppliers will need to be able to provide flawless logistics.
�Have you ever had to reorder water in the toilet? Bossard makes his point about how efficient JIT must be.
There are no pipes to automatically deliver fasteners, but it can be just as seamless, he believes.
A computer sends information overnight, and the supplier can respond. �It doesn�t really matter if you are supplying fasteners in Alaska, Singapore or Switzerland,� he said.
The toughest industry problem will be the �rising demand to make money on low prices in the supply chain.� That is where the theory of cutting the supply chain costs rather than fastener costs comes in.
Bossard is willing to let customers go who are �squeezing as much out to keep you at zero. Too many people just see the big orders and overlook the costs.�
Ahead for Bossard
Bossard may well make more acquisitions. But don�t expect high-profile, expensive companies. Once again, it will be more customer oriented.
�They have to have the right thinking for us,� Bossard described potential acquisitions. �We are not able to buy the rich company, but we can afford competence.�
Iowa Industrial Products Inc. needed the stronger partner for global sourcing with anchor customer John Deere, Bossard concurred with what Ed McIlhon said when the IIP acquisition was announced.
�Ed and his gang are a very fine team,� Bossard said. �I respect him as a friend and businessman.�
�John Larson is an engineer who every week walked the lines at B&G� to find improvements.
Henry Bossard, proud of the six generations of the family business, is looking forward to having a son, Daniel Bossard, and nephew, Beat Grob, from the seventh generation now preparing to join the company.
The company also will be changing, with more outsiders joining the traditionally family-dominated board of the publicly held company. Beat L�thy is slated to take a new board position this month.
Attorney Helen Wetter Bossard will replace her father, Peter Bossard, who as a Zug government minister was among 14 killed in an armed attack at the parliament building September 27, 2001.
Henry Bossard believes the company is ready for whatever happens. �Our future is wide open. In the recession we are winning market share. If the resurgence is as fast as the decline, we might have some problems. We could have more customers than we can handle.� \ �2002 FastenerNews.com