A hundred years, a thousand challenges

Posted on Written by David Shaw

16_mesco_01Marine Equipment & Supply Company marks its centennial and looks back at other challenging times

The telephone in the home of Don Kirkland Sr. rang at 2:30 a.m. March 3, 1959, jarring him out of a sound sleep. On the other end of the line was Margaret Heller, the bookkeeper and office manager of Kirkland’s firm, Marine Equipment & Supply Company, a regional marine products distributor then based in Philadelphia.

She told him she’d heard news of an eight-alarm fire on Walnut Street, where the company’s 30,000-square-foot showroom, warehouse and offices were located. Arriving at the scene, Kirkland watched in horror as flames roared skyward. Firemen with hoses crowded the street, yet there was little they could do to extinguish the inferno.

“The fire happened not more than six months after we lost Mercury. It was a real double whammy,” says Kirkland Sr., chairman of MESCO.

16_mesco_02MESCO had been a distributor for Mercury outboards, he says, and the manufacturer had cancelled the contract to go with its own dealer network. At the time, sales from Mercury had been generating about 50 percent of MESCO’s annual sales. The company was already on the ropes, and the fire seemed to have delivered a knockout blow.

“That was the worst time in our company’s history,” says Kirkland Sr., who is 84. “One day we had a business and inventory, and the next we had no business and no inventory.”

As tough as it was, the company survived, just as it had through World War I, the Great Depression and World War II, all of which greatly disrupted the recreational boating industry. And today, MESCO, established in 1910, is weathering the current economic storm, yet another in the series of ups and downs any century-old company faces.

“The party was over in 2007,” says Don Kirkland Jr., president of MESCO.

17_mesco_03From 2000 to 2007, MESCO, still a large regional marine distributor and now based in Thorofare, N.J., in a 72,000-square-foot office and warehouse complex, saw annual sales grow at a steady 5 to 7 percent, down from the average 12 percent annual growth in the 1980s and ’90s when recreational boating was growing at a faster rate. Kirkland Jr., 56, says growth flattened in 2008 and 2009, but the family-owned company is still in the black and has dodged the layoffs that have hit many other marine businesses in the last two years. MESCO employs approximately 100 people.

17_mesco_04Accessories and supplies

Kirkland Jr. attributes the sustained profitability in hard times to a number of factors. He and other top management implemented measures to cut costs early in the downturn, shaving 10 percent off the expenditures for various outside service suppliers. Much of MESCO’s core business is from boatyards, marinas, marine service shops, accessory and supply retailers, and boat dealers that have a heavy emphasis on service, which is still in demand. The company enjoys a loyal customer base and a relationship with some lenders that dates back more than five decades.

17_mesco_05“The accessory and supply side of [our customers'] businesses has remained more steady and reliable than new-boat sales, which is a key reason why we have been able to remain profitable in spite of the bad economy,” Kirkland Jr. says. “Our long-term relationship with our lenders has also been substantially helpful. We have been able to invest in inventory when some competitors could not.”

MESCO is a distributor of more than 24,000 products from more than 250 manufacturers, including Interlux, Pettit, Perko, Teleflex Marine, Sea-Dog Line, and Rule. Its service area, served with a fleet of 30 trucks, includes New Jersey, New York, Connecticut, Pennsylvania, Delaware, Maryland and Virginia. Customers cater mainly to the recreational powerboat market for boats to 60 feet, which is still relatively active, says Jim Del Cioppo, vice president of sales and marketing.

“Many of our customers are not reliant on new-boat sales for a large portion of their revenue,” Del Cioppo says. “In fact, the high fuel prices in 2008 impacted them more than the plunge in new-boat sales, and as fuel prices dropped in 2009, these companies actually saw an increase in their overall revenue. That has helped our bottom line.”

Poised for growth

MESCO got its start at a good time. Norwegian immigrant Ole Evinrude’s new enterprise, Evinrude Motor Company of Milwaukee, established in 1909, was seeing orders for its newly developed 2-hp outboard soar from 10 to more than 1,000 in 1910. By 1913, Evinrude was selling more than 8,000 engines annually, effectively revolutionizing recreational boating and bringing it to the middle class with the advent of the first reliable and affordable outboard. (An Evinrude outboard sold for $62 in 1910).

MESCO was positioned to take advantage of the growth of boating in the early 1900s, and the company grew steadily, adjusting and adapting its business as it went. William Kirkland, father of Don Kirkland Sr., worked his way up from bookkeeper to a director, and by 1919 he was the sole stockholder in the company. In those days, of course, marine supplies and equipment were much different from what they are now – mooring buoys were made of steel, manila and cotton rope was used instead of nylon, and oakum and caulking cotton were needed to seal seams in wooden hulls.

Back then, MESCO had a manufacturing arm. Its machine shop produced the Never Leak tank, Liberty tackle blocks, Harthan True Screw propellers, universal double- and single-leg struts, and throttle and clutch controls. The firm also sold outboards from Bendix and Mercury, among others; gas and diesel inboards, including those from Chrysler and Gray Marine; and marine hardware, fittings and specialty items. In addition, the company became a distributor for runabouts from Chris-Craft and Gar Wood.

MESCO also sold at the retail level until the early 1960s, though retail only amounted to about 10 percent of overall sales. At that time, the business focus shifted more toward supplying products for marine businesses at the wholesale level, says Kirkland Sr. The machine shop operation was discontinued. Boat and outboard manufacturers were going more with dealer networks rather than distributors, so the shift made sense, he says, adding that MESCO did still generate revenue with sales of boat trailers at the wholesale level.

“When you’re talking about smaller items, such as paint or accessories, it makes no sense for a manufacturer to not go through a distributor because in these cases a distributor is the most cost-effective in getting the product out there,” Kirkland Sr. says. “The bottom line is if we can continue to get the product to the consumer through the dealer for less money than the manufacturer can, we’ll always have a business.”

Toward that end, MESCO acquired Seacoast Distributors in Lindenhurst, N.Y., in 2001. It is now a wholly owned affiliate of MESCO serving markets on Long Island and in Connecticut. “We found serving these markets from South Jersey was somewhat problematic from a delivery standpoint, which is why we acquired the company,” Kirkland Jr. says. “We felt it was important to increase our share of the market. The acquisition has added 30 to 35 percent to our overall annual sales revenue.”

The Seacoast acquisition was emblematic of the way MESCO continues to evolve and expand. The company is exploring further expansion of product categories in service-related parts, dock hardware, fishing equipment, and marina and boatyard supplies, according to Del Cioppo. “We try to spur growth in a number of ways,” he says. “It’s been a core philosophy for the last several decades at least, and that has helped to slow the erosion of sales in these difficult economic times. Diversity is important within any company.”

This article originally appeared in the April 2010 issue.

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