"Ken does his homework," says Sherman Davis, of Globe Industries Inc., an ABC supplier. "You can wander around every nook and cranny of this country, and Ken knows every supplier and whether he's good or not. Most guys know their backyards, but not the whole territory the way he does."
"Everyone in this industry thought he couldn't pull this off," adds Ron Hritz, vice-president of purchasing and a 15-year veteran of the roofing industry's manufacturing side. "They went from 'It'll never happen' to 'Well, he's a flash in the pan.' A lot of them are still wondering what happened."
They would wonder less if they saw Ken Hendricks at work. Although he swears he's not a detail man, he can rattle off the location and status of virtually every truck and every inventory load in ABC's domain. He takes all calls from his managers, and while it remains their responsibility to run their own shows, woe to the field guy who thinks Hendricks might have forgotten a salient sales figure. He never does.
"Ken would have made a great tax lawyer," says Nelson. "He's unique. He never forgets a number, and he doesn't take no for an answer, either. When we bought the G.A.F. stores last year, we were up against a bunch of New York attorneys who didn't even know where Beloit, Wisconsin, was. By the time Ken finished with 'em, they barely knew where New York was."
Which is not to say that the CEO runs a one-man show. Diane Hendricks, for example, handles all of ABC's legal and insurance matters, freeing her husband to focus more on long-range planning. Daughter Kendra, 27, is responsible for ABC's centralize accounting and finance functions. Another daughter, Kimberlee, 25, is treasurer of the dealer supply division, and Kathy, 23, installs computer systems for the distributorships.
Still, if there is an underlying secret to ABC's success, it lies in Hendricks's determination to exert unilateral control over every aspect of support services provided to the 62 ABC distributorships. When he asserts that he could turn a profit on any hardwarestore item, he means precisely this: that the margins in the wholesale business are primarily in overhead and cost control -- in the dozens of tiny details that Hendricks is so good at, whether they have to do with restoring a home or restoring a company.
No line item, therefore, escapes ABC's meticulous attention. A prominent one is product price, which the company minimizes through volume purchasing. While individual centers are not obligated to carry all ABC lines, the ones they do stock reach their shelves at extremely competitive prices. Another is the cost of delivering to the end-user, which can eat into the profit margin of what are low-ticket items to begin with. ABC's leasing subsidiary of 800 trucks, cars, and forklifts helps hold this cost in check by buying and maintaining less-than-new equipment, usually at substantial savings.
And the list goes on. Leasing arrangements, for instance, which are handled through ABC's real estate division, reflect Hendricks's flair for taking old commercial space and revitalizing it. Inventory turnover and accounts receivable, the twin banes of most independents' existence, become the centerpieces of ABC's profit-sharing plan, a formula that rewards individual managers for moving product quickly. The average industry figure for inventory turnover is 4 to 6 times annually; the average ABC figure is 10 to 12. And corporate overhead is such an abiding concern that ABC executives automatically schedule wee-hour plane trips if it means they can save $50.
The effect of all this penny-pinching is both cumulative and dramatic. With Hendricks minding the ABCs, a $7,000 storefront sign goes up for $350, and it goes up overnight. Blow a truck engine in Baltimore? Ship it to Beloit and get a fresh one; don't wait for some Maryland mechanic to send their kid through college on the cost of a valve job. Asked to explain how 13 G.A.F. stores losing $1.7 million annually posted a $1.2-million profit for ABC, the CEO says, "They were leasing $2,000 copying machines for $700 a month. Big companies think that way. We don't."
Jim Flickinger has seen both ways of thinking, and he obviously likes the Beloit way of doing things. As manager of ABC's Wilmington, Del., center, he continues in the same slot he once occupied with G.A.F. Like most of his G.A.F. counterparts, Flickinger owes his job to Hendricks's conviction that the blame for their failure lay in corporate hands, not theirs. And now? His revenues are up 34%, and Flickinger finds fewer layers of management and a degree of accessibility to the top man himself that would have been unthinkable under the previous regime. But the biggest benefit, he says, may belong to the customers: not only do they have better inventory from which to choose, but their needs as businesspeople are also more keenly appreciated by the folks in Beloit.
"Credit and collections make or break this business," Flickinger points out. "G.A.F. had this philosophy that one central office in Wayne, N. J., could collect on their accounts all over the United States. What they never understood was you've got to know each account personally, know their situation. I mean, what's the point of taking [the small contractors] to court and maybe putting them out of business? You think that helps you in the long run? No way.
"Ken gives me all the responsibility for running my business," he adds," "but he also gives me all the control. I decide what product to carry. I decide when to go out and collect an account. If I fall behind in my receivables, sure, I'll be penalized for it. But I'm out there making those calls."
Flickinger points out that he's also carrying $50,000 to $70,000 credit accounts that G.A.F. would have floated for $10,000 to $15,000 -- and hasn't had to write one off yet.
Back in Beloit, meanwhile, Hendricks concedes that his growth goals for ABC are bound to tax even his skills as a builder. "Some people around here ask me why we don't slow down and get better organized," he says. "My answer is, Hey, we're already better organized than any of our competitors -- let's go do it. But there's a saturation point to all this. In five years, I might hire another CEO and go find something else to do -- something that challenges me, that I can look at and see in its completed form. You follow me?"
Why not? Four hundred and ninety-nine other fast-growth companies already do.
