Valley Welders Supply, Inc.

Each Monday through Friday night, trucks containing gas cylinders, welding equipment and automotive products leave from the headquarters of Valley Welders Supply, Inc. in Billings, Montana, en route to the company's six other branch stores. The longest route extends roughly 550 miles each way, adding up to 1,100 miles of driving every night.

COMPANY SNAPSHOT Valley Welders Supply, Inc. President: Ron Adkins Founded: 1949 Year Joined GAWDA: 1957 Headquarters: Billings, Montana Other Branches: Great Falls, Helena and       Missoula, Montana; Sheridan, Cody and       Gillette, Wyoming Employees: 62 2003 Sales: $13,000,000 Web site: www.valleywelders.com

That's a long way to travel in one day, and the company itself has come a long way throughout its 55 years. It began as an offshoot of Valley Motor Supply, an automotive parts company, in 1949. Valley Welders Supply served as a distributor of Linde gases for Union Carbide and Carbon Corporation. Back then, Valley Welders Supply had just the one store in Billings, but it managed to do business throughout all of eastern and central Montana and up to the Canadian border. As the store acquired more customers, its geographic footprint expanded to include parts of western North Dakota and northern Wyoming. Still, the company was able to conduct all its business from that single location in Billings and cover the territory with route trucks.

It wasn't until 1980 that Valley Welders Supply saw the opportunity to build its first branch store, in Sheridan, Wyoming. That branch, under the leadership of Ron Adkins, proved to be an unqualified success. In 1983, General Parts Inc. (GPI) dba CARQUEST Auto Parts purchased the majority stock of both Valley Motor Supply and Valley Welders Supply, and the welding side of the business really began to take off. In 1984, a branch opened in Great Falls, Montana, and the company chose Adkins to run it. After again proving successful, Adkins moved to Billings in 1988 as Valley Welders Supply's sales manager and became president in 1992. In 2001, Valley Welders Supply purchased four stores from Air Liquide, moving the total number of stores to seven, one each in Billings, Great Falls, Helena and Missoula, Montana; and Sheridan, Cody and Gillette, Wyoming. A sister company, Wausau, Wisconsin-based Northern Welding and Supply, purchased in 1992, has four stores throughout Wisconsin and the upper peninsula of Michigan.

President Ron Adkins

Despite its growth, Valley Welders Supply has not lost touch with its roots. In fact, the aforementioned truck route is actually for the automotive company's 65 stores. “We have what we feel is a very unique infrastructure,” Adkins says. “We are able to piggyback on the truck route distribution system, and it keeps our costs under control and well managed. It works very well for us and helps us maintain our operation as one cohesive unit.”

One Cohesive Unit
Even being part of GPI, a company with close to $2 billion in sales, Valley Welders Supply can still maintain its own identity. “We can't think that because we're part of a large company, we don't have to make money,” Adkins says. “We either make money or we wouldn't be here. We have to stand on our own and be profitable.” This mentality promotes growth while also not hampering the culture of openness in the company. Adkins abhors the structure of some large corporations that requires “peeling through layers and layers of red tape to accomplish anything.” He favors more of a decentralized structure where each branch functions independently as its own entity, planning its own routes, sales and customer contact activity. Also, paperwork is kept to a minimum at Valley Welders Supply. “We don't have a lot of reporting to do, just a simple call report for salespeople and a simple driver's report. Most paperwork is busywork that doesn't turn into anything profitable; it's just something people do because someone else up the line wants to see it. Keeping it simple is how we remain as a small and close-knit group.”

Further illustrating the closeness of the organization, store managers hold monthly meetings to inform employees of the company's performance. “We tell everyone in the company how the store is doing profitability-wise. Nothing is held back. They know if the store is losing money, if it's making money and what the margins are. By doing this, employees know they must perform every day they're on the payroll.”

Adkins also advocates an open policy of communication throughout the organization. He finds that the openness creates a culture where miscommunication and the problems associated with it do not occur often. “Treating it that way keeps us from always being in crisis mode. We can be productive because we don't have to be continually stomping out fires,” he says.

Long-Term Commitments
The close-knit feel may be one reason some Valley Welders Supply employees stay on until retirement. Adkins, who has been with the company 27 years, cites an operations manager with 33 years' experience to illustrate this. “Our turnover seems to be only at the entry level. Young employees want to get to the top right away and often don't want to go through the steps,” Adkins says. “They aren't willing to learn some of the things they need to learn to become capable of management.”

In an effort to decrease the number of departing employees, GPI implemented a week-long managerial training workshop two years ago. Store managers are required to attend, and employees cannot become managers until they have successfully completed that class. Topics covered include how to hire people, counsel them and properly document issues, as well as sexual harassment and the legal issues associated with it. To avoid repetition, the class is tailor-made every year with different topics and conducted by a professional training firm. “It's expensive, but it's very worthwhile because these trainers are qualified to teach our employees, and we're not,” Adkins says. “Now we do a much better job of hiring, which is key to job retention.” Since the classes were implemented, Valley Welders Supply's turnover rate has dropped by about two-thirds.

Hiring the right people is a struggle for managers everywhere, but it is especially crucial in an area where the population is so sparse. As a result, the company can't afford to pigeonhole itself into looking for one special type of employee. “We have employees from every age group, so the struggle at times is making sure that everybody communicates. A Generation X employee doesn't necessarily have the same ideals as someone from the radio age.” However, Adkins feels that this is where the open communication policy really becomes beneficial. “Having people talk avoids most of these issues, as they will find the issue isn't as big as they make it out to be.” Adkins also makes it clear that he does not hire employees away from competitors. “Over the years, we've hired a few that approached us first, but we do not actively solicit them.”

Trying to mesh different age groups and ideals is not the only challenge presented in today's hiring landscape. “There was a time when we hired individuals because of a certain skill level they had, or because they knew a lot about welding,” Adkins says. “Now we're more likely to hire a person who has good capabilities, one we can train. Even if the person's experience is in an unrelated field, we will make an investment in that person if he or she has the sales capabilities we are looking for. We believe we are better off if we can hand pick and train our own people so they're more likely to be here long term.”

Employee Stock Ownership Plan
One more reason employees are so willing to stay is the financial incentive Valley Welders Supply gives them through its Employee Stock Ownership Plan (ESOP). The company has had an ESOP fund in place since 1970 that has become more aggressive since GPI took over in 1983. All full-time employees over 21 years of age who work over 1,000 hours in a year have money put into the ESOP fund on their behalf.

Every year, the company holds an ESOP meeting, presenting each participant with a certificate to show how much money they have in their fund. The presentation includes a video, and Adkins is proud of the way that it makes his employees feel. “It gives them the feeling that they work for a great company, and it lets them know that we're very people-oriented. People are our greatest asset. Anyone can buy a building and inventory to put in it, but you need people to manage it and sell it. We recognize that and reward our employees' performance.”

Staunch Proponents of Ethics
It's easier to retain good people when the employer provides an atmosphere of camaraderie and integrity, something Valley Welders Supply does quite well. An attitude of responsibility permeates the organization, thanks to a set of values and guiding principles including respect, honesty and integrity, responsibility, quality of life and growth. These are not just meaningless words, either. “We're all participants in what we call a 'journey to the elite.' The journey will probably never end, but it's something we want to keep striving for. We want to be a company that people talk about, like Southwest Airlines, Domino's Pizza or IBM,” Adkins says.

One of several route trucks in Valley Welders' fleet. The one pictured here, in front of Valley Welders' main store location in Billings, travels an average of 1,100 miles per week. Its driver, Larry Dewald, has been with the company for 19 years.

Valley Welders Supply is adamant in its belief that no customer would be satisfied doing business with a company that behaves immorally. So Adkins and his associates steadfastly support a policy of ethical behavior. Adkins explains, “If one of our suppliers accidentally puts an extra case of paint in our order, our warehouse staff is required to get in touch with that vendor and make sure either we get billed for it or we send it back. Under no circumstances will we just keep it. In fact, if someone did keep it, he or she would probably be terminated because that's our way of showing that we are an honest company. We will accept nothing less.”

Beyond the guiding principles mentioned above, Valley Welders Supply does not have a bona fide mission statement, but Adkins reveals the company's mindset when he says, “Our customers are everything to us. Everything we do revolves around our customers.”

Maintaining Customer Relationships
Valley Welders Supply believes in this credo so much that it almost went overboard. At one time, the company tried to provide everything customers could possibly want, including industrial products, tools and fasteners, in addition to gases and welding equipment. Before long, however, this strategy backfired. “We were expecting our employees to be jacks-of-all-trades. We were expecting salespeople to sell machine tools, welding equipment, saw mill chains and more, and it really wasn't the best decision,” Adkins explains. Therefore, the company decided to spin off its machine tool business in 2000, sell the industrial portion of the business three years ago and sell the fastener company last year.

Now, Valley Welders Supply is streamlined to focus on distributing its core products of welding supplies and gases, including medical gases, packaged gases, lab gases and all the bulk gases. The company carries bulk argon, oxygen, nitrogen, carbon dioxide, nitrous oxide and propane. Valley Welders Supply has the only acetylene plant in the state of Montana and a gas chromatograph to test many gases for purity and structure.

The company has its own fleet of tankers as a way to “control its own destiny.” Adkins explains, “Had we not made this critical decision several years ago, we would be out of the CO2 business today. We had no control over the cost of the product or the supply chain and felt like we were being held hostage. Today, we are able to haul our oxygen, argon, and to a limited degree, nitrogen. We will continue to grow our bulk fleet as our business expands.”

In addition to the wide array of gases it offers, the company also focuses on service, employing a full-time factory trained repairman to keep customers' welding equipment running properly.

All these different capabilities are necessary to provide for the myriad customer types served by the company. Valley Welders Supply deals with power plants, refineries, hospitals, fabricators, pipeline companies and more. “Being in a sparsely populated market, we try to serve as many different customer bases as we can,” Adkins says. “In fact, lately a pretty substantial amount of our business has come from selling CO2 to fast food restaurants and the food industry. We acquired the CO2 portion of another company just about a year ago that allowed us to become a dominant player in the carbonic business, so that's been a rewarding move for us.” Valley Welders Supply commissions a tanker to Canada to pick up the liquid CO2 and then distributes it via the company's trucking operation.

A well-stocked and displayed showroom is typical at all Valley Welders' locations.

Servicing a broad array of customers could prove to be confusing, but Valley Welders Supply has devised systems to keep things organized, including Vendor Managed Inventory. To avoid sending incorrect shipments, each order is checked by the person who fills it and double checked by someone else. Any mistake that comes back is recorded. This monthly checklist has led to a shipping accuracy rate of about 99.9 percent. The company uses monetary rewards as a way to motivate employees to adhere to the policy. “Each person in the warehouse starts with a $40 bank each month, and the company deducts one dollar for every error that's made. Whatever amount of money left at the end of the month—it may be $12 or it may be $40—is added to their next check. It's just a way of rewarding them for a job well done,” Adkins notes.

Another procedural change in the warehouse is the adoption of a bin location system. All of the inventory in the main Billings store is bin located and tickets are printed in bin order. Workers fill orders in numerical bin sequence rather than having to search around to find what is needed. This process saves time and allows a new employee to learn to fill orders in a very short time. Palletization of trucks is another method Valley Welders Supply has incorporated to improve efficiency at nearly all of its branch locations.

Utilizing Technology
Having to cover such a large geographical area makes technology essential for communication between stores. Drivers currently are outfitted with cell phones, and all the stores are connected via the Internet. Each store is online with the others through a frame relay network, allowing someone in Missoula to look at inventory in Sheridan and instantly run a ticket if the needed item is in stock. The product is then delivered overnight by the route truck.

Adkins plans to give handheld PDAs, much like those used by commercial delivery services like FedEx and UPS, to the route drivers. This will enable customers to sign a glass screen, and the driver then can return to the store and download the information into the company system. Adkins anticipates this move to be “short-term pain for long-term gain.” He explains, “PDAs are costly, but this will eliminate people having to spend three to four hours a day entering gas tickets, save costs of the books themselves and enable more accurate reference with less chance of mistakes.”

An Eye Toward the Future
The plan for PDAs is an indicator that Valley Welders Supply is turning toward the future. “We're a company that looks for trends. For example, many people are talking about hydrogen fuel cells. We'll keep up on that and make sure we know what's coming, what's involved and how to react,” he says.

Valley Welders Supply is currently in the midst of an upgrade of its gas plant. The company had purchased Linde's Billings gas plant in 1985 and added another gas plant in the Air Liquide deal in 2001. Merging the two plant operations caused congestion and other complications, so after extensive research and budgeting, Valley Welders Supply decided to invest a substantial amount of capital into an improved facility to be completed later this summer. “This investment will provide labor and product savings and allow for anticipated growth over the next several years,” Adkins says.

Adkins predicts a strong future for his company and for the industry as a whole throughout the next few years, but he also recognizes some challenges that lie ahead. “Business people have been lulled into the belief that they can keep their prices the same for two years, but those bubbles are all breaking,” he says. One major challenge is the current steel crisis and the pricing issues it is causing.

Another challenge Adkins mentions is dealing with the companies that seem to have recurring financial problems. “These companies haven't weathered the storm as well as their competitors. They were unable to cut their costs as much as they needed to when the downturns were here. So as a company, we must be selective of whom we want to be a partner with.”

Like many in the business, Adkins is concerned about the shortage of capable laborers throughout the industry. “We will forever face the challenge of picking the right people and trying to entice them to make this industry their career. There seems to be a real shortage of welders, people who actually do the work, and it doesn't appear that it's getting any easier.”

For Adkins and Valley Welders Supply, it all comes down to having good people. “That's how we function well, by having capable employees. In order to do the very best for our customers, we must have the very best people who are well-trained to sell the best products at a reasonable price. Without them, we couldn't be here.”

And it's here that Valley Welders Supply stands, well focused and strongly committed on its journey to the elite.