To say things have been happening at International Decorative Surfaces or International Timber recently would be an understatement. In fact, the companies seem to have packed about 20 years worth of change and evolution into the last two.
IDS and IT, which evolved from the merger of long-established Meyer Group businesses, have undertaken intensive marketing to stamp their identities on the market. There has been major branch restructuring, plus heavy-weight investment in new facilities, computer systems and transport.
But, according to John Bagshaw – managing director of IDS since 1998 and also of IT since the New Year – while the developments have come fast and furious, there has been a common thread running through the whole programme.
‘The aim has been to focus the companies ever more closely on core competencies,’ he said. ‘IDS is purely a laminate and sheet materials distributor – perhaps the only one left in the sector – and IT a timber importer and distributor. We won’t do anything to distract us from these businesses or risk putting us into competition with customers.’
The ultimate proof of the International approach is that, despite testing market conditions, both businesses are hitting budget and are on track for combined turnover of £125m his year. This adds up to 1,000m³ of timber and £300,000 of sheet materials daily, figures which Mr Bagshaw checks religiously each morning. ‘It’s the first thing I do when I come into to the office!’
IDS’s sales of worktops, laminates and panel products make it the biggest player in its field by quite a margin, with the others, it says ‘now playing catch up’. The operation resulted from the 1999 unification of the Meyer sheet materials businesses, Meyer Laminates and L Bloom. Both companies were successful in their own right. In fact, Mr Bagshaw described Bloom as ‘setting the pace in supply-chain management’. But in an increasingly fast-moving, competitive market it became clear that a single, cohesive business was the way forward.
Two years on, Mr Bagshaw describes the panels business as ‘exciting and inspirational’. But he acknowledges that the pressures in the sector have become ever more intense.
‘These days customers might want 10 items on a wagon and, perhaps, one delivery in the morning, one in the afternoon,’ he said. ‘At the same time, the diversity of our product portfolio means we have to be geared to an ongoing programme of product launches – perhaps one every six months.’
A consultancy initially suggested that IDS become highly centralised. ‘But I rejected that in favour of a national distribution model which, at the same time offered regional presence,’ said Mr Bagshaw. ‘That allowed us to satisfy large key accounts, who made up the bulk of Bloom’s customer base, and the smaller companies Meyer Laminates serviced.’
Regional approach
What this meant on the ground was distilling 17 branches into 10 by expanding some sites and integrating those in close proximity in a single location. To complement this network, IDS also opened a 90,000ft² central distribution operation in Nuneaton.
‘The concept is that the branches stock the products that account for 90% of their sales in depth, with the remaining 10% trunked from Nuneaton.’
To co-ordinate the new set-up, IDS commissioned a third generation Maginus computer system. It was a mammoth undertaking, but the business now has a wealth of management information at its fingertips.
‘We’ve got total stock visibility and instant access to key performance indicators,’ said Mr Bagshaw.
The end result, says IDS, is a ‘distribution approach that adds real value to the chain’.
‘The old style of distribution is dead and at IDS we now epitomise the new approach – integrated, flexible, national, but regionally focused,’ said Mr Bagshaw. ‘Partnership with manufacturers is also key to the operation. Many of the large producers increasingly recognise the value of the distributor as a real route to market, rather than an element to be bypassed to cut costs.’
The company’s marketing strategy highlights another central IDS philosophy: that brand is king. ‘I see us as the Selfridges of the decorative surface materials sector,’ said Mr Bagshaw. ‘They offer all the famous labels under one roof in a quality environment. They promote their own name, but in a way that enhances the brands they sell. We try to emulate that. We use the theme “Surfaces of the World” for our advertising but, within this, we highlight the brands; including Polyrey, Formica, Kronoswiss, Unilin and Nexfor. They’re all backed by the manufacturer’s own marketing – for instance our laminate flooring partner Unilin spends millions each year on promotion – so it makes sense to build on that, not duplicate it.’
Branding is also important at International Timber. ‘The traditional weakness of the timber industry is that it focuses on production first, then looks for markets,’ said Mr Bagshaw. ‘That’s why it lost out to alternative materials. We have to generate demand and give our products a stronger identity – branding is part of that.’
International has launched own label hardwood flooring, machined at its Trafford Park operation, plus mouldings and decking produced at its Grangemouth sawmill.The IT name and logo is also prominently stamped on packs of sawn timber. It’s all part of product differentiation process – to highlight that the entire range is, in sales director Tony Miles’ words, ‘backed by the International charter’.
A new blend
Also like IDS, the story at IT has been about blending complementary, but very distinct businesses into a coherent unit. The company was formed from the previous International business, a hardwood, softwood and clears specialist, and Sinclair Laing, the Grangemouth softwood firm.
‘It was a process of integrating the hardwoods into Scotland and the softwoods into the English depots,’ said Mr Bagshaw. ‘It wasn’t revolutionary, but the end result is greater than the sum of the separate businesses. We’ve got a wider range to offer customers, greater leverage because of the volumes and better market penetration.’
Networking its four sites – which include Park End and Colchester – with a new computer system, this time from Kerridge, has also been key to moulding the new IT business. As at IDS, it has helped ensure a uniform service over the product offer and that stocks are in the right place at the right time.
‘Value added’ have also become buzz words at the company.
‘And adding value means continually going that bit further,’ said Mr Bagshaw. ‘In the past you were planing and moulding, now you might cross-cut and shrink wrap too.’
This strategy has entailed further investment, with £200,000 of new equipment recently installed at Grangemouth, and expansion of already extensive hardwood moulding racking at Trafford Park.
IT also believes in giving its market development role an advisory angle.’We work with customers to come up with solutions for specific projects and to tackle manufacturing difficulties,’ said Mr Bagshaw. ‘We also advise architects and specifiers on the use and potential of timber.’
The inevitable question that arises when looking at IDS and IT is whether the two will eventually tie the knot, particularly as they now share the same managing director. But Mr Bagshaw insists a merger is not on the horizon. ‘The companies operate very differently and I just don’t see it happening,’ he said. ‘Although there may be potential in specific project collaboration.’
The other obvious questions to ask about the International businesses concern their relationship with sister company Jewson and, of course, the impact of the takeover of previous parent Meyer by French multinational St Gobain.
Jewson, with its 500-plus branches, is clearly an important customer for both companies. But they insist that theirs is a customer/supplier relationship, with no favours asked or given.
As for the St Gobain connection: ‘It is obviously good for us to have the backing of such a big, entrepreneurial business,’ said Mr Bagshaw. ‘However, they don’t over-manage. The approach is; “it’s your job, get on with it!”‘
Capital investment
And ‘get on with it’ is precisely what IDS and IT clearly plan to do. Even after the level of activity of the past two years, a consolidating breather is clearly not on the agenda. Both companies plan further capital investment and a step up in advertising and marketing intensity.
Mr Bagshaw wasn’t about to give away any secrets but said that still more developments are in the pipeline and that, after the recent focus on organic growth, acquisitions may also form part of the game plan.
‘We’re always assessing strategic options. But we’re not looking at direct competitors. More companies in specialist areas which would bring something new to the business.’
