Minnesota Flexible Corp. started in 1969 with one idea: to "provide products that meet or exceed our customers' quality requirements, supported by exceptional customer service." Those are distributors' words to live by, according to Scott Keiffer, president of the St. Paul, Minn.-based hose and accessories distributor.

"We started in 1969 with a typical two-car garage operation. We sold hose by day and built assemblies at night. We started with strictly metal hose, but found that other types of hose were popular and profitable," Keiffer said.

As his expertise grew, Keiffer added lines including Teflon™, rubber and composite hoses, and Minnesota Flexible (MFC) became a full-line distributor of hose, fittings and assemblies.

The process of growth over the years has not been easy but the fundamentals have remained the same, according to Will Stewart, vice president of marketing. The company battles ever-growing distributor chains and increased direct sales by manufacturers, while maintaining its narrow niche: selling custom hose-and-fitting assemblies almost exclusively, for MRO, OEM and HVAC use.

About 15 years ago, Will's father George Stewart bought the firm from Keiffer, who became president at that time. Through the changes, the company has stayed loyal to the quality promise and customer satisfaction that has created growth in every business climate, good and bad.

"Customer service does not begin and end with the customer service team. It is a fundamental part of every function in the company. If it isn't directly involved in dealing with customer issues, a job function will either cut costs or speed up processes," Will Stewart says.

The company started in business by making hose assemblies for exhaust and pump connections. Today, Minnesota Flexible fabricates assemblies from all industrial hose types: metal, rubber, plastic, Teflon®, composite, duct and hydraulic. Their expertise in solving customers' hose and fitting problems evolved over years of specializing.

"In the beginning, we tried to sell [commodities] to contractors, like reels of air hose, but soon found that specials were the best products, competitively and profitably," Keiffer says. "Even in MRO applications, the products are usually specialized to some degree."

According to Stewart, MFC continues to grow revenue and profitability every year because the company's process of buying and selling has several hard and fast rules. The first principle, he says, is that they maintain service without adding a lot of additional cost like personnel, infrastructure and inventory. MFC grows by selling new products only if those products fit into a narrowly defined product field.

Stewart then leads the sales force out to find new customers with special hose needs, and sell new products to existing customers. Only four employees are needed — three welders and one fabricator — to complete all the metal assemblies MFC needs to fill customer orders and maintain stocking levels. MFC has four outside salespeople, including Keiffer and Stewart.

Some products are best outsourced to save time and money, Stewart says. MFC has split its business into two areas: direct sales of OEM and MRO assemblies in the five-state area around Minnesota, and sales of HVAC products across the U. S. through a network of HVAC distributors.

An example from the airline industry represents a typical solution to a customer's problem. Airliners need to drain toilet facilities into trucks using a drop hose. One commonly used hose caused myriad problems including clogging and leaking.

"The hose was a big problem, and the airline wanted to see the liquid passing through the hose in order to anticipate problems, so we supplied a clear hose that not only allows visibility but handles corrosiveness better. We found a better product, and were able to price it to everyone's satisfaction," Stewart says.

MFC is a master distributor of specialty products produced in-house and shipped under private labels throughout the country.

"In several cases, MFC is building custom hose assemblies to customer specifications, private labeling the product, packaging it in customer-specific materials and sending it directly to the customer's distribution center where it is routed on to the end user. [Our] customer never opens a box or repackages anything, saving ... time and money," he says.

The company's sales of HVAC assemblies through a network of representatives has really taken off, Keiffer says. MFC has more than a dozen exclusive dealers handling those products, which include stainless steel, braided pump connectors and expansion joints.

One of their distributor/representatives is B.J. Mulcahy, Co., Inc., of St. Paul, Minn., a manufacturer's representative specializing in heating and cooling. Tom Reilly is the company's president.

"We've been dealing with Minnesota Flexible for about 15 years. Sam [Wood] in customer service is just great," Reilly says. "Our business with them has grown dramatically in the last four or five years because [Stewart] has taken a more hands-on approach to seeing what he can do to help our business grow. He's one of those rare owners who gets involved directly with customers."

A majority of the products MFC supplies to Mulcahy are accessories to their pump and heat exchanger lines, he says.

"We don't do installations, so we take a number of products that relate to each other and package them to make it easier for mechanical contractors to offer a complete package to their customers," he says.

Lisa Haines, senior buyer for North American Graco, based in Minneapolis, Minn., has been buying from MFC for about five years.

"They're probably one of my best suppliers. We deal with Scott Keiffer or Sam Wood. When we need fast delivery of a product, we just need to ask for the best lead time and they meet it. MFC makes over 99 to near 100 percent of [on-time] deliveries," Haines said.

Graco, a maker of pressurized fluid dispensing equipment, buys coupled hose, fittings and packaged assemblies from MFC.

A large manufacturer of paint equipment cleans hoses with some of the most corrosive chemicals in the industry. They insist, according to Stewart, on operating pressures up to 7,200 psi, but need the hose to stand up to chemicals, as well. It's a challenge of the kind that MFC relishes.

"We went on a global search for the right hose, which we found in England, and it is fully ISO certified. We used the manufacturer's fittings, and the customer put it through the most rigorous testing imaginable. They ran over 500,000 impulse cycles to test it. That assembly is now shipped all over the world," Keiffer says.

In the process, MFC was able to fine tune the assembly for use in chemical refineries, another customer segment trying to maximize hose pressures and volumes for better productivity. Each time they learn something new about a process or application, Keiffer and Stewart can carry the information over as a starting point toward creating another special product, they said.

At one customer that makes adhesives and tapes, MFC supplied a pure teflon tube because the product is resistant to almost all chemicals.

"We looked at a recent National Assn. of Hose and Accessories Distributors report. We are above the national average in profitability for distributors of our size, with about the same number employees we've had for many years," Keiffer says. "Our employees are what make us a success. A lot of them cross lines — they have knowledge in a lot of areas of the business — and they do several types of work well."

According to Terry Kelly, vice president of operations, MFC looks for the right person to fill every job.

"When we lose someone, we don't immediately try to fill the gap. We ask everyone involved 'what do we need from the next person.' Then we reassign tasks and wait for the breaking point before we actually make a new hire," Kelly says. "We want to make sure that the person can do the job and is comfortable, and is someone who fits not only our work ethic but our business culture and personality criteria as well."

Keiffer noted that MFC owes its success to people who are experienced but also requires entry level employees that are teachable. MFC has three inside salespeople, an inside sales manager, 15 production employees, and a chief of manufacturing, Jerry Kramer, who has 30 years experience in manufacturing and quality.

The last 18 months have been difficult because of the slow economy in the region but MFC has actually grown its business and improved its prospects for more.

"Our business has remained very diverse. With more divisions of products, we get more opportunities. Actually, in August, we had our best month ever. We just added 35,000 square feet to our warehouse and now have over 75,000. We offer certain customers a just-in-time contract to deliver their products in two days, so we have a lot of make-and-hold [items]," he said.

MFC competes with manufacturers who sell direct. Some OEM customers believe that they get better products or pricing when dealing directly with the manufacturer, according to Kelly.

"We don't appreciate manufacturers that we represent going direct, and [customers] sometimes find the situation is not what they had hoped," Kelly said. "About a year ago, we lost business at one customer who began buying product directly from a competitive manufacturer. It was a disaster for them and within seven or eight months, they were back buying from us and wanted us to gear up even faster than that," he said.

In January, 2003, MFC will complete a succession plan that makes Stewart the new president. Keiffer will continue with the company.

"Will steps into the role of new president," Keiffer said. "It will be a smooth transition because he is someone who really knows the business. Today, there's a tremendous era of change, with companies going down or being sold. But our employees' concerns have been allayed and this will truly be a continuous operation with few changes."