Movin' on up

Spurred on by a major acquisition in 1996 and a new parent company in 1997, Curtis Industries is charging full force into the industrial realm

By Victoria Fraza -- Industrial Distribution, 8/1/1998

Curtis Industries

Headquarters: Mayfield Heights, Ohio

Founded: 1932

Locations: 5

1997 Sales: $81 million

Primary Products: General MRO supplies

Web site: www.curtisindustries.com

When Curtis Industries opened its doors for business back in 1932, keys were the name of the game.

As a locksmith supply company in the Cleveland, Ohio area, Curtis dealt mainly in key blanks and key cutting equipment. Over the years, the company expanded that business significantly, introducing state-of-the-art security products for cars and trucks. Though that business represents only 25 percent of revenues today, company leaders say it is the foundation for the $81 million in sales recorded in 1997. Security products placed Curtis in more than 16,000 car dealerships across the country -- in addition to rental agencies and trucking companies -- putting it in the perfect position to supply those customers with much-needed MRO products.

From there, Curtis Industries became a full service general-line distributor, and the next move was to supply industrial customers. Today the company serves industries as diverse as pipeline construction, large equipment manufacturing, government agencies, food processing and pharmaceuticals, to name a few. The business is a 60-40 split between automotive (dealers, rental agencies, etc.) and industrial MRO, and is national in scope.

Though Curtis has come a long way since the early years, the last six have seen the most significant changes. In an effort to make Curtis Industries into an industrial MRO giant, company leaders Maurice Andrien, Idelle Wolf, and Keith Drewett have: streamlined the distribution process, gained a parent company intent on expanding through acquisition, made heavy investments in technology and personnel, and purchased industrial distributor Mechanics Choice, a former division of billion dollar electronics distributor Avnet. (Andrien is president and CEO, Wolf is senior vice president and CFO, and Drewett is president, automotive and industrial division.)

With anticipated sales of $88 million this year, Curtis Industries is on the fast track to becoming a major player in the business. As evidence, company leaders say its far-reaching, national coverage will allow Curtis Industries to become a successful player in the integrated supply game. And the financial backing of parent company NESCO should allow Curtis to become a consolidator, fueling rapid growth through acquisition. These strategies will build on the company's core strengths: a network of over 700 field salespeople; 28,000 SKUs; centralized distribution at four key locations in North America; well-established on-site inventory management programs; and a reported 97 percent fill rate.

Shifting gears

"We want to be aligned with the winners of the future, and we think [Curtis Industries is] going to be one of the winners," says Frank Corrigan, national sales manager for abrasives manufacturer Norton Co.

Though Norton worked for years with Curtis on the automotive side, it wasn't until recently that the company began to expand the relationship. Like other suppliers and customers, Norton is excited about Curtis Industries' plans to grow, and Corrigan says Norton is intent on growing with them. A key part of that growth will involve Curtis' three-fold plan to pursue the industrial marketplace: through its direct sales force; by the pursuit of large, multi-location national accounts; and through integrated supply.

First and foremost is through the sales force. Sales and service reps across the country provide Curtis Industries' customers with on-site inventory management for small consumable items -- Curtis' core competency. Curtis has established itself as a provider of what it calls "free issue bin stock" -- products such as fasteners that don't need to be inventoried, but have to be there when the customer needs them. Curtis reps replenish those items on a regular basis. Managing consumables for the customer takes cost out of the channel, says Drewett, and thus makes Curtis Industries a valuable partner.

"We think our ability to essentially provide on-site service in literally any zip code in the USA is extremely significant," Drewett says, adding that technologies like EDI, sales force automation and a customer-service software package -- which allows customers to place orders and obtain their order history -- help sellers in the pursuit of new business, as well.

Secondly, in 1992, Curtis began to focus on building business through national accounts. Since then the company has seen significant growth in that sector -- 30 percent last year alone. Drewett reasons that a major issue distributors are struggling with today is how to get their businesses to a national scale. That's because to be a long-term player, he adds, a distributor must be able to deal with large "sophisticated" accounts and provide them with a consistent level of service.

"We have that ability, we're there, we're at a national scale and can deliver seamless service," Drewett says. "And it's extremely powerful."

And that's what makes Curtis Industries the perfect ally in terms of its third growth strategy: integrated supply. In pursuing that avenue, Curtis does not see itself as an integrator. On the contrary, Curtis Industries' role will be that of a tier-one supplier to lead integrators across the country, says industrial marketing manager Mark Knight. The company has already made contact with what it believes are the top 15 to 20 integrators in the United States, and has hopes of starting some programs soon.

"We believe that [MRO] is about a $100 billion marketplace and that integrated supply is about half of that total," says Knight, adding that those large MRO purchases that don't turn into integrated supply accounts, will certainly go to a commodity bucket concept in which five or six main distributors supply all the MRO products a plant needs. "We believe to play a role in those environments, directionally it makes sense to work with the people we perceive to be lead integrators."

Knight says he sees Curtis' competitors shying away from integrated supply and commodity management because they are concerned about eroding margins or the effect on their sales force. To the other extreme, he says some competitors are forgetting their core competencies and trying to actually become lead integrators. Curtis Industries will not make either mistake, he says, and believes in sticking to what it does best -- providing a range of MRO products on a national scale.

There is, of course, another crucial element that will help make Curtis Industries a successful integrated supply partner, and it's something that's already helped the company on a national scale: technology. In addition to EDI, sales force automation and Cuflink (its customer-service software package), Curtis Industries has invested heavily in a centralized distribution system. Within the last three years, Curtis has completely re-configured its distribution system, going from five facilities to three in the United States. The main distribution center in Shelbyville, Ky. handles 55 percent of the company's U.S. order volume, while an Atlanta facility handles 30 percent, and a third facility in Sparks, Nev. handles the rest. A distribution center in Ontario handles the volume for all of Canada. Knight says 97 percent of customers receive their orders within two days.

Drewett says the speed and efficiency with which Curtis Industries operates gives the company another distinct advantage over the competition -- especially over alliances and consortiums, which are main competitors for integrated supply accounts. Drewett reasons that such entities have yet to prove whether or not they can stand the test of time and consistently deliver top-notch products and services.

"Can an alliance work?" Drewett asks. "Can these alliances hold together, make a commitment to deliver coast to coast? Can they deliver seamlessly, with the same quality, when different locations are serviced by different entities? It's an interesting question, and I don't know the answer to it."

Value-added philosophy

While Curtis Industries can rival its competitors with advanced logistics systems, a wide product offering (everything from fasteners to hose and accessories), and the ability to cover the entire nation, skeptics may question its lack of local, personalized service -- an attribute of many small and mid-sized distributors. Drewett counters by saying that, first, his company's network of sales and service reps can give customers the local attention that many large houses can't -- that includes the technical and applications support customers need.

Secondly, he points out that Curtis Industries is, for the most part, not dealing with the kind of products that need to be available through local inventory. Curtis Industries' methodology is to be pro-active rather than reactive -- and the kinds of products it supplies fit into that philosophy. By managing the inventory of small, consumable items, Curtis ensures that customers will have their products when they need them.

"In a sense we believe we have the best of both worlds," says Drewett. "Our sales force gives local attention you don't get from catalog houses, but we do give the efficiency of national distribution."

It all comes down to adding value, say Drewett and Knight. And Drewett offers an example. A truck driver is carrying fresh strawberries from California to Boston. Along the way, there is a mechanical problem and the truck needs to be repaired. At a maintenance station run by the trucking company half way across the country, the truck driver checks in and a mechanic takes a look at the problem and figures out what he needs to fix it. The mechanic then walks to a bin (in close proximity and already stocked by a Curtis Industries rep), finds the part he needs, and fixes the truck.

"The convenience of already having the parts to fix it, right at his fingertips, what is that worth, $1, $3?" asks Drewett. "No, it goes beyond that. It's getting the $30 an hour driver with $150,000 worth of strawberries on his way."

It's that value-added concept that Curtis Industries is transferring to the industrial customer. And so far it seems to be working.

"I've got a crew of three people, and everything's always going crazy, nuts and bolts are going like crazy," explains Adrian Garcia, purchasing agent for Murphy Brothers, an Illinois-based pipeline construction company and Curtis Industries customer for five years. Garcia explains that it gets tough for workers using the fasteners to keep track of them and do their jobs too. Having Curtis Industries around to take care of it makes a big difference. "It's better for us that way...and they have everything -- price, service, selection. I have absolutely no complaints."

Editor's note: This story was reprinted from ID's ASMMA/I.D.A. Spring Convention Guide published in June, 1998.

Fueling growth

In 1996, Curtis Industries purchased Mechanics Choice from billion-dollar electronics distributor Avnet. A well-established industrial supply business, Mechanics Choice fit into Curtis Industries' strategy to grow through acquisition and increase its presence in the industrial market.

Mark Knight, industrial marketing manager for Curtis Industries, says the deal was a win-win for everyone. Mechanics Choice helped beef up the industrial MRO side of Curtis Industries (a longtime supplier to auto dealers, rental agencies, and trucking companies), while Curtis provided Mechanics Choice the national presence it needed.

Today, Mechanics Choice operates as a division of Curtis Industries, with its own sales force that works closely with Curtis Industries' staff. The acquisition was a major step in a strategic plan aimed at turning Curtis Industries into a key consolidator in the industrial distribution marketplace.

"Our whole intent is to aggressively pursue acquisition," says Knight. "Industry consolidation is certainly an issue and we see ourselves as a consolidator."