Diversify for success
Jefferds and Remstar ask their customers, "What do you need from us?"
By Joe Nowlan, Associate Editor -- Industrial Distribution, 8/1/2005
For Jefferds Co. and Remstar International—two materials handling specialists—things are going well. But executives at both companies remain cautious in their overall business outlook.
"I've been in this business for 30 years and I'm not sure I can remember a time when business has been as strong as it is right now," says Richard Sinclair, president/CEO of Jefferds, a materials handling equipment distributor based in St. Albans, W. Va.
Business is also strong at Remstar, a manufacturer and marketer of automated storage and retrieval solutions headquartered in Westbrook, Maine. Yet marketing director Ed Romaine also asks, "When things are going well, life is wonderful. But what happens when the economy turns?"
Both men are experienced enough to know that these successes didn't just happen. Each company took specific strategic steps to get where they are. As with many industries that "Market Outlook" has analyzed in recent months, staying diversified has been essential to the respective success of Remstar and Jefferds.
Remstar changed its business plan about four years ago, Romaine explains. The company noticed that many potential competitors in materials handling tended to gravitate towards the same group of prospective customers. If that sector began performing poorly, those companies would eventually be hurt as well.
"The trick was to create a business plan that goes after a number of different target markets, all of which are in different sectors of the economy," he says.
Remstar went into more varied markets, Romaine explains, including medical devices, pharmaceutical and health care, and automotive.
At Jefferds, diversifying has always been a vital part of the business plan, Sinclair says. The regions in which Jefferds operates (Virginia, West Virginia, Kentucky and Tennessee) are mostly rural areas and smaller markets where, "you have to be able to do a lot of things. If you have all your eggs in one basket, that can be very good during the time that everybody wants that particular product line. But those things can come and they can go," he says.
The industries with which Jefferds works include food and beverage; lumber; mining; and automotive. The distributor is located not very far from Georgetown, Ky., where Toyota has a plant, and Smyrna, Tenn., where Nissan has a truck plant, Sinclair explains.
"We're within about a 300-mile radius of a lot of small automotive plants that have been springing up," he points out. "Many of these plants and companies are not huge like a GM, but for us, they're fabulous. They're wonderful people, make a great product, and turn to us for solutions for their materials handling needs."
While things are going well right now, Sinclair admits his, "number one worry is that the bubble will burst. We've been there before, and when-ever you have a positive upturn, one of the concerns I have is staffing for it, without overstaffing. No one wants to put people on the payroll and then subsequently have to jettison them."
Summing up the state of the materials handling industry from the Remstar perspective, Romaine says that, "the economy is always transitioning to another type of economy. You'll have to alter your business while those businesses around you are being altered and changed."
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