Solid as a ROCK
Kaman Industrial Technologies may not be the biggest PT house on the block, but to many industry watchers it's one of the best
By Victoria Fraza -- Industrial Distribution, 10/1/1998
There isn't much to differentiate the buildings that dot the main roads of Bloomfield, Conn.'s industrial region, just a few miles from Hartford's Bradley International Airport. But as you drive down Blue Hills Avenue, one building does stand out -- and not because of its size, color, or any kind of new-wave architecture.Firmly planted in the grass beside the building's driveway are five simple letters: K-A-M-A-N. The three-foot high, free-standing structures, in metallic gray, present a sturdy, strong and powerful image. Understated and conservative, it's the kind of image that perfectly suits the Kaman Corp., a company perhaps best known for its aerospace business, but firmly entrenched in the distribution industry, as well.
Just a half mile up the road, in Windsor, Conn., is the home office of Kaman Industrial Technologies, the power transmission/motion control distributorship Charles Kaman founded 27 years ago. Considerably smaller than the other two PT giants (Motion Industries and Applied Industrial Technologies), Kaman is nevertheless a powerful force in the market -- the publicly traded firm is twice the size of the industry's other big players. Customers and suppliers praise Kaman's services, people and innovative use of technology, characterizing the steadily growing organization as a solid business partner.
Kaman has done much in recent years to sharpen that image. In 1995, the company formed an alliance with Graybar Electric and Vallen Safety Supply to heighten its integrated supply capabilities. In the last 18 months, it has expanded its geographic coverage, opening 26 branches primarily in the Southeast. Five of those branches are the result of acquiring Alliance Industrial Products of Fort Worth, Tex., but the remainder are start-ups. And in March, 1998, Kaman opened its newest distribution center in Louisville, Ky. The 71,000 square-foot facility is located near a UPS hub to provide next-day service to nearly all of Kaman's customers. Given the center's proximity to UPS, Kaman is able to ship orders until 11 p.m. for next-day delivery.
While Kaman Industrial Technologies has traditionally kept a low profile, that status does not equate to stagnancy. Choosing to stay out (for now) of the acquisition frenzy rocking the industry, the half-billion dollar company has chosen to focus on extending the "Kaman culture" to new markets. Having landed one of the biggest single-source PT deals in the country in 1996 -- a contract to supply 34 Procter & Gamble plants across the United States -- that strategy seems to be working.
Solid roots
Charlie Kaman, a lanky but powerful-looking 79-year-old who is still active in the company, founded Kaman Corp. 53 years ago. An aeronautical engineer, Charlie Kaman began by designing and building helicopters and eventually got into the design and manufacture of aerospace components as well. About 25 years into the business, he realized the need to diversify the corporation and decided to get into industrial distribution. In 1971 he founded Kaman Bearing & Supply through a series of acquisitions that began on the West Coast and slowly moved east. Today, the distributorship makes up 53 percent of Kaman Corp.
Until 1986, most of Kaman Bearing & Supply's divisions operated autonomously, using different computer systems to conduct day-to-day business. That year, the company launched a marketing program aimed at unifying the divisions -- the program included changing the company's name to Kaman Industrial Technologies (which officially happened in 1990) and implementing a single, company-wide computer system.
"We called it our new beginning," says Jack Cahill, the company's soft-spoken, gentlemanly leader who joined Kaman in 1975 and was named president five years ago.
The late 1980s did, indeed, mark a turning point for Kaman Industrial Technologies. Behind the name change and the new computer system was the philosophy of selling systems. So, instead of focusing primarily on bearings and power transmission as it had in the past, Kaman added things like electrical products and components, material handling systems, linear motion products, fluid power components and a range of accessories. While Kaman Bearing & Supply had always focused on providing service along with its products, the concept of supplying a full range of industrial systems was new. At the same time, Kaman began investing in shop services -- things like belt fabrication, fluid power centers, machining, and repair services. The new philosophy spawned many of Kaman's current programs -- like integrated supply, national accounts, and others.
"That took us to a new avenue of serving the customer," says Cahill, adding that the goal was to take responsibility for a customer's entire project. Not only would Kaman provide the products and services, but it would offer solutions to a range of problems -- solutions that would improve the customer's capabilities. Cahill says that's what the advanced distributors are doing today.
And he's right. The strategy Kaman initiated in the mid-80s is not unlike what many distributors are beginning to focus on now. And while the company has sufficiently increased its capabilities, it continues to diversify the markets and geographic areas it serves. Today, no SIC code represents more than 10 percent of Kaman's business, and the company has 189 locations in 35 states and British Columbia.
Underlining all of this progress is a commitment to technology -- not only in product offering, but in business systems. EDI links Kaman's computer system to customers' purchasing departments so that purchase orders, proposal requests and invoices can be sent through the system immediately. Direct access technology allows branches to connect directly to vendor inventories in real time. Employees are then able to search for items not only in Kaman's stock, but also anywhere in that vendor's stock. Warehouse automation has sped up delivery services at the Albany, N.Y. distribution center, and the technology will be rolled out to Kaman's other four distribution centers sometime next year.
"They are very innovative in terms of efficiencies," says Charlie Monahan, sales manager for the Gates Rubber Co., a longtime Kaman supplier. Monahan refers to Carlos Ingram, Kaman's vice president of business systems, as a "systems wizard."
Ingram implemented Kaman's "network-centric" computer system in 1986, and continues to oversee the development of all company systems. Recent projects include developing a company Intranet (expected to be up and running this month) aimed at reducing much of the paperflow that still exists within the company despite its advanced systems. Ingram also anticipates using the Internet for electronic commerce in the near future. Today, Kaman's Web site is used primarily as a marketing tool.
Among Ingram's "wizardly" skills is the ability to get things done thoroughly and quickly. A case in point is the Y2K issue. Kaman tackled the problem and became compliant in record time. Last December, a team was assigned the task and put up at a separate location to address it so that they would have no distractions. Six months later, Kaman had converted, tested and implemented Y2K software without interrupting daily computer operations. The project involved changing over 9,000 computer programs. For its efforts, Kaman was named a gold winner of the 1998 Connecticut Innovation Award, a state-sponsored award that recognizes excellence in Connecticut firms.
From technology to people
Being part of a major aerospace engineering firm makes it tough not to be technologically astute, says Cahill. But as more and more companies begin to focus on technology, it becomes harder to stay ahead of the curve. Today, Ingram works closely with Blair Hawley, vice president, logistics, to take the company's technology to the next level. The two are working together to streamline purchasing functions, and are in the process of developing vendor managed inventory programs, for example. But despite such forward-thinking strategies, Cahill explains that since everyone has the same products, and everyone will eventually have the same technologies, the only real differentiating factor left is people.
And he's especially proud of the diversity of Kaman's staff. Just about half of the company's executives came from distribution, and the rest came to Kaman from other industries -- retail, manufacturing, and insurance, to name a few. It's a healthy mix, according to Cahill, who realizes that while much of a company's talent needs to be homegrown, there is also a need for outside influence.
The idea to bring in managers from other industries was born five years ago, when Kaman was growing rapidly and couldn't promote enough people from within to support the growth. At the same time, company leaders realized the distribution industry was behind the times in many areas -- logistics is one example. To "get up to speed" they hired people like Hawley, whose retail background made him the perfect candidate for the logistics position, and Bill Childers, vice president, sales and marketing, who came from manufacturing.
Kaman's emphasis on people can be seen most clearly in its recent growth strategy. Rather than expand in the Southeast by acquisition, they chose to develop new branches on their own. The reasons were actually two-fold: first, there was no company or combination of companies Kaman could purchase to give it coverage in the 26 new areas it serves; and second, company leaders wanted to establish the "Kaman culture" right away, and what better way to do that than with their own people?
A spokesman for one of Kaman's major national accounts says that philosophy has served Kaman well. Kaman opened new branches to service the account, assigned a project manager to lead the transition from several distributors down to one (Kaman) at all plant locations, and was willing to move the right people to the new locations that needed help. Not only was Kaman willing to accommodate the account, but it did so with a professionalism uncommon to many companies in the industry, the spokesman adds.
That professional attitude is part of the rock-solid base Kaman was founded on. And from that base, a network of quality services has emerged. Integrated supply is available to customers in many forms -- procurement and inventory management, participation in a vendor city concept, and partnering with other distributors to increase product offerings. Cahill describes integrated supply as an evolution of the distribution process -- and he thinks it will continue to evolve.
Kaman's integrated supply program is closely aligned with its national accounts and "Documented Savings" programs. The former was developed in response to the consolidating customer base and the need to supply those customers on a national basis. While both national accounts and integrated supply are an important part of Kaman's business today, Cahill says Kaman wants to strike a balance between such agreements and individual customers.
"I wouldn't want to see us totally reliant on contracts for business," he comments. "It really has to be a much stronger relationship than just winning a bid."
That's, in part, where the Documented Savings program comes in. Born out of Kaman's desire to solve customers' problems, the program was pioneered in the mid-1980s, but really took off in the last five years. It involves analyzing a customer's cost, developing a method for measuring cost savings, and submitting in writing the dollar savings that can be achieved through Kaman's recommendations. Cahill says when the company introduced the concept, no one had ever heard of it, making it a tough sell. Now, customers are demanding the service -- not only from Kaman, but from other distributors. Kaman is seeking to have the phrase trademarked.
That would be an important step in ensuring that Kaman's reputation as an innovative company be known in the distribution community. But for Kaman, it seems that success does not lie in gaining prominence among its peers. Preferring to stay out of the limelight, the company is much more focused on its external relationships -- the strength of which attest to Kaman's reputation as a solid, steady company among customers, suppliers, and the investment community.
"They have an outstanding reputation in the industry," says Wayne Clark, Gates Rubber Co. vice president. "They are respected by the manufacturing industry and by the customer base they service."
What could be better than that?
COMPANY SNAPSHOT
Kaman IndustrialTechnologies
President: Jack Cahill
1997 Sales: $480 million
Founded: 1971
Headquarters: Windsor, Conn.
Locations: 189
Primary Products: Power trans-
mission/motion control
NASDAQ: KAMNA
Web site:
www.kaman-ind-tech.com
Kaman Industrial Technologies: MILESTONES
1971 Charlie Kaman founds Kaman Bearing & Supply
1971-85 Series of 34 major acquisitions establishes the company as an industry leader
1978 Kaman hits $100 million in sales
1984 Reaches $200 million sales goal
1990 Kaman Bearing & Supply officially becomes Kaman
Industrial Technologies
1993 Jack Cahill named president
1995 Kaman hits $400 million in sales
1996-97 Opens 20 branches, primarily in the Southeast
1997 Acquires Alliance Industrial Products, Fort Worth, Tex.
1998 Opens newest distribution center in Louisville, Ky.;
named gold winner of the 1998 Connecticut Innovation
Award for becoming Y2K compliant within six months
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