In 2012, MDM is recognizing distributors that are innovative in their approach to their markets. Industrial distributor MSCO is the second of two featured as an MDM Market Mover this year.

2012 MDM Market Mover

Distributor: MSCO Inc.
Headquarters: Sheffield, AL
Leadership: Gordon, Doug and David Ruggles
Details: Industrial distributor MSCO invested during the downturn and has seen double-digit growth as a result of its new safety division, acquisitions and ongoing integrated supply success.

Industrial distributor MSCO Inc.’s growth has been driven in recent years by its investments during the downturn and ongoing focus on diversification. The Alabama-based distributor, with $80 million in annual sales, grew more than 10 percent from 2010 to 2011.

“During uncertain economic times, we were aggressive in acquiring companies, starting a new division, and we were successful in landing new integrated accounts,” says David Ruggles, one of three brothers that run the company. “We saw the downturn as an opportunity. Short-term it was tough on us like everybody else. But we saw an opportunity to grow market share and grow into new markets.”

The distributor has been proactive in its approach to growth through its divisions, Martin Industrial Supply, Martin Plant Services, Martin Fastening, Townsend Door Hardware and Townsend Systems. It launched a new safety division, Martin Safety Solutions, in 2011. While many distributors have tacked on safety products as a complementary offering, MSCO has taken the strategy to another level.

Customers wanted a safety company with expertise. When a potential acquisition of a safety specialist did not go through, MSCO decided to launch a safety division organically.

“We saw it as a natural progression for our company,” David Ruggles says. “But to be in it, you can’t be halfway there. You have to be in the business and be a total safety company.” It hired a group of specialists, and over the past 12 months they are ahead of schedule in terms of where they expected sales to be. This success has contributed to the distributor’s double-digit rate of growth so far in 2012.

Acquisitions and integrated supply have also contributed to the distributor’s growth.

While many family-owned companies have sought an exit post-recession, the brothers that run MSCO are committed to staying and becoming another option for family businesses that want to sell. Acquisitions will remain an important part of the distributor’s growth, Doug Ruggles says. Atlanta, GA-based Ziegler Tools is the latest company to join MSCO’s fold.

“One of the advantages we offer is that we’re a privately owned business with a lot of the same culture they are looking to maintain,” he says. MSCO considers companies with one to three branches, and up to $30 million in sales. The priority: finding a good cultural fit.

One way the company finds acquisition candidates is through networking. MSCO is an active member of several groups in distribution, including the Industrial Supply Association and SupplyForce, a network of distributors that deliver MRO programs to national customers. “Our latest acquisition came through a relationship we had for 30 years,” Doug Ruggles says.

Geographic expansion beyond the Southeast U.S. is another driver for MSCO. “We always have and continue to have the belief that growing the geographic footprint is important to the future of the company,” Doug Ruggles says. But any physical expansion will be driven by a customer need, he says. The distributor serves customers nationwide and in Canada, Mexico and China.

Ultimately, the customer is what drives MSCO in all its expansion decisions, the brothers say. That’s why they have succeeded over decades of offering integrated supply services, for example, where some have struggled to produce an ROI. “When you approach it with the customer working together to solve the problem, typically you can find a way to have a fair return on investment and they can have a lower total cost,” Doug Ruggles says.

MSCO recognizes the challenge in keeping a focus on the customer as it grows. Culture is a big part of that, he says. “That’s a big challenge for us going forward. We’re looking every day for talented people to help us grow the business. That’s probably the No. 1 thing we’re focused on is protecting that culture and communicating and emulating that to the rest of our team.”