'Made-to-order' gets the order

Offering customized belting secures more accounts and increases margins

By -- Industrial Distribution, 9/1/2000

Winning accounts and increasing profits in the industrial belting supply business often comes down to the "Cuisinartrfactor" of how well a distributor can slice and dice a belt to meet customer needs.

Distribution companies must still navigate the integrated supply chess game played by many manufacturing customers, but transforming the hay-bale-or-larger sized rolls of belting into straps or ribbons that function in sync with increasingly specialized and efficient machines can help a company checkmate the competition.

Conveyor Belt Services, Inc., a mid-sized distributor in Duluth, Minn., has noticed the integrated supply trend among its wood products and mining customers. From its sole branch, Conveyor Belt Services distributes products to North and South Dakota, Iowa, Wisconsin and Michigan's upper peninsula.

"We have customers with multiple plants and they've been trying to consolidate their purchasing efforts to have it under one contract," says company president Bruce Mars. "It's a little bit scary in that if you lose that order, you're no longer getting any of the pie."

Working with these companies has forced Conveyor Belt to convince customers it has the information technology and employees to handle larger accounts. More importantly, selling Conveyor Belt Services means pitching the technical assistance, installation and repair services, Mars says.

"Mining companies in general are expecting more and more from their suppliers, [and asking] them to provide a host of services to help lower their costs," Mars says.

Anecdotal examples aside, national wholesale companies like St. Louis, Mo.-based Beltservice Corp. say integrated supply is still a real threat. Dale Waltz, one of the company's key account managers, says it's a classic case of the middleman getting squeezed.

"We're seeing that our distributors are facing continued pressure," Waltz says. "Their customers are involved in integrated supply and reducing the number of vendors. That's making the market a lot tighter."

Multi-line distribution companies like St. Paul, Minn.-based Applied Power Products, Inc. enjoy some advantages. Angela Field, the company's national marketing manager, says synergies among the company's five divisions covering the belting, die cutting, hose, seals and o-rings and power transmission product families help Applied Power Products win customers.

"We've seen some additional business come our way through customer consolidation," Field says.

Distribution companies primarily selling belting, however, need to emphasize how they can improve the product's performance. Larry Cain, president of California Industrial Rubber Co., says his company has regained business from customers that have backed away from integrated supply agreements. Cain says specialty items often require installation and tailoring and it's especially difficult on a third party integrator when customers need fabrication.

"We've had several major national accounts that have gone to integrated supply and for a while we were locked out," Cain says. "But our function is so special that very often we're able to recapture the business."

About 80 percent of sales made by this Fresno, Calif.-based mid-sized distributor are to agricultural customers. Other major accounts include lumber, aggregate and mining. California Industrial Rubber competes through its value-added services like cleating, vulcanizing and lacing.

"Just selling a flat conveyor belt is extremely competitive, so you have to have the value-added functions," Cain says. "Once companies get into value-added [services], the margins become much more attractive and viable."

What's old is new again