Managed Growth
With a focus on three distinct channels, Bostwick-Braun looks for growth opportunities
By Rich Vurva
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From left: Bostwick-Braun Industrial Supply president Matt Mazur, Bostwick-Braun Co. president and CEO Chris Beach and company chairman Bill Bollin |
Like many industrial distributors, Bostwick-Braun Co. has expanded its geographic footprint and product mix through acquisition. Since 2006, the company has completed five acquisitions, giving the Toledo, Ohio-based distributor a much more diversified portfolio of products
and services. Annual sales are about $150 million.
Although growth is always a good thing, the management team and the board of directors recognized that looking at each acquisition as a separate operating company was not necessarily the best way to manage from a strategic perspective. That’s why the company that began as a retail hardware wholesaler in 1855 is now divided into three operating divisions serving distinct business channels: hardware retailers, industrial customers and the grocery and specialty retail channel.
“Our plan is to build and grow each of these platforms both organically and through acquisition,” says Bill Bollin, company chairman.
The Wholesale Hardware Division is the largest. It consists of Bostwick-Braun’s original hardware division operated out of its Toledo headquarters location, plus Southern Hardware (acquired in 2010) in West Helena, Ark., and Blackstone Supply (acquired in 2012) of Providence, R.I. The division focuses on independent hardware retailers, which is a shrinking market, as “ma and pa” hardware stores face pressure from major national retail chains and big box home improvement centers. The primary growth opportunity for the hardware division is east of the Mississippi.
Although independent hardware retailers face competitive pressure from multiple fronts, they remain a viable channel for Bostwick-Braun, says president and CEO Chris Beach. He says many successful local hardware retailers have augmented their walk-in customer business by growing commercial sales to local municipalities, factories and other businesses. Bostwick-Braun provides a business-to-business e-catalog and private label catalogs to help retailers market to their end-use customers.
“What they are finding is that Bostwick-Braun is a partner that is in position to help them not only from a product mix standpoint but from a knowledge standpoint to cater to those markets,” Beach says.
The Industrial Division consists of Bostwick-Braun Industrial Supply, JMC Sales & Engineering (acquired in 2010), with branches in Indianapolis and Fort Wayne, Ind., and Columbus Fasteners (acquired in 2013), with locations in Columbus and Cincinnati, Ohio.
“I think the biggest opportunity is to continue to grow this industrial platform,” Bollin says. “By taking our industrial business and moving it into a separate industrial business unit, naming Matt Mazur president of the business unit and looking to grow both organically and by merger and acquisition, I think we have a huge opportunity.”
Prior to the acquisitions of JMC and Columbus Fasteners, Bostwick-Braun’s primary focus was on industrial MRO supplies. Customers valued inventory management programs but also needed solutions beyond the tool crib that could enhance manufacturing productivity.
The JMC acquisition not only doubled the size of the sales force but also brought in expertise in cutting tools, indexable carbide tooling, coolant and other metalworking technologies aimed at helping customers with production floor issues. The Columbus Fasteners acquisition helps Bostwick-Braun to compete in the contractor’s segment as well as in high-volume production OE applications requiring fasteners.
Beach says cutting tools and fasteners product categories were logical expansion opportunities.
“When you look at your customers and the consolidation trend that continues, they want to do more with less. They want deeper, broader relationships. We have always promoted ourselves as a one-stop-shop, but we recognized that we were missing a value proposition in certain categories,” Beach says. He adds that the next logical opportunities for expansion are likely the safety and jan./san. categories, but doesn’t rule out acquiring additional cutting tool distributors.
The smallest group, the Grocery and Specialty Retail Division, was created with the 2006 acquisition of Steel City Products in McKeesport, Pa. Steel City is a distributor of automotive supplies, lawn & garden items and pet supplies. It serves grocery stores, drug stores and some hardware stores. During the economic downturn in 2009, when hardware and industrial sales both suffered, the Grocery and Specialty Retail Division helped offset those declining sales. Car owners, who changed their own oil to save money or washed their vehicles by hand instead of taking them to a car wash, purchased motor oil and automotive cleaning supplies that Steel City offers.
Common platform
M&A activity may slow while Bostwick-Braun absorbs its most recent purchases and also completes a new company-wide ERP integration. The conversion to the Infor Distribution SX.e software program is scheduled to begin mid-2013 and all of the operating companies will be running on the platform in 2014.
Bollin says the common platform will consolidate internal activities such as accounts payable and accounts receivable, but will also improve customer-facing functions.
“From a customer perspective, once we are on a common platform our people and our customers will have visibility of SKUs throughout the entire organization. That’s going to be a huge benefit,” he says.
Greater visibility will also benefit cross-selling opportunities between divisions. Customers that historically purchased only cutting tools and coolant from JMC, for example, will find it easier to learn about the MRO supplies and fasteners available through Bostwick-Braun.
Sales teams in each division continue to focus on their primary customer and product segments, but are also looking for ways to expand sales of new product lines that Bostwick-Braun offers.
“We want to make sure the salespeople stay focused on their core competency, but when they have the opportunity, supplement those efforts with the additional products and services that they haven’t had before,” says Mazur, who was named president of Bostwick-Braun Industrial Supply in early 2012.
Targeted sales efforts – what Beach calls “good, old-fashioned team selling” – have already generated cross-selling success stories. A forklift manufacturer that was a long-time customer of JMC is now also buying gloves and other MRO supplies. The larger purchasing volume and product mix also justified installation of an automated vending solution. Beach says that large, multi-national customers in particular are interested in taking advantage of two purchasing trends, consolidation and vending.
“The objective isn’t to place vending machines. The objective is to get better control over inventory and improve performance,” Beach says.
Another success story involved a stud and fastener manufacturer where Bostwick-Braun was the incumbent supplier of MRO supplies. The company had planned to issue a request for quote to further consolidate its supplier base. The acquisition of JMC Sales and Engineering enabled Bostwick-Braun to add cutting tools expertise and a cutting tools vending program to its existing product and service mix and hold onto the business. Bostwick-Braun installed a cutting tools specialist near the plant to serve the account. That person eventually will be charged with growing the customer base in the area.
In the future, inventory management programs will include fasteners supplied by Columbus Fasteners. “We have a ready-made customer base for fasteners,” says Beach. “Every customer in our industrial division uses fasteners. Ultimately, Columbus Fasteners is going to be our No. 1 fastener vendor for the Industrial Division and will be our stocking distributor eventually for the hardware side. We just need to set up the system to make it happen,” he says.
This article originally appeared in the May/June 2013 issue of Industrial Supply magazine. Copyright 2013, Direct Business Media.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Kimball Midwest. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and Mike Marks, as well as interviews with numerous product and distribution industry experts.
