Clips/ Feature Article

From the Big Dig to Alaska, no job is too big for this small distributor

Albeco Fastener & Supply Corp. has been involved in contracts to supply contractors at the $14.7 billion BIG DIG project, Hanscom Air Force Base, Logan Airport, the early warning radar project in Alaska, and more than 20 energy plants, to name a few projects. It competes with large national distributors, integrated suppliers and big box hardware stores, but it is a single location distributorship with humble beginnings.

Alfred Belcher founded Albeco in 1951. The company originally provided fasteners to the automotive industry and, like so many small distributorships, the first 'warehouse" was the trunk of his car.

The fastener distributorship soon grew and located itself in a former carpentry shop in West Newton, Mass., a suburb of Boston. Sons Al and Fred joined the business as soon as they were old enough to count fastener inventories.

While both brothers have been involved in the business, Al Belcher, the current general manager, has also followed other careers at various times. Fred Belcher took to the business and at age 44, has worked there 26 years.

"That is where I spent every day after school," says president Fred Belcher. "1 grew up learning the business at my father's side."

He started running the business for his father in 1988 and purchased the business in 1996. The company has seen continual growth for the past I 0 years and has grown by 50 percent each of the past four years. says Belcher.

Despite having grown many times its original size, Albeco is still headquartered in its West Newton location where more than 150 will-call orders are picked up daily at its care-worn retail shop. The quarters are cramped and the many tons of inventory have required enhancements to the building structure, which was never designed to be a warehouse.

"We could move to a larger place, or if we owned the building we could expand,' says Belcher. "It makes us think about inventory and the lines we carry much more when we have limited space."

He says that helps to keep the overhead costs low and requires Albeco to know its customers' needs better to be sure that it stocks only the right inventory.

"I try to get manufacturers to take back inventory I can't use," says Belcher. I am not afraid to drop lines or throw away inventory."

It also means that dead inventory has no place in his warehouse. Rather than trying to auction off dead stock, Belcher simply sends to the dump pallets of inventory he can not turn quickly or are of poor quality.

There is simply too much activity in the products that do sell to worry about those that don't, he acids. By knowing the customer and closely monitoring inventory, Belcher says he needs to be flexible and make decisions which cause his inventory to evolve with the changing requirements of customers.

Thinking big

Early on, the company started to shoot for high targets and get involved in big contracts in the equipment hardware supply business when it supplied to the Massachusetts Turnpike construction. One of Fred Belcher's first prospects as a salesman was the Seabrook Nuclear Generating Station, Seabrook, N.H.

At the time, Albeco had annual sales of under $1 million. The Seabrook account nearly doubled the company's sales volume and required new product lines and new services.

Perhaps because he was so new to the business, Belcher didn't realize how unlikely such a small distributor would be able to acquire and service such a large account. It is a lesson he never learned, as shown by the major accounts the company holds today.

"We convinced the vendors that we could handle the contract," says Beicher. "Since then, we have grown and supply more products and services to a number of state and federal contracts."

The flexibility and service of a small distributorship can help to win contracts that once went to big box or large national suppliers, says Belcher. Over the past decade Albeco has landed a large share of the state government contracts including projects like the multi-million dollar tunnel projects initiated by the Massachusetts Water Resources Authority.

"Ten years ago, large competitors gained as much as 90 percent of the contracts," he says. "Now we have a significant share of that because they are primarily catalogs while we have people out at the customer's site."

Though Albeco wants to be able to handle any supply contract, it doesn't want to do it all by itself, says Belcher. To compete with large national distributors and meet the requirements of municipal and government contracts, Albeco developed a network of 14 subcontractors.

A combined effort

Many of the contracts require a wide variety of goods from janitorial and paint to hardware and general mill supplies. The subcontractors specialize in what Albeco doesn't and carry the inventories that the fastener distributor cannot, says Belcher. The network was designed to provide as much variety as possible while limiting overlap or competition between members.

"Each subcontractor provides goods and services directly," says Belcher. "It allows purchasing of the entire spectrum of products from under one contract, all billed through Albeco."

By being small, Albeco can accommodate large customers and serve them just the way they want to be served. No red tape and local inventory means fast service, he says.

Most of the subcontractors are small specialty distributors like Albeco, says Belcher. He looked for local companies that shared his service philosophy, but Albeco's network includes MSC Industrial Direct Co., Inc., a specialist in integrated supply and catalog distribution.

Massco, Inc., is perhaps more representative of the subcontractor network. The janitorial and sanitation supply distributor says the network allows better service than a large supplier could provide.

"Like Albeco, we concentrate on our expertise and serving the customer," says general manager Richard Raskind. "The customer gets what they want at a fair price."

Massco has held its own state contracts, but contracts have become more complicated and frequently require the entire range of supplies under a single account. This allows customers to continue to purchase from local suppliers with greater expertise and product depth than a single large supplier, says Raskind.

"We still solicit and deliver our own orders," he says. "It preserves the human element, and that is what makes us what we are."

Value in the pipeline

Albeco has a highly-charged customer service culture, says Belcher. All of the staff put in 10 hour days to keep its three trucks moving and the stock flowing.

It is hard work but customers like purchasing agent Mike Belcher of Shea Traylor-Healy appreciate the high level of personal service. The Walnut, Calif.-based joint venture is digging 12 miles of MRWA tunnel with two boring machines.

"We use many hydraulic hoses, fittings and fasteners and are particular about using the Parker Hydraulic line," says Mike Belcher. "Albeco has a tremendous stock."

The distributor quickly delivers emergency orders to the site even when it is clear Albeco won't make a profit, he says.

"If you have to have it, they are great people to call," says Mike Belcher. "And I'm not related to Fred Belcher."

Another contractor that appreciates Albeco's service is Modern Continental Construction, says purchasing agent David Barr.

"When we first dealt with them we asked ken to fix a machine and pay them later," says Barr. "I don't think we ever did pay them for that job."

Modern, a major Big Dig contractor has given them plenty of profitable business over the years and they have both grown through the relationship, says Barr. He purchases tools and hardware as well as large amounts of fasteners to maintain the fleet of vehicles.

"Albeco can get anything, which is why they get so many government contracts, I think," says Barr. "Fred Belcher makes time for everyone. He is the owner and the only person I talk to. I know what want will get done."

Independence and flexibility are two of the key elements of Albeco's formula for success. Although he has looked at buying groups and alliances, Belcher wonders if there is a trade-off to surrendering some of that independence by joining on to a group.

"I'm not sure what's in it for me -- perhaps a rebate at the end of the year, says Belcher. "I can usually negotiate a price equal to what the buying group does."

Rebates pay off

He also looks for suppliers that offer early payment or cash discounts. The rebates he negotiated has paid for two employees' salaries, he says.

Albeco uses a master distributor, however. That allows the small distributor to offer custom catalogs incorporating its own inventory to offer a depth of products which rivals large competitors, says Belcher.

"Since we sell only through distribution, clients like Albeco mean everything to us," says Chuck Reisner, a sales representative with Muskogee, Okla.-based Oklahoma Rig & Supply Co. "In turn, they rely on our marketing support and catalog content and services."

Oklahoma Rig also has millions of dollars in inventory in a distribution center just hours from Albeco's customers, says Reisner. This allows smaller distributors to better manage their inventory and increase profitability, he adds.

"Albeco is an interesting small business with incredible potential," he says. "It has grown substantially with governmental contracts and continues to grow. There is no limit to what it can do."

Vendors also appreciate what this independent distributor does for their products, says Dennis Conry, Easton, Mass. branch manager of Brighton Best Socket Screw. He says Albeco provides great customer service.

"They have some large contracts and do whatever it takes to get the customer what they need," says Conry. "It all comes down to having the right stock at the right time and that is something Albeco does well."

COMPANY SNAPSHOT

Albeco Fastener & Supply Corp.

President: Fred Belcher
Headquarters: West Newton, Mass.
Founded: 1951
2001 Sales: 7 million
Employees: 10
Territory: New England region
Web Site: www.albecofast.com

COPYRIGHT 2002 Reed Business Information in association with The Gale Group and LookSmart.