Northern exposure
Western Canada's The BC Bearing Group reveals the steely resolve at the heart of the company's success
By Susan L. P. Srikonda -- Industrial Distribution, 10/1/1999
Credited with being western Canada's unofficial gatekeeper, The BC Bearing Group provides formidable competition to American companies trying to penetrate the British Columbia market. Although the broad sweep of consolidation hasn't yet hit Canada, where many post-war firms are still owned by their founders, that doesn't mean the threat is far from the minds of chairman and CEO Wendy B. McDonald and her four children who lead the ranks at The BC Bearing Group.In fact, it's the knowledge that acquisitions and mergers are a fact of life, combined with a simultaneous determination to remain independent, that contributes to BCB's current push to secure sole source supplier and other long-term agreements with its customers. In an age when ties of local and national loyalty can't be counted on, BCB knows that providing solutions and adding documented value is the way to win a customer's loyalty, no matter which side of the border they call home.
Family values at work
McDonald, the matriarch of this bearing and power transmission distributorship, headquartered just outside of Vancouver, British Columbia, has established a clear set of values and the sense of an extended family for the company. The members of McDonald's family currently involved in the business include: Robert S. MacPherson, president and chief operating officer; Scott A. MacPherson, president and chief operating officer of US Bearings and Drives; W. Penny Omnès, vice president of marketing and human resources; W. M. (Bill) Dix, vice president, international; and Lance D. Ross, marketing manager.
Omnès says her mother has always exemplified the participatory style of leadership now coming into vogue that many management experts say women are particularly good at.
"A lot of top companies now are going toward the type of leadership where everybody is involved. That way you're all going in the same direction," says Omnès. "It just works better: it's teamwork. And that's the way my mom has led the company for years. She's always surrounded herself with good people and they all know that they're part of [the business] and it works.
"We have open book management so [employees] know exactly how the company stands. We don't withhold any information; we try and involve them as much as possible because we're all in this together. And that's how she is. She's a great leader," Omnès says.
Rob Gillis is just one example of the fruits of McDonald's efforts to support and encourage her employees. Gillis has been with BCB for 23 years, advancing from the shipping department through various positions to his current post managing BCB's New Westminster branch. Gillis credits the family for giving him the autonomy to succeed in his work.
"They trust you and you're allowed to make your own decisions, so it's sink or swim," Gillis says. "I think Mrs. Mac's biggest strength is her rapport with people, with big customers and things like that. As far as the technical side of the business, she hires people who know what they're doing. I think that's the secret to running a good business: to surround yourself with good people and let them do what they're supposed to do."
The BCB leaders have extended their leadership roles into industry trade associations. McDonald paved the way by presiding as president of the Bearing Specialists Assn. in 1985. Robby MacPherson was BSA president in 1991 and Scott MacPherson was 1988 president of Associated Bearings and Power Transmission Distributors and will be BSA president in 2002. Omnès is quickly following her family's lead. She is just finishing a term as 1st vice president of the Power Transmission Distributors Assn. and will reign as the association's first female president for the year following this October's convention. Omnès credits the example her mother set for women in the industry to play leadership roles.
"She just instills it in you that you're as capable as a man, so why not?" Omnès says. "But the first time I went to a PTDA convention, there were a thousand people there and mostly men. It's just so overwhelming. But then they asked me to serve on a committee and once you do that you've got a circle of people that you meet and it makes it so much easier."
Attracting new faces to PTDA's membership rosters will be one of Omnès' primary tasks for the coming year. The era of mergers and acquisitions has caused PTDA's membership to drop and so Omnès and her fellow board members will accept the challenge of attracting new members, which is critical to maintaining the organization's current level of program offerings, Omnès says.
Canadian stronghold
The names of McDonald and her children have been familiar names in the industry for many years as representations of all that it means to be a family-owned distributorship. And the family intends to keep it that way.
"We've had offers. We're not interested," Omnès says. "We enjoy the business -- all of us. We intend to keep it a family owned business into the third generation and possibly the fourth. My mom is committed, absolutely. That's why she's still here: she loves it. She'd be bored to tears if she didn't have this place to come to. We're absolutely committed to the future."
Such a strong commitment to a company, an industry and even a country is often not enough in today's fiercely competitive market where loyalty runs thin. McDonald and her children know that, and they're keeping a very close eye on the competition.
Though BCB is firmly entrenched in the western provinces of Canada, corporate leaders are also keenly aware that they face competition from local companies like Industrial Equipment and Bearing & Transmission, as well as from American companies like Kaman Industrial Technologies, which has a dozen locations inside British Columbia, and Motion Industries. Motion's one branch in B.C. just provides a toehold in the province, but the company has greater representation within Canada in the prairies and Ontario.
David Heal, general manager of western Canada for NSK/RHP Canada Inc., believes that American companies would have a greater number of branches in western Canada if it weren't for BCB.
"There was talk about five years ago that a large U.S. player would come in and take over the market, but it's a difficult market to penetrate," Heal says. "They'd have to come in and deeply entrench themselves, literally open up a branch side-by-side with BC Bearing. That's a very difficult battle ... BC Bearing is the one standing at the gate stopping them from entering western Canada because of their strengths and their relationships with their customers."
When asked about that theory, McDonald responds that she hadn't thought about the company's role that way, but notes that BCB knows from experience what it's like to break into a solid market. The company's American subsidiary, US Bearings and Drives, opened its first branch in Washington State in 1980, and has 14 locations in the western states.
"We fought a really tough battle when we moved to the States, and that was before the Free Trade Agreement," McDonald says. "Especially in Seattle. Our competition would go around to their customers and say 'don't buy from them, they're Canadian.' And it took us a good 10 years [to get established]."
Perhaps from that experience, BCB learned that when it comes to business, you can't take national loyalty to the bank.
Gary Hill, BCB's vice president of sales for Canada, says the company is acutely aware that the mergers and acquisitions affecting their customers' industries directly impacts their loyalty.
"When most of these companies [involved in cross-border trade or mergers and acquisitions] were Canadian-owned, I think there was a sense of 'let's deal locally with other Canadian companies,'" Hill says. "But I think that's changing. I think that companies are going to deal with whomever they think will do the best job for them, whether that is a company in Canada or in the U.S. or from Asia or Europe. ... I don't think you can sit here and think that if you've created this whole little world that you're going to have control of your business."
Comments from BCB customer Dave Hargreaves, manager, central services, of Howe Sound Pulp & Paper Ltd., confirm Hill's opinion.
"The company philosophy is to support regional business where it makes economic sense to do so," Hargreaves says. "As long as we get competitive pricing and exemplary services, if everything else is equal, we would pick a Canadian supplier."
Aiming for alliances
In order to compete and grow in such a capricious market, The BC Bearing Group is making an aggressive effort to reach out to customers to form strategic alliances and has focused on building relationships with other distributors through alliances designed to provide clients with national supply capabilities. US Bearings and Drives is involved with the ID One consortium in the U.S. and BC Bearing has entered into an alliance with eastern Canada-based distributor Canadian Bearings.
Two years ago, BCB customer Howe Sound Pulp & Paper Ltd. entered into a five-year single sourcing agreement with BCB to supply a complete range of mechanical power transmission products. BCB is currently one of nine key suppliers that Howe Sound contracts with, down from nearly 1,000 suppliers a few years ago, Hargreaves says.
"It's been excellent," Hargreaves says of the company's decision to reduce vendors. "We've lowered our costs, lowered our inventory, built better relationships with the key suppliers and taken advantage of their technical capabilities."
What distinguishes BCB from its competitors, Hargreaves says, is the very thing that BCB management says makes them different: their staff.
"[BCB's] real strength is their people," Hargreaves says. "The real strength of any distributor is the point of contact. We've been real fortunate that the people who've called on us here have been superb, and with that comes a level of trust and from that you can build a relationship."
For BCB, forming strategic alliances with customers is crucial to maintaining its position in the marketplace and to keeping the competition, American or otherwise, at bay.
"The more long-term agreements we have in our marketplace," Hill says, "the stronger we are and the less concerned we have to be about the larger players coming into this market. So we've wanted to do the best we can in our marketplace to show our customers that our capabilities are there, as a way of keeping out the [competition]."
The company's effort to strengthen itself through alliances led to a coast-to-coast alliance with Canadian Bearings Ltd. in 1995. The alliance is intended to capitalize on the distributors' strong presences in the western and eastern Canadian markets, respectively.
The Canadian coastal markets are separated by natural barriers that include the Rocky Mountains, the forests and lakes of Ontario, and a vast prairie, which may have contributed to the tendency of both companies to develop solely on their respective coasts. The alliance allows both companies to offer nationwide service to customers.
The alliance is seen favorably by BCB customers like Steve Bishop of Weldwood of Canada, a forest products and market pulp manufacturer for whom BCB is a primary supplier.
"It shows that BC Bearing understands the benefits of working together and by understanding other organizations they can benchmark themselves. I think it's a plus," Bishop says. "It broadens their horizons and enhances their performance."
Keeping customers close
Aware that simply delivering product on time at a fair price is no longer enough to keep customers satisfied, BC Bearing is making strides to work more closely with customers. And it hasn't gone unnoticed.
Bishop says Weldwood appreciates the tailor-made technical training seminars that BCB offers, as well as the company's ability to conduct comprehensive plant surveys.
"Our plywood plant was reconfigured recently with a limited amount of time left to do a survey," Bishop says. "BC Bearing made an extraordinary effort to bring in a task force that worked continuously during a 24 hour period to get the survey done. Although it was not cost effective for them, it helped our maintenance agreement immensely."
Beyond offering extensive service and technical capabilities, The BC Bearing Group makes a unique effort to keep its customers close. Three times a year the company publishes a newsstand-quality magazine called The BCB Communicator -- and a sister publication in the U.S. called The USB Communicator -- that together go to more than 6,000 customers. Far more than a standard company newsletter, The BCB Communicator couples general interest articles, ranging from sports to entertainment, with news about BCB and technical updates.
The purpose of the unique format, says marketing manager Lance Ross, is to reinforce BCB's relationships with suppliers and customers while giving the company's primary direct-to-the-customer communication forum a chance at getting more than a 15 to 30 second scan.
"Through the balance [of article topics] there's something to attract their interest. Ideally, it will help them understand our company," Ross says. "Because when a customer understands their supplier and their strategic partners better, they're more inclined to have a better relationship with that supplier."
The final element that is helping BCB pull its customers closer is that the company has recently begun to focus even further on developing one-to-one business relationships with their customers.
"We take into consideration the size of the customer, combined with the activities we do to service them," Omnès says.
"All customers require services -- some more than others -- and it's critical to cost-effectively customize our offerings in meeting the customer's needs and requirements," says Hill.
Beyond the border
Keeping close tabs on customers is getting increasingly complicated for BC Bearing as it works to expand its international presence, particularly in the United States, Chile and Mexico. With the exception of the U.S., in most cases BCB has followed its existing customer base to foreign markets.
"A lot of the [international] business is with the same types of companies and the same types of equipment so there are some synergies," Hill says. "A lot of the Chilean business is Canadian mining companies operating in Chile and the mining equipment is quite often the same, so it makes sense." BCB opened its Chile office in 1993.
BCB opened a branch in Hermosillo, Mexico, in 1989, providing access to an area of Mexico where a number of American companies have manufacturing facilities. Altogether, BCB has expanded to three locations as it grows further into the Latin American marketplace.
Given the role that McDonald has played in promoting free trade (see sidebar), it comes as no surprise that BCB has ventured into international markets. After BCB's enterprises in existing international markets have stabilized, McDonald says, it is quite likely that the company will pursue other international opportunities for growth.
"I'd like to see our sales up around $200 million at least [within the next 10 years]," McDonald says. "I'd also like to see us expand more in the States, get Chile really on its feet and expand further in Mexico."
COMPANY SNAPSHOT
The BC Bearing Group
Headquarters: Burnaby, British Columbia
Principals: Wendy McDonald, chairman and CEO
Robert MacPherson, president and COO
1998 sales: USD $84 million (CDN $125 million)
Branches: 54
Locations: Western Canada, United States, Chile, Mexico
Product categories: Bearings, power transmission/material handling, electrical, allied industrial products
Markets: Pulp & paper; forestry/lumber; mining; oil, gas and petro-chemicals; food processing; agriculture/farm equipment; transportation; electronics
Web site: www.bearings.com
At the helm: Wendy McDonald
Though The BC Bearing Group, headquartered in Burnaby, British Columbia, was started by Wendy McDonald's first husband, Robert MacPherson, in 1935 as a small machine shop, it's McDonald -- or "Mrs. Mac" as she's known to employees and associates -- who has built the business now recognized as one of North America's leading bearing and power transmission distributors.
McDonald first ventured into the business when her husband gave her power of attorney upon going overseas as a bomber pilot during World War II.
"I found out I had power of attorney and I didn't know what that meant. So I went to a lawyer and was told 'well, you'd better go and look after your interests,'" says McDonald.
McDonald then went into the office a couple of days a week, while her sister looked after her two young children, and familiarized herself with the administrative side of the business and met the local suppliers.
When her husband returned from the war, McDonald returned to being a full-time mother and had two more children.
MacPherson was killed when his private plane crashed in 1950 and McDonald stepped in to lead the company. She says the decision to take over the company was fairly cut-and-dry: "Quite simply, I had four children to feed," she says.
Being a woman in the distribution industry in the early '50s wasn't easy for McDonald. Early in her assumed presidency she faced an internal insurrection that resulted in the loss of a number of key employees. Undaunted, she moved forward consulting lawyers, bankers and mentors in the industry along the way and created a company known for treating its employees as extended family.
"You never go alone in a business," McDonald says. "You're part of the business, and all of the people who work for you and with you, they're part of the business."
Over the years she has assumed the role of matriarch seemingly with open arms. She buried two more husbands after MacPherson, had one more child with her second husband and adopted another five -- in case you've lost count, that's 10 children. And 28 grandchildren. More than 360 employees. And, at 76, she shows no signs of stopping.
"What else would I do? I've been working all my life, raising kids and building this business," she says.
Her business acumen has won her numerous awards and honors, among them: the Veuve Clicquot Award of Distinction, which is awarded to the top businesswoman in a different country each year; Power Transmission Distributor of the Year, 1987; the first woman chair of the Vancouver Board of Trade, 1990; the Order of Canada, 1997; and membership on Canada's International Trade Advisory Committee, which helped open the borders between Canada and the U.S. and, later, Mexico under the North American Free Trade Agreement.
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