Expanding horizons
Employee training, monthly profit-sharing helps welding-gas supplier grow
By Ken Brack -- Industrial Distribution, 2/1/1998
To continue growing as an independent welding supplies and specialty gas distributor, Kent Lacey and his managers devised several business plans including a profit-sharing incentive in 1995 for employees who boosted the bottom line. In exchange for cutting costs and bringing in new customers for the Waterford, Conn.-based firm, all 58 employees at ABCO Welding & Industrial Supply, Inc. began receiving monthly bonuses.The results have been extra cash for employees during each of the first 24 months and higher profits for the company, which has doubled its sales in the past six years. Employees are serving up new ideas from purchasing delivery trucks to suggesting that customers use a new cutting tool that is more productive than a traditional acetylene torch. It's no coincidence that customer satisfaction improved when warehouse workers, salespeople and drivers got to see balance sheets and income statements of the privately owned company.
"It's open-book management,'' says Lacey, ABCO's general manager. "If you're playing basketball or baseball and there's no scoreboard, how do you know how you're doing at it? It's crazy not to share the results with people. They need that feedback, and they need that information to know if they're doing a good job.''
"They are a real tough bunch,'' says company controller Barry Colvin, referring to his employees. "They want to know why the money is spent'' on an advertising campaign, for example. "That's okay. It's all part of the feedback.''
Colvin says sharing financial information and providing the cash bonus cemented the company's team approach "There's a real personal tie. Instead of pointing a finger at other areas (of the company), they immediately saw that money saved not only goes into their pocket but also helps to create a stronger company,'' he says.
Managed growth
ABCO has carved a large niche for itself by supplying diverse customers from pharmaceutical makers to high technology labs that use specialty gases such as pure helium for gas chromatography. While the traditional welding supplies market in New England has declined with the demise of heavy manufacturing, ABCO began serving emerging specialty markets in the late 1980s. The company, founded in the nearby New London seaport as an automotive battery maker in 1921, also broke away from its reliance on supplying the defense-related shipbuilding and nuclear power industries before their downfall in the 1980s. It broadened its sales base by acquiring other distributors across Connecticut, and now has six branches including one in Rhode Island and serves all of southern New England.
Several large industrial gas suppliers have tried to acquire ABCO but Lacey says the owners will not bite, despite the trend toward consolidation across the industry. While larger competitors present a challenge, he believes there is room for both to co-exist.
"They do what they do well, but there's room for the independent distributors. We don't have a hard time beating them in our area,'' he says. The company identified its industrial and specialty gases product lines as areas of opportunity and six years ago hired a marketing specialist. Welding hardware and products from welding cable to safety equipment continue to account for about 60 percent of the company's sales.
The company's standing has been strengthened by strategic buyouts of other independents, efficient inventory management and its ability to attract and retain quality people, says Steve Iffland, a regional sales manager at Miller Electric Manufacturing Co., a supplier to ABCO. He says employees at ABCO's distribution center in particular keep a close eye on inventory, stock what end users need and refrain from buying other products in bulk.
"They've had managed growth in the past few years but inventory dollars are not higher. They have keyed in on using their suppliers and on inventory turns,'' says Iffland. He agrees the monthly incentives appear to be making a difference as employees find more ways to cut costs and service customers in ways large conglomerates won't.
ABCO's employees consistently do the little things well in service, according to customers. Scott Barmore, owner of AcuCut Inc. in Bristol Conn., says salesmen do everything from hook up new laser-cutting lines and vaporizers for free to check pro-actively what his company needs next. AcuCut makes specialty parts for the automotive, medical and aerospace industries, among others.
"They pretty much bend over backwards to have it here when we need it,'' Barmore says. "There's some days we run out and call late and it comes the same day...It's (the relationship) been going well and requires so little of my attention, I don't even follow it.''
Decisions downstream
To keep operations running smoothly, Lacey, Colvin and sales manager Bob Abbott -- the company's top executives -- spend about one-third of their time on what they call "people management.'' That includes training, conducting employee meetings and determining where to place people to take advantage of their skills. Iffland notes that ABCO has a reputation for treating employees well and enjoys low turnover. When they need someone new, however, Abbott, Lacey and others search diligently among their competitors and even suppliers for talent. Iffland knows that well: ABCO hired one of his firm's district managers last year.
The trio also delegate decision making "downstream,'' Lacey says, and give employees with certain expertise a chance to flourish. For example, that means branch managers have authority to do whatever it takes to solve a customer's need, from ordering parts by next-day air to visiting a customer's facility, Abbott says. Even new employees may issue credit to customers without a supervisor looking over their shoulder. And truck drivers are given responsibility to schedule maintenance on their vehicles, rather than assigning that to someone else.
"Basically we want them to run the branches as their own business,'' Abbott says. The home office provides the branches with constant feedback on product turnaround time and other essential information, and "under wide parameters they can mix and match inventory how they see fit,'' Lacey says.
While monthly profit sharing is an important motivator, Lacey says it is not the chief source of success. He says thorough training and giving employees decision-making authority -- both of which have been in place about six years -- are paying dividends. "We spend a lot of time teaching people the basics,'' he says. "Just listen to what the customer's saying and then do what he's asking.''
The company also operates as what Lacey calls a "hybrid" distributor-manufacturer since a large part of its business is mixing and measuring gases for specialty uses such as cryogenics. Orders may be filled and delivered within 24 hours and during one day recently some 38,000 cylinders were out on jobs. ABCO maintains its own cylinders, which involves sandblasting, re-valving and repainting.
"We'll try to pursue customers who are leaders in their field, whether its metal fabrication or research and development,'' says Lacey, who has been with the company 25 years. "We feel if we can service them well, we'll grow with them.'' I
AT-A-GLANCE
ABCO Welding & Industrial Supply, Inc.
Founded: 1921
Headquarters: Waterford, Conn.
Employees: 58
1997 sales: $13 million
Products: Welding supplies, industrial and specialty gases
Territory: Southern New England
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