News

From the pages of Industrial Distribution, September 2003

By Jack Keough, Editor

Kathleen Hersey, the new chief executive officer of Chandler & Farquhar, speaks wistfully as she points to some of the old photos that line the entryway of her Randolph, Mass.-based distributorship.

"This picture was taken when the company was located in downtown Boston in the 1930s," she says, looking at a photo of old delivery trucks bearing the C&F name. "And here's the pictures of the two men who founded the company." She stops and then adds: "Yes, this company has quite a history."

Indeed it does. Chandler &Farquhar's roots go back to July of 1882 when Frank Chandler and Charles Farquhar agreed to "associate together in the Business of Dealers Hardware to the faithful performance of which they mutually bind themselves." The partnership worked and the company soon outgrew its humble Boston beginnings. Despite its success, C&F had its ups and downs over the years. It survived wars, recessions, depressions, a foreclosure, loss of major suppliers, customers and new management teams, and eventually became a regional powerhouse. But last year was one of the worst in C&F's illustrious history as it nearly was forced to close its doors due to the economic downturn.

Now C&F is on its way back.

CEO Hersey and president Greg Garbick, the new owners of the company, are determined to rebuild C&F, restore its luster, and protect the jobs of their employees. They both admit that it will be a challenge but then again it was a major challenge just becoming owners of this well-known distributorship.

A new beginning

"So much of my life has been spent with Chandler & Farquhar," Hersey says, noting that her career with C&F began in 1976 as a data processing manager before she worked her way up the corporate ladder. The company at that time had 68 employees and $10 million in sales. The future for C&F looked very bright. (Today the company has 14 employees and is projecting sales of less than $5 million this year.)

In fact, C&F became the first industrial supply house in the United States to install a terminal at a customer's location for "on site" order entry. And two years later, a complete "on line" system was installed with total order entry and inventory control on the IBM System III computer.

Ken Pulkonik and Burt Isaacson, owners of the Rush Corp., purchased C&F in 1987 and moved the company from Boston to an industrial park in Canton, Mass. The company had good years and bad years in the '90s and even made an acquisition of a grinding repair shop in 1994. And four years later, C&F lost its largest customer, a major defense contractor causing the company to eliminate jobs. "We were just too tied up with one customer," Hersey said. "It was a mistake." The company eventually moved to its current location in Randolph.

Two years later, Greg Garbick, a long-time employee of the Valenite Corp. was brought in as vice president of sales. "Frankly, I was technically sound but didn't have a lot of managerial experience," Garbick says. But what he lacked in managerial experience, he more than made up for by developing a solid sales plan. He met with the staff and then hit the road visiting as many customers as possible. He wanted to learn not only about their businesses, but also the markets. He also developed a "customer intimacy" program, designed to provide employees with an in-depth customer relationship analysis so they could learn as much as possible about their customers and the industrial sectors they sell in. Garbick also devised a separate customer analysis program so C&F employees could determine the profitability of each individual account.

As a result, C&F fired some customers. "It was just unprofitable for us to do business with them," Garbick says. Things seemed to be going in the right direction until the telecommunications market, which comprised 10 percent of the company's sales, plunged.

"I had never seen anything like it," Garbick said. "It wasn't a situation where sales just fell down gradually month after month. It was like sales just fell off a cliff in one month. It was unbelievable to us."

The telecommunications downturn continued (and still does today).

A learning experience

It was a hands-on learning experience. Over the years the company had lost a major line. It survived. It lost a major customer. It survived. It lasted through the Depression. Now there was a legitimate question as to whether the company could rebound once again.

The company cut back on the hours of employees and slashed expenses to the bone. The 9/11 tragedies caused C&F to reduce costs even further. And its parent company, now located in Canada and involved in the electronics sector, also was feeling the devastating economic collapse in their own markets.

Last year, the company sold its grinding repair business in New Hampshire, leaving six employees without jobs. "That was the toughest call I had to make," Garbick says. And having an absentee owner located in another country wasn't the best situation to be in.

Then last October, a Canadian bank called in the loan of C&F's parent company. It looked like the end of the line for C&F.

Garbick and Hersey, the team that had been running C&F, decided to try and buy the company from the bank. "I guess I always wanted to run a company but I thought that was a long time off," Garbick says. "This was sort of thrust upon me."

Hersey had her own reasons. "This company is part of me," she says. "And I also felt an obligation to the 14 employees who were still here. This company had too much history and potential to go out of business."

The difficulty was that neither Garbick nor Hersey knew anything about buying a business. Fortunately they had a good lawyer and then two advisors who helped them during the buying process and after the sale. And even the bank was helpful. "We spent hundreds and hundreds of hours on the phone with lawyers and the bank," Garbick adds as Hersey nods in agreement. In fact, the two developed such a strong working relationship that they often finish each other's sentences. To keep the company in operation, vendors and customers were notified of the impending purchase and that C&F would be conducting "business as usual."

A week before the closing, the two called in the staff and told them of the purchase. The employees were not only supportive but also thankful the company was going to stay in business. Only one employee decided to leave while the remaining employees pitched in to do extra jobs. "We have an excellent staff here, " Hersey says. "Some of them have been here more than 20 years."

Garbick and Hersey didn't take to the executive suites. They often helped out in shipping and receiving and stocking product. Vendors were told to ship everything COD to ensure payment. They used their own credit cards for receiving shipments and on one occasion another employee used his personal credit card to receive an order.

What impressed the both of them were the reactions of their employees, vendors and customers. "They all seemed to understand what we were trying to do here," Garbick says. "Norton (Saint Gobain Abrasives) and Valenite were terrific. They helped us out greatly."

Jack Houston, a sales application engineer for Valenite, says Garbick and Hersey are "very focused" and determined to make the business a success. "Greg certainly has put a lot of time into the business," Houston says, adding that he often receives telephone calls from Garbick late at night.

"I give them a lot of credit for putting this together," Houston says. He added that C&F are true cutting tool specialists. Houston recently presented a technical seminar to C&F's staff followed by a cookout at the company's headquarters. He praised the technical knowledge of the employees.

Tim Hladik, a sales engineer with the Norton Company, says C&F may be the company's oldest distributorship in the country. "It's been a great company for us," he says. "Greg Garbick comes from my side of the fence, manufacturing. He understands manufacturing-type issues and is very astute. Plus, the company employees are very quick to learn new products. They're an easy company to do business with."

Tom Maynard, a purchasing manager with Smith & Nephew, a manufacturer of medical instrumentation products, says that C&F is their number one supplier. "They are very accommodating," says Maynard who has been buying MRO products from C&F for several years. "Our outside salesperson (for C&F) Ron Rapoza is excellent. If he doesn't have the answer to a problem he gets the answer."

Maynard said he strongly supports the company. "They're (Hersey and Garbick) two great people. They're extremely hard working and get the job done for us. I wish them nothing but the best and we're going to continue working with them."

The employees at C&F are equally enthusiastic. "We are very upbeat," says Rapoza, who has been with C&F for 23 years. "We realize that if the company is to succeed we had better make the extra effort and do whatever it takes to satisfy the customer.

"You know they (Garbick and Hersey) didn't have to take this risk. We could have all gone our separate ways but they are determined that we will succeed."

Rapoza went on to say that C&F is a small group of people working together to make the company successful. "We're not a conglomerate or anything like that," he said. "They talk about a team effort in sports but this is the ultimate team effort. It's up to us, both individually and as a team, to put forth that extra effort. And we all know it."

Deborah Bako, whose title is marketing production coordinator, but who is involved in many facets of the operation including sales, says she wouldn't want to work anywhere else. "I wouldn't trade my job for anything," she says. "I think everyone else feels the same way. It sounds trite, but we are like a family. Greg and Kathy have been wonderful to all of us. They'd never ask us to do anything that they themselves wouldn't do."

A good start

And what's happened since C&F was purchased in January?

Well, the company is off to a good start. Sales exceeded projections in February and March before tailing off slightly in April and May. But for the year, revenues are ahead of forecasts.

Garbick has set up a telemarketing program to increase sales, which is proving to be successful. C&F is much more diversified, selling to a variety of industries such as aerospace, medical, machine job shops, and automotive sectors. C&F is especially well respected as employing experts in the cutting tool arena. The two young executives know they're not out of the woods yet, but financially, the company is headed in the right direction.

"We're putting long-term strategic plans in place," Garbick says. "We really want to grow this business, add some complementary lines. We're proud to be a distributor and proud of what we've done so far. We couldn't have done this without the support of our employees as well as our families."

Adds Hersey: "We've got a responsibility here to ourselves and our employees. So far, so good. This has been an interesting few months, to say the least. We're determined to succeed."

That determination isn't lost on Norton's Hladik, who has known Hersey for 23 years. "She really loves that company," he says. "To find that type of passion is rare these days. And she had that passion long before she was one of the owners. I wish them nothing but the best."

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