News

Industrial Distribution

July 2001

By Richard Trombly, Associate Editor

Portland, located on Maine's Casco Bay, has a rich history in the wooden shipbuilding industry. In the 20th century, Portland developed a small industrial base, served as a center for the fishing business and as a port for the shipping industry. Now, however, there is little industry in this small city. This might not seem like the ideal place to headquarter an industrial supply business, but PRC Industrial Supply Inc. likes a challenge.

Founded in 1880 as Franklin Rubber, the company supplied rubber products throughout Maine. From 1895-1995 the company was known as the Portland Rubber Co. It grew strong with industry's demand for conveyor belts and other industrial rubber products.

Throughout the century Portland Rubber Co. grew and acquired other small distributors in economic boom times and consolidated in hard times. In 1994, Portland Rubber Co. expanded again with the purchase of Boston-based Acme Rubber of New England. A branch in Bangor specializing in fluid power was also reopened that year.

More with less

PRC Industrial Supply now employs 28 people and has annual sales of $7 million. The company is a perfect example of how small distributors have developed niches to survive today's competitive business environment.

PRC president Dick Hall says since 1980 PRC has developed four times the sales on one-quarter of the products. PRC cut the items to which it couldn't add value.

"It wasn't by choice," admits Hall "We simply knew we couldn't compete, so we didn't. We are in a stronger position now than we were 20 years ago."

At one time, PRC was the largest distributor of V-belts in Maine. Now it doesn't sell any V-belts or many popular "A" or "B" items.

"We focus on the 'E' items, the hardest jobs, and the tasks with the most difficult-to-earn profit," says Hall. "We go to our customers and say 'what's impossible -- what can't be done' to save money or improve their processes -- and then we do it."

Hall says PRC will pass up opportunities to do volume business. He says it's a matter of staying focused. Commodity items would distract from the true goal -- value-added service.

"Why would highly trained people spend their time selling raincoats or V-belts?" he asks. "We survive the pressure of competition by assuring that we don't compete. Rather, we perform. There is a big difference."

The same philosophy applies to how PRC faces the Internet and other new business technologies. Custom services simply cannot be purchased online.

The business world may have changed for large companies, but not much has changed in the last 30 years for small distributors, says Hall.

"We do the things that can't be done on the Internet," says Hall. "We are still supplying parts to customers who don't necessarily know the specifications or part numbers, or need a custom belt fabricated at their facility."

Strength in (small) numbers

One of PRC's greatest strengths is its employees, says Hall. He prides himself on having an empowered workforce comprised of highly trained and motivated individuals.

"After returning from a two-week vacation, I had no messages on my desk and no fires to put out," says Hall. "That tells me I have capable employees. I don't want to have to manage them at every step."

This environment of efficiency and empowerment is one of the reasons that employees stay on at PRC, says warehouse manager Eric Tebbenhoff.

"Any one of our crew could be in another company and might earn more money," says Tebbenhoff. "But people are important here."

Tebbenhoff says that there used to be high turnover, mostly because of overwork, until they hired a larger workforce. Now most of the team has been together for more than four years.

Hall says that adding new employees has paid off in the level of service PRC can provide. Even though the economy is slack right now, there are no plans for layoffs.

"Our employees are our greatest asset," says Hall. "Also, unemployment rates are still near an all-time low in this area."

Surviving the times

Hall admits that economic slowdowns and recessions are hard on small businesses. Many companies have delayed purchases of capital equipment and items like new conveyor belting or scheduled maintenance.

"We can help them reduce costs by, for instance, repairing a belt rather than replacing [one], where it makes sense," says Hall. "We give advice and expertise to our customers."

In some cases, says Hall, a repair will cost more in the long run. He says PRC tries to lower overall costs, which makes its service valuable during tough economic times.

"It is hard to have the discipline to simply survive a recession and stick with your game plan, rather than trying to grow," says Hall. "Short-term gains can have long-term costs."

Hall says some vendors are still suffering from poor choices made to cut costs during the recession in the early 1990's. He says PRC must continually monitor its vendors and assure that the products maintain the highest level of quality.

With the vendors PRC chooses, it forms strong business relationships, says Don Honohan, president of Honohan Sales, the N.E. sales rep for PT Coupling.

"PRC asks its suppliers to meet certain criteria," says Honohan. "In exchange, they remain loyal. With PRC, that loyalty is a commodity."

Bob Lytle, an account executive for the Goodyear Tire and Rubber Co., Engineered Product Division, says PRC's service is unparalleled and the company understands its customers' needs.

"This service is so important when so many of our customers have cut back on their own maintenance departments," says Lytle. "No one holds the title of sales rep, they are more like problem solvers. Distributors who provide that are very valuable."

One of the changes in industry, says Hall, is that companies have smaller maintenance and purchasing departments. In focusing on core competencies, industries have lost the ability to handle all of their own maintenance issues.

"Our customers are moving away from self sufficiency in the minor and obscure parts of their businesses," says Hall. "They used to have their own maintenance experts, but now they outsource to companies like PRC. In some cases, we are their maintenance department."

But Hall says there is a conflict between the goals of purchasing and maintenance.

Repeat business

"We have always been very satisfied with the level of service and quality PRC provides," says John Cyr, maintenance supervisor for Great Northern Paper Co.

Cyr points out that his company entered a single source agreement with a larger distributor but returned to PRC. He says Great Northern Paper could purchase cheaper product through the larger source, but the overall cost was higher.

"We learned the hard way," says Cyr. "Uptime decreased and productivity suffered. We got PRC back. We found we needed them."

Cyr says PRC has always been there to keep the machines online when it's critical. He says Great Northern Paper's maintenance staff relies on PRC's expertise.

"PRC, perhaps because it is smaller, is so focused," says Cyr. "We rely on their specialized knowledge."

Cyr says PRC visits customers regularly and often finds issues during inspections that will increase the life of a belt or a machine. He says PRC actually services some of their machines and conveyors.

Healthy and strong

If a company gives up its expertise in a field, outside vendors become business partners and an important part of the organization, says Hall.

"It is important that somebody is doing [for industry] what we do," says Hall. "It is also important to industry that [we] are healthy. Some customers may only need us once in a year, but they send other business our way because they want us to be there when they need us."

At a time when small distributors' very existence may seem threatened by the big pressures, Hall says he is confident about the future.

"If we do our job well, are reliable and efficient, we'll do fine," says Hall. " If we're not successful, it's an internal problem -- not the economy or business climate."

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