Reel life

Despite higher prices, there are opportunities for reel sales gains for salespeople who look in the right places

by Rich Vurva

Skyrocketing costs of steel and fuel are forcing some reel manufacturers to raise prices on most of their products. Hannay Reels of Westerlo, N.Y., notified customers that higher metals and energy costs required an average price increase of about 6 percent on most reels effective August 1.

“Delivery fees and the cost of steel is hurting everybody,” says company spokesman Ed Rash.

In a statement to customers, Hannay said the price it pays for cold-rolled steel climbed more than 60 percent, with forecasts calling for even higher pricing through the rest of 2008.

“We are simply unable to carry current pricing over through to the end of a second year without offsetting a portion of these raw material cost hikes,” according to the statement.

Reelcraft Industries, Columbia City, Ind., raised prices by an average of 7 percent on July 1, according to Rex Larkin, vice president of sales and marketing.

“The cost for a ton of steel has doubled from January to July,” he says. “There’s a lot more cost components to our products than just steel, but when the cost of any raw material doubles, it’s awfully hard to contain or decrease our other costs to offset that.”

Larkin says most distributors understand the reasons for the price increase and have been able to pass it along to their customers, who are experiencing similar raw material cost spikes in their own businesses.

Improvements to its manufacturing process have enabled Coxreels in Tempe, Ariz., to hold the line on prices, according to vice president of sales and marketing Steve Cropper. A new paint line that improved efficiency in the powder coating process by 30 percent and a new single-person assembly station — which puts all of the components needed by an assembler within easy reach — have allowed Coxreels to manage manufacturing costs.

“We’ve engineered and implemented ways to be more efficient and take costs out of our own processes so we could avoid a mid-year price increase,” says Cropper. He adds, however, that a price increase is likely in 2009 if costs remain at this level.

To mitigate rising costs, manufacturers are escalating efforts to help distributors lower their cost of doing business and improve marketing efforts. For example, most reel makers are sending more drop-shipments of reels with hose installed to end-user customers on behalf of distributors, which eliminates freight costs in the channel. It also eliminates the hassle of assembling the hose and attaching it to the reel.

“We’re also doing things like making fliers at no cost for distributors to promote products. We make it very easy for distributors to know what we stock by placing a Quick Ship icon in our catalog,” says Larkin. Upon request, Reelcraft ships these items within 24 hours from three warehouses in North America, so distributors don’t incur stocking, shipping and handling costs.

Despite cost and price pressures, reel makers say business is growing. Even when industries such as the automotive sector slows, reels are used across so many varied applications that new opportunities await those distributors who know what products to promote.

Cropper says Coxreels is putting the finishing touches on a new online system that will enable distributors to spec reels online and narrow the sales cycle. Salespeople will be able to answer questions about the application, hose diameter, pressure required, type of retraction needed and other parameters. The objective is to make it easier to order the exact reel for the application.

“We’re unusual in that we make all of our own springs. We can adjust and change the spring to match the application,” says Cropper. “Obviously, a reel at 10 feet and a reel at 30 feet would require different spring tensions, so we want to know exactly how a reel is going to be used.”

Customer motivation
What motivates customers to buy reels? Through customer surveys, Reelcraft has learned that savings and efficiency are the No. 1 motivators, Larkin says.

“Companies are looking for anything they can do to be more efficient, make them more competitive and take cost out of their processes,” he says.

Sales are being driven in part by product innovations, such as remote control rewind, switches, variable speed control and other application-specific enhancements.

“Our product isn’t an off-the-shelf item. So, it takes a little more specification but it fits exactly the needs of the end-user,” says Rash. “You can have a reel that winds from the top right or the bottom left. Or the intake is on the left or the right. No matter how you want it, we can build it, and it’s for the same price within that series. We build to order.”

Hannay’s new Air-Governor (AG Series) reels feature an air governor that controls the rewind speed of a spring-powered reel. The device regulates speed by linking the power spring to an air restrictor, resulting in smooth, controlled rewind speed every time the reel is used. It can be scaled for use on large or light-duty springs. The company says that because the AG series uses air flow to control speed — rather than hydraulic fluids — it operates consistently in all climates.

Coxreels says its patented EZ-Coil reel is a tamper free, mechanical dampening system used successfully in all climates and applications since its introduction in 2001. The dampening system offers a series of sealed systems matched to the range of torque required and avoids the use of hydraulic fluids. Without the use of costly motors, chains, and sprockets, EZ-Coil requires no maintenance and cannot be tampered with.

In addition, Coxreels works with distributors to create feature and benefit sheets specific to their market at no cost to the distributor. This is part of a sales and product training program Coxreels implemented in early 2006 to train and support wholesale distribution. The program is designed to make distribution aware of the numerous applications within each specific market.

In applications requiring fluid transfer that may not be compatible with steel, brass or copper, Reelcraft now offers an option that’s about 50 percent cheaper than its existing stainless steel reels. The non-corrosive fluid path option includes stainless steel in the fluid path only, not the entire reel.

“We’ve always had all stainless reels with stainless fluid paths, but often the person doesn’t need the stainless structure, they just need the area that’s in contact with the fluid to be made of stainless material,” says Larkin.

This article originally appeared in the September/October 2008 issue of Progressive Distributor. Copyright 2008.

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