In Phoenix: Products meet politics
If all politics are local, Sarah Palin was by all measures the local girl up on stage at the 34th annual Specialty Tools & Fasteners Distributors Association, or STAFDA, convention in Phoenix. Before she delivered the event’s keynote speech Nov. 8, STAFDA president Mike Kangas, president of Alaska Industrial Hardware, explained that Palin’s husband, Todd, was a customer of his in Wasilla. Once Palin took the podium, she cast her eyes over a sea of supporters and said: “I look out there and see a whole bunch of Todds.”
Despite the housing downturn and economic pressure from the recession, STAFDA boosted its show attendance by 17% this year to nearly 4,000 people. Many came to see Palin, of course, and few left disappointed by her shout-out to Federal Reserve Chairman Ben Bernanke, whom she accused of devaluing the dollar by purchasing $600 billion in U.S. treasury bonds.
“Where will all of this money printing take us?” Palin asked. “I want to know. What’s the plan, Ben?”
Palin’s ruminations on quantitative easing, the national debt and inflation provided grist for the mill of political commentators, who obtained copies of her STAFDA speech. But Palin also spoke at length about the impact of Washington, D.C., on small businesses, those “unpretentious job creators” who will bear the brunt of future tax hikes and onerous costs associated with healthcare reform.
“A lot of people don’t know what’s coming down the pike,” Palin said. “Many small businesses are going to have to reduce their work forces or close up shop once they realize what’s involved in ObamaCare.”
Inside the exhibit hall of the Phoenix Convention Center, political debate continued to percolate. Marvin Anderson, president of Coilhose Pneumatics, observed that this year’s event seemed a little livelier.
“I feel like there’s a little more optimism,” said Anderson, who was attending his 10th STAFDA show. He attributed it, in part, to the Nov. 2 election returns. “I think business people like a divided government,” he explained.
STAFDA members seemed united behind the American Recovery and Reinvestment Act of 2009, or at least the provision that mandates that public works projects use iron and steel construction materials produced or manufactured in the United States. “Made in USA” signs were on display at a number of booths. Max “Andy” Johnson, president of MarMac Wire in McBee, S.C., addressed this issue in his “State of the Industry” report to the general membership.
Although the marketplace is still sorting it out, Johnson said the “Buy American” provision of the ARRA has noticeably helped business.
“There are projects across the country that are ARRA compliant,” he said. “[We] have noticed a change in the ordering process.”
Although Palin warned of a long wait for “shovel-ready jobs” from stimulus funds, STAFDA members seemed eager to go out and get whatever business is available. Hardware and tools vendors for the residential, commercial and industrial channels came to the show with new or redesigned products. Arrow Fastener did a makeover of its T50 Heavy Duty Staple Gun, which has been on the market for 58 years, turning it into a sleek red and black model (manual or electric) that doubles as a brad nailer. The four-SKU line started shipping in October. Irwin, maker of the quintessential locking pliers, has updated its original 1957 model once again. The latest Vise-Grip has a curved jaw that clamps without slipping or scratching.
Some companies took the opportunity to display products obtained through new acquisitions or licensing agreements. Empire Level, which agreed to acquire American Level from M-D Building Products in May, displayed its new line of handcrafted mahogany and brass levels, along with built-to-last DeWalt box levels, which sales reps were repeatedly dropping around the booth to prove their durability on the construction site.
For some companies, the Phoenix Convention Center provided the opportunity to try out new channels. Tim Fitzpatrick of Michigan Industrial Tools attended STAFDA for the first time this year, prominently displaying his company’s bright yellow Goodyear-branded rubber hose and reel. Michigan Industrial Tools does a lot of business with the hardware co-ops, Fitzpatrick said, but pneumatic tool users might represent an untapped source of revenue.
“A lot of this market needs hose,” he observed.
Generac, mostly know for its compressors and generators, decided to get back into the pressure washer business. The Waukesha, Wis., manufacturer debuted the new models at the outdoor power equipment show in Louisville, Ky., in October; its second stop was in Phoenix.
The Generac pressure washer features a horizontal engine, which may not sound like anything special—until you have to connect the water supply.
“The consumer doesn’t have to crouch down to put in the hose,” explained VP sales John Quast. The six-SKU line, which begins shipping in February 2011, has an opening price point of $299. Both the residential and the commercial models come with a soft grip and an easy-to-pull “inverted fulcrum trigger” to reduce user fatigue.
Ergonomics was top-of-mind for many manufacturers, especially when it came to vibration control. At the DeWalt booth, Jeff Beck demonstrated the “floating handle” on the tool maker’s rotary hammer, which he said has decreased vibration by 50% from the previous model. Makita has also developed an anti-vibration technology for its line of concrete hammers. Based on seismic engineering, Makita claims its rotary and demolition hammers use a counterbalance design gleaned from earthquake research for three times less vibration.
STAFDA was a coming out party, of sorts, for the third generation of the Nosek family, owners of Keson Industries. Aaron, Dave and Jude Nosek proudly displayed the new logo, color scheme, packaging and marketing campaign for Keson’s measuring and marking tools. Their tapes, chalk boxes and measuring wheels have been widely used in the building industry since 1968, but few tradespeople knew that Keson was Nosek spelled backwards. The young Noseks are determined to imprint their orange and black color scheme and “Make Your Mark” tagline on the construction, surveying and engineering markets. They’re even going after archaeologists and golf course designers.
Although spirits ran high at the STAFDA event, there was one group of professionals that carried a damp blanket with them to the show. A panel of bankers did its best to raise hopes during “The Outlook for Distributor Bank Credit,” one of several educational seminars offered to STAFDA members. Representatives from the Federal Reserve Bank of Atlanta, Wells Fargo and two smaller lending institutions explained the constraints they operate under and offered some frank advice on getting loan officers to part with their capital.
Borrowing against inventory is going to be difficult, especially when that inventory is specialty fasteners or tools that a banker can’t sell, the bankers advised. Using accounts receivables as backup has also changed.
“[Relying on] 70% of receivables is a thing of the past,” said Chuck Gitles, VP commercial lending for American Chartered Bank in Chicago. “The norm now is 30% to 40%.”
What bankers are looking for, in terms of collateral, is real estate, Gitles said. They also want to see a good personal credit score for business loan applicants.
“We’re willing to overlook losses in 2009,” Gitles explained. “Everybody lost business in 2009. But if you destroyed your personal credit, we’re probably going to move on to the next guy.”
Although the bankers on the panel insisted they have money to loan—especially to small businesses—they admitted they are wary of companies tied to the construction industry. The closing advice from one panelist: “You need to treat your bank like any other core supplier. You should be talking to other banks as a backup plan.”