Finding the right fit
American Hose & Fittings reserves its product knowledge for customers who match its selling philosophy
By Sara Procknow -- Industrial Distribution, 6/1/1998
Product knowledge, whether it's hose and accessories or something high-tech like the Internet, is what sets American Hose & Fittings apart from its competition. And the competition in the Northwest is tough, often cutthroat between distributors. Just ask American Hose & Fittings co-owners Peter Grimes and Greg Bowman, who count at least five direct competitors -- some within only a few blocks of their firm."The market in the Northwest is growing -- so it's a customer's market. Some of the distributors are doing better than others, says Bowman, who serves as the company's president and stands by his hose-and-accessories-only philosophy. "We've seen some decline. Certain distributors are successful because they find a niche, instead of being a general-line house."
With Bowman's background in the hydraulic hose business and Grimes' in industrial belting, it seemed a perfect fit for these two businessmen to come together in 1983 to form American Hose & Fittings. They've stuck to some core business values -- staying small ($6.5 million in sales last year), staying focused and staying competitive. And, they've kept to their same product niche: a combination of industrial and hydraulic hose lines, which American Hose sells -- often to the same accounts.
"You can sell more product to the same customer base with these two complementary lines. Gives us much more flexibility as far as who we can call on," Bowman adds. "Plus, we're a specialist. If you want to buy something in a box, you go to Grainger. If you want help, you come to us."
Promises made, promises kept
Tom Chojnacki, Dixon Valve's western regional operations manager explains, "They are a complete hose house -- hydraulics and industrial. American is strong in hydraulics. And, they're genuine in their efforts. They tell you what they can do it as opposed to promising a lot and not being able to deliver. It's integrity. Unfortunately, not everybody in this industry is the same way."
He adds, "What I see happening, especially among power transmission people, is the industry is growing by leaps and bounds. Distributors are buying other distributors and expanding their product offerings in the process. Unfortunately, their expertise gets watered down. American has the expertise of being well-qualified, on-site to handle the problems for both sides of their business. Hose is their meat and potatoes."
With such a competitive market, what keeps American's sales force motivated? Bowman answers, "A big part of outside sales is knowing that we can back them up on the inside. So, whenever they're in the field, they know customer service on the inside will do whatever is necessary. We give them the confidence that if they promise the customer something, we can deliver."
Ron Cherry, purchasing agent for Hydramaster, a manufacturer of carpet cleaning equipment, didn't believe all of American Hose's promises -- that is, until they delivered.
"At first, there seemed to be a lot of promises on the table that I wasn't so sure they could fulfill," he says. "But that wasn't true with American Hose. Plus, they make it a point to understand who we are as a company."
That's important to Cherry, who deals with more than 400 distributors. He primarily buys from three hose and accessory houses. "Each one has their niche and expertise for a specific slice of the product line," he adds.
Tapping into a customer's needs is part of American's Hose's philosophy on service. American Hose is the only supplier in the area that has its own fleet of trucks and can turnaround orders in 24 hours or less. It's part of what sets them apart from the competition.
Delivery is a big part of American Hose & Fitting's value-added service -- shipping most orders the same day with its own fleet of trucks. Committed inventory for many OEMs keep the just-in-time service levels necessary to keep customers happy.
Support like that makes Al Morash, a parts expediter for Pacific North Equipment, a satisfied customer. Pacific North Equipment is a heavy-equipment dealer with a full sales, repair and rental business for Komatsu, P&H Cranes and Timberjacks. Morash has been working with the folks at American Hose for the past 10 years.
"American hose is very knowledgeable on product. If I can't figure out what we need, they usually can," says Morash. "I always contact them first when I have any hydraulic questions. They provide very good service -- same day delivery if that's what I need. They can actually identify 'tricky' adapters over the phone, just by my description. They can tell you if it's metric or American, and they'll tell you if they've got it."
That problem-solving ability is also important to Cherry.
"They reviewed our inventory and found what products work for them in their niche, such as multiple like-items where they can save money," he says. "They know the market and they know where their price needs to be. They also know when they have to bend a little."
Service and expertise keep Hydramaster up and running. Cherry points to a recent example where American found a better hose for an application: "The problem with the hose is that it wasn't handling the heat. And we have engines that run off our hose lines that produce a lot of heat. American Hose came in and specified a different product to keep up with the heat."
Customer focus
"It used to be, the customer needed product today. Now, customers are waiting longer to order so they call and actually needed it yesterday," Grimes says. "They think that since they order faster (via fax), they are able to get the product faster."
Grimes also says that today's customers have higher expectations. Plus, customers are still looking for the best price. American Hose offers a bit more service than the typical specialist does. Its value-added offerings look more like a service menu:
* Help with installation
* Assemblies & fabrication (over 200 a day)
* Cutting of hose
* Twenty four-hour delivery
* Extended store hours (6 a.m. to 6 p.m. Monday through and 9 a.m. to 3 p.m. Saturday)
* Customized kitting
The salespeople at American Hose make it a point to qualify their customers. "Is price all they're interested in?" Bowman asks. "Experience will tell what you can and can't get with price shoppers." Bowman has learned the hard way. A distributor spends time with a customer, working to find the answer to a problem only to be under-cut on price from the guy up the street. Bowman's not afraid to turn down a request-for-quote.
It goes with the American Hose philosophy to make price a non-issue. "With our extra value-add, we are able to compete in a higher gross-margin environment," Grimes adds. "We are not a price house. We are a problem solver."
Experience has also shaped American Hose's customer base. By design, no one customer represents more than 10 percent of the business. MRO customers make up about 40 percent of American Hose's customer base, while 60 percent is wholesale, resale and OEM.
"We go after the smaller MRO user that's at a higher profit. If you service those smaller accounts, they won't shop around. We put our efforts into the smaller accounts," Grimes says. "Initially when we started out, our focal point was more MRO. We've progressed since then and have chosen not to pursue the larger MRO accounts, like Boeing. We prefer to go after the lower risk, higher-profit accounts."
The Bowman and Grimes team has also kept to one location. "It has its advantages especially with inventory," Bowman admits. "We've had a tremendous growth rate and honestly have had no time to branch out."
With steady growth hovering around 12 percent each year, Grimes and Bowman feel confident that it's growth that's manageable, yet promising.
Vendor relationships
Bowman and Grimes agree that their base of suppliers is built on quality. They've chosen to align with brand-name vendors who offer higher-end products. And it's a concept that's stood the test of time.
"We've formed relationships with these vendors that have lasted 15 years. We picked those types of supplies who have integrity. Lots of manufacturers sell to everybody. We didn't pick those types of suppliers to represent," Bowman adds.
Don Brown, field sales manager for HBD Industries, says his firm has a deep respect for American Hose. "Originally, it was us calling on them (to take on the line), and eventually the relationship grew with their respect for us and our respect for them. When their previous source was taken out of the picture, we grew into their source for air and water hose.
"One of the things American Hose does well is they target accounts and really service them. It's their ability and expertise, to solve problems that sets them apart. They try to be something more than somebody who's just got product and a brochure."
American Hose turns to its vendors for market support in three areas: qualified leads and information on market share, product training, and goal setting. The last area is a hot button for Bowman.
"It's great to have a vendor come up for a visit," says Bowman. "But we need a plan if we're going to work with them. Let's talk target accounts and target products -- goals and volume."
"Our relationships with our vendors has not changed very much. There is a much larger push technologically for EDI," Grimes adds. "If anything, our vendors are more 'hands-off' than ever before."
Dixon Valve's Chojnacki says it isn't uncommon for "most distributors to take the purchase order and run. American instead goes back through the plant and says there may be a better way -- a safer way to do this," he says.
Chojnacki is referring to American Hose & Fitting's expertise and uncommon field presence -- even though they are a small distribution house. Together, Dixon and American have conducted safety seminars at the customer level. This joint venture, meant as a value-add, involves surveying a given operation in a plant and addressing potential problem areas.
"We don't sell hose and fittings, we sell service," says Bowman. "Everyone's got product; not everyone has our degree of service. Service is really how our business has been built.'' I
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