No matter what they sell, independent reps in different industries have many common concerns. That’s what the nearly 200 independent reps from the National Electrical Manufacturers Representatives Association (NEMRA), Electronics Reps Association (ERA) and Manufacturers Agents National Association (MANA) learned in September at the three-day inaugural Keystone Conference at the Saddlebrook Resort near Tampa, Fla.
The attendees, nearly all of whom were reps from the electrical; electronics; and other industrial, construction and retail trades, invested three days listening to presentations, panel discussions and attending more than a dozen workshops on key aspects of running a profitable rep firm.
They learned how other independent reps are coping with the worst economy in over a decade and are positioning their companies for a future that will present new and difficult challenges.
Jim Harris, a management consultant with Strategic Advantage, Toronto, Ontario, and author of the book “Blindsided,” set the tone for the conference when he analyzed several examples of companies and industries that were blindsided by ideas or trends not considered serious threats to businesses. He offered the example of how Napster decimated the $40 billion music recording industry and will revolutionize how music is distributed.
In 1999, Shawn Fanning, a college student, developed “Napster,” a software program that simplified the sharing on MP3 music files over the Web. He sent that program to just 10 friends. In less than two years, the software had been downloaded 20 million times. Although the Recording Industry Association of America’s (RIAA’s) lawsuit against Napster eventually killed it, Harris said, “The day after Napster died, 90 new file sharing services sprung up and by August 2001 the top four had collectively facilitated 3.05 billion file transfers.”
While most reps have not been blindsided by “offshoring,” where vendors and customers are moving manufacturing plants to China and other less-expensive manufacturing sites around the world, it was a big concern at the conference. Ron Rutkowski, president, Control Sales, Elk Grove Village, Ill., captivated the audience with his experiences starting up electronics manufacturing firms in China. Rutkowski, an electronics rep, private labels electronics components for OEM accounts in the United States.
The electronics industry has been hit harder than the electrical business with the loss of customers, and the Chicago-based ERA trade association has set up trade missions to China for its members interested in starting up ventures similar to Rutkowski’s manufacturing companies. MANA, Laguna Hills, Calif., also recently led a contingent of its members to China on a similar mission. Hank Bergson, NEMRA’s president, said NEMRA members have not had as much interest in a trade mission, but the association would sponsor one if the need arises.
In his presentation on the state of the U.S. economy, Martin Regalia, chief economist, U.S. Chamber of Commerce, said while burdensome U.S. regulations and bad policy decisions are pushing U.S. manufacturers overseas, part of the demise of manufacturing in the United States can be attributed to the fact that the U.S. economy is maturing.
“Growing globalization will continue to pose challenges to the U.S. manufacturing sector,” he said. “But growing productivity and increased efficiency in the United States will help counter the trend to produce abroad. More important, the factors that appear to have radically tipped the scales against U.S. manufacturers, especially in the last few decades, have not been these global forces but, rather, bad domestic policy decisions. Reforming the regulatory, legal, and tax systems such that they continue to provide the necessary protection and raise required revenue without placing undue burden on the economy would help ensure a vibrant manufacturing sector into the 21st century.”
The Keystone Conference attendees were nearly all owners of independent rep firms, with the exception of several vendors on one panel. Bob Smith, vice president of sales and marketing, for Pass and Seymour/Legrand, Syracuse, N.Y., brought an electrical industry perspective to the panel, “Reinventing your rep firm from your principal’s perspective.”
Smith said reps must be able to “help create demand and develop new markets while selling and servicing more sophisticated end users and distributors while combating fierce competition coming at them from all sides. In addition, today’s rep needs to be sharper, leaner, technologically savvy, financially sound, marketers, outstanding in sales, and flat out sound business people.”
One of the other manufacturers on the vendor panel, Bob Terwall, president, Cherry Electrical Products, Waukegan, Ill., sparked a lot of discussion with his analysis of using independent manufacturers’ reps versus direct factory salespeople. In the analysis done earlier this year on his company’s sales structure, he found it costs two-to-four times more to go to market with direct factory salespeople than with independent reps. NEMRA chairman Sam Johnson, principal, Electra-Tek Carolinas Inc., Greensboro, N.C., and a member of the Keystone committee, took away more than 30 ideas from the presentations and breakout sessions.
“They were all so good that I had some work to do to get them down to about 10 I can implement right away,” he says.
Specifically, he learned how several reps were receiving retainers from manufacturers for selling new products or “missionary lines,” why reps need to invest in technology, share annual business plans with key principals and diversify into new markets or geographic areas.
Tony May, H.M. Brown & Sons, Dartmouth, Nova Scotia, says his journey to Tampa was worth it. “What I learned at the Keystone Conference and what I’ll be able to put to use in my agency will more than pay for the cost of my registration.”