LWS - can they survive

[Arc weld]

Sometimes a LWS will hope to get your future business for consumables and wire, rods, etc. Working in a welding supply you get all types of people coming in. A lot depends on the attitude of the customer. I've seen guys buy a machine elsewhere to save a few bucks and then come in with an attitude like it's the welding supplies fault it doesn't work right and they should drop everything else to fix it for them.

I'll give an example:
A customer was looking into setting up a sub-arc system to do small to medium size tanks and vessels in their newly expanded shop. They were told it wasn't going to be cheap($40,000+) but they wanted to go ahead. The Lincoln rep. was brought in to access the best system for their needs. He sent the info to Lincoln in Cleveland and it took about 3 weeks for Lincoln engineers to design a complete system for them including all the machines, wire feeders, positioners/rollers, etc. they would need. AFTER all this work was done, the customer went to an auction and bought a used Lincoln sub-arc welding machine. The machine they purchased didn't have the upgraded programmer they wanted(probably why it was sold)but expected the welding supply to bend over backwards to help them out with their auction buy. The welding supply basically told this idiot foreman to go pound sand. I can't blame them.:muttering: Now if the customer had bought the machine first or even asked about it before the Lincoln rep. was brought in would be a different story. It was a complete waste of everyone's time. Lincoln probably spent $1000 designing a system for them.

 

[wroughtn_harv]

The only competition for the LWS is other LWS's. Those who buy off the internet or from the box stores and Tractor Supply are not and have never been their bread and butter. The manufacturers are about volume sales and that is why we are seeing all the user friendly low end products being introduced. Manufacturers don't care who sells their product as long as they are getting sold. For the LWS's I can guarantee you that they don't want to have to deal with the buyers who go first to Home Depot or Tractor Supply or the internet shopping for price.

I have a wholesaler that sells me the fence materials I need. They carry a lot of the same products the box stores carry. The difference is you don't pick through a bundle to find the stuff you want. Your materials are pulled for you and there are no returns. The desk doesn't answer technical questions about how to do something because they figure that's your job. The price savings are considerable. That's because they deal in volume and there's an order taker along with yard guys with fork lifts to pull your order and load it on your vehicle. A couple of years ago put up a sign out front, WHOLESALE ONLY no street sales. I expect that in the next couple of years we will see the same thing at a lot of our LWS's as they find the hobbyists not worth messing with. That might sound harsh but think about it. As the LWS's are forced to become leaner because of the competition they will specialize. That will mean they will not carry products to compete with the internet and stores like Harbor Freight, Northern Supply, Home Depot, Lowes, and Tractor Supply. And they won't be able to carry the labor load required to deal with those kinds of customers either because it will become more and more of a professional to professional relationship. They won't want or need the kind of help that can answer questions people new to the business have.

 

[Mark @ Everlast]

Harv,
I'd like to strongly, but politely disagree with you on several points.
1) The Lincoln tombstone and thunderbolt have been around for years. These are in the mix of the low end welders you spoke about, and they have always been sold by the LWS, as far back as I can remember into the 70's and 80's.
2) In the course of my job, I talk to a lot of people running the LWS, and they are always complaining that the Big box stores have hurt their business significantly, and is one reason they are looking for alternatives. This represents cash flow to the LWS. While they may not be the huge chunk of the industrial business, it affects their ability to stock more shelf product that we all need when we go in...which turns many pros to online sources.
3) Companies that shut down one end of a business to specialize in service to one end of the industry are more susceptible to wide economic swings, particularly in the welding and construction industry. The slightest thing can send them into an economic tail spin. The people that are weekenders keep things going in tight times. It's a matter of economics. It's a sure sign the company is hurting. Fastenal recently found this out because in many locations they stopped "breaking" large qty. bags for customers. That lasted all of less than 6 months before they started breaking bags again and even offering smaller prepackaged qtys.
4) What I expect in the next couple years, is that LWS are going (and are) looking for MORE avenues to market their product, which will include going online with competitive priced products, and in store delivery of product, just like the walmart model.

It goes back to a company being dependent upon a company "narrowing" its customer base. In no way does that make business sense. The big box store is BIG business with the manufacturers as you suggested...if these sales weren't there, sure some of the sales would not exist, but the balance would be heading for the LWS. There are many LWS now that do business online and it is a huge part of their business.
Miller also sees this trend and is why they are offering direct sales to customers as they don't want to leave any stone "unturned"....especially if the LWS refuse to use good business sense and as the old Southern saying goes : "You cut your nose off to spite your face."

My prediction: Over the next 5-7 years, the LWS will get leaner, but not meaner. They will be forced to become more customer friendly, and seek new ways to service customers.

Big businesses are also money conscious, and the small guy is too. The bottom line trumps many things. Companies with CFO's etc. will not spend more money on equipement just for personal service at a LWS. They will buy from the cheapest source for whatever equipment is deemed needed. Small guys who run their own welding shop feel alienated from the LWS with guys who leave them standing in the aisle while the go cater to the big money customer. These guys are just as much a professional as anyone else, and if they get that kind of treatment at the LWS, it's just as easy to walk into a BIG box store or go click something online and get faster service.

Don't make a mistake of thinking that equipment sales are a welding supplies bread and butter not at the average 5-7% margin these guys tell me they work on. It's the nickel and dime things, and their gas sales where there is a 200-400% profit margin. Hey, soapstone, and safety glasses add up to big bucks pretty quickly...

 

[Shield Arc]

Few years ago, the guys at my LWS were telling me if it wasn't for selling metal they would had to have closed the doors.

 

[wroughtn_harv]

Harv,
I'd like to strongly, but politely disagree with you on several points.
1) The Lincoln tombstone and thunderbolt have been around for years. These are in the mix of the low end welders you spoke about, and they have always been sold by the LWS, as far back as I can remember into the 70's and 80's.
2) In the course of my job, I talk to a lot of people running the LWS, and they are always complaining that the Big box stores have hurt their business significantly, and is one reason they are looking for alternatives. This represents cash flow to the LWS. While they may not be the huge chunk of the industrial business, it affects their ability to stock more shelf product that we all need when we go in...which turns many pros to online sources.
3) Companies that shut down one end of a business to specialize in service to one end of the industry are more susceptible to wide economic swings, particularly in the welding and construction industry. The slightest thing can send them into an economic tail spin. The people that are weekenders keep things going in tight times. It's a matter of economics. It's a sure sign the company is hurting. Fastenal recently found this out because in many locations they stopped "breaking" large qty. bags for customers. That lasted all of less than 6 months before they started breaking bags again and even offering smaller prepackaged qtys.
4) What I expect in the next couple years, is that LWS are going (and are) looking for MORE avenues to market their product, which will include going online with competitive priced products, and in store delivery of product, just like the walmart model.

It goes back to a company being dependent upon a company "narrowing" its customer base. In no way does that make business sense. The big box store is BIG business with the manufacturers as you suggested...if these sales weren't there, sure some of the sales would not exist, but the balance would be heading for the LWS. There are many LWS now that do business online and it is a huge part of their business.
Miller also sees this trend and is why they are offering direct sales to customers as they don't want to leave any stone "unturned"....especially if the LWS refuse to use good business sense and as the old Southern saying goes : "You cut your nose off to spite your face."

My prediction: Over the next 5-7 years, the LWS will get leaner, but not meaner. They will be forced to become more customer friendly, and seek new ways to service customers.

Big businesses are also money conscious, and the small guy is too. The bottom line trumps many things. Companies with CFO's etc. will not spend more money on equipement just for personal service at a LWS. They will buy from the cheapest source for whatever equipment is deemed needed. Small guys who run their own welding shop feel alienated from the LWS with guys who leave them standing in the aisle while the go cater to the big money customer. These guys are just as much a professional as anyone else, and if they get that kind of treatment at the LWS, it's just as easy to walk into a BIG box store or go click something online and get faster service.

Don't make a mistake of thinking that equipment sales are a welding supplies bread and butter not at the average 5-7% margin these guys tell me they work on. It's the nickel and dime things, and their gas sales where there is a 200-400% profit margin. Hey, soapstone, and safety glasses add up to big bucks pretty quickly...

The will become more customer friendly but their customers won't be the the ones buying their welding stuff at the box stores. If you go to your friendly box store you will find a section that has the bulk of what those shoppers are looking for, soap stone and safety glasses are high profit items.

I deal with two different suppliers that have seen their business models change drastically because of the box store epidemic, yes it is a sickness. I prefer stainless fasteners for most of my projects needing fasteners. I have two fastener suppliers locally that service me quite well. I mentally give them a hug every time I'm in a box store and for grins price stainless fasteners. They charge me a fraction of what the box stores charge. Of course I buy quantity and I respect their need for minimums for credit card purchases, even twenty dollar minimums for cash. One of them has stopped carrying Dewalt, Milwaukee, and Makita tools in store because they won't even try to compete with the box stores on pricing on the most common items. But when I need something I will buy it there and wait for the time to get it because I know that they will honor the warranty without question and more than once has went to bat for me when an item went bad and it was out of warranty. These businesses have thrived catering to the professional.

The other business is fence wholesalers. Most of them have signs out front discouraging the do it yourselfer from even crossing the threshold. You don't get to pick and choose your wood. It's bulk sales. The desk help are experts on product and don't even expect to explain to you how to install etc. They're professionals and expect you to be the same. I buy schedule forty galvanized pipe for my wood fence posts and my farm pipe fencing. Last month I priced out some pipe posts and then helped a friend pick up some stuff at Home Depot and compared the pricing. My stuff is .154 wall, hot dipped galvanized, and it cost just five cents more per foot than the .072 to .090 stuff from Home Depot, and it's electro galvanized and not near the product I get. One of the things we use I buy for $99.00 per hundred. It comes in a burlap bag with everything including nuts and bolts. The box stores sell the same product from a different manufacturer and by the time you get the nuts and bolts you need they cost considerably more than two hundred dollars for 100 of them. Now I do have to buy a hundred at a time to get my break. I'll accept that anytime.

It used to be I could go to a real hardware store and they had the rare stuff I needed or could get it for me. They were knowledgeable and would give me price breaks for being a volume buyer. Those places are gone now because of the box store business model The same thing is happening to welding supplies. You can buy your gas at Home Depot or Tractor Supply but only in tanks that do it yourselfers use. I have big tanks and still have to go to the LWS for exchange and I have to be on the watch for them giving me proprietary tanks instead of owner tanks. The box stores won't carry the rod I like to use nor will they have the heliarc consumables ever, no volume for them.

I will admit to having an extreme dislike for the box stores. They are a plague.

 

[Mark @ Everlast]

The reason home town stores are gone, is not because of the introduction of big box stores in the community, but because they simply refused to compete. I have a local hardware store that sells stuff cheaper anywhere than I can find. They started small and sold things a very good price and kept name brand. Business built, and they moved across the road into a former blue jean factory and now it's full. For example: I went in the other day during the recent cold snap and they had some of those enviro-logs. I needed a few because well, the fire place hasn't needed use in a couple years and my wood was also wet and would not dry out before the cold came through. Their price was 9.50 plus tax. Went into Wal Mart the next day and it was 15.00 for the same box. Online it sells for 20.00. I worked for a small independent fastener store here locally back when I was in college. It carried a wide variety of items including farm tillage pieces and hardware. It was locally owned when several big box stores came to town, they dropped their prices to compete and they are still in business. I can't say the same for a couple of other hardware stores that were in town. Every time you'd go in you'd hear them poor mouth about how they couldn't compete and how they hated the big box store etc. They aren't in business anymore. The reason they couldn't compete was that they were in the business of overcharging customers. They had everything you need, but you'd pay through the nose for it.
Regionally here, you cannot buy gas anywhere but through the lws. Tractor supply had it for a while but no longer due to strong arm tactics of the LWS who disliked TSC and others selling the larger cylinders and even filling them under lease from the lws and took them to court. Last year my rental fee on full size cylinders doubled at the lws when the TSC went out of business with it. I don't think HD ever did sell cylinders other than a jewelers size.

 

[Arc weld]

Lincoln for sure makes lower end wire feed welders to sell in the box stores along with the Century brand they bought. People buy these machines cheaper and then complain the LWS is too expensive. They aren't the same machine! Even worse is they use different consumables that the box stores often don't have in stock, so the customer goes to the LWS because they are a Lincoln dealer. Then they get mad because the LWS doesn't have the "special" consumables either. Why would the LWS carry parts for something they can't sell in the first place? A big problem is the manufacturers selling to anyone who wants their products. While this may seem logical, they are stabbing themselves in the back because everyone has to lower their prices to compete. Box stores could sell the product as a loss leader just to cater to small DIYers. The manager where I work was at meeting with a large group of welding supplies that buys large quantities of product. A 3M rep. was there and he questioned why because 3M will make everybody and their dog a 3M dealer. I think it's better to have dealers more specialized sell products for specific industries than anybody with a general store. I think it cheapens some brands to see them in the box stores. As for welding equipment, the LWS should have a lot more knowledgeable people working there. If they don't, there's something wrong. Unfortunately, a lot of welding supplies are hiring young kids with no clue about welding and not providing any training. They're saving money but at what cost? There's no substitute for knowledge when you need it. You sure won't get it at a box store as far as welding goes.

 

[Shield Arc]

I've been at my LWS and some guy will come in and ask a simple question. The answers those smucks give I just have to laugh and walk away! The questions that really get my attention are ones that should be ask of an engineer, but the guys behind the counter will give engineering advice!:shocked:

 

[muddstopper]

I dont think I will agree with LWS hireing knowlegable people. Not to long ago, I had a buddy wanting to buy a plasma cutter. I talked him into buying one of the miller 110v/220v/ spectrum 625 machines at National Welders in Asheville NC. And I hope they read this. All told, cost was around $1800. Well, he took the plasma machine home and everywk he complained to me that it just didnt cut right. His first experience with a plasma machine of any kind, I thought he was just doing something wrong. Yesterday, he brought the tips he was using to show me how the torch was setup. He was using the drag tip and trying to cut thick metal. I told him to change out and remove the drag tip and use the 40a tip . Well he wasnt satisfied with my suggestion so we stopped by the place where he bought the torch. Guy at the counter gave him all kinds of advise, but it was mostly buy this and that, and what I told him to do wouldnt work!. I listened for a minute and got sort of aggravated so I asked the saleman just how many plasma torches he had used. Answer, NONE!, didnt know much about them! He knew enought to try and sell my buddy a bill of goods, but nothing that would actually help with the problem. Buddy went home, changed out the tip like I told him and this morning told me he couldnt believe the difference it made in his torch, the before and after wasnt even a comparison. Now, I aint a professional welder in any sense of the word, but For a salesman at a big name LWS, that guy knew a lot less than I did.

 

[Mark @ Everlast]

That's a constant theme I hear from my customers too. They have no knowledge base from experience...and these aren't young guys. They've been there 20 years. I can't tell the countless times I've gotten a tech call from a distraught customer trying to weld aluminum on AC and couldn't get the right arc...They went to the welding store and the counter man working there 20 years sold them a bunch of pure tungsten and told them it was the ONLY thing to use for welding AC with any machine. That tells me that the company doesn't update their training, or experience or they like to stick a bunch of excess green tungsten on unsuscpecting customers. For those that don't know what I am getting at, inverters do not run green tungsten, but can use any other type for AC. Green tungsten generally won't run a stable arc in an inverter because of the large ball on the end it forms.