Document 7Rmwwn3L83z6RYYMxNqxp3m96

BOARD OF DIRECTORS' MEETING ' July 28, 1964 C&R GROUP - INDUSTRIAL DIVISION JUL 221964 The Industrial Division of the Coatings and Resins Group is primarily engaged in the development, sale and service of specially formulated coatings .end resins for original equipment manufacturers. Further sales are in specialty markets such as industrial maintenance, aviation, marine and railroad which require special formulation, sales and service. Industrial sales have his torically accounted for 40% of the Group total sales volume. The chemical coatings or industrial market is estimated by NPVLA at $750,000,000 and our share of this potential is about 4.5%. Industrial business is reasonably stable in good times or bad and brims with rich potential for us. However, it is a highly technical and competitive field which requires competent personnel in both product development and sales. Our industrial organization encompasses both staff and line functions. The national Industrial Headquarters staff of ten men reports to me. The attached organization chart is self-explanatory.' The Manager-Industrial Marketing and five Product Managers reporting to him are technically oriented specialists covering new markets of opportunity for profitable growth. This group has close liaison with research and development projects at both the Research Center and regional laboratories. They are charged with coordinating and implementing programs to bring these specialized products to sales maturity in as short a period of time as possible. Our National Industrial Sales Manager is responsible for establishing national policies and procedures for industrial sales operations. He is also charged with the development and training of industrial personnel. Regional Industrial Departments are headed by. an'Industrial Sales Manager reporting to the Regional Vice President or Director, As a line function, their responsibility is to implement those policies and procedures established by headquarters. The industrial field organization of 215 people is broken down as follows: Industrial Sales Managers Assistant Industrial Sales Managers District .Sales Managers Sales Representatives Technical Service Administrative Personnel 8 3 3 127 35 39 The past six years have been years of considerable change for us in both marketing emphasis and organization. Sales during this period have been on a relative plateau while profits first swung down and now have returned to their original levels. * GLD014271 2- - 1958 Table I Total Dollar Sales and Net Profit 1959 1960 1961 1962 1963 (10 mos.) 1964 Net Sales 27,815,133 33,026,009 33,185,029 32,385,003 34,684,886 34,355,321 29,060,110 Net Profit 1,323,571 3,254,834 2,597,062 2,091,062 1,876,434 2,419,699 2,383i228 4.8% 9.9% 7.8* 6.57. 5.4% 7.0% 8.2% Internally we have used this period to revitalize our sales force and reorient our market emphasis. To take advantage of new growth markets we have set up six fields of speciali zation, each with a Product Manager coordinating product development and sales programs. Table II Fields of Specialization ~ Dollar Sales 1958 1959 1960 1961 . 1962 1963 Polyester 1,695,601 2,723,826 3,782,625 3,134,049 3,125,714 3,620,357 Metal Decorating 3,703,494 4,245,578 4,250,610 4,661,742 5,109,275 5,891,979 Wood 1,220,391 1,495,409 1,545,794 1,425,559 1,955,168 2,234,968 Coll and Strip 152,723 244,596 246,635 520,839 590,901 434,101 Paper Foam 663,804 819,381 .. 786,087 1,074,760 '50,111 1,044,146 656,022 1,129,126 798,105 7,436,013 9,528,790 10,611,751 10,866,960 12,481,226 14,108,636 1958 30.1% Table III Fields of Specialization - % of Sales 1959 1960 1961 1962 31.6% 35.3% 36.6% 38.3% 1963 ' 43.4% Every year since 1958 independent of the level of our overall business, ve have shown an increase in the fields of specialization. Ifr 1958 they con stituted only 30.1% of our business; in 1963 they constituted 43.4% of our GL0014272 -3- business and the trend continues upward. These areas offer prime possibility for continued growth and profit. However, in many cases they represent fields and technologies where our experi ence was limited. This has necessitated educating and regrouping of our sales organization. Since 1958 we have revitalized our sales force: 1. Replaced 48% of our 1958 sales representatives. 2. Increased volume per territory 22%. 3. Decreased average age from over 48 to 43 years. We have stabilized our sales force by: 1. Increased average income. 2. Placing greater responsibility on younger men. 3. Training through product seminars. 4. Increased and strengthened regional management. We now have a well trained group with over 71% of our territorial business being produced by the productive 35-54 year age bracket. This compared to 51% in 1958. Table IV Redistribution of Territorial Business Age Grouping 1958 Salesmen 1963 Salesmen 25-34 Sales $ 3,203,901 24 $ 4,273,840 21 % of Business 14% 16% Volume per Han 133,000 204,000 35-44 Sales $ 6,813,394 39 $ 8,254,220 38 % of Business 30% 32% Volume per Man 175,000 217,000 45-54 Sales $ 5,262,023 29 $10,231,196 41 . % of Business 23% 39% Volume per Man 181,000 250,000 55-Up Sales $ 7,576,098 35 $ 3,219,737 16 % of Business 33% 13% Volume per Man 217,000 201.000 $22,855,416 $25,978,993 Our Glldden Industrial representative had this profile at the end of the last fiscal year: Average age - 43 years Average years Glldden territory - 9.5 years Average compensation - $15,400 GL0014273 -4- We feel this level of compensation, tied to volume and profit, insures a continued high caliber sales group, and ultimately a continued profitable operation. To make our efforts more productive, considerable time hasbeen expended in concentrating our efforts on worthwhile accounts. The continued expansion of our Trade Sales Branch organization has allowed many smaller accounts to be transferred for more economical handling. Thus, while our volume has increased our number of accounts has steadily decreased, allowing more time for concen tration on large volume users. Thus, in the past ten years: 1953 1963 Table V Trend to Larger Accounts Small Accounts (Under $5.000/Year) Large Accounts (Over $5r000/Tear) 5,186 Accounts Amounted to $3,342,000 675 Accounts Amounted to $21,169,000 3,699 Accounts Amounted to $3,125,000 907 Accounts Amounted to $32,454,000 By: We have: 1. CONCENTRATION on large users; 2. SPECIALIZATION in volume fields; and 3. DIRECTION AND CONTROL of research and development; 1. INCREASED the number of large accounts 35%; 2. INCREASED volume per account 85%; and 3. INCREASED volume per salesman 27%. Naturally the growth of our Industrial Division is directly connected to the successful development of new and improved products by our C&R research and development groups, both at the Research Center and in the regions. The increasing complexity of our business as well as our ventures into fields requiring new technologies, demands our continued growth in this area. GLD014274 -5Careful programming and direction of development is being utilized to direct our research and development dollars into the most profitable fields. Con tinued regular review of research and development programs takes a good portion of our top management personnel^ time and effort. At this time there are many technological changes taking place in the industrial product finishing field, 1. Increased use of mill applied finishes to metal coil and strip, siding and paneling. 2. Continued increase in coating efficiency through^ a. Electrostatic b. Flow coat c. Roll coat 3. Introduction of radical new coating methods such as electro coating and radiation curing. Our future in the industrial coatings and resins field depends on our adapt ability to these technological changes as well as expansion into new fields with related technologies such as elastomerics and adhesives. Our Macco-Gates acquisition is a promising step in this direction. G. S, FORBES mp GLD014R75 o 8 H 4_> CJ 0O 0 r o >; o2 uo 3 M u O o 5w < 0* *u-> c>%? H o to < s *CJ it, i-t Ott Si -iHJ 1c3 2cC- E - uo H,Eoe iJ foj s<; p* OU ' * po r-< r<-V; p O tI u ass* o fcO (3 T3 O 4J o o p T/ O M O N H C5 V Pt GL001A276