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Hungry for more

By: Bruce Meyer

October 29, 2007

 

There’s no doubt Tim Callison has big plans for his business. There’s also no doubt the company has a long way to go to reach those goals.

The president of Trelleborg Sealing Solutions’ Marketing Americas unit wants the supplier of precision seals to meet Swedish parent Trelleborg A.B.’s stated goal of being No. 1 or 2 in its specific target markets. Right now, however, Callison rates the Fort Wayne, Ind.-based firm as a having a “mid-single-digit market share position,” probably ranking fourth or fifth.

With Parker-Hannifin Corp. and Freudenberg-NOK G.P. leading the pack, the Americas market is quite fractionalized, so Callison feels there are plenty of chances to gain share.

Globally, Trelleborg Sealing Solutions posts $830 million in sales, with Europe accounting for 71 percent and the Americas just 22 percent, or about $183 million, according to company data. On a product basis, 65 percent of sales are from industrial, 20 percent automotive and 15 percent aerospace.

“We have a lot of growth to accomplish in the next couple of years in order to get to that No. 2 or No. 1 position,” Callison said.

The strategy to do that includes progressing organically through strategic marketing and growth initiatives; territory expansion; acquisitions to fill in product gaps or expand territory; and exploring product adjacencies to boost its offerings.

“We’d like to be at 15 percent of market turnover in the next three to four years, so somewhere double to triple in size,” Callison said, acknowledging the goal is high but achievable. “It’s a highly fractionalized market today, so there’s going to be some continued consolidation, either by us earning the business or by acquiring smaller players.”

Total focus on sales

Under the global Trelleborg Sealing Solutions business structure, Callison only has to worry about the sales and marketing part of the business in his region.

The organization is set up with marketing companies in each of the global regions, with separate units taking care of global operations for elastomers, plastics and supply chain management. Trelleborg Sealing Solutions Marketing Americas then breaks down into 12 separate local marketing units, nine of those in the U.S. and one each in Canada, Mexico and Brazil.

The market structure has been in place for the last three years, following a model used for many years in Europe, according to Per Danielsson, vice president for Marketing Americas.

“We’re a big company, but we’re broken down like a small company so you know where to go for help,”  he said. “Be strong locally-that’s the key.”

In trying to identify trends and potential new applications, Callison said the firm uses both internal and external marketing activities. It also calls on customers to talk about future developments but not in the typical cold-call fashion.

“It’s a traditional sales approach in that the activity occurs on a local basis with a sales engineer, but we do a lot of homework up front,” Callison said, “so he’s calling on the right customer in the right segment with the right targeted opportunities for us so we’re not wasting time, simply collecting general leads and then acting on them.”

Short term, aerospace is a strong market for the Trelleborg unit and Callison said his firm will work to capitalize on the current uptrend in the segment. He also sees growth potential in medical-because of aging demographics-and in applications for food and beverage dispensing and packaging. “You can’t walk into a gas station without seeing some type of new beverage dispenser in the mini-market there,” he said, noting that those products contain a variety of seals.

One thing that Trelleborg Sealing Solutions has going for it in gaining business is that it’s not tied to a specific material, Danielsson said. Where some competitors may specialize in one type of material and try to nudge customers in that direction, Trelleborg will look at the application and determine the best product, even if it’s a less expensive seal. The firm also will source product elsewhere, as it makes roughly 65 to 75 percent of what it sells and buys the rest from outside vendors.

“We’re really looking into what the demands and needs are from our customers, and then we look to recommend the best solution from our customer’s eyes,” Danielsson said. ”The reason we tend to do that is we have a wide and deep product range.”

Callison also believes the decision made earlier this year to drop the Busak + Shamban name from the company to focus on the more global Trelleborg name will pay dividends down the road. The executive said the name is well recognized, particularly in engineering circles, and it’s clear to the market “We either seal or we protect or we dampen,” he said. “We think that as time goes on we’re going to really become the leading global brand name for those kinds of applications.”

Acquisition profile

Trelleborg has been a big player in the mergers and acquisitions market and will continue to be so, according to Callison. In looking at candidates to purchase, the firm looks at three criteria:

* Fill a gap in product offerings. That is what led to the May acquisition of Hydro-Components Research & Development Corp., an Illinois manufacturer that focuses on large-diameter seals and bearings.

* Improve territorial coverage. That brought the July purchase of distributor AFM Inc., which had a toehold in the Northwest U.S., with headquarters in Portland, Ore., and an office in Fresno, Calif.

* Provide entrance into a market Trelleborg considers important. The 2005 purchase of Chase-Walton Elastomers Inc. gave Trelleborg the ability to service the U.S. commercial and defense aerospace industry and also capability in liquid silicone rubber products for medical. And it’s normally not just Trelleborg that benefits but the purchased firm, as well, Callison said. “The thing that is an advantage to the acquired company is they get tied into our global network of supply chain and marketing locations,” he said.

Trelleborg receives its share of unsolicited offers of companies looking to sell, but generally prefers to identify its own targets because companies seeking a buyer often are on the block because of financial problems. Callison said the company normally looks for candidates that are culturally similar to Trelleborg: firms with engineered, high-end products that add value. ‘There are generally more similarities than there are differences if they do make it to the point where they are an acquisition,” he said.

 Not all created equal

While some firms say they seek to treat all customers-big or small-on an equal basis, Trelleborg knows the world doesn’t work that way. It ranks its customers on an “A, B or C” scale, with service rendered accordingly. The “A” customers, Callison said, get the works throughout the organization, be it delivery, customer service, pricing or a research and development program. If you’re a “B”‘ you get what is called “best service in class.” And the smaller, “C”customers normally are handed over to distributors to service.

“We’re very careful about who our customers are,” Callison said. “We are a marketing driven company, not a market-driven company. We don’t follow the market, we follow specific customers. And we try to align our resource and our service levels and our capabilities with those companies that are going to give us the best opportunity for growth.”

Though some may find the attitude arrogant, Callison said there isn’t much resentment from smaller accounts because Trelleborg is up-front about the system and most customers realize that you can’t expect “A-level service” if you’re a smaller customer.

“You can’t be treated the same,” he said. ”That’s just the way it is, and we build our economic model on it. If we treated everyone equally, it would end up everybody being treated poorly, because then the rationing of our resources would be incorrect.”

And it’s clear which customers Trelleborg Sealing Solutions aims for.

“We try to pick the market leader, the people that have a high value of solution and understand what our products can do for their products in terms of performance,” Callison said. “We’re going to pick customers that are going to be market leaders and be in the market for the long term.”

* * *

TRELLEBORG

Name: Trelleborg Sealing Solutions Marketing Americas

President: Tim Callison

Headquarters: Fort Wayne, Ind.

Sales: About $183 million.

Stated goal: To reach the No. 1 or No. 2 spot in the market over the next several years with a 15-percent market

share.

Main markets: Industrial, automotive and aerospace.

Offerings: A wide breadth of sealing products that use elastomer, thermoplastic, PTFE and composite technologies.

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