Distributed Growth 2015
Article from Wholesale & Distrbution Magazine, Written by Jim Harris
BlackHawk Industrial CEO Bill Scheller admits the company’s rapid growth in just five years of existence may seem extraordinary to many of his peers in the industrial distribution industry. “If you look at our space and what we’ve been able to accomplish, I’m sure there are people shaking their heads wondering how we’re doing what we’re doing or asking if we have some sort of secret mojo,” he says. “To me, that kind of mystique is good, and is a validation of what we’re doing here.”
Founded in 2010 by Scheller with backing from Brazos Private Equity Partners, the Broken Arrow, Okla.-headquartered company has established a footprint across North America through a geographically focused “buy and build” strategy. Since its inception, the company has acquired a number of small, regional distributors, which it then provides with the scale, resources and capital they need to grow. “The Graingers and Fastenals or other big boys in the space make up maybe 25 to 30 percent of total marketshare, with the balance consisting of more than 100,000 independent distributors,” Scheller says.
These independent distributors, Scheller notes, have a loyal customer base that often looks to them instead of large national companies for the personalized service they provide. “People stay true to companies who know them and serve them extremely well,” he says. Many of these companies, however, lack the ability to take on larger, international projects.
BlackHawk’s model – which Scheller calls being “big enough to serve, small enough to care” – combines many of the positive attributes of local distributors such as high customer satisfaction, great customer service and technical expertise with the national presence, broad customer diversification, SKU offering, catalog and infrastructure of large national distributors. “I’m extremely proud of being able to find and attract the best industrial distributors to be a part of the company,” Scheller adds.
Before forming the company, Scheller was president and CEO of ORS Nasco, one of North America’s largest wholesale distributors of industrial supplies. During his tenure there, the company experienced significant growth in revenue and earnings, as well as improved operations, working capital efficiency and enhanced sales and marketing capabilities. These improvements led to the company’s sale in 2007 to United Stationers. Scheller notes that he has a total of 36 years of distribution experience, including leadership roles at Pillsbury and Patterson Companies.
The first of BlackHawk’s acquisitions came in October 2010, when it purchased Duncan Industrial Solutions, an Oklahoma City-based national distributor of name-brand maintenance, repair and operations (MRO) equipment founded in 1948. Two sister operations – Duncan Equipment Co., a pump and pump system manufacturer, and Duncan Industrial De Mexico, a service provider to Mexican manufacturing companies – were also acquired.
Since October 2010 the company has made 12 acquisitions of 23 companies. In January, BlackHawk purchased Packaging Inc., an Eden Prairie, Minn.-based provider of packaging and fastening equipment and supplies known for technical solutions including niche fastening products. BlackHawk in March added Agawam, Mass.-based Pioneer Tool Supply, a cutting tool supplier with onsite manufacturing capabilities, and its affiliates, Pioneer Precision Grinding and Cataleap, an online click-through product catalog system.
These acquisitions all reflect the company’s focus on not only distributing products, but also offering engineered supply solutions and manufacturing services to its customers. “We can provide not only the item, but also the technical expertise behind that item, which helps our customers make their products better,” Scheller notes.
The company’s engineered supply solutions include:
- Inventory management solutions including design, setup and installation of storage systems;
- A suite of procurement solutions including lead-time calculations and reporting;
- Product sourcing;
- Technical and IT solutions.
In addition to pumps, the company also has experience fabricating parts including electric motors; pneumatic drives; gasoline, natural gas or diesel engines; and accessories including couplings, hoses and belts.
BlackHawk’s Tool Fab division designs and manufactures special cutting tools. “While custom specials are a major focus for us, over the years we have expanded this scope by developing important stock standard cutting tools and highly engineered products for metalworking companies who seek high-performance tools at a competitive price,” the company says. “Our customers depend on these tools to achieve their own manufacturing objectives – performance, productivity, efficiency and better profitability – through time savings and maximum cost reduction.”
The company also offers tool-reconditioning services through its BlackHawk X-Press Tool division. “Utilizing the ultimate in today’s technology, our customers’ dull, worn and damaged tools are restored to their original accuracy to perform like new,” BlackHawk adds. “In addition to our state-of-the-art CNC grinders, BlackHawk X-Press Tool maintains equipment to assure you precise, cost-effective tooling.”
Other manufacturing services include turnkey fluid service and management programs that are designed to help companies decrease their concentrate usage and disposal costs. “Regular, proper cleaning of machines and sumps is critical to maximize the life of metalworking fluids and to maintain the safety of a facility,” the company says. “We use special equipment to completely remove sludge, tramp oils and other residues from machinery and work areas, providing a cleaner and more pleasant environment for employees.”
Integrating all of BlackHawk’s distribution and manufacturing holdings into a single system is a high priority for Scheller. “The system and cultural differences between all of our companies are a challenge in and of itself,” he says. “We’ve now reached a point in our lifecycle where we’re about one BlackHawk, one process and one mindset.”
The company is in the process of implementing an Epicor enterprise resource planning system across all of its operations and migrating multiple legacy ERP systems, data networks, reporting systems and phone systems to a single platform. BlackHawk has also established a single, enterprise-wide accounts payable process across the operation. The company also recently invested in a new web-based ordering and vendor portal platform it intends to roll out this fall.
BlackHawk continues to invest in its internal capabilities while seeking new acquisitions. The company is also looking to diversify its services to reach additional markets. “No matter what goes on in the economy, we will continue to look for what we consider to be the best industrial distributors in the marketplace,” Scheller says. “We are building out a geographically diverse organization that is also end-user market and product category diverse and can handle the ups and downs of the economy.”
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