Proud past, bright future

With a storied past dating back more than a half-century, Ziegler Tools is poised for new growth and profitability.

by Rich Vurva

In the 55 years since Bill Ziegler Sr. started selling tools from the trunk of his car, Ziegler Tools has seen the best of times and the worst of times. What started as a one-man Atlanta operation with a single line of tools slowly grew into a multi-line industrial distribution company with nearly $30 million in annual sales and branches in Macon, Ga., and Greer, S.C. Major manufacturer customers included General Motors, Lockheed, Delta and Boeing.

Business was so good, at one memorable banquet Ziegler Tools and its suppliers handed out more than $64,000 in cash awards to inside and outside salespeople. In short, life was good.

As the century drew to a close, however, Ziegler Tools felt the pain caused by the manufacturing recession. Large manufacturer customers such as Lockheed, Ford, GM and Delta started eliminating jobs in Atlanta or downsizing operations.

“We used to be able to survive on big business. But it’s a different story today. It’s hard to develop relationships in the large companies,” says Bill Ziegler Sr.

Manufacturing employment in Georgia peaked at about 551,400 in late 1998, according to the Bureau of Labor Statistics. Since then, the sector shrunk to about 451,000, losing jobs for 50 straight months.

“In 33 out of the last 36 months, manufacturing has been declining. It’s hard in our business, which is a sales-oriented business, to keep up that enthusiasm and drive when you’re looking at so much business declining. The challenge is to keep people motivated and focused,” says president Bill Ziegler Jr.

Bill Jr. keeps people motivated by sending them notes and computer messages of thanks for a job well done, celebrating their years of service to the company with a cake or an extra day off, and holding annual employee outings to build team spirit and camaraderie. But the best way to keep employees motivated is for management to let them know how they’re positioning the company for long-term survival and growth.

“Our philosophy has always been to do what’s right, do the best that you can and treat other people as you’d like to be treated. It has been a struggle. Most distributors are trying to survive and look for ways to grow their business in different venues. We’re no different from any other distributor in that regard,” says Bill Jr.

While the long-running recession crippled lesser companies, thanks to prudent financial management, Ziegler managed to survive the downturn without major layoffs. Today, the outside sales staff averages 17 years of service, while the inside sales staff averages 15 years, demonstrating the loyalty employees and the Ziegler family feel toward each other.

To help weather the storm, most employees took a pay cut of 5 percent in late 2001, while top managers reduced their pay by 10 percent.

“When a person would leave for one reason or another, we would talk to the manager of that department and encourage the others to carry the load and split 50 percent of that person’s salary among the remaining people in the department,” says Bill Sr. “So, we saved 50 percent of the salary of the person that was lost, but the other 50 percent went to the group in that department to encourage them to pick up the slack.”

Improvements in technology led to the elimination of the customer service department. Inside salespeople now handle tasks previously assigned to customer service employees.

“Our computer system gives inside salespeople access to more information, so they can answer a customer’s questions without transferring them to someone else,” says Benton Gramling, vice president of sales.

Despite the difficult economic environment, morale remains high. After making the difficult choices needed to survive the longest recession the company has ever seen, Ziegler Tools is poised to enter a new era of growth and profitability.

A bright future
With annual sales of about $25 million, Ziegler Tools plans to grow by expanding its product offering to existing accounts and branching into new market segments.

“Because our traditional customer base is shrinking, we must pick up more market share with existing customers,” says Gramling. “What I’m trying to do is come up with things we can sell to our existing customers.”

Recent additions to the line card include safety products, janitorial supplies and more MRO products.

At one customer’s location, Ziegler installed a bar code inventory system for gloves. The account’s glove purchases decreased from $225,000 in one year to $85,000.

“The reason was employees had to wand their badge. When employees found out it registered how many gloves they checked out, usage decreased sizably,” says Gramling.

The system generated a major cost saving for the customer and a new profit center for Ziegler Tools.

A greater reliance on master distributors in select product groups will help Ziegler expand its line card without a huge investment in inventory.

“We’re using more master distributors. When you’re trying to supply a customer every one of his needs, you have to find other avenues. You can’t afford to bring it all into your own warehouse,” says Gramling.

Ziegler also plans to expand its traditional customer base of metalworking, assembly plants and heavy manufacturing by soliciting new business from mid-market manufacturers, vocational-technical schools and government business.

A move into a new 40,000-square-foot building in mid-2001 more than doubled warehouse space, enabling Ziegler Tools to add product lines. In order to keep total inventory costs down, however, the company also consolidated its existing supply base. For example, Ziegler once carried as many as 42 different hand tool lines. It reduced that total to about 20 hand tool manufacturers, with a key focus on preferred suppliers that belong to the Affiliated Distributors marketing and buying group.

The addition of the Craftsman hand tool line last year also opened new doors for salespeople.

“There are some major accounts where we couldn’t get in the front door, and because we have Craftsman, our salesman now has a venue to get in. Craftsman helped us do that. The name Craftsman sells,” Bill Jr. says.

Joint sales calls
Another strategy to grow sales is by working more closely with factory reps on joint sales call activity.

“We believe strongly in working with factory people. The more we can have local factory reps work with Benton and our outside sales guys, the more success we’re going to have and the stronger our relationships will be,” says Bill Jr.

Part of the strategy involves better planning and training from manufacturers at monthly sales meetings. When it comes to newer product lines, such as gloves or wire rope slings, salespeople initially rely on factory reps to tell them the types of key decision-makers to contact. As the company expands its breadth of products, salespeople must expand their contacts within customer accounts.

Gramling also works closely with factory reps to be more focused in sales meetings. He doesn’t want reps reading from a catalog or giving a presentation that’s technical in nature and not teaching salespeople the key selling points of their product.

“I’m trying to get our factory guys to change their approach. I don’t want them standing there telling me this is an aluminum oxide product that’s better than what anyone else has. I want them to tell the guys where to sell this. We don’t need to know all the technical details. What we need to know is when I go into a metalworking shop and they’re doing welding, how do I sell that product?” says Gramling.

The final step in Ziegler Tools’ revamped approach is to do a better job of documenting its value to customers. In the highly competitive Atlanta market, with every major catalog house and big box store competing for business, Ziegler Tools salespeople strive to demonstrate their superior product knowledge.

“If the customer doesn’t understand our value and we don’t document it, they might take us for granted,” Bill Jr. says.

Getting veteran salespeople to document the company’s value has been a struggle, Gramling admits. That’s why Bill Jr. closes every sales meeting by summarizing all of the cost savings that salespeople turned in since the last meeting.

“Most salespeople hate to do paperwork. In this case we’re trying to get them to understand that they’ve been doing cost savings, they just haven’t been documenting it. By documenting it and giving it to your contact in purchasing or to the plant manager, they understand the value of what you do,” Gramling says.

The documentation effort recently helped Ziegler Tools hold onto a major account that threatened to go to a competitor.

“At one of our larger accounts last year, we thought we were going to lose the business,” says Bill Jr. “Benton and I went over and met with him and he said, ‘I didn’t know you were doing all of these cost savings for us. Please keep putting these down on paper so I can pass them on in our company.’”

This article originally appeared in the January/February 2004 issue of Progressive Distributor. Copyright 2004.

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