Are Suppliers a Dime a Dozen?

If you weren't in Las Vegas last month for the Coast Distribution and Brand Name's buyer's shows, you missed the excitement. To set the stage, the Coast show was at the Tropicana Hotel and the so-called Brand Name's show was across the street at the MGM Grand Hotel.

The highlight of the week might have been when Tim McGuire, CEO of Coast Distribution, told Jay Hesse, president of Automatic Equipment Manufacturing Company, an exhibitor at the Coast Show, "When the show closes tonight at 6 p.m. get your stuff out of here or I'll throw it out into the street."

Automatic Equipment Manufacturing Company is justifiably proud of being a brand name and has invested a lot of money over the years to make Blue Ox and Duncan towing products and KarTote car dollies highly recognizable brand names. Hesse looked at the Brand Name's show as another opportunity.

Hesse got a suite on the 19th floor of the MGM where all the action was for the "Brand Name" suppliers and decided to open the doors of the suite and catch whatever traffic was going by _ he even had his company logo printed on the Brand Name's show flyer. And yes, Automatic had paid close to $10,000 for booths at the Coast show.

Coincidentally, I was in Hesse's room when he decided to use his suite for an additional sales room _ dealers, after all, were coming across the street. This way, Automatic might see more people and be able to present their programs in a more relaxed atmosphere. I witnessed first hand that Automatic was selling only the Coast program and would tell dealers that dropped by that the program was the same here as across the street at the Coast show. He brought his sign and Coast order forms over from the Coast show and put the sign up in the hallway and left one sales person in the room for this satellite operation. Hesse is one of the industry's best marketing minds.

Then Hesse located Tim McGuire and explained what he was doing - Coast's program is the program talked about in both places. At first, according to Hesse, McGuire wasn't happy, but after a bit he seemed to be satisfied that it would be okay _ at least that was Hesse's impression. That was Monday night during the Coast show opening. So the stage was set for the upcoming drama.

On Tuesday, Hesse went to the Coast show in the late morning. McGuire came over to the Automatic exhibit and said to Hesse, `Tell me again what you are doing at the suite across the street?" Hesse went over the program again.

McGuire said, "I want you out of the show! When the show closes tonight at 6 p.m. get your stuff out of here or I'll throw it out into the street."

Frankly, while it was a little embarrassing, Hesse was amused by Tim's sudden change of heart. He certainly could not figure why it had been okay on Monday, but suddenly on Tuesday, it wasn't. Had he asked Hesse to shut the suite at the MGM down? No.

So at 6 p.m. Hesse's crew broke down the booth and cleared out of the Coast show.

Not surprisingly, the MGM Grand suite took on a different mood on Wednesday, the last day of the show. The Automatic sales team spent the day reassuring dealers that their orders would be filled, but the Automatic sales team didn't write any more Coast orders.

Now the story takes on an even stranger twist. When Hesse got back in his office on Monday, there had been several telephone calls from Coast personnel. According to Hesse, they wanted him to know that what had happened in Las Vegas had nothing to do with their business relationship and wanted assurances from Hesse that they could still buy Automatic products. They had bought well over $1 million last year so it was a pretty nice piece of business for both Coast and Automatic. Hesse was non-committal as far as a future relationship with Coast was concerned.

But Hesse has made up his mind now. Hesse has decided to cease doing business with Coast Distribution. It wasn't just the incident at this year's Coast show. Hesse recalls his first Coast show and the first time he met Tim McGuire, who told him at that time, "Suppliers are a dime a dozen." Hesse has never forgotten that quote.

Makes you wonder if suppliers are a dime a dozen.

Hesse says he feels an obligation to the dealers who bought his brand name products at the Coast show, filling those orders is a matter of customer service. So Automatic will provide Coast with enough product to take care of the orders taken at the Coast show, but after that, it's over. In the future, Automatic's products will be available only through other distributors.

RV News wonders how long Coast Distribution can go on alienating major brand name suppliers in the RV industry. Mr. McGuire embarrassed Hesse and never offered an explanation as to why he took the actions he did toward Automatic.

Those suppliers who backed the Brand Name's show were all former customers of Coast and left because Coast had become their competitor. When you take the combined business--estimated at around $10 million_that Coast has forced out in the past year, it doesn't seem to make good business sense. But the answer may be that McGuire has ambitions to make Coast a supplier rather than a distributor. And he said it just that way in his opening speech at the Coast show. He said, "Coast is a company in transition _ A distributor in transition to becoming a supplier."

Does that mean that Coast Distribution is a distributor that doesn't believe in two-step distribution?