Winnipeg Free Press - PRINT EDITION

ENTREPRENEUR: THE INNOVATORS Retooling to reach new market

Decision-makers at a crossroads

  • Print

Brampton, Ont.-based Gray Tools has been manufacturing high-quality, professional hand tools for the automotive, oil and gas, mining and manufacturing industries for 100 years. In the past 20 years, lower-priced players in China have forced competitors to consolidate or leave. In 2009, in the depths of the downturn, management decided to shake things up. After taking a fresh look at its markets and customers, how it managed its supply chain and introducing the latest forecasting technology, it launched an import line, Dynamic Tools. This took place as ownership changed hands from third-generation Alex Gray and family to Gary Nuttall, CEO, and Frank Dominguez, the marketing director. The pair share their strategy for making Canadian manufacturing a competitive advantage. The following is an edited transcript of their conversation with Mary Teresa Bitti.

Q What has been at the core of Gray Tools' staying power?

Gary Nuttall World wars, recessions, the Great Depression -- the company survived it all. Gray Tools started as an equipment company but became different companies, adapting to whatever the market and customers threw at it. In 1922, each type of automobile required a different set of tools and Gray Tools manufactured tools for each specific model. As the auto industry evolved, it didn't need that specificity anymore and Gray Tools had to change. And when there was an increasing influx of lower-priced products from Asia, Gray Tools hit on the strategy to focus on making high-quality tools designed for professional users in traditional industries such as mining, oil and gas, serving tradespeople like boiler makers, pipefitters, people in charge of keeping operations running smoothly eight hours a day. As our competitors got out of the market, we made the most of the strong brand we had developed, stopped selling direct to end users and moved to selling through an industrial distribution network.

Q What was the catalyst to develop a lower-priced line of tools?

GN About seven years ago, the strategy of selling high-quality tools to heavy-use industries had matured. We realized the next level of professional user also represented a market we could provide value to. We decided to introduce a line of tools that was less expensive but still at a higher quality level than existed in the market. That meant going offshore and in our case, largely (to) Taiwan. Traditionally, when Canadian companies went offshore, they would take what was available. We reached out to our global suppliers and worked with them to develop a line of tools to meet the specific needs and attributes we had identified based on market research that spelled out exactly what our potential customers wanted.

Q What steps did you take to develop the right products and suppliers?

Frank Dominguez We engaged in focus groups with end users. We then reached out to potential supply partners and said, this is the concept we want to come to market with, can you help produce it? We went through many different suppliers in different product categories to achieve the look, the feel, the features and benefits we needed. We also mined our distributor partners. They knew a lot about the end users. We covered both areas to ensure maximum likelihood of success. We commissioned a research group to conduct blind focus groups. That took about a year. The whole development of the Dynamic line took four years. It could have been done in a month if we just went to these countries and took what was sitting on their shelves and put our name on it.

Q How do you approach supply-chain management now?

GN About seven years ago, we changed our whole methodology and introduced world-class forecasting technology that adapts to our marketing activities. It looks out 12 months to let us know we need this raw material at this time, it does manufacturing planning. That helped us a lot. On top of that, we were able to negotiate successfully with our suppliers in Taiwan to reduce the minimum order quantities so we could order more frequently and not have too much product in our inventory. That is the hard or durable aspect of supply-chain management.

FD The other part is communicating and sharing the vision with the partners. You're building trust and a clear understanding of what you are both trying to achieve. That includes frequent visits by the management team, at least twice a year. That gives you the opportunity to provide and get feedback: how it's doing in the market, areas for improvement, advancement in their process that you can take advantage of to make your tools better. Building those relationships rather than just viewing supply chain as a cost centre allows you to improve, innovate and maybe even lead to new revenue streams. We look at all the opportunities our suppliers bring to us on advancements in design, packaging. They bring that to us first because of the strong relationships.

Q How was the product received?

GN Slowly. Launching during the downturn showed distributors and end users Gray Tools was going to move forward despite difficult economic times and it allowed us to canvass across Canada and introduce its features and benefits. That takes time. Our Dynamic line has 1,500 SKUs. Gray Tools has 5,500. It's a huge amount of work to take on a line. We introduced a medium-price-point line that had a higher level of quality than existed at the time. That's hard to believe at the beginning.

Q Were you concerned that Dynamic would cannibalize the Gray Tools line and what impact has it had?

GN We are going after a separate target market but there is overlap. We chose a totally different name, different marketing presentation and found it has allowed us to enter marketplaces we couldn't get into with Gray. Gray sales have in fact increased. Sales for both lines are up double digits in the past three years. For example, many distributors have a marketplace made up of the professional user that wanted a more cost-effective product and they didn't have a market for Gray but they did for Dynamic. They would take the Dynamic line and then found there was a portion of the market that did want Gray and they could order both on one purchase order to get all the efficiencies. So Gray penetrated distributors that normally would not have taken it.

-- Financial Post

Republished from the Winnipeg Free Press print edition December 4, 2012 B6

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Perry Bellegarde elected as national chief of Assembly of First Nations

View more like this

Photo Store Gallery

  • JOE.BRYKSA@FREEPRESS.MB.CA Local-(Standup photo)- Humming Around- A female ruby -throated hummingbird fly's through the bee bomb  flowers Friday at the Assiniboine Park English Garden- Nectar from flowers are their main source of food. Hummingbirds wings can beat as fast as 75x times second. Better get a glimpse of them soon the birds fly far south for the winter - from Mexico to South America- JOE BRYKSA/WINNIPEG FREE PRESS- Sept 10, 2009
  • A group of Horese pose for the camera in the early evening light at Southcreek Stables in Stl Norbert Wednessday. Sept  14, 2011 (RUTH BONNEVILLE) / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Will you watch The Interview?

View Results

View Related Story

Ads by Google