Cornwell has tools to expand business, footprint

Sunday, January 01, 2017

Photo by DAN SHINGLER Cornwell Quality Tools sells directly to mechanics.

By
Photo by DAN SHINGLER Cornwell president Bob Studenic
Apparently, you can still grow a manufacturing company in the United States, even if you make something as old as the buggy whip.

You just need to make it well, price it aggressively and have an energized network of dealers "" or at least that's what the management of Wadsworth-based Cornwell Quality Tools says has worked for them. For proof, they point to a big hole in the ground "" by late spring, it will be the site of a new warehouse the company is building to house its expanding line of products.

"Business is going so poorly, we decided to add a 107,000-square-foot warehouse in Wadsworth," laughed Cornwell president Bob Studenic.

He laughed then, but he said things weren't so funny just a few years ago.

Cornwell will post sales of about $138 million this year, Studenic said, an increase of more than 100% from 2009.

"We bottomed out at $68 million in 2009, coming off a pretty deep recession for everyone," he said. "But the contraction in our industry was worse than other sectors, because of the auto dealerships." Those dealerships are among Cornwell's primary customers. In fact, if you've never heard of Cornwell, it's probably because you're not a professional mechanic.

The company sells direct to mechanics and technicians at auto dealerships, independent repair and body shops, manufacturing facilities, aircraft maintenance facilities, marinas "" places where people use the tools to make their living. The tools generally cost more than what you would pay at a Home Depot or a Sears store, but the companies market them as being tougher and better. Dedicated franchisees show up to job sites with trucks that are portable tool showrooms.

Cornwell is the smallest of four companies that sell this way across the U.S. Snap-on is the biggest of the group, followed by Mac Tools and Matco Tools.

So, when the U.S. auto industry tanked in the recession and dealerships across the U.S. were shut down, Cornwell and its competitors all lost potential customers, Studenic said. The customers who remained were often too nervous about their job security to spend money on new tools. Some who were laid off even sold their used tools on the cheap.

A lot of franchisees also left the business, and Cornwell saw its dealer network shrink from 600 to about 500 during the recession.

It was not a good time to be in the tool-selling business, Studenic said.

Today, however, things have rebounded nicely. U.S. auto sales have bounced back in a big way. The dealerships that survived the recession have largely expanded, and mechanics are feeling good about their jobs. Plus, other industries are similarly expanding, hiring more mechanics and spending more money.

Also adding to sales is Cornwell's Oct. 1 acquisition of Kennedy Manufacturing in the western Ohio town of Van Wert. Kennedy makes tool boxes and has made them for Cornwell in the past. Its annual sales are about $14 million, Studenic said.

That's part of the company's effort to expand its product range. Cornwell's own tools only make up a portion of the company's product line, Studenic said. The rest are manufactured by other companies in the U.S., though they often are sold with the Cornwell name on them.

Those other products include small parts and accessories, and range up to sophisticated diagnostic equipment that can cost thousands of dollars.

"We've aggressively gone after unique product, and we've promoted it in a way that the dealer wants to put it on his truck "" and of the big four tool makers, we're probably the most aggressive on pricing," said Don Russell, Cornwell digital marketing and diagnostics product manager.

Another way the company has been growing sales has been by adding new dealership franchises. Selling franchises is what sells tools, Cornwell says, and the company has added more than 100 new dealers since the recession, to the tune of 620 today.

Becoming a dealer is not for everyone, and you can find plenty of stories of people who have failed as dealers for all of the big four tool companies in the market. But some succeed and say they love it.

"I wish I had done it 20 years ago," said Tim Oliver, who worked at auto dealerships for about 20 years before becoming a Cornwell dealer two years ago.

Oliver said he spent about $85,000 on his truck and initial inventory "" $50,000 of which he borrowed from Cornwell on what he said where fair terms for five years. That's less than it would have cost him to go into a business as a dealer with some other companies, said Oliver, who considered one other company along with Cornwell before pulling the trigger on his business.

It's hard but rewarding work, he said, adding he drives between 75 and 100 miles a day visiting equipment repair shops, aircraft facilities and other regular customers.

Now, Studenic and the rest of Cornwell need to keep up the momentum.

He said the new warehouse will help. It replaces an existing 30,000-square-foot facility that is not big enough to hold the company's inventory. Cornwell currently rents storage space for some inventory. Next year, it will have all of its inventory for the eastern half of the U.S. under one roof for the first time in many years, Studenic said.

"And it sits right next to a UPS facility, so we'll be ready to go come spring, he said.


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