A group of National Association for Hose and Accessories members converged in the conference room, anxious to hear what the three manufacturers and three distributors had to say about competition in the marketplace. It was an open-panel discussion between six handpicked participants that ranged in size from a very large motion industry distributor to smaller, independent companies.

One of the first discussions to come up, according to NAHAD president Michael Armbruster, involved distributors who specialize in hose and accessories and how they can compete against larger, general line companies that simply "add" hose to their lineups.

"It was interesting to hear the answer from the horse's mouth," says Armbruster. That "horse" headed up a large distributorship that didn't specialize in hose. Addressing the crowd, he explained that as a large, publicly traded company, the distributor's investment dollars were limited. That, he says, significantly impacts its ability to stock inventory in its many locations.

"Smaller, specialty distributors can stand out on sheer inventory," says Armbruster, who is also president of 15-employee Valley Belting and Hose in Cincinnati. "Plus, we're more 'experts' than they are. They have technically competent people, but it would be almost impossible for them to have a 'true hose expert' at every location. It's just not feasible."

Besides, says Armbruster, when a customer calls Valley Belting for advice on a hose purchase, they want to know that the person on the other end of the phone really understands what they're talking about — and that they're not just another order taker.

"They want to get that hunky-dory feeling, and I don't think they get that from some of the larger organizations," says Armbruster, who points to companies like Grainger, Applied Technologies and Motion as examples of companies that sell hose and accessories as part of a larger product offering.

Despite his own firm's competitive advantage in a field that requires a salesperson to do more than just pluck a part number from a catalog and place an order, Armbruster admits that competition is lurking around every corner.

"The threat level has really not changed much over the last three to five years," he explains. "It's something we always have a contingency plan in place to deal with, just in case the big guys figure out how to curb some of their disadvantages."

In business since 1961, Pennington Rubber Co. of Cincinnati has dealt with a lot of purchasing agents over the years. With one location and 15 employees, this hose specialist works often with the type of buyer who bases their purchase decisions not on "apples to apples" comparisons, but instead focuses only on the bottom-line price.

John Pennington, CEO, traces the problem back to sales reps from larger, general line distributors who quote prices without realizing the intricacies of the hose business. "They don't realize how many different compounds, end configurations and fittings there are out there," says Pennington. "Some people have gotten in and out of this business quickly when they find out that it's not like selling o-rings."

To stand out from the pack of wannabes, Pennington Rubber uses a quality control manual that requires two employees to sign off on every hose that leaves the building. During the process they're checking for the right size, the correct threads and couplings, and other key elements. The distributor holds weekly training sessions for its employees. Manufacturers who demonstrate proper hose assembly techniques and fitting applications often put on the classes.

Pennington Rubber also has a "cut and couple" program through which it sells cut-links of hose to other U.S. distributors at a competitive price. "That allows us to have a very large inventory, which is basically how we've risen above the competition," says Pennington, who sees that competition growing, particularly due to manufacturers' drive to get more visibility in the marketplace by pushing into larger, general line distributors.

"The problem is, if you remove the profit from the supply chain the distributor isn't going to push your product anymore," says Pennington. "This strategy can actually stifle the manufacturer's growth because the distributors whose sales forces sell hose instead of giving it away will win out."

Its strength is in the hydraulic hose and fitting industry, but Adam-Hill Co. of South San Francisco is also a power transmission distributor. According to Rob Aveson, president of the 9-employee company, competition from companies like Grainger and McMaster-Carr has increased over the last few years.

Aveson isn't worried. "What do we have that they don't? Mainly a full line of fittings and an understanding of them," he says. "Grainger, for example, carries a high volume of those common items, but if a customer needs an unusual part, they won't get it from Grainger. We, on the other hand, have on the shelf a full line of uncommon fittings."

Adam-Hill also provides customer service and technical expertise — two things that the national chains typically lack. And if one of those chains undercuts Adam-Hill and decides to "give away" the house, so be it. "If one of the larger companies wants to give something away, we say 'go ahead,'" says Aveson. "Everybody is in business to make money, and if it gets to the point where we're not making any money, there's no point in getting the sale just for the sake of getting the sale."

Going forward, Aveson doesn't see the competition from larger, general line distributors waning anytime soon, and he also says that some customers will naturally gravitate to the low-price leader. "The big distributors will continue to get what they can because it's a way to add volume, but we really don't worry about them," says Aveson. "We've been here 85 years and our customers know where we are and what we do, and they appreciate our service."