Aligning internationally
Marketing agreements with suppliers are on the rise as consolidation continues
By Staff -- Industrial Distribution, 9/1/1998
Belting distributors increasingly are doing specialty fabrication and establishing mar-keting partnerships with international suppliers to prosper in a mature industry.Many companies no longer rely mostly on selling conveyor belts to traditional domestic industries like sand and gravel or mining. Distributors fabricate and alter belts with cleating, splicing and other technologies. Lightweight, European-style belts also continue to gain popularity with a variety of industries both at home and abroad.
At the same time, the growing presence of international manufacturers in the U.S. belting market has prompted more distributors to forge marketing agreements with their suppliers. Some company executives expect that continued consolidation among both manufacturers and distributors will also spur more alignment -- in some cases exclusive contracts -- with suppliers.
"Today, in order to be a participant in our market you've got to have some sort of international alliance either through ownership or a marketing partnership," says Wayne Hoffman, president of Siegling America, Inc. "We've finally reached the point that all companies of any size have an international alliance that I can think of.
"We find the industry demands us to add new, value-added products," Hoffman continues. For example, Siegling America fabricates edge-sealing belts to prevent the penetration of foreign particles. "It's the constant quest by our company," he says.
Many expect international manufacturers, which began entering the U.S. in earnest during the early '90's, to continue the heady pace of mergers and acquisitions here. The National Industrial Belting Assn. now counts firms from more than 20 countries among its 285 members, compared to a handful only five years ago. In addition to European countries, nations now represented in- clude South Africa, Korea, New Zealand, Australia and Chile.
"It might have taken a breather but there's no question in my mind that the acquisition trend is continuing, on both sides," says Rene Morf, president of Vis USA, LLC, a manufacturer in Branchburg, N.J. Concurrently, he says relationships among many suppliers and distributors are tightening. Vis USA, for example, is weighing whether to enter exclusive, "close relationships versus multiple relationships" with its suppliers in Canada and Mexico.
Unlike the trend in other industrial distribution sectors, Morf and others do not expect many belting distributors' buying groups or consortiums to form. Morf says individual manufacturers are strengthening distributor ties on their own. "Some of these consolidating companies are large and have interests in a variety of areas," he says. "It's up to the skills of management to connect these dots."
On the other hand, some distributors have formed selling groups in response to end users' demands to cut costs. NIBA president Richard Womack, for one, believes that type of marketing alliance will grow as distributors go after large international end users.
Carl Covin, president of Industrial Rubber Products, Inc. in Houston, Tex., says the shakeout from consolidations has yet to be fully felt -- but one result may be more suppliers selling direct. During the past 20 months, about half of his company's top eight vendors have gone through acquisitions. "My general sense is it's leading to perhaps a higher degree of independence among manufacturers," he says.
But Covin adds: "I don't really think they've figured out where they're headed with this."
Talkback
Related Content
Related Content
Sponsored Links
View All Blogs
