Some Like It Hot: What Shop Supply Businesses Are Selling In the New Millennium
By Jenna Bates
Like the rest of the automotive aftermarket, the shop supply business has seen many changes in recent years and expects to see many more in the future. The shop supply business has become more competitive, and, like many businesses associated with the automotive aftermarket, the term "flattened" keeps coming up. Could the new millennium breathe new life and increased demand from rebuilders?
We asked the people who know the business best to explain how the industry has changed in recent years and share their predictions of the future.
In the past, the 1960s and ‘70s, people were buying their supplies directly from the manufacturers," says Lacey Williams of Lacey Williams Equipment Co., which has been in business for 39 years. "Today, machinists purchase shop supplies from all over the country, and they buy more generic brands."
Mickey Foster, operations manager of B-H-J Products located in Newark, CA, agrees.
"Shop supplies that used to be distributed by almost all ‘heavy iron’ equipment dealers on a regional basis are now more readily available through shop supply companies such as Goodson, K-Line and Silver Seal," Foster says. "The number of ‘heavy iron’ machine equipment dealers has decreased dramatically over the past few years."
David Kammeraad, of K-Line Industries, Inc., located in Holland, MI, echoes those sentiments.
"The shop supply business has become more competitive, and competition is good," he says. "It has forced us to keep our focus on the needs of our customers."
David Monyhan, national sales manager for Goodson, a 55-year-old shop supplier in Winona, MN, agrees.
"The old business of supplying shops has really gone out the window. We wake up every day to new challenges."
The changes in the shop supply business have produced new technology and hotter products. What was par for the course 10 years ago isn’t necessarily going to swing today, and that’s reflected in what machinists are purchasing.
"The average person today doesn’t always have the knowledge to sharpen tooling properly," says Lacey Williams. "Machinists are now more interested in indexable insert tooling instead of using a cylinder bore bar and sharpening their own tooling. We’re selling a lot more indexable insert tooling because of the problems with cylinder bore bars, and some of our hottest products are diamond wheels for flywheel grinders instead of abrasive wheels."
"We’re noticing a slight migration toward the cutting tools," Goodson’s Monyhan says. "Technology is changing, and people are more aware of environmental issues. They don’t want to breathe that dust anymore. We’re seeing a lot more cutting instead of grinding."
Responding to the customers’ demands is key to the supply business.
"Ceramic and diamond cutting is coming into the market place right now," explains Monyhan. "Machinists don’t want to deal with the coolants and dust anymore, and we listen to them."
According to B-H-J’s Foster, sales on higher end fixturing packages for performing machining operations such as lifter bores, block decks, cylinder bores and line bore correction/blueprinting have increased dramatically.
Foster attributes this change directly to so many "mom and pop" family machine shops being "driven out of business by the high volume PERs" as well as the large boom in the performance engine building market across the country.
"Change is the one thing we can count on," says K-Line’s Kammeraad. "Changing engine design and materials. Changing customer expectations for better service, higher quality and faster delivery. Customers are increasingly demanding all of these. Part of the changes are more stringent rebuilding specifications and new component materials, which have really made people aware of the need for precise measuring and tool equipment."
Silver Seal President Geff Havens also recognizes the changes impacting the industry.
"We have always recognized one of the most important elements in our business as ‘be prepared to change,’ " Havens says. "Through the years we have witnessed significant changes in engine technology, design and development. This has created the necessity to develop new procedures for engine rebuilding, which creates the need for new machinery and equipment. This in turn creates the need to develop new shop tools and supplies to provide engine rebuilders the products required to complete the engine rebuilding process."
B-H-J, which has been in business for 24 years, cites the increased sales off ultrasonic cylinder wall thickness gauges as an example of how new technology and materials impact the shop supply market.
"When machining a cylinder bore to its absolute maximum diameter, it is imperative the engine builder know exactly how much material there is with which to work," says Foster. "With cylinder bore diameters continuing to increase, while bore center-to-center distances remain the same, this becomes a very valuable tool."
Foster also says that cam tunnel line boring equipment has been a fast mover for B-H-J. According to Foster, the use of needle-type roller bearings in the cam tunnel has become commonplace.
Regis, a Dallas, TX, shop supplier since 1959, cites three-angle tooling, which uses carbide inserts, as a tooling trend that has replaced valve seat stones.
"Equipment has become much more sophisticated and accurate," says Regis general manager Mike Reed.
Like businesses everywhere, shop suppliers are looking toward future trends to point them in the right direction now. The key word for the future is "change."
"Like most other industries, ours is moving and changing rapidly," says K-Line’s Kammeraad. "The underlying requirement will remain, ‘provide customers with what they want when they want it.’ To continue meeting that requirement, we must keep up with technology in a variety of ways: in how we keep up with changing engine technology; in how we design new products using state-of-the-art CAD systems; in how we manufacture our products; in how we handle customers’ orders and questions through e-commerce and the Internet; and in how we manage inventory and shipments all over the world."
However, not all change is for the good. Rapid changes in technology can mean that some shop suppliers may not be able to keep up, and that means fewer customers and perhaps even fewer suppliers when all is said and done.
"The industry will continue to have a certain amount of attrition from customers," says Goodson’s Monyhan. "And, as machinists continue to cut each other’s throats in the price game, we’ll see more of them go out of business."
Retaining the ones strong enough to survive is key to the future of the shop supply industry.
"It’s going to narrow down even further," says Lacey’s Williams. "The industry is receding like a hairline, and it’s going to recede further before it levels out. There’s a smaller piece of the pie to get a hold of, and we’re still going down hill a bit."
Williams says the 1990s were especially bad for the shop supply business, saying that manufacturers of engine rebuilding equipment took a 50% hit in the ‘90s from what they had made the previous decade.
"If we had had a heartbeat, we would have been dead," Williams jokes.
B-H-J’s Foster echoes the sentiment if not the exact words.
"We foresee an ongoing decline in the number of independent sales representatives in the equipment and shop supply businesses due to the decline of engine rebuilding shops in general," he says. "Businesses that are fortunate enough to be located in an area with a high concentration of small shops or one or two large PERs or both will be the ones left standing."
Silver Seal’s Havens also recognizes the difficulties the industry has had to contend with.
"In recent years, we have observed the decline in the number of small machine shops. A maturing ownership, chain store competitors, additional equipment investment and an ever-changing competitive aftermarket are the major contributing factors for this decline."
According to Havens, the last two years have shown some significant changes in the purchasing habits of all engine rebuilders, who are now only buying what they need when they need it.
Despite some of these doom and gloom predictions, there is hope and growth to be had for those who seek it out.
"There will be different segments of growth," says Goodson’s Monyhan. "The most important area is high performance. The difference there is that people want to spend money in that side of the industry. It’s not a ‘have to’; it’s a ‘want to.’ "
K-Line’s Kammeraad agrees.
"Perhaps the largest area of growth is the performance market," he says, adding that K-Line is continuing to develop more business relationships with performance engine rebuilders and racing teams.
Adds Regis’ Reed, "There will be more consolidation, and the business will become more specialized in both the standard automotive rebuild as well as the high performance market."
In the end, those who can most effectively deal with the inevitabilities of the industry will be the survivors at the expense of those who cannot ride the waters of change.
"The winner in the battle for the small shop supplies market will probably come down to two or three of the larger existing companies through acquisition and attrition," says B-H-J’s Foster.
In the meantime, shop supply companies will continue to improve the industry by offering innovative technology to the engine rebuilder who depends on them for his livelihood. The future for those shop supply businesses that make the transition into the next decade should remain strong, as by nature, shop supplies are generally more perishable product lines.
However, as most of the shop supply representatives we interviewed noted, it is an increasingly more difficult and competitive market to do business in. All agree that in a maturing industry they must continue to focus on availability, bring to market new products that improve shop efficiency and profitability, and provide higher levels of service and technical support dictated by today’s part proliferation and product technology.
Throughout this article are examples of popular products being sold by shop suppliers; they represent some of the more in-demand and/or recently introduced shop supplies, tooling and equipment being purchased by rebuilders. Check the directory on page 50 for contact information.
|Directory of Shop Suppliers
B-H-J Products, Inc.
37530 Enterprise Ct.
Newark, CA 94560
Web address: www.bhjinc.com
Goodson Shop Supplies
Airport Industries Park
Winona, MN 55987
Web address: www.goodson.com
Contact: David Monyhan, National sales manager
K-Line Industries, Inc.
315 Garden Ave.
Holland, MI 49424
Web address: www.klineind.com
Contact: David Kammeraad
E-mail: email@example.com, Dkammeraad@klineind.com, firstname.lastname@example.org
Lacey Williams Equipment Company
216 Rt. 206 #2
Somerville, NJ 08876
Phone: 908-431-1013 or 800-524-2599
Web address: www.laceymwilliams.com
Contact: Lacey M. Williams, Jr., President
1500 Corinth St.
Dallas, TX 75215
Contact: Mike Reed or Jane Smith
Silver Seal Products Co., Inc.
P.O. Box 1050
19224 Allen Road
Trenton, MI 48183
Phone: 313-479-2255 or 800-521-2936
Contact: Geff Havens, President