Global Fastener News

1997 FIN – Global Giant Würth Reentering North American Fastener Market

1997 FIN – Global Giant Würth Reentering North American Fastener Market
September 11
00:00 2012

His father had started a screw wholesale business just after World War II, but died suddenly of a heart attack in 1954.

“As a small boy I helped sort the first screws into the storage shelves at his warehouse, wrote delivery notes and took parcels to the rail station. I traveled with my parents to visit customers, first by train and then in our own car,” Würth wrote in his company biography, Management Culture: The Secret of Success.

In an interview in the Würth headquarters in Künzelsau-Gaisbach, Germany, Fastener Industry News asked Reinhold Würth what path he would take for success in the fastener business if he were 19 years old again.

“Selling,” Würth responded without a second of hesitation. “Going out selling.”

Würth’s observations on sales make it clear selling is more than a job to him.
“The profession of being a salesperson is most fascinating,” Würth added enthusiastically. “It is unbelievable the different characters you meet. You see all kinds of species of God’s garden. Sales is very, very interesting.”

His emphasis on sales ability shows in a breakdown of Würth Group staffing: More than half – 12,725 -of the 24,066 employees around the world are in sales.

Even as his company achieved multinational status, Würth continued to make sales calls with his salespeople. Würth told FIN it keeps him motivated and in touch with customers.

Those who master the art of selling can conquer purchasing, warehousing and financing, Würth believes.

A high turnover rate for your sales staff is an “early warning system for a company’s strategic stability.”
If salespeople are leaving, it is an indication that the economy is not good enough, prices are too high, quality is too low, delivery is too slow or the backlog is too long, Würth reasons.

Würth doesn’t like any employee turnover. “Job hoppers” aren’t likely to get hired by Würth. Those who have numerous employers on their resume may keep leaving because they “find a hair in the soup,” and “the chance is very high they will leave you,” Würth pointed out.
Though early career job changes are acceptable, “at some point they have to show they are ready to settle down.”

The Future of Würth Group

Reinhold Würth went into semi-retirement at age 58, turning the CEO title over to Dr. Walter Jaeger and assuming the title of chairman of the Advisory Board. He speaks freely about his own role over the years and in general about the future of Würth, but comfortably defers day-to-day management questions to Jaeger.

He started thinking about the company’s post-Reinhold era when he turned 40 because he didn’t want the company he built “to be destroyed in the next generation.”

He turned company ownership over to a family trust, putting three independent people and two family members on the advisory board.

The trust protects the company from potential future family problems, such as divorces or “a woman-chasing, playboy heir,” Würth explained.

“Nothing living lasts forever,” Würth told FIN. “My approach is to try to give it a long life cycle.” ©1997-2009 Fastener Industry News.

December 9, 1997 FIN – In the village of Künzelsau-Gaisbach, between Munich and Frankfurt and a half hour drive from an autobahn, is the home of the Würth Group.

Künzelsau, population 40,000, isn’t Chicago, but the closer you get to the world headquarters, the more the real size of the Würth Group becomes apparent.

Künzelsau doesn’t have the 110-story Sears Tower, but Würth Group has a fully automated warehouse with racks 37 meters (121 feet) high that holds 9,010 pallets. An even larger – human staffed – warehouse holds 17,890 pallets. And that’s just two buildings in the complex.

In the fastener industry, those racks are skyscrapers.

North Americans still might not be aware of the size of the global giant (1996 worldwide sales totaled US$3.05 billion and profits were US$230 million) if it weren’t for the high-profile acquisitions in less than four years: Eastern Fasteners of Connecticut; RevCar Fasteners Inc., Virginia; Snider Bolt & Screw, Kentucky; and Adams Nut & Bolt Co., Minnesota.

Last month Service Supply Company of Indiana, with 41 midwestern branches in 21 states, announced it was negotiating a sale to Würth group.

Now the industry is interested in what the Würth Group is doing.
And Würth Group is interested in acquiring more North American distributors.

Würth’s North American Strategy

In 1969 Würth Group tried to establish distributorships in the U.S. using successful European formulas but was unable to make inroads. This time Würth Group has established a different strategy. Instead of opening all new offices and branches, Würth Group is selectively acquiring more well-established distributorships.

“It is the better way and faster way to grow our company, ” Dr. Walter Jaeger, Würth Group board president, told Fastener Industry News in an interview at the headquarters in Künzelsau.

“First, we want only the best companies. No rubbish,” Jaeger said. “We are looking for good management.”

Jaeger’s requirements include: Companies should be $10 million to $15 million or more; have quality management in place; should be in strong financial shape (“Growth without profits is fatal” is a company motto, and Jaeger added, “We are not looking for loss leaders”); a geographical location fitting the expansion pattern; and not dependent on one customer.

A simply look at a map reveals where the industry can expect Würth Group to go next. There are no Würth acquisition dots on the map in Canada, much of the southern U.S. or anywhere in western states.

Würth Group also will grow by encouraging its acquisitions to expand. The industry already is seeing that as Kentucky-based Snider Bolt, which had branches in Lexington and Elizabethtown acquired E&K Fasteners Inc. of Henderson, KY.

The acquisitions thus far don’t have branches in such major states as Florida, Texas and California.

Buying distributorships makes sense because Reinhold Würth knows other markets are different from what he has succeeded in.
“The British and U.S. markets are very different from the continental market, even for very simple wood screws,” he told FIN.

And there are differences in styles. For example, Würth acknowledged not being able to understand the “hiring and firing” patterns in the U.S. vs. more patient European companies, which try to develop employees.

Worldwide Expansion

Würth first expanded beyond the German border when it opened a subsidiary in the Netherlands in 1962, followed soon by Switzerland, Austria and Italy.

As the end of 1997 nears, the Würth Group is in 59 countries.

At the same time the company is expanding in North America, Würth said his company would continue worldwide – starting at home. “It is almost a must to improve European conglomerates,” he said.

Jaeger pointed out that the growth is vital to keep up with the market. The fastener industry used to be “normally very local.” However, that is changing. “This is a very global business,” Jaeger said. “Many American companies have affiliates in Europe.”

There is an opening for partnering with international companies, and that requires a worldwide presence for Würth Group, Jaeger explained.

“Big companies don’t want as many suppliers,” Jaeger said. “They want single sourcing. Purchasing departments spend 80% of their efforts and expenses” on buying small items and “20% on very important things.”

“We cover your demand so you can save on that 80%,” Jaeger said. Würth Group provides the inventory and both sides benefit, he said.

But providing those services to multinational companies is a reason Würth Group must expand. “Business is still local,” Jaeger said. “You have to have local delivery. Despite consolidations, you have to have an outlet near the customer.”

Würth doesn’t want any companies ahead of them in providing the service to international companies.

Jaeger envisions Würth Group expansion in Southeast Asia, China and Eastern Europe.
Würth Group opened in the former East Germany eight months after reunification.
Last year Würth opened companies in China, Kazakhstan, Kenya, and the Philippines and acquired fastener companies in the U.S., Slovak, Finland and Germany.

The 15 countries of Eastern Europe lack economic power today, but in the next 10 years will grow based on natural resources. Unlike the strategy in the U.S., the economic conditions in Eastern Europe are prime for Würth Group to start small companies and grow with the economies, Jaeger explained.

Even a small sales volume gives Würth Group “a foot in the market,” Jaeger said.

Beyond Geography

Though based in more traditionally defined fasteners, the Würth Group will be watching developments in other markets such as adhesives.
“We always have to be open,” Würth said. “Who knows? Is this only a tool or what will the market be in 10 to 20 years?”

Reinhold Würth, though retired from the day-to-day operations since 1994, said the company’s future would be in “extremely top, top, top, top quality,” with a cadence emphasizing the multiple tops.

Jaeger said the strategy is to find the right people to run Würth companies and build up business with high quality standards and adding value with finding solutions for customers.

“Only being cheaper is disastrous,” Jaeger said. “Quality beats prices.” Quality is the key to expanding its buying.

Today 60% of Würth’s fasteners are manufactured in Germany, 30% elsewhere in Europe and 10% in Eastern Europe, Asia and Taiwan.

Some emerging nations may have price advantages due to labor costs, but “up to now are not able to comply with out quality standards,” Jaeger said.

Würth Group is doing everything they find necessary to grow, such as speeding deliveries. Würth is proud to say the average delivery time in the past three years dropped from 89 hours to 53.
After all, as the saying goes, “time is money,” Würth noted.

Though Reinhold Würth remembers that when took over from his father the company consisted of just him and his mother, small companies “cannot keep up with high technology today” and it is difficult to take each technological step customers want, Würth said. Small companies don’t have the research and development potential of such firms as Würth Group.

For example, last year Würth Group introduced the Environmental Information System, providing the automotive industry information on laws, job safety, handling of hazardous materials, training and waste water analysis on CD-ROM.

Würth has 130 people working in R&D and holds “three digits of patents.”

Würth proudly offered the example of a joint research and development project Würth conducted with the University of Stuttgart to design wall hangers for earthquake zones.

Würth Group won’t give away product to grow. Profit is necessary, Würth emphasized. Increasing sales without profits will spell trouble for the company.
In addition to company profit, Würth said employees and customers need to be profiting too.

Though Würth Group has become involved in some screw manufacturing, the company’s growth will be in distribution. “We leave manufacturing to our manufacturers,” Würth said. “If you manufacture yourself, in three or five years a competitor may start a new product or move where there is a low labor cost. What are you going to do with your own factory?”

The Change for RevCar: “Seamless”

The Würth Group acquired the nearly 30-year-old RevCar Fasteners Inc. in 1996, and the word to describe the change in ownership is “seamless,” Stuart Revercomb said. “There is no change. If we hadn’t told our employees, they wouldn’t know.”

“There are no changes in day-to-day operation,” Randy Revercomb agreed. “The only difference is that there are more resources available – financial, quality control and computer information that a $4 billion company has to share with you.”

Randy Revercomb acknowledged there were “anxieties and things” in selling the privately held business his father founded, but the results “have worked out the way the Würth Group expressed. They have gone above and beyond in the fairness factor.”

The product mix hasn’t changed and RevCar doesn’t have to sell inventory from Europe, Randy Revercomb said.
RevCar’s primary market is the Mid-Atlantic states, but the company has accounts from coast to coast.

Now the Würth Group distributors in the U.S. are starting to look at ways “to take advantage of the synergies,” he added.

Ben Taber, who was hired as director for Würth Group in North America four years ago to acquire distributorships, said the U.S. distributors “all want and see the need and the good” of working together, but there is no corporate pushing to act as one centralized company.” ©2009 Fastener Industry News.
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Beyond Business ? W?rth’s Community Role
December 9, 1997 FIN – Künzelsau has the benefits of being a company town.
Nestled in the Hoenlohe region of Germany, because of Reinhold Würth and the Würth Group the 1,629 employees in the world headquarters and the city gain numerous forms of the arts, architecture and even a screw museum.

In 1995 Christo and Jeanne-Claude draped the Würth headquarters lobby floors, stairs and windows, drawing 83,000 visitors during the company’s 50th anniversary year.
That and other displays were estimated to yield US$10 million in public relations for the Würth Group.

When the company outgrew its headquarters in the 1980s, Reinhold Würth decided to conduct a design competition. The administration building, built in 1991, is surrounded by sculptures and features a wide central hall with a large glass roof and open railings intentionally creating the impression of a ship.

The futuristic architecture is important because “employees spend the most pleasant part of their life at their jobs – the sunlit hours of the day, and generally the best years of life from age 20 to 62,” Würth explained.

The Würth Academy provides lifelong learning, corporate training, job-related knowledge and skills and brings in performing artists.
Reinhold Würth sees the Academy as important for personnel development. The academy creates a corporate culture, provides cultural events for the region and a forum for exchange of ideas between scientific theory and practical experience.

Employees are “more than just people who work from nine to five …that cultural activities are conducive to the development of personality … a sensible investment in his company’s most important asset, namely the minds, wishes, dreams, and ideas of its employees,” Würth wrote.

The Würth Art Museum attracts a variety of art but also allows Würth to exhibit his collection “to meet the public obligation of private ownership.” In the first five years 370,000 people visited the art and screw museums, including 120,000 business associates, customers and suppliers.

“The enormous fascination which the Screw Museum has for schoolchildren becomes quite understandable when we realize that the civilized world would fall completely apart within less than five minutes if it were not for screws and threaded parts,” Würth wrote.
The Würth Foundation was founded by Würth and his wife, Carmen, in 1987 to fund science and research and sponsor art and cultural activities. In 1996 Würth Group introduced the first Würth Literary Prize. ©2009

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