| Dancker, Sellew & Douglas: Desk Job |
| Distribution | |||
| Written by John Zorabedian | |||
| Sunday, 01 June 2008 | |||
 Scott Douglas explains how this office furniture and lighting supply company restructured to stay competitive.
Scott Douglas, DS&D’s president, said the lack of consolidation of the New York market was squeezing margin out of its business, prompting the decision to restructure. DS&D acquired a lighting distribution company to service Manhattan, but most of its business now is in the dense urban office network around Interstate 287 in New Jersey.  Scott Douglas, President Douglas said the major manufacturers were competing on price rather than through innovation, and that compressed margin. “Discounts get deeper and deeper, and the distributor is in a very difficult spot,” he said. “So what do you? We diversified our business.” In 2004, DS&D acquired a New Jersey/New York distributorship of Thermo Fisher, a $6 billion manufacturer of laboratory products for pharmaceutical companies and educational institutions, a much less competitive market. “We wanted to be the only company representing a product line in a given marketplace,” Douglas said. “In New Jersey, you’ve got every worldwide pharmaceutical company headquartered here.” Three years ago, DS&D acquired a lighting company to service Manhattan clients, another specialized market, including providing all of the fixtures for a 2 million-square-foot office tower constructed by Bank of America in Times Square. “It was a relatively small business in Brooklyn,” Douglas said. “We moved it to Manhattan and hired the top three people in the industry to represent us in marketing, estimating, and project management. We filled in with additional people, but we got the top producers.” Market shift Fortunately for DS&D, the company’s decision to pull out of the New York furniture business came at just the right time—before the current downturn in the banking sector put the pinch on sales throughout city. “New York is high risk, high reward,” Douglas said. “You either make a ton of dough or get killed very quickly. Financial institutions have remarkable control on capital dollars. When their business turns south, they turn the faucet off faster than any industry I’ve ever seen.” The lesson from DS&D’s strategic divestiture is not lost on Douglas, who said it is better to be the best in your industry, or get out—something management guru Jack Welch has said time and again. “You can call it luck or prescience, but the fact that I’m out of the New York marketplace is a good thing,” Douglas said. “Coupled with the fact that we invested in these businesses three to four years ago, this past year, things came to fruition for us.” At the same time, Douglas said, he is relieved that he made what he considers the best business decision for his company and his employees. When DS&D sold its Steelcase distributorship to a competitor, employees in that business had to change jobs to the new owner. In a sense, Douglas saved those workers’ jobs, because they could have been laid off in the current business climate had DS&D not sold the business last year. “If I were still in New York, I don’t know what my numbers would have been, but there’s a good chance that New York would have thrown off a loss last year,” Douglas said. “I’m extraordinarily loyal to the employees. I didn’t want to let them down. That was part of the emotion—these people need jobs.” Douglas can rest easy that his management team made the right decision to diversify, and the company’s strong brand and history made it easier to acquire new businesses. “DS&D has a long history of running an ethical, strong, fiscally conservative business. In our industry, particularly in New York City, that’s a little unusual,” he said. “There’s always a list of two or three people who would like us to acquire them.” Douglas said he would advise business leaders in the same boat to think about the bigger picture when making a decision to get out of a certain business. “Can you make that once-in-a-lifetime extraordinarily emotional decision that you think is the right thing to do?” he asked. “To have it turn out as well as it has one year later, it dawns on me that we did the right thing. Because we made the decision to buy those business, and they are now to the point where they are starting to accrue profits, instead of making a little bit of money, we’re making good money.” |
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© 2008 American Executive - RedCoat Publishing. All rights reserved.
American Executive is a RedCoat Publishing publication.
American Executive is a RedCoat Publishing publication.
