Distributors weather the economic storm

Dec. 1, 2001


When asked how the current economic climate has affected business from a fiber-optic equipment distributor's perspective, Timothy C. Gressett, president of Metrotek Industries Inc. (St. Petersburg, FL), admits that his company's phones stopped ringing around Memorial Day and orders stopped coming in around the Fourth of July. Marjorie Katz, president of Optimark (Chestnut Hill, MA), has seen demand for several of her companies' product lines drop by as much as 70%. While they wait for the market to rebound, most distributors are focusing on customer service as the best way to retain their existing customers in the near-term.

Anixter International (Skokie, IL) has felt the sting of fewer and smaller sales-and has changed its business strategy as a result. "As the economy has been exposed to a stream of negative economic news, we have seen customers steadily and consistently react by cutting costs and capital spending," said president and CEO Robert W. Grubbs in a press release dated September 11, 2001. "Early in this cycle, the major impact on us was with larger capital spending projects. Increasingly, however, this has effected our day-to-day, expense-type business, as more customers seem to have focused on the short term."

To improve operating margins in the near term, the company has reduced its total staff by 14% and closed or consolidated approximately 1 million sq ft of office space. After a careful evaluation of its portfolio of international locations, Anixter also decided to withdraw from the Korean market.

While such cutbacks are always worrisome, Grubbs contends that the future looks stable. "While the drop in revenues has affected most of our customer markets, it has been disproportionately centered in our service-provider business," he said via the press release.

Not all distributors have had to alter their business plans in this lagging economy, however. Some have been able to maintain sales with only a slight decrease, and they are more than satisfied with that. Frank Giotto, president of Fiber Instrument Sales (Oriskany, NY), contends that product orders, though smaller in dollar amount, are as numerous as before.

Speer Fiber Optics Inc. (Belle Mead, NJ) expects to achieve the same numbers it saw last year, "which is actually good compared to a lot of people," asserts president Frank Speer. He cites the company's relative youth as one reason why it hasn't been hit as hard as others may have been.

"We're still growing, still gaining a database as far as customers go," he contents, "and that's helping out because our big clients-the Lucents and Nortels-have dropped off a lot," he adds.

In the current economy, it is more important than ever for a distributor to distinguish itself from the competition, and it does so through good, old-fashioned customer service. As always, timeliness is key-"As a distributor, customers probably now more than ever depend on us to have the products they need in stock and ready for delivery," asserts Giotto of Fiber Instrument Sales. A breadth of products is also important, as is ensuring the quality of those products. Speer Fiber Optics, for example, stocks only those products that have been field tested and approved by the company's engineers.

The folks at Atlanta Cable Sales Inc. (Suwanee, GA) also take quality control seriously, subjecting each cable they ship to six quality control steps, including DS-0, DS-1, and DS-3. The company also sets aside 500 production minutes every day for mission-critical, same-day service should a customer need immediate attention. Amherst FiberOptics Inc. (Brentwood, TN) guarantees the quality of its products by offering a range of extended service plans to complement existing fac tory-limited warranties. A preventive maintenance agreement is also available, as is same-day emergency service, same-day machine repair to shipping, and 24-hour technical support.

Many distributors have also gotten into the education and training business. Amherst FiberOptics, for example, offers one-on-one instruction in a small classroom setting on such topics as fundamentals of fiber optics, advanced fiber splicing techniques, cleaver maintenance, and basic OSP fiber handling. Fiber Instrument Sales also offers basic and advanced fiber training programs throughout North America. In addition, its Website features training videos that can be downloaded.

Despite a rather difficult year, most distributors maintain an optimistic, though realistic outlook for the future. "I expect [the market] to rebound in about 12 to 18 months," contends Gressett.

"It's all going to turn around," agrees Speer. "Probably by the end of next year, we'll be back to where we were before, I hope."

Download Component Distributors PDF file (file is 140k)