Industrial Distribution

Jack Keough

Emerging from bankruptcy, battling steel costs, and cheering for the Red Sox
April 6, 2005

An employee luncheon at the Kennedy Manufacturing plant in Ohio took on a special meaning today as the company, a leading producer of tool boxes and accessories, formally emerged from bankruptcy. “It’s been a long and difficult time for us,” company president David Thompson said in an interview with ID. The Van Wert, Ohio-based company filed for bankruptcy in February 2004.

During the last year, Kennedy reduced its total employment by a third (including two-thirds of its salaried employees). The company now has 200 people on its payroll. Kennedy also closed a plant in Indiana and consolidated two of its Ohio plants into one. That plant is now running three shifts in a new lean manufacturing process.

In addition, benefits, salaries and pension plans were reduced for many employees. “This has been painful for them,” Thompson said, noting that the employees are glad to still have jobs and are looking ahead to the future. “We have a good team here. We’re fortunate.”

He also said that both customers and distributors were loyal to Kennedy Manufacturing during the bankruptcy process.

Describing the last 13 months as a “roller-coaster ride,” Thompson said his company was hammered by rising steel prices. But he also said he’s seeing a pent-up demand for his product. “We’re very optimistic about this year,” he added.

Speaking of steel, a distributor told us during a recent interview that he had lost nearly $6 million in revenue last year because of a steel plant closing. Fortunately, he made up half that loss by pushing heavier into other sectors, such as food and pharmaceutical. “I learned a valuable lesson,” he told us. “As trite as it sounds, you can’t put too many eggs into one basket. It can kill you.” Sounds simple, but it’s true.

That reminds me of a distributor in the Northeast who, quite a few years ago, had a major customer that comprised 20 percent of his business. He was almost wiped out when that customer changed distributors. But he was one of the fortunate ones. He eventually made up for the shortfall, although it took him a few years and many sleepless nights to do it.

Actually, it wasn’t so bad for him in the end. He eventually sold his business and moved to Arizona, which isn’t a bad move in my opinion. Not when we, here in New England, are emerging from our fourth snowiest winter in history. As I look out from our palatial. but not overly ostentatious (and new), surroundings here in Waltham, Mass., there is still snow on the ground. Enough is enough.

Well, at least the World Champion Red Sox open their season next week. Boy, doesn’t that sound strange? World Champions? You’d swear it was 1918 all over again. And no, hell hasn’t frozen over.

Posted by Jack Keough on April 6, 2005 | Comments (2)