Manufacturing Remains Strong

Drill down sales with the sector that is fourth on the list for market share of promotional products revenues.

Good news for you if you’re one of the promotional products distributors that count manufacturing as a key client base. According to the most recent ASI research, “manufacturing/distribution” ranks fourth in the top five promotional product markets.

That position slipped slightly from third place in 2012 (due to the financial sector’s 2% rally). However, in 2012 it accounted for 8.1% of distributors’ sales revenue, so it’s also gained a slight edge at 8.4% for 2013. Even better, now there’s ample reason to expect the slice of the pie to grow, perhaps at an accelerated pace.

The Forecast

The Institute for Supply Management’s Spring 2014 Semiannual Economic Forecast deems manufacturing healthy and optimistic. Economic growth is expected in the United States throughout the remainder of 2014 in both manufacturing and non-manufacturing sectors. Looking only at expectations in the manufacturing arena, 68% of respondents from a panel of manufacturing supply management executives predict their revenues will be 9.1% greater in 2014 compared to 2013. Factor in the manufacturers (9.6%) that predict a decline and those (23%) that see no change, and the outlook is still positive, yielding an overall average expectation of 5.3% revenue growth among manufacturers in 2014.

The positive perspective has manufacturers in a proactive mood. The ISM reports an expected capital expenditure increase of 10.3% and a 1.5% increase in employment of workers for the balance of the year. “With 18 industries within the manufacturing sector predicting growth in 2014 when compared to 2013, U.S. manufacturing continues to demonstrate its broad-based strength, efficiency and leadership in the world economy,” says Bradley Holcomb, chair of the ISM Business Survey Committee.

That means there’s plenty of room for you to cash in on the growth. Regardless of whether you’re already a distributor that counts manufacturing as an important source of revenue or a newcomer wanting to get in on the action, there are multiple paths to take.

Specialize In A Sector

Howard Schwartz, founder and CEO of HDS Promotional Marketing (asi/216807), has been working with manufacturing companies long enough to know there will be ups and downs. HDS specializes in industrial manufacturers and large equipment and tool companies, which took a hit in the recession. “We were in it during the early 2000s and did very well,” Schwartz says. “When the economy crashed, however, manufacturing clients fell off the map. We’re not ones to abandon our clients, and because of that, they don’t abandon us.” Now those accounts are coming back and placing orders for myriad programs.

“Manufacturing is a good sector to be in,” Schwartz says. “Typically they’ll have a distributor base and dealer base.” As a vertical market, there’s a secondary tier for you to sell into. These clients have many uses for promotional products. Schwartz lists trade shows, marketing, conferences/events, safety/wellness, sales/dealer awards and contests as some of the many programs manufacturing companies use. This diversity typically means you’ll work with more than one contact in a manufacturing account; for example, a marketing manager, human resources officer, executive administrator, safety manager and channel manager.

A wide variety of merchandise appeals to the manufacturing audience. “Apparel is first and foremost the top product, and it ranges from T-shirts to high-end jackets,” Schwartz says. He explains that while workers on the production floor may prefer a camouflage cap, the executive office might need a dozen high-end shirts for the president to take to an important meeting. “Manufacturers also like hard goods,” he continues. “For example, Leatherman Tools are popular.”

Company store programs include an array of merchandise perfect for giveaways and as motivational incentives. Such programs are used to excite the dealer channel and reward employees. There are opportunities to sell a large amount of product to these accounts, which often need value-added service.

HDS has a manufacturing client that regularly goes to CONEXPO, an international trade show for the construction industries. Every three years, the show rotates from Germany to France to the United States. Not only does HDS put together a store of logoed merchandise for the exhibiting manufacturer, it also supports the client onsite by staffing the store to sell products to the exhibitors’ dealers, distributors and customers. By focusing on industrial manufacturers and large equipment/tool companies, HDS is positioned to go deep into each account, providing extensive service where others cannot.

Supply Parts and Printed Instruction/Tools

Another point of entry to the manufacturing industry is through the production door. Exclusively Yours (asi/522711), a Tyler, TX-based distributor, works with manufacturing clients, but not in the traditional ad specialty role. “Oddly, when we first started out 20-plus years ago, someone asked if we did decals, which started the whole thing,” says DeAnn Wells of Exclusively Yours. “Manufacturers rank as some of our highest paying clients, but we don’t do any ‘advertising’ for them, per se. We act more as a parts vendor. The upside to that is as long as products are going out the door, the clients are still ordering. Advertising budgets can get cut in down times, but they still have to have the parts to put together a product, so there is still business coming in.”

Wells tapped this profitable stream of sales mainly by stocking manufacturing labels for the oil industry/factories. She explains: “Because they don’t hold the inventory, we were able to win the business and they are ‘locked in’ with our services. These are the ‘insert battery here’ kinds of labels, or part-number label – basic, but necessary, on every single piece of equipment. We also do hard hats and truck magnets for field personnel. We are also tapped into the ‘job supplies’ side of the company, such as screwdrivers to assemble components.”

Though most of the advertising and marketing for her clients is done from their corporate offices, Exclusively Yours does provide safety awards and general production awards; things like coasters that say, “We passed testing.”

Wells’ screwdriver example comes straight from a successful marriage of necessity and marketing. PCS Ferguson, a leader in well deliquification and production optimization for oil and gas producers, sends a special screwdriver along with every component they provide their customers. Instead of a generic screwdriver, Exclusively Yours suggested that each tool has the PCS logo and contact information as well as a special hardened tip for the manufacturer’s particular use.

“When they changed components, we were able to create a custom blade that fit exactly the new specifications,” Wells says. “So their customers receive the correct blade and it further enhances their brand. Production solved their problem, and marketing appreciated the extra brand reinforcement. We also made the decals that go on their recycle barrels for the iron shavings, etc. This keeps the production area organized and reduces errors and accidents.”

Wells definitely sees ample room to grow the sector beyond traditional promotional products. “There is a whole other side to manufacturing that requires imprinted items,” she explains. “Decals with wiring instructions … there is even a label for tracking repairs. Even the banners that say, ‘Now hiring welders’ and the signage that designates areas in the production facility. Because you are going in through the production side, there is a lot less competition from traditional marketing companies.”

Wells notes that being able to cite the adhesive properties and temperature tolerances on a label makes you automatically more valuable to the production manager. And once you become the problem solver for the production floor, you really have no competition anymore.

Focus On The Middleman

Heidi Thorne, owner of Thorne Communications LLC (asi/344244), works the middle strata of the manufacturing market. “Most of my manufacturing industry clients are manufacturing representatives, distributors and wholesalers,” she says. “Their promotional product budgets are typically dictated by co-op marketing funds provided by the manufacturer.”

What they’re buying has to do with where they are in the sales stream. “Because many of my manufacturing arena clients are selling to dealers and other wholesalers, and not end-users, dealer incentive programs are a primary use of promotional products for them,” Thorne says. “They are also interested in trade show display products and giveaways.” She notes popular low-tech items such as calendars, pens, notepads and hats as go-to choices for her manufacturing accounts, particularly those that serve the construction and related fields.

One has to wonder, when selling to manufacturers and their dealers/wholesalers, does product pedigree make a difference? It depends. “The demand for U.S./union label promotional products varies,” Thorne says. “Some manufacturers are global, so domestic sourcing doesn’t really matter as much to them. I have a bigger demand for USA and/or union label products from associations that serve the manufacturing or construction markets.”

Her advice to salespeople who are trying to break into the manufacturing market is research: “Having a thorough knowledge and understanding of the target manufacturing sector, as well as the players in it, and working any available networking connections are important to making opportunities.”