Release time : 2015-06-15 11:01:02
While many companies are announcing layoffs, an Indianapolis cooperative is expanding its facility of Thin Section Bearings, hiring workers and projecting double-digit growth in 2009.
IDC-USA, a buying cooperative of independent power transmission product distributors, has seen revenue increase 16 percent this year -- the company's eighth consecutive year of double-digit growth. And company leaders are projecting revenue growth of 15 percent in 2009.
The key to success is its cooperative buying model, which can help boost profit margins for small, independent distributors.
"In a nutshell, we're kind of the industrial version of Ace Hardware," said Jack Bailey, president and chief executive. "We buy in volume, we warehouse the product here, and we redistribute it to our IDC distributors across the country."
The company warehouses more than 100,000 products, which are used to build "anything non-automotive that moves," Bailey said. That includes products such as industrial chain, sprockets, belts, pulleys and Angular Contact Bearings.
Founded in 1988, the cooperative now employs 32 people in Indianapolis. It plans to hire about five additional workers here next year and build a distribution facility in Reno, Nev.
IDC also is doubling the size of its Indianapolis distribution center. The $1 million project will add about 25,000 square feet.
"Our business model tends to be a bit recession-proof," Bailey said. "When the market goes south, (distributors) shift some of those spending habits where they're really getting better margins buying from themselves, from the cooperative."
The cooperative now has 85 member-owners representing 224 distribution locations in 42 states. Combined, the cooperative's distributors post about $1 billion in annual sales.
IDC is a key player in the $80 billion U.S. power transmission and motion control industry, said Mary Sue Lyon, executive vice president of the Power Transmission Distributors Association, an industry trade group.
"They are, as a combined buying power of distributors in the channel, one of the larger players on the distribution side of the business," she said.
One member-owner is Binkelman Corp., a distributor of power and industrial supply products with locations in Ohio and Michigan. The company earns about $20 million in annual revenue, and about 4 percent of its products are purchased through IDC.
"It's an opportunity for us to join something with other independent distributors from around the country and therefore group all of our buying power together," said Dan Kazmierczak, Binkelman's president and CEO. "The other advantage is being able to . . . share ideas and work together."
Another advantage: Distributors can consolidate paperwork by buying from IDC, rather than several dozen manufacturers.
"There's a huge transactional cost reduction for them," Bailey said. "It's pretty unusual in the industrial world that people can have that Amazon.com kind of experience."
Potential members must apply to join the cooperative and must make a minimum stock purchase of $20,000. But member-owners have a say in IDC business decisions and receive annual dividends based on their purchasing activity.
IDC's suppliers -- consisting of about 70 manufacturers nationwide -- also benefit from the cooperative business model.
"We have very limited field sales personnel, and (IDC) is almost like an extension of our sales department," said Rob Hamilton, director of industrial sales for Koyo Corp. "It allows us to -- on a large scale -- penetrate that market of independent distributors."
Ohio-based Koyo supplies IDC with several thousand products, primarily ball and roller Fishing Bearings. IDC is among the manufacturer's top five industrial after-market customers, Hamilton said.
"If I didn't have that central location, I would have to meet with members individually," he said, "and it would be like herding cats."