GRK: A Success Story With a German Twist
When the Canadian market proved disappointing, Uli Walthers didn’t let that stop him. With his company, GRK Fasteners, teetering on the edge of bankruptcy, he took some of his patented screws, a piece of wood and a power tool in the trunk of his car, and drove the sixty kilometers south from Thunder Bay to Minnesota.
“Everybody whom I told I was going to the U.S. said, ‘You’re nuts. They’re Phillips. You will never be able to succeed.’ The truth of the matter is the market was waiting for something better. When you have a 25-33% success rate every day in cold calls, that’s a lot. You can convince the end users that there is something better here.”
That “something better” is a unique design of building screw that requires no pre-drilling, wrenching or pre-countersinking, and is virtually unbreakable. All of GRK’s ’s products are patented, and the company is vigilant about enforcing its patent protection.
From the outset Walthers made a decision to market his product to lumberyards and building supply stores specializing in serving professional builders.
“Showing a product to a clientele like we have—construction—they’re really down to earth. What they need is to get their hands on something, and they will decide. The dealers are always the weakest link.”
His strategy paid off. Within a year, the company broke even, and Walthers was able to expand his Thunder Bay workforce and hire several new sales representatives in the United States. Twelve years later, GRK Fasteners realizes annual sales of fifteen million dollars. From then to now over 95% of the company’s sales come from the U.S.
Although the Canadian market accounts for only 2.6% of total sales, Walthers believes it was his “big break” to base his business in Thunder Bay. Less than an hour by car from the Minnesota border, GRK has been able to benefit from the favourable exchange rate while selling to the upper Midwest, “the most stable area economically in the U.S. From Thunder Bay you can penetrate a market of twenty million people within a day’s drive.” That market grew to include General Motors, where GRK’s Starhead screw proved a cost-saver to the auto industry. In 1994 GRK expanded to the New England states, and in 1998/99, all but the Southeastern States.
Keeping up with an expanding market meant staying in touch with customers’ needs, and constantly innovating. Conversations with customers led to new patent designs and new manufacturing partners. Japan emerged as a new market in 1997. A year later GRK opened a foreign subsidiary, GRK Europe, to serve German and Swiss customers. By 2002 GRK’s growth was well over 40%. Its products have been featured on “This Old House” and “Home Savvy”, and have received industry awards for innovation.
Walthers is proud, not only of the company’s success, but of its standard of customer service. “We are the only North American fastener and distributor who says, ‘When you have trouble, let us know. We will replace the screws plus the cost for labour and materials.’ Our reported failure rate is less than 0.0002%. It’s a very important issue that our salespeople are going to those job sites, talking to people, making sure that if it is our failure, they will get replacements. Nobody else will do that. Quality and service are first priorities. If you have a twenty-four hour call-in service, you have to be there twenty-four hours—not just an answering machine.”
Uli’s marketing savvy was honed in Germany where he originally worked as sales and marketing manager for Reisser Schraubenwerke GmbH, a German-based supplier of fasteners for construction. He credits the business apprenticeship training he received at high school in Germany for his solid foundation in all aspects of business, and would like to see a similar apprenticeship system in Canadian schools.
Walthers believes that continued success in any business requires looking at market reality and being able to change quickly. 2003 is the year GRK is launching a new educational initiative. By providing free product to high school shop classes and technical colleges throughout the United States, they hope to create loyal customers for the future. In addition, the company keeps creating new designs to meet customers’ needs. One of their most recent acquisitions is an insulation cutting knife that can cut through insulation in thin slices “like bologna. Now we have the rights to it worldwide. It was already a success in the first half-year.” It is that kind of initiative that recently earned the company The Ontario Global Traders Northern Region Innovation Award and Market Expansion Award for Excellence in Exporting.
Ninety-five per cent of GRK’s profits are turned back into the company to ensure that growth is stable as well as rapid. Sales are directed toward independently owned lumberyards and building supply stores rather than large chains. Walthers considers “big box stores” to be “the kiss of death to every small company.”
At present GRK employs 24 people in the Thunder Bay warehousing office, 11 salespeople deployed throughout the U.S., and 4 manufacturing representatives.
“If you’re going to succeed,” Walthers advises, “it can only be on quality. It can never be on price because you cannot beat the low end in either Canada or the U.S. At the low end you are competing with every third-world country and you will never be able to beat their prices. When we started selling in the U.S., right from day one we were the most expensive company by far. The closest in price to us was 20% below us.”
Customers have found that the savings to them in time and labour costs make the pricier fasteners more cost-effective in the long run. Walthers believes the American market is easier to convince of this than the Canadian. “Canadians are notorious penny-pinchers. Their first question is always, ‘What will this cost me?’ Americans ask, ‘What will this do for me?’”
“Money, bookkeeping and marketing are of paramount importance. Explore your market first. Have all your ducks in a row. Don’t get ahead of yourself. And stay out of the banks as much as humanly possible.”
Source: http://www.ArticlePros.com/author.php?Marianne Jones
|
