COMPANY SNAPSHOT

Barnes Distribution

Headquarters: Cleveland, Ohio

President: A. Keith Drewett

COO: Idelle Wolf

2000 Sales: $291 million

Employees: 2,200

Products: General MRO supplies

Territory: North America, France, United Kingdom

Web Site:www.barnesgroupinc.com

The merger of two well-established Midwest distributors may not seem like earth-shattering news. But when you learn that their combined sales are about $300 million and their coverage reaches across North America, the event becomes a bit more intriguing. Throw in that they have a growing presence in Europe and it really gets interesting.

We're talking, of course, about the announcement last Spring that Connecticut-based Barnes Group would purchase Cleveland-based Curtis Industries and merge the company with its Bowman Distribution division, also headquartered in Cleveland. A year into the acquisition, managers at newly formed Barnes Distribution are working to combine the best of both companies.

On the surface, the union of Bowman and Curtis may seem a bit like a marriage of convenience. Headquartered in the same city, with comparable locations nationwide and similar distribution strategies, why wouldn't they get together and go to market as one? The opportunity to gain market share, alone, is staggering.

Naturally, there is much more than convenience at work in this union. Barnes Group had been looking for new opportunities to grow its distribution business at home and abroad. Similarly, Curtis Industries had been focused on becoming an even bigger player in the market since the early 90s. The union gives both companies what they were looking for and creates a new player in ID's Top 100 Distributors list. Barnes Distribution ranked #32 this year, ahead of Bowman's #37 spot and Curtis's #65 ranking last year.

"We've got a terrific team going forward that includes people from both companies," says A. Keith Drewett, president of Barnes Distribution. "We're positioned right and we clearly see the [growth] potential being quite good."

Drewett was president and CEO of Curtis Industries before being named president of Barnes Distribution. Likewise, Barnes COO Idelle Wolf was a top-ranking Curtis exec before becoming part of the new company's management team. In its 2000 annual report, Barnes Group expressed confidence in their ability to lead and grow the organization. Drewett says he's excited to be part of a much bigger company — Bowman was three times the size of Curtis — and welcomes the opportunity to "drive significant costs out of the combined organization and take the best of what each company was doing to benefit all Barnes Distribution customers, suppliers and investors." He also cites an expanded benefits package, training opportunities and the support network that comes from being part of $740 million Barnes Group as advantages for employees.

To date, Drewett and Wolf say the acquisition has gone well. There have been challenges, of course — most notably on the technology side. Curtis Industries is moving onto the Bowman platform, which was implemented two years ago with some difficulty. As a result, management has had to make improvements to the system during the integration. Completing that integration is a key project for the remainder of the year.

While the company will be linked by one computer system, each division will continue to go to market under its established brand name — Bowman Distribution, Curtis Industries and Mechanics' Choice, which Curtis acquired from electronics distributor Avnet in 1996.

As for other transitions, in March, Curtis's Cleveland employees moved into the former Bowman headquarters building, which is located near Cleveland's waterfront, not far from the Rock 'n Roll Hall of Fame. The move was a bit of a switch for Curtis employees, who were accustomed to commuting to the other side of the city. But Drewett says it was the right decision. The space — three floors in The Galleria and Tower at Erieview — includes plenty of room for growth.

The close proximity of their headquarters wasn't the only thing Bowman and Curtis had in common. They each have distribution centers in key locations — near Louisville, Ky., in Toronto, Ontario, and in the United Kingdom. It's likely some of those facilities will be consolidated, though a plan to do so has not been announced. The companies also have similar product lines — a strength in fasteners with the support of other general MRO items. Despite those similarities, product marketing director Mark Knight says there was little customer overlap. Curtis was strong in the automotive and fleet maintenance industries, while Bowman focused on more traditional MRO markets like railroads and aerospace.

There are cultural similarities, as well. Both companies were committed to a "high velocity, transaction-intensive" business. Translation: managing consumable items for the customer is the name of the game. With a combined 42,000 SKUs, that goal becomes an even bigger task. As a result, the ability to coordinate the receiving, packaging, shipping and delivery of those items is more important than ever, say Drewett and Knight. That effort depends on the technology and people Barnes has in place.

Drewett explains that ninety-five percent of Barnes Distribution's orders are received electronically. They are entered directly through the laptops and scanners of the company's 1,000-member sales force. All of this ties into the company's "triple threat" — it has bricks, clicks and "touch," according to Knight. The "bricks" is the company's physical infrastructure and established business; the "clicks" is its technological capabilities (soon to be enhanced by an e-commerce option); and the "touch" is its ability to put a salesman through the door of any customer in any zip code in North America. Drewett, Wolf and Knight agree that the latter element is a key advantage for Barnes Distribution.

"We have a real philosophy of understanding who our customer is," says Wolf. "We have employees at customer locations every day ... and we depend on [their] feedback to make sure we're up to date on what customers want."

Brenda Krug, customer service manager at Lake Erie Screw, agrees with that assessment. She's worked with Bowman and Curtis during her 16-year tenure at the fastener manufacturing company and says one thing she's noticed is that they are sensitive to customer needs. On top of that, she agrees that Barnes Distribution has the systems and people in place to accommodate those needs.

"They've got a lot of experience behind them and they know what they need to do," says Krug. "Sometimes when you deal with other distributors ... they may not have been in the business as long and don't know how to deal with things.

"[Barnes Distribution] has people that have been around, they know what they're doing, they're professionals, and they don't panic."

There was no panicking at the company's main distribution center in Elizabethtown, Ky., one Wednesday morning in mid-March. Drewett moved comfortably through the office and warehouse space, greeting employees and asking them how things were going. He asked more pointed questions of distribution center manager Rich Laing. Were they on schedule for all of the day's orders? Had changes to the computer system gone smoothly? Did he get any feedback following Drewett's visit the week before?

The "E-town" facility processes 50 percent of Barnes Distribution's orders. At 205,000 square feet it's the company's largest distribution center and serves as a replenishment facility for other North American operations. Originally a Bowman facility, E-town isn't far from the Curtis Industries main distribution center in Shelbyville, Ky.

As first-shift employees worked — picking products from the shelves and placing them in bins that make their way through the warehouse on conveyors — Laing talked about productivity improvements made in the last few years. Simple steps like placing products within easier reach of employees and flagging special orders for immediate attention have helped improve product flow. That was evidenced by the dwindling number of products on the shelves and empty pallets stacked throughout the warehouse by noon. Orders received by 11 a.m. are shipped by 4 p.m.

"[We have] improved movement of product through the facility," Laing explains. "Now everything flows better."

That philosophy comes from Barnes Group's commitment to "lean manufacturing" concepts. (The group's two other divisions — Associated Spring and Barnes Aerospace — are manufacturing companies.) Lean manufacturing is all about streamlining procedures and eliminating waste. Wolf says such concepts can be extended throughout the entire organization and that all of Barnes' headquarters and distribution employees will be trained on "lean" principles this year. Both Bowman and Curtis are in a good position to implement the philosophy, she adds, since many of their locations are ISO 9000 certified and therefore accustomed to understanding process flows and quality issues.

The "lean" attitude is another thing that helps keep Barnes Distribution in sync with customers. Just 70 miles from the E-Town facility, in Bowling Green, Ky., is a Hayes Lemmerz plant serviced by salesman Steve Dotson. A 15-year Bowman employee, Dotson has been calling on Hayes Lemmerz — one of the world's largest wheel manufacturers — since the plant opened in 1993. Dotson manages inventory on-site for the customer, a job that continues to grow as Hayes Lemmerz reduces its distributor base. Jim Bieschke, MRO manager, says the service Dotson provides is invaluable.

"I can't say enough about him," says Bieschke, who's worked for Hayes Lemmerz for 26 and a half years. "Steve — he doesn't sell nuts & bolts, he sells service."

Dotson is at the Hayes Lemmerz plant every day, checking inventory levels, ordering and replenishing stock and working with Beischke and his employees to find out what else Bowman/Barnes can do to make their jobs easier. The 300,000 square-foot plant employs about 250 people and produces 17,000 wheels a day. The wheels are used by major auto companies like GM, Ford and Toyota. Dotson admits the account requires a bit more attention than some of his others, but says the effort has been well worth it. He increased business by $100,000 last year and hopes to do the same this year.

"This account requires a bit more service, but it's paid off," Dotson explains. "Service is how you build business."

Frank Corrigan, a regional sales manager for Norton Co., is no stranger to building business with new distributors. He started working with Curtis Industries several years ago when both companies were looking for new ways to penetrate the MRO market. Norton supplies Curtis with grinding wheels, coated and non-woven abrasives, and some diamond products, and the relationship has flourished. Now, Corrigan looks forward to even more growth with the larger organization.

"Bowman [was] an even bigger player in the MRO market than Curtis is, so we couldn't be more excited," he says. "[Barnes Distribution] is probably the best partner we could have."

Managers at Barnes are equally optimistic about the future. And while much of the past year has been spent talking about company values, behaviors and goals, the coming year is the time to put those ideas into action. New marketing efforts, the e-commerce initiative and the refinement of its distribution strategy are all on the table. Longer-term efforts include acquisition, expansion in Europe and hitting $500 million in sales.

To be sure, it's a busy time at Barnes Distribution. But it's also an exciting one.

"As the blended organization sees improvement and growth, it starts to get exciting for everyone," says Knight. "It's a lot of work, but it's fun, too."