How to build a rep with reps in custom metal fabrication

In many small startup custom fabricators, 15 employees or fewer, the founder or owner plays a key sales role. When fabricators grow larger (sometimes much larger), they eventually put together a formal sales team. At this point they have a choice: go with an independent manufacturer’s representative, or hire or train somebody in-house. The choice depends on the circumstance, of course, and both have their positives and negatives.

But if a fabricator chooses to go with independent reps, what can it do to ensure that the relationship is a successful one? To find out, The FABRICATOR spoke with Charles Cohon, CEO and president of the Manufacturers’ Agents National Association (MANA). Cohon presented at the most recent FABTECH^® show, held in November in Las Vegas.

So what makes a good rep? According to Cohon, it’s his or her experience and expertise in the local market. They’ve built a line card over the years of reputable, noncompeting contract manufacturers and job shops that can adapt to demand changes and consistently deliver quality products on time.

Sure, there may be some “soft” conflicts. One fabricator on the line card may offer some stamping, while a stamper may offer some metal fabrication, and a job’s volume is such that it conceivably could be made by either process.

As Cohon explained, “That’s why we encourage manufacturers to review the rep’s line card, make sure it includes not only quality, reputable companies, but also ensure that any minor conflicts are acceptable. And this acceptance should be written into the contract.

“If you took the rep’s line card and put it on a Venn diagram, you can’t reach a point where there is absolutely no overlap,” Cohon continued. In fact, if there were no overlap at all, there’s a chance the rep may lack experience in the market, which should be the rep’s greatest asset. “But still, those overlaps should be very minimal.”

Regardless, each company on a rep’s line card has its core strengths that ideally complement one another. A rep can visit a prospect and offer not only metal fabrication from one company but also casting or machining from another. From the customer’s perspective, a rep is a one-stop shop, even though the customer is sending work to various suppliers.

And when two companies on a rep’s line card could make the product, one could help the other when capacity constraints arise. For instance, a fabricator has a stamping press on the floor, and even though stamping isn’t its core business, it still can help another custom stamper that’s in a pinch.

“One company may have a backlog of 16 weeks, but the other could have a hole in their schedule open up,” Cohon said.

In effect, a rep allows a small shop to take part in a kind of informal shop network. Marketing itself through a good independent rep, a fabricator can act big without taking on the risk of acquiring additional processes and machines and hiring the necessary employees.

Finding a Good Rep

The last thing a fabricator wants is a rep to misrepresent the operation or tarnish the company’s reputation. Good reps are, of course, usually successful with established line cards, and it can take significant recruiting effort to bring them onboard.

“You can’t just send a help-wanted email out and expect responses,” Cohon said. “It’s very much like you were trying to recruit a new VP of sales, and the person you want already has a job somewhere else.”

If experience and local market expertise are a rep’s greatest asset, what about someone who’s new to the rep business? Surely, people can’t start out as experts on day one, right?

As Cohon explained, the typical rep doesn’t enter the business entirely green. They usually come to the business one of two ways: through a family connection or from a previous sales job at a manufacturer or distributor. If it’s through a family connection, reps often grow up in the family business. He or she spends years learning from mentors—their parent, grandparent, or whomever else—visiting plants with them and building relationships.

Other times people start as a rep after spending years climbing the sales ladder at one or more manufacturing companies. And it can be a tough climb. Climbing the sales ladder in manufacturing (or in any other business, for that matter) often means more time sitting in airplanes. The life can be great for people who are young and single, but when they settle down, it can be difficult on a family.

So they instead choose the life of the rep. “They come to the business with a Rolodex of previous customers who trust them, rely on them, and are willing to buy from them,” Cohon said.

They come to the job with years of manufacturing experience, yet they no longer spend so many nights away from their families. They instead focus on a specific region. They’re still on the road—that’s the nature of any outside sales job—but they’re usually within a day’s drive of clients and customers.

“The rapport with customers in the area has been built up during time spent working as a regional or national sales manager [at other manufacturing companies],” Cohon said.

This experience results in a rep who knows the territory, the manufacturing processes, and how to communicate on a technical level. This experience means that the fabricator need not feed leads to the rep, at least not continually. Ideally, the rep should take ownership of the sales territory.

“A manufacturer’s rep may have 10 to 20 years of experience calling on the same customers,” Cohon said. “The reps don’t just go into the purchasing department and say, ‘Hey, do you have any prints?’ They burrow deep into the engineering department to find out what projects are coming up and what’s going to be needed.”

Say an engineer shows a rep a part that must hold certain tolerances. The rep knows one fabricator on his line card can hold that tolerance, but they could be much more competitive if the tolerance were just a little looser; here, the rep may make suggestions. “The rep can encourage engineers to design parts that take advantage of where a fabricator really shines,” Cohon said.

Knowledge allows the rep to do this, but the relationship he has built over the years gets him a seat at the design table. As Cohon put it, “The rep has called on the engineers of this company for 20 years and has built a reputation for being a reliable, go-to person in that product category.”

These long-term relationships, all centered in one geographic region, also (at least ideally) keep a rep honest. A rep in effect sells his or her reputation. People talk. “A rep may live in Oklahoma City,” Cohon said. “He figures he’ll be in Oklahoma City until he retires. He’s thinking, ‘I need all the potential customers in Oklahoma City to like me and trust me. There are only a fixed number of customers here, and I need to have a good reputation with all of them. I had better take care of these people.’”

Building the Rep Relationship

What makes the relationship between an independent rep and a fabricator productive? “Trust” is part of the typical answer, but how do you define a “trusting relationship,” exactly? It starts, Cohon said, with full transparency. A rep should be able to communicate with the fabricator to ensure neither rep nor the fabricator overpromises and underdelivers. Most important, both the rep and fabricator should know what’s at stake on both sides of the relationship.

For instance, during a customer visit, a rep may be careful in choosing which lines to present. They have limited time in front of a prospect, so they need to choose wisely. Choose too many lines, and they don’t give each adequate time. Choose ones that aren’t the best fit, and they can lose an opportunity.

“There’s an opportunity cost,” Cohon said. “To mention your product they also have to pick another product not to mention during that visit.”

If a fabricator misses a delivery date or produces subpar products requiring rework, that tarnishes not only the fabricator’s reputation but also the reputations of the rep and, quite often, the other companies on the rep’s line card.

“If a rep has trouble with a $10,000 order [from one company on his line card], then he could in fact lose hundreds of thousands of dollars from his other lines of business,” Cohon said.

Here Cohon was honest: If a fabricator has trouble making delivery deadlines or providing quality products, increased effort in sales—be it in-house or with a rep—won’t by itself solve a fabricator’s problems. In fact, after being a rep for more than two decades, Cohon actually received training in lean manufacturing and other methods of continuous improvement. After selling for so many manufacturers, he knew how important continuous improvement has been for success, both for manufacturers and the reps that work with them.

To make this happen, Cohon said that reps should be thought of as part of the team, not as a distant contractor. He recalled working with one manufacturer that ran short of cash for a particular month. In order to pay in-house salaries, the owner delayed his commissions payment for a month. Similarly, he recalled some orders from his customers being delayed while orders from the customers that manufacturers dealt with directly got preferential treatment, both in the quoting department and in production.

He said that these and similar acts indicate a larger problem in the relationship. The rep isn’t on equal footing with everyone else in the company.

The rep perception problem often stems from the time between work performed and the pay received. It can take months or even years for a rep to land a large contract, and yet much of the compensation for that work occurs after the contract has begun.

As the late Dick Kallage, former columnist for this magazine, wrote in 2011: “In-house personnel, not the outside rep, usually service a high-volume account in the mature production stage … The dollars paid to the rep, while aligned with sales, are not aligned with the perceived effort. To people at the company, the commission for such mature accounts can seem like an annuity—and simply not right. Of course, they often forget or discount the substantial investment in time and money the rep made (and the company was happy to avoid) to get the account to the mature level.

“All this may sound as if reps aren’t worth the trouble, but managers should remember their advantages,” Kallage continued. “Finding the right person, of course, is vital. Manufacturers’ reps can be (though not always) the cream of the crop. They earn a good living and quite often are at the top of their careers. A small job shop probably couldn’t afford to hire such a person in-house.”

Say a rep lands a large, multiyear contract for a fabricator. Circumstances change, and the fabricator no longer works with that independent rep. And yet, abiding by the original contract, the fabricator still cuts the rep’s commission check month after month for the duration of the job.

“That’s work the manufacturer didn’t have before,” said Cohon, “so there’s nothing unusual about the rep being paid for their efforts. And for every job that does come in, there are probably five or 10 potential jobs the rep worked on that never came to fruition.”

Emotions can run high, particularly because reputations are on the line. Conflicts can arise on both sides of the relationship. And fabricators certainly have stories to tell. For this reason, Cohon said, it is so critical for manufacturers to work with good reps with other good manufacturers on their line cards.

About Reputation

A good reputation in a regional market, Cohon said, is really what good independent reps bring to the table. The best have worked with local customers for years, know their engineering processes, and can suggest design changes that reduce manufacturing costs.

The idea of the independent rep buttresses the idea that, like politics, sales in U.S. manufacturing is local. Reps concentrate on a small territory, so they get to know customers on a personal level. “It turns out your kids go to the same high school or play on the same soccer team or Little League,” Cohon said.

Good relationships can be soured, of course, and either the rep or the fabricator can be the cause. It’s for this reason, Cohon said, that a fab shop must choose a rep wisely, and vice versa. If it’s not a good fit, for whatever reason, reputations can be tarnished, which can snowball into larger troubles for everyone involved.

But ultimately, those good relationships, if maintained well between suppliers and customers, drive more business. And in the best of cases, a manufacturer’s rep can be the mortar holding it together.