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Update on Reese Products
by Don Magary
Why are there so many smiles on the faces of the Reese Products executive team? Three years ago RV News visited Reese Products at its headquarters in Elkhart, IN, to meet the newly assigned president, Bob Mater. Mater had come to Reese from outside the industry, and he inherited a company struggling for lack of leadership and a clear mission. As a result of the need to trim costs to offset languishing sales, the former leadership had dramatically decreased the production staff, adding more problems to an already poor order-fill rate. Needless to say, Mater had his work cut out for him. When we talked he had assembled an executive team and was ready to try to turn Reese around. When that team was assembled it included Lee Adelman, vice president of sales and marketing; Jim Cook, vice president, finance, Rick McCoy, vice president of operations who heads engineering, quality and manufacturing; and Howard McMahan, vice president of materials and distribution. RV News decided to take another look to see what pro-gress, if any, Reese had made. We sat down recently with Mater and Lee Adelman to get the update. When we reminded Mater of the challenges he faced three years ago, he laughed and said, "We were certainly only marginally profitable. All of our profit was really being made internationally; domestically, we were break-even and had been flat in sales for a good period of time - several years. Our complete and on-time fill rate was about 64 percent, and the company had been reduced to a shadow of itself in terms of production capabilities, because my predecessor had panicked and implemented a disastrous layoff." Mater took on the job at Reese and faced challenges that could have gone either way. But he didn't look at the possibility of failing. He said, "I think everybody wants to be successful. In our situation we had a lot of positive things to build upon. We had a company that had a tremendously proud heritage. People in the organization who had been there awhile remembered when Reese was well respected. They were very hungry for a return to that. Part of my leadership role was becoming a cheerleader, to point out the things that we were doing well."
Adelman added, "We were just in the process of identifying a lot of the problems, and we were trying to get to the bottom of where we were in terms of customer service. We were definitely talking about what we were going to be doing to solve our problems." Reese talked to customers and found out what the major problems were and then developed a strategic plan. In the meantime, Reese assured customers im-provement was on the way. In order to accomplish that Mater had to go in and completely rebuild Reese's infrastructure so the company would have a strong manufacturing and distribution capability. He started with the basics: maintenance, quality, planning and scheduling, purchasing materials, em-ployee skill levels and training. "We had a finance department that wasn't on top of it's game until we got our new team in place. Brad Eudell, our controller, and Jim Cook, our CFO, have done wonders to make our business hum and give us the data and the reporting that we need to know what our costs are. All that infrastructure, the quality work, repeatability and so forth, all those things were missing. It was a matter of trying to decide which pieces to work on first; it was kind of helter-skelter for awhile. But we were earning back our reputation; going out and rebuilding the partnerships; letting people know who we were and getting to know that we are good people who have integrity and care about their business being successful. You can't just go out and say you mean it - you have to go out and show you mean it. "I told the staff, now we have to walk the talk; we knew where we needed to go, but we had to perform. The first year we built inventories, rebuilt our manufacturing cadre, and really by just force of sheer blunder-busting, we stocked the warehouses full of product and we managed to get our order fill up to 88 percent. That was a year of real strong growth for us, and the in-dustry grew too. When the dust settled, we weren't real happy with our 88 percent, because during the peak season, we were well below that. But when we looked around and evaluated these, we probably shipped as good or better than any hitch supplier in the industry; and it was fortuitous for us that we had built ahead of demand. We had a lot of product in warehouses that we could ship. "Since that time we have improved. We went from 88 to 96 percent, and now we are at 98 percent plus in terms of complete and on-time orders. We still get a few complaints sometimes, but it's usually about a new product that is slower coming on stream than projected. But the staples, as some of our customers call them, have been in good supply." One of the key elements to Reese's increase in customer satisfaction is keeping all the employees informed and working toward the company's mission. From time to time, Mater will assemble all the employees to-gether on one of the loading bays and give them an update as to how the company is performing.
When Reese dropped Coast Distribution as a customer last year, there was a lot of apprehension on the part of our em-ployees and Mater kept them informed on that decision. He said, "They were naturally worried. Coast was a big customer, they had been a customer forever, and that big customer was gone. It was well known that they were one of our largest customers and we had grown Coast's business about 60-percent-a-year since I had been there." If there was one element in Reese's effort to turn the company around that could have side tracked progress it was the decision to sever relations with Coast. But in the Reese team's collective mind, they had little choice. Mater explained, "When I came to Reese, Tim McGuire told me he wasn't happy with the way his hitch business was going, so our mission was to show him that we could be the best partner he had, and we enlarged our presence at his shows. We brought everybody in the sales organization to the Coast shows. We needed Coast because they did a lot of business, and our mission was to show Tim McGuire that we were a company to take good care of." In Mater's mind, that is not how it turned out and as a result of actions by Coast, Reese decided to stop supplying Coast. Mater explained, "I thought Tim took advantage of our enthusiasm, took advantage of us, and tried to prey on our developments. You really can't do business with people when you're building their business and they're taking your ideas and giving them to somebody else and saying, `This is a good product - copy it, and that's a good product - copy it, and here's what we will pay for it, and this is what you have to do.' "We were disappointed that Tim chose to take that direction. But, you know in retrospect, we had a nice increase in our RV segment of business last year. Our other distributors were magnificent, supporting our decision to leave Coast." Mater points out that the difference between a company that knocks off someone else's technology and a brand name company is in developing and refining ideas that end up as new products for the marketplace. He said, "If you knock off an idea there's no history and therefore refinements to that product are non-existent. If your engineers developed the idea, they are constantly working on ways to improve that product and developing new products as well. When Reese develops new products and improves existing products, everybody wins. The dealer wins because he has more products to offer and the consumer wins because they can have a better product and the distributor wins because they are the heart of the supply chain to get the product from the manufacturer to the end-user." And Reese is a company that is focused on bringing new ideas to the marketplace. In Mater's second year at Reese, the company applied for about 13 patents. Last year, that number increased to around 50. Mater said, "If you look at what these patents are on and what our product development has been, you can clearly see where Reese is focused. The focus of Reese is on the RV, big hauling, heavy hauling product line. It takes a tremendous commitment to do the kind of innovation; we've out-innovated the industry every year since I've been here. Our shows in Louisville are mad-houses; you can hardly walk through our booth most of the time because people are excited about seeing what Reese has that's new. "So, my answer to Tim McGuire, who says that we're hurting the industry, is we are building this industry; we're building the products that make it safe and enjoyable to pull these big, heavier rigs around. We brought Titan out last year, which answered a lot of problems with the slide-out units and the heavier units. We brought out new weight-distributing products this year. We've up-graded our weight distributing products and raised the ratings; and we've raised the ratings on the most popular hitch. And then the revenue we get, we re-invest back into the industry." One of the criticisms Reese hears from dealers is that Reese sells to mass merchandisers. Mater responds, "We think that builds Reese's reputation as a quality supplier when people walk through the mass-merchandiser's and automotive stores and see Reese products. But the products in those stores, other than hitch balls and that sort of thing, are not the important products from the standpoint of the RV dealer. The im-portant products he needs are: the new slider that makes a short-bed pick-up work with a fifth wheel; the Titan that can carry the heavy loads; the mini-weight distributing hitches that he can sell pop-up camper owners so they can pull them with Caravans and lighter weight utility vehicles. Those are the things that we think are important to build this industry. "And, Tim's supplier of CP hitches, Valley, has really never been an innovator in this industry. The most they can ever do is copy. On the other hand, Valley is the biggest supplier of hitches to Detroit. And who does that hurt? When auto-makers install hitches at the factory they steal hitch sales from RV dealers." Mater and Adelman were amused by the report that Tim McGuire's recent speech to RV dealers at the Coast show criticized both Reese and Thetford for selling to Wal-Mart. Adelman said, "If you check your history, you might be surprised at how RV products found their way into mass merchandisers. Coast was the founder of the feast in terms of selling RV parts and accessories to mass-merchandisers. I'm not condemning Tim because he sells to a particular customer. We all have a right to sell what we want to sell to whoever we want to. But if you live in a glass house, you shouldn't be throwing bricks." Mater said, "As I understand it, and I wasn't in this industry at the time, Tim McGuire's organization was the first to sell Thetford products to mass-merchandisers." "That's right," Adelman said. "In fact Thetford was forced to come in and take control of the situation. They didn't plan for the Thetford brand name, Aqua-Chem, to be sold in mass merchandiser outlets. That's when they took Aqua-Chem off the shelf in an effort to protect the RV distribution channel and put in Campa-Chem in-stead." "It's ironic. You can go down to WalMart and buy Travelux brand products and inside the package find items with the CP Products trademark stamped on it. Did I hear someone tell dealers, `You'll never find CP Products on a WalMart shelf?' If I were a dealer I might be asking myself, `Who owns Travelux and how do CP Products get into WalMart stores." Mater said, "Tim twists things to suit himself. But I think most dealer's know that Tim McGuire does not come to the party with clean hands." Mater laughed and added, "and in my opinion he complaineth too loudly."
"It takes a profit; it takes a company willing to reinvest, and TriMas, our parent corporation, has stepped-up to the plate very well for us. This past year Tri-Mas approved over $3.5 million of new capital for equipment, tooling, and other improvements." Obviously, the company had a long way to go and has come a long way. The evidence is that last year Reese broke all previous sales records and recorded its best year in history. Mater smiled and added, "I recently told our employees that our turnaround mission is accomplished. We've doubled the business since the new team stepped in, and the increase in profitability is evidence. "This is where we had to be. These numbers are generally where the rest of the companies in our parent company operate. Reese was an under-achiever until this past year. Now, I would say Reese is poised to be one of the stars of the company. We project fairly substantial growth in sales next year be-cause we have some new custo-mers and have, what I think, are some real home-runs in new product development. We have set big goals and objectives for ourselves. We think that if the economy is half-way decent we can do it. "Like I said, our mission is accomplished as far as the turnaround. But our new goals involve being world-class in every way -- in manufacturing, marketing, and educationally in terms of helping our customers." Adelman said, "What's so nice to see, looking back, is that three years ago we sat in a room at the Warehouse Distributors Execu-tive Conference and distributor after distributor told us what was wrong. I think our distributor's had high hopes for Reese, but really questioned our vitality - and, in the long term, our viability. And to see that against what we have today, which is that Reese is the total partner to the two-step distribution channel, it's gratifying." Yes, there are a lot of smiles on the faces of the Reese team and why not? And Bob Mater is proud of the accomplishment, but it's a pride in people rather than himself. He said, "I have to give all of our people the credit. One person can never make these kinds of things happen. I can chart the course, but after awhile we all chart it." Reese has proven that it does more than just talk a good game. Reese is a company that really does "walk the talk," as Mater puts it. Bob Mater just returned from the annual Tri-Mas Presidents meeting and Reese was awarded the plaque for the company with the most improved return on investment. Reese also ranked #1 in improvement in economic value added, #1 in sales growth and #1 in margin improvement. Reese also received the new product award for their Titan hitch. And if that weren't enough, Reese also won an award for the best safety im-provement in Tri-Mas over the last twenty-four months. Not a bad year! |
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