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Rarely can a successful business enterprise be attributed solely to the work of a single person. In the July/August 2004 issue, we took an inside look at the marvelous success of Chicago Steel Tape (CST), and its previous owner Dennis Nardoni. As mentioned in the article, two people played a key part in the growth of CST: Ash Puri and David White. Because both Puri and White stayed on with CST after it was purchased by The Stanley Works, we traveled back to Watseka, Illinois to get "the rest of the story" and to find out where CST is headed.
But first, a bit of Puri’s personal history. Puri graduated with a B.Com (Hons) from SRCC, University of Delhi, one of the top economics and commerce colleges in India. He spent three years with HCL, a leading IT company in India, and in 1985, he and his wife moved to the US to continue their education. Puri graduated at the top of his MBA class, while his wife eventually obtained a Ph.D. in French literature. At the time of his graduation, the State of Illinois had an innovative intern program, whereby the governor selected a half-dozen small businesses that could benefit from someone with an MBA or a JD, and CST made the list. Puri selected CST because of its proximity to their home in West Lafayette, Indiana.
At the time Puri came onboard, CST was a small company with challenges typical of small businesses; inventory/ delivery, cash flow, etc. The product line had not changed since 1983. When Puri became the manager of CST in 1989, he was not yet 30 years of age. In 1990 Puri and White attended the FIG show in Helsinki, and although CST had no catalog, with only a few color photos of new products they were able to gather a halfmillion dollars in orders on the show floor. This was certainly a turning point, but the company still wasn’t out of the woods. In his heart, Puri knew he could parlay CST’s manufacturing know-how and key customer relationships with companies such as APE, FL&T, Lengemann, Hayes, Forestry Suppliers, and others.
Puri’s first task was to improve service and quality. He did so by starting a reorganization of the manufacturing operation, and invigorating the product lines. The numbers speak for themselves. Beginning in 1990 the company started experiencing double-digit growth, with revenues of $4.0 million; to $6 million in 1992, $8 million in 1993, and $12+ million in 1994.
And still their growth continued; from 1990 to 1994, the company grew 250 percent. Their formula for success was no secret: they added products, guaranteed delivery, and improved quality consistency. They began a Guaranteed Delivery Program for the top 200 products that promised delivery within ten days, or the customer received a 10 percent discount.
By 1994, the company was running on all cylinders. In the early 1990s they started a search to find the right partner for optical instruments in China, and in the mid-90s they achieved a major goal to become a global player by becoming one of the first manufacturers in the world to have builders’ levels made in China. Another goal for CST was to lessen its dependence on OEM sales.
Puri also saw a need to deal with the perception that CST was more than a manufacturer of survey accessories, although CST had key competitive advantages in this "commodities" business. Nardoni, White and Puri firmly believed that the company needed brand name tools and instruments to sell in order to lessen its dependence on the accessories market.
They turned their attention to Berger Instruments, a legacy brand of builders’ optical instruments that was struggling at the time. In the 80s and early 90s, Berger’s management had elected to dismantle its vertically integrated manufacturing operation and outsource core manufacturing operations such as precision machining, powder painting and plastic injection molding. CST in the 80s and early 90s had done the opposite and had ramped up its manufacturing operations; in 1993-94 it had set up a full injection molding operation. The acquisition of Berger in late 1994 was a perfect strategic fit for CST. Berger’s legacy brand provided access to the building and construction markets and provided CST critical mass in machining, painting and injection molding; all areas in which CST had under-utilization of capacity.
In early 1995, Puri and Carmine Citro, General Manager of Berger, attended BAU MA, the largest construction show in Europe. Discussions and building construction trends evidenced at the show convinced Puri that the next big growth opportunity in the building and construction and tools channels would be lasers. He began thinking about how to leverage CST/ Berger into that arena. At the time, Spectra Physics and Laser Alignment were only concentrating on the high-end laser market. And so in 1996 CST launched its Lasermark line of rotating and alignment lasers for the small builder/contractor and tradesman.
That year, CST grew Berger’s revenues by 50 percent in 12 months. CST’s revenue also grew steadily, from $14 million in 1995, to $21 million in 1996, to almost $50M in 2000. Puri says that since then, revenues have continued to climb, with the biggest growth in the building and contractor markets. Until the late 1980s, 90 percent of CST’s sales were in North America. In 1986, export revenues were $100,000, but by 1999 they had grown to $10 million.
Another key move for CST was the 2002 acquisition of David White Instruments, the number one brand for builders and contractors instruments based out of Wisconsin.
At the International Builders Show in 2002, Puri met Miguel Nistal, Vice President of Hand Tools, Stanley Works. Nistal indicated that Stanley was very interested in entering the laser business and did not feel that Stanley had the "know how" or "expertise" to do this organically in a short time frame. Hence, an acquisition was the only way to participate in this growing industry. For CST to step up to the next level, it needed a partner with strong global distribution as well as resources to make key acquisitions. Thus, it was an ideal match. Stanley had the resources and distribution while CST had a stable of legacy brand names with industry specific expertise and know-how. CST became a part of the Stanley family in January 2004. Puri continues as the President and COO and David White is Vice President of Sales. Because of Stanley’s global distribution muscle, especially in retail channels worldwide, Puri is confident that the Stanley acquisition will significantly increase overseas sales.
In our conversation with David White, we learned that CST will further its strategy of multi-branding, and building on brand-name loyalty. White said that many dealers are considering whether to expand from the survey market into the construction market. He admitted that there’s a different mentality between land surveyors and contractors, and added that while CST was limited to the surveying channel, Berger and David White products continue to prosper and leverage their brand loyalty and preference with contractors and builders.
White discussed the importance of keeping sales focused, and pushing the right products. He says they have the largest sales force in North America, with 15 in-house salespeople, and nearly 150 reps. CST will be adding new reps beyond the traditional dealer network. The goal will be to cut out the middleman. But he stressed that CST has always treated its dealers fairly, and values the loyalty of those dealers who carry CST products.
Today, CST is competing with such companies as Black & Decker/DeWalt for the home center and professional builder markets. Black & Decker, known for its consumer power tools, and DeWalt for its &q
uot;pro" tools, also makes toasters and coffee makers, but has recently branched out further, and now also carries laser levels, transit levels and auto levels.
Watseka, because of its remote location and small size, is known better for its corn than for its cultural attractions. But many people like its small town atmosphere. Steve Brodrick, CST’s new CFO, and Joe Garrard, Director of Operations, both embraced the move to Watseka and viewed it as an opportunity for career growth.
Puri credits David White as being a major part of CST’s success since White came onboard in 1984. Another person Puri credits is Duard Wilson. Duard came along with the acquisition of Triad Industries. Wilson started working in the industry at age 16 as an instrument repairman, and is a former partner at SECO Manufacturing of Redding, California. He is now VP of Engineering and has played a pivotal role in developing the laser product line.
Along with the Berger acquisition came Carmine Citro, another well-known name in the industry. Citro started at Berger when he was 20, and has been there more than three decades. An expert on the optical side, Citro moved from Berger Sales Manager to product manager, and now has various key account sales responsibilities. The Berger operation was recently moved from Braintree, Massachusetts to Watseka, and combined with the David White manufacturing operation that was moved from Wisconsin to Illinois.
Puri claims that CST is continuing to leverage its expertise in product development and manufacturing technology and has a deep pipeline of survey and construction products slated for introduction in the next 6-12 months. Evidence of this is their recent acquisition of Rolatape, the top manufacturer of measuring wheels in North America, which is another move to strengthen its position as the "one-stop-shop" for survey accessories.
Stanley has established very ambitious goals for future growth; 40-50 percent just over the next 12 months, which would take the company to three times its current size in a few years. To do this, they will concentrate on identifying the right brands, the right product lines, and the right channels. It will be interesting to watch as Puri and White take the company to new heights.
Marc Cheves is Editor of the magazine.
A 949Kb PDF of this article as it appeared in the magazine—complete with images—is available by clicking HERE