STAFDA STATE OF THE INDUSTRY MANUFACTURING – Gericke: Are Your Customers Consistent With Your Growth Plans?

John Wolz

The Werner Co. fired Home Depot as a customer because “we found ourselves going in a strategically different direction than our largest customer,” Ed Gericke told the Specialty Tools & Fasteners Distributors Association 30th annual convention.
In his “State of Manufacturing” speech, the senior vice president for sales & marketing of the ladder manufacturer recommended STAFDA distributor members ask if their customer growth areas are “consistent with your future growth plans, if they are viewed as important to their customers” success and do you have appropriate resources allocated to customers?”
Gericke suggested manufacturers ask if they are “effectively working with, understanding needs and influencing users?”
“Are manufacturers providing the needed support to grow your distributorship?” Gericke asked distributors.
If manufacturers, distributors or reps are leaving their “comfort zone to go after new market segments, do you have the resources to still grow your core business?”
The 80-year-old Franklin Park, IL-based Werner was built “by working with the STAFDA channel. But when the power retailers began to grow at a phenomenal rate, Werner was part of that action too,” Gericke recalled.
But Werner found the power retailers don”t provide the “amount of support needed to maximize” the climbing industry company”s sales.
Werner”s largest customer in 2003 was Home Depot. The big box retailer “requires and deserves a lot of resources,” Gericke observed. “Werner wanted to get its brand message out to professional users and Home Depot wanted private label programs.”
At the end of 2003 Werner decided to drop Home Depot. Losing 30% of sales required “some serious downsizing of people and facilities,” Gericke acknowledged.
Werner formed an alliance with Lowe”s to help grow their business while securing the retail component of our sales.
Werner also sought the STAFDA channel and its access to targeted users to boost sales.
“Today, we have nearly made up the loss of the Home Depot business,” Gericke reported.
“Everyone in the industry is allocating more resources to acquire a larger share of this prized customer
“We are even seeing some large general contractors trying to get into distribution.”
State of Manufacturing
“2005 will go into the books as one of the best business years in recent history,” with the latest STAFDA quarterly trend report showing distributor sales up 13%, Gericke pointed out.
“The “goldilocks economy” of recent years continues not too hot, not too cold, just about right,” Gericke surmised.
He cautioned that growth has been driven by the construction industry and that there are trouble signs.
Nationally housing prices jumped 50% in the past five years.
The bubble may be most precarious on the coasts “where the frenzy about housing brings to mind the stock market madness of 1999,” Gericke observed. New York is up 77%, Miami 96% and San Diego 118%.
“This is unsustainable growth,” Gericke declared. Interest rate increases and higher energy prices have some economists “beginning to hear a hissing sound as air leaks out of the housing bubble,” Gericke warned.
“Thankfully, housing prices move much slower than stock prices so the likely decline will come in the way of softening prices, falling sales and rising inventory as sellers try to get prices that buyers are no longer willing to pay,” Gericke observed. “I suggest all STAFDA member be prepared to react.”
Residential construction is currently running 12% ahead of last year and there will be massive rebuilding due to the hurricanes.
In discussing his climbing products industry, Gericke reported 36% of ladders are sold through STAFDA-type distributors. Big Boxes account for 32% and other retailers such as hardware and paint stores sell the rest. About 60% are purchased by professionals and 40% by homeowners.
Product liability is a huge issue in the ladder industry though a majority of accidents are due to improper use of products. Most injuries are caused by falls, followed by electrocution.
Gericke noted “Craig Werner believes that if someone gets hurt on a ladder, it might be 20 years after they purchased it. We don”t want to leave any of these issues for our grandchildren to deal with.”\ �2005 FastenerNews.com