A new vision, a bright future

In keeping with tradition, but having embraced more modern concepts and ideas, TIPCO Technologies has continued its growth under the new ownership of Rob Lyons and Terri David

By Kimberly Griffiths, Associate Editor -- Industrial Distribution, 4/1/2004 7:00:00 AM

Picture it: One Monday morning you walk into your parents' company offices and find they have been cleaned out. No, not the inventory or office supplies. But their offices themselves are cleaned out. The metaphorical sign, "Mom and Dad don't live here anymore," swings from squeaky hinges above their doors, like some eerie Western movie. Suddenly, it hits you. "It's up to me now."

"It was almost bizarre," says Rob Lyons, president and co-owner of TIPCO Technologies, Inc., an industrial hose and hose accessories distributor for the industrial, high-purity and construction markets, headquartered in Owings Mills, Md., of his parents' night-time evacuation. "To come in Monday morning and find both my mother's and father's offices are cleaned out. And we have to sit in them!"

The "we" encompasses himself and his sister, Terri David, vice president and co-owner of TIPCO. Their parents, Bob and Jane, had helmed the company from 1982 until that fateful Monday in April 2001, and handed it over to Lyons and David with little fanfare…but clearly, a fair amount of drama.

"We knew what we were doing," says David, recalling the day. "Two years before they retired, they would start taking long trips away from the office, leaving Rob and me in charge. They were preparing us for it in that way."

Says Lyons, "But there was not a lot of training in the weeks or months ahead of time. I think that was part of their 'grand plan.' They never tried to impart their philosophy or plans for the company to us. They thought it would be healthy for a new vision to take the company to another level."

Turning to other markets

First established in 1888 as George P. Thomas Rubber, selling matting, rubber boots, rain wear, gloves and some industrial hose, the company was bought by Bob, a regional manager for Dayco at the time, and Jane, who then added hydraulic hose to its product line. About four years later, the company's name changed to Thomas Industrial Products, and in entering into other hose markets more recently, the moniker changed to TIPCO Technologies.

"TIPCO lends itself better to some of the environments that we were starting to call on," says Lyons. "It would be difficult for us to call on some of the accounts we call on with 'industrial products' in our name. Even though that is still our core business."

Today, TIPCO provides flexible connections for all industries, and boasts being experts in taking costs out of a customer's chain, via kitting, product development, assembly or removing labor.

The company's highest sales are still in industrial hose, which can be moving air, diesel fuel, water or acid or even food—a wide variety of products. Fluid power is their next biggest product market.

TIPCO sells to OEM markets of all types, mostly small- to medium-sized operations, and counts that market segment as the biggest they sell to today.

"But because other markets are in a deflationary mode recently, Terri and I have turned the company into a position to sell to the high-purity market," says Lyons. "Because the customer was gaining more purchasing power, and the manufacturers were gaining power, the middle guy was getting squeezed. We had to rotate to growth markets, which, for us, was high purity."

The largest employer in Maryland, according to Lyons, is Johns Hopkins University, which promotes medical and cancer research. Another local organization is the National Institutes of Health, an agency under the U.S. Department of Health and Human Services. In part because of these organizations, pharmaceutical and biotechnology firms have built a community in the area. It has become the second largest biotech community in the United States, just within the last 10 years.

"We are the only company with the capabilities to assemble their products locally," says Lyons.

"TIPCO has developed into a supplier for all our corporate needs," says Bob Harwood, facilities manager of Human Genome Sciences, Inc., located in Rockville, Md. "If we need specialty items, they will research and procure them for us. We were looking for a specific sanitary relief valve, and while it wasn't anything they keep in their normal stock, TIPCO found the manufacturer and got them for us."

Harwood credits Greg Evans, branch manager of TIPCO's Frederick, Md., branch, for being a model of what TIPCO is to them. He praises Evans for walking the fine line between being too forward, and being there when needed.

A second phase of business coming into the state is support for government contracting. As an example, TIPCO does a lot of work with Northrop Grumman, which is making anthrax-detection equipment for the Postal Service.

"Because of open lines of communications between us and our supplier, Northrop Grumman will probably be our largest customer this year," says Lyons. "This was a textbook success story about customer, distributor and manufacturer working together to design, specify and kit assemblies of tubing and plastic quick connects."

TIPCO also corners the local market in construction. They are very reliant on road construction—a segment requiring hydraulic hoses—as a market that they dominate.

"Each branch represents our three main market segments," says Lyons. "Here, in Owings Mills, we are all OEM. In Frederick, it's the high purity. Chantilly [Va., managed by John Genco] is heavily weighted towards construction. Even for the other branches that may have an OEM customer, we manage the product out of Owings Mills. We don't want them touching the product. We pick and ship out of here. They keep only what they need for the customer's immediate needs."

Capitalizing on premier suppliers

TIPCO's loyalty though, goes to its premier suppliers. Lyons and David decided to go with the premier suppliers concept when faced with pursuing continued growth into the future and within their own markets.

Lyons and David looked at the premier supplier concept because the old model of managing a business—managers sitting in their offices, looking at a product graph of all their suppliers and selecting based on price—was, in their eyes, a disservice to the company.

"If you build market share, those things will take care of themselves," says Lyons. "We spend our time with our premier lines, which give us protected territories, selected distribution and all their area leads."

When selling these commodity products, TIPCO supports its buying group, IDCO, an industrial distributor co-op comprised of independent hose distributors, with Bob serving as a director.

Since gaining control of the company, Lyons and David switched TIPCO's major supplier to Eaton Aeroquip.

"Aeroquip has a long-standing, recognized name, and TIPCO is a steadfast, nationally recognized company, so a partnership was an extremely good choice between both companies," says Dan Stokes, national account manager for Eaton Hydraulics Group, headquartered in Cleveland. "While they were looking for a major supplier, and we were looking at them, both sides evaluated the other heavily. TIPCO is a great company, and we selected each other, which makes for a better relationship between supplier and distributor."

States Lyons, "At the end of the day, Aeroquip yielded us the trade name to compete, and to take on more market share. If we stayed with our former supplier, we wouldn't get spec'ed-in product; Aeroquip has a core focus on our growth markets, and it helps our company secure business in military contracting, OEM and mobile markets."

And TIPCO has capitalized on that recognition, says Lyons. No longer able to chase smokestacks or construction equipment, today's sales staff finds that most companies' operations are lower-key facilities in an industrial park. Rather than knock on all the doors in such parks, TIPCO also relies on their premier suppliers to open doors for them with a lead or some pull-through business.

"When we get into that account to follow through, we find that they aren't buying from a traditional competitor, but from a catalog house or a big-box supplier," says Lyons. "The customer doesn't know that anyone like us exists in the area."

"TIPCO is growth and customer focused, and market driven," enthuses Jim Fitzpatrick, regional sales director East of Colder Products Co., a quick couplings and fittings manufacturer headquartered in St. Paul, Minn. "They have the personnel and resources to develop and grow markets. They have the ability to deliver complete systems.

"The company is conscious of the relationship between supplier and distributor, and they work hard at improving sales on their end, exceeding expectations."

Beyond traditional sales

As a premier supplier, Aeroquip was a natural and cultural change for TIPCO, but with that came Lyons' and David's newest venture, the Express Store, a retail counter area with available product for visiting customers.

"I was really enamored with the concept of the Express Store," says Lyons. "I felt that that it could shore up a weak link in our company that couldn't be fixed with people."

Lyons and David didn't think it would be possible to hire a person to do the kind of up-selling possible with a counter space, or even let customers know everything that TIPCO was capable of doing. The retail environment would better tell that story to the customer.

David stresses that impulse buying is the primary reason why the stores have been successful.

"The customer sees products he didn't know we carried, or could supply," agrees Lyons. "The margins are great in that arena."

The Express Store in Chantilly, Va., is a remarkable success, and once the Owings Mills area is finished, Lyons and David anticipate similar success.

Another new venture that has met with success has been TIPCO's recent acquisition of independent sales representatives in New Jersey, New York and Delaware, for the rental supply construction market. Lyons did some background research, and found that there was no single, dominate distributor servicing that particular market.

"Customers up there were buying from Milwaukee, Detroit or Georgia," says Lyons. "I felt that we, logistically, could serve them a lot better. And I didn't think we had much to lose if we paid salespeople on commission only."

The enterprise has been slow but successful, and TIPCO has also developed a new product catalog for those reps to use.

Ongoing, consistent training

Training, for the TIPCO sales staff, means an ongoing and consistent education in products, sales technique and persistence. All sales staff is put through the Brian Tracy International sales course. Every premier supplier comes in annually to do product training.

While Lyons isn't out doing sales as much as he used to, he still spends a good portion of his time out with the sales staff.

"I try to get them to run five plays in 100 days for a targeted account," says Lyons. " 'Plays' can include an introduction, running a demo, obtaining a pricing analysis or showing a new product or presentation of some kind. They choose their own plays and their order, but the fifth play is 'take Rob in with me.' That puts the pressure on them to really follow through and do their business."

Depending on how seasoned the salesperson is in the field or with the product, Lyons will take the lead or the backseat in the meeting. Sometimes he finds that the person they are meeting with isn't the decision maker, or that the salesperson is getting pigeonholed with their contact in the company. Lyons trains them how to evolve around those roadblocks.

"Sometimes, the customer feels that we are a larger cost to their channel, so we work very hard to show them how we are taking cost out of their channel," says Lyons. "Some manufacturers feel that way, too, so we also stress telling them how we are helping them get larger market share."

In that, when premier suppliers visit for their annual product training, each salesperson comes in with two target accounts for each supplier. At that point, they have identified the target, the dollar potential and, more importantly, show the desire to work with the supplier to work with them to secure the business.

Capturing market share

TIPCO battles margin pressures and gross profit pressures just like every distributor, but has managed to capture more market share every year since Lyons and David took over for their parents in 2001.

The next natural progression for Lyons and David is to add more branches. And probably each with their own Express Store.

"We won't be able to continue to grow at this pace without them," says Lyons. "Because of the types of customers we serve at each branch, our real growth is through more branches. It is definitely on our minds."

But if the future can be seen at all from the past, Lyons and David have nothing to worry about.

"I've been working with TIPCO for 20 years, from back when it was called Thomas," says Jeff McKissack, general manager of Pump & Power Equipment Corp. in Jessup, Md. "I am always confident that they will perform excellently for me, whether I am ordering pieces for stock, or in need of something immediately.

"As to our future with TIPCO, I see it growing stronger," he says. "Their service is one that you don't find in many companies these days."

But according to Lyons, TIPCO's greatest success is held closer to heart: their parents' peace of mind.

"Most people that have given their life to something find it very hard to walk away," he says. "They are around if we need them, but don't come in or impart their philosophy on Terri and me. That is something you will find to be very rare. We both appreciate that trust."