Global Fastener News

2002 FIN  Perspective: McIlhon: Metrics Led to IIP/Bossard Relationship

June 11, 2002 FIN – Ed McIlhon of Iowa Industrial Products Inc. first started doing business with Switzerland-based Bossard about 1980. To compete in the global market IIP customer John Deere decided to convert to metric.
“Metric fasteners were rare in the United States,” McIlhon recalled. “At that time if it were not for Bossard, I don’t think we could have got the job done.”
In addition to being a Bossard customer, McIlhon learned more about the company when his son, Casey McIlhon, went to work for Bossard before IIP was sold to Bossard in 1999. Three weeks after selling to Bossard, patriarch Dan McIlhon died.
“Simply put, Henry Bossard is a great guy. When Dad died, I needed someone to mentor to, and Henry became that person.” “I would say we have mutual respect for each other,” McIlhon described the relationship. “Make no mistake, he’s in charge, and I’m OK with that.’
Henry Bossard said he understands the relationship and that such entrepreneurs as McIlhon may have trouble joining another company. “I would hate it if a Henry Bossard were telling me what to do,” Bossard said of himself. That’s why he wants individual companies to have as much independence as possible “to make mistakes and to do business.”
McIlhon, the 1994-95 president of the National Fastener Distributors Association, said the best thing about the IIP/Bossard merger is what they have brought to the table. “Without going into detail, let me just say that I’m a better CEO because of them,” McIlhon explained. “I have a much better understanding of things like Net Working Capital, operating cost and world-class global sourcing.”
McIlhon said he loves doing business beyond his Iowa base. “I love the international marketplace. We are now in contact with 42 different John Deere units worldwide from Charlotte to China. I actually went to a Deere factory in India.”
“And Switzerland is not the worst place in the world to have board meetings,” McIlhon smiled.
“The most difficult thing is giving up control,” McIlhon reflected. “When Dad and I ran the company we had a philosophy: If we made money we would bonus it, and if we lost we borrowed it. The banks loved us. We really did have a great time. Of course if we would have kept doing business that way, we’d either be severely in debt or out of business today. While we really did have a lot of fun, we probably weren’t the most efficient company in the world. Board meetings pretty much consisted of a three-hour lunch.” Though he has gained from Bossard, McIlhon has had to give too. Son Casey at one point returned to IIP, but another Bossard division later recruited him away. “I fully supported this. You have to go where you have the most to offer,” McIlhon acknowledged. But he added that “I may go back after him someday. After all, this is America.”
Is McIlhon happy with selling IIP to Bossard? “One need only look at some of the other mergers and acquisitions,” he said in obvious reference to recent bankruptcies of publicly held distributor roll-ups. “Bossard is a fastener company, period. I like that.” .©2002/2012 Fastener Industry NewsFor information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

June 11, 2002 FIN – “We don’t look left and right at the competition,” CEO Heinrich Bossard explained the strategy of Bossard Holding AG. “We look at the customer. We are thinking of what the customer needs.”
The customer orientation is what makes Bossard ask the question, “How can you help customers become more competitive with fasteners?” Bossard – better known as Henry rather than Heinrich – who is part of the sixth generation in the family business, talked mostly about the future during a FINinterview at the Zug, Switzerland, headquarters. The Bossard family can trace the name back to 1450 and the family business to 1789 in silk importing.
Importing and exporting came easily to the Bossards, because the Swiss have always had to rely on trade, and they are multilingual, Henry Bossard noted.
Bossard Group considers 1831 the founding date of the hardware business. They know from handwritten records and letters dated from 1828 to 1832 that were found in family furniture.
Initially the Bossard family was in the hardware business, supplying the professional trades with tools, screws, wires and bolts. After World War II Henry Bossard’s father, Walter Bossard, and uncle, Carl Bossard, expanded the local hardware business to a regional supplier of fittings, fasteners and steel.
The steel business was later spun off because of the special skills required. The next generation has expanded further.
Young Henry Bossard headed to the U.S. for an education and to seek a broader worldview. “There have to be solutions to problems we have,” he recalled thinking. “I couldn’t believe we were the first to have these problems.”
In the 1980s the Bossard Group was increasingly supplying to other countries and developing an international network. “We began to receive orders from America,” Bossard said, recalling the seven-foot-long telexes. “Hey, these Americans must be lacking something we have.”
What the U.S. needed was small numbers of replacement parts for metric machinery. And Americans were paying more for freight for a few fasteners than for the actual part. Bossard quickly saw the opportunity. “Why pay 100% for shipping? This void will be filled by someone. Why not we do it?”
So Bossard opened in Danbury, CT, with a goal of selling at an annual $5 million rate within five years. “We surpassed it in 18 months,” Bossard smiled.
That also was an early version of Bossard “going to the customers.” The textile machine industry brought Bossard to South Carolina, and soon the company was shipping up to 10 metric tons by air per week to the U.S.
Subsequently, Bossard has expanded to a global company with 1,300 employees with European, U.S. and Asia/Pacific divisions.
Encouraged by multinational customers, Bossard now boasts a 140% annual growth rate in India and 66% in China.
The international moves are easy for Henry Bossard. He was headed for Harvard University when he had to postpone his education after an uncle died. He eventually did go the U.S. for an education and has subsequently visited all 50 states.
But wherever the Bossard Group goes, it will fit in the customer-oriented strategy. “Today you don’t go for markets, you go for customers,” Bossard explained the growth.
The corporate vision states, “We want to be the best and most successful fastener house in the world.”
Henry Bossard points out that it doesn’t say the “biggest.” The growth will be anywhere in the world. “Where do our customers need us?” is the question, not where does Bossard Group want to expand, he said. Bossard would like it if customers took them to more areas of the Southern Hemisphere, he mentioned.
Countering the Price Squeeze
Many fastener manufacturers are being pressured by customers to reduce prices. Bossard’s answer is to point out how little difference the price of a fastener makes. Bossard traces the fastener prices in a $250 Briggs & Stratton motor down to $3.40, or 1.36% of the sales price. A 10% discount in the fastener price yields only a 0.13% difference in sales price.
“Wasting time in freight is more expensive than the fastener,” Bossard points out. Bossard’s goal is to cut the more significant costs. “The fastener might be only 15% of the cost. That means 85% is in procurement, control, warehousing, internal transport, preassembly, assembly preparation, assembly, etc.,” he observed. Bossard worked with a hot water heater manufacturer to reduce 11 fasteners requiring five drives to four fasteners and one drive.
Bossard likes to point out how the company has cut costs. Bossard, which acquired Iowa Industrial Products in 2000, helped John Deere turn over a former small parts warehouse to new tractor production.
Bossard’s advice is to “save the gigantic costs,” instead of shaving pennies off the price of a fastener. That’s why Bossard isn’t looking for just fastener orders. “We don’t want people to walk in and ask for fasteners,” Bossard said. He would rather talk about quality than number of customers, because part of serving a customer is selling a quality level that saves money in the long run.
“You can save more with better products,” he said in reference to corrosion-resistant fasteners, protection against loosening and assembly-oriented design. That applies to the way the company operates too, Bossard said.
He proudly notes that Bossard Group has rarely been sued by customers or former employees. The annual report features a circle of yellow, smiling “Happy Faces” to illustrate the “Happy Bossard” philosophy. “Happy employees” lead to better performance, which leads to happy customers and suppliers and thus to more success.

Industry Future
Bossard sees China as a “strong source” of fasteners as quality becomes more consistent. “Now Taiwan is investing in China,” he noted.
Other potential sources are Eastern Europe and India.
Wherever the new source, Bossard said it is strategic to take time in accepting a supplier. “We try to avoid returns. First we visit, we audit, we tell them the changes we need, test orders, provide test equipment before we close the contract. False deliveries are inefficient.”
Bossard withdrew from the Grade 8 nuts market for three years due to quality problems, he noted.
Bossard predicts there will be more fastener industry consolidation in the coming five years and “the development of niche players. We will see the passing away of midsize guys. They have to consider where they want to go.”
Some customers won’t deal with suppliers that have under $100 million in sales, he noted. “There will be more integration of the supply chain, more services for less money, and you will have to be efficient enough to provide what customers want.”
Fastener suppliers will need to be able to provide flawless logistics. “Have you ever had to reorder water in the toilet? Bossard makes his point about how efficient JIT must be. There are no pipes to automatically deliver fasteners, but it can be just as seamless, he believes. A computer sends information overnight, and the supplier can respond. “It doesn’t really matter if you are supplying fasteners in Alaska, Singapore or Switzerland,” he said.
The toughest industry problem will be the “rising demand to make money on low prices in the supply chain.” That is where the theory of cutting the supply chain costs rather than fastener costs comes in. Bossard is willing to let customers go who are “squeezing as much out to keep you at zero. Too many people just see the big orders and overlook the costs.”

Ahead for Bossard
Bossard may well make more acquisitions. But don’t expect high-profile, expensive companies. Once again, it will be more customer oriented. “They have to have the right thinking for us,” Bossard described potential acquisitions. “We are not able to buy the rich company, but we can afford competence.”
Iowa Industrial Products Inc. needed the stronger partner for global sourcing with anchor customer John Deere, Bossard concurred with what Ed McIlhon said when the IIP acquisition was announced.
“Ed and his gang are a very fine team,” Bossard said. “I respect him as a friend and businessman.”
“John Larson is an engineer who every week walked the lines at B&G” to find improvements.
Henry Bossard, proud of the six generations of the family business, is looking forward to having a son, Daniel Bossard, and nephew, Beat Grob, from the seventh generation now preparing to join the company.
The company also will be changing, with more outsiders joining the traditionally family-dominated board of the publicly held company. Beat Lüthy is slated to take a new board position this month.
Attorney Helen Wetter Bossard will replace her father, Peter Bossard, who as a Zug government minister was among 14 killed in an armed attack at the parliament building September 27, 2001.
Henry Bossard believes the company is ready for whatever happens. “Our future is wide open. In the recession we are winning market share. If the resurgence is as fast as the decline, we might have some problems. We could have more customers than we can handle.” .©2002/2012 Fastener Industry News
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

2002 FIN ? The Bossard Headquarters
June 11, 2002 FIN – The entrance to the Bossard complex in Zug, Switzerland, features a metal sculpture of a 20-ft-high arrow pointing “onward and upward.” The von Felix Fehlman sculpture was a gift by employees in 1983 to the company.
Inside the highly automated stacks of the warehouse one robotic machine can pick 11 different products in one run, day or night. Automation allows the warehouse to be more compact and the picking more reliable, CEO Henry Bossard explained.
The facilities can hold 417,180 small pallets. The last warehouse addition cost “8 million Swiss francs in mechanicals, 8 million in software, but only 4 million to build,” Bossard said. s Bossard proudly explains the assembly process, he notes that workers had to learn to be careful of the automation. On the first day one packer set down a sandwich, and it got picked up seconds later in a carton. “We still don’t know what customer got it,” Bossard mused.
The Bossard Group ships an average of 1,654 orders per day from Zug. The orders total an average of 9,337 small pallets with 6,812 line items per day. Many packages go out with computer labeling, so the ultimate customer in one country doesn’t know it came from Bossard in Switzerland.
The entire operation is so efficient that “we even ship for competitors,” Bossard pointed to several pallets stacked with packages ready to go. Bossard is particularly happy to show the returns area. “This is my pride,” he boasted as he pointed to empty shelves.
The company is currently operating at only one out of 6,000 picks being wrong.
Bossard’s headquarters is in northern Switzerland, about a half hour from Zürich. Zug, population 23,000, has picturesque late-Gothic buildings in its old town, dominated by the hallmark Zyttrum tower. Zug is known for recreational activities, including hiking, sports and cycling, and water sports on Zug Lake.

• Bossard Sales: 2001 Swiss francs 507 million (U.S.$325.4 million) 2000 CHF 535 million Stock Price: End 2000 CHF 68.60 End 2001 CHF 30 Bossard announced that sales for the first four months of 2002 “remained at the expected low level of some CHF40 million per month,” but “cost and capacity adjustments introduced in the prior year when demand began to fall really took effect in the first four months of the current year.”
That yielded profits exceeding CHF 1 million per month for the first four months this year, contrasted to monthly losses averaging more than CHF 3 million in the last four months of 2001. Swiss Stock Exchange Symbol: BOS/BOSZ.S Customers: Alstom, Asea Brown Boveri, Ascom, Berninina, Bosch, Briggs & Stratton, Compaq, Fritschi, Generac, General Electric, John Deere, Leica, Martin Lighting, MBK, Nokia, Schindler, and Siemens. Bossard has 75 subsidiaries in three geographic regions.
• Key executives: Dr. Kurt Reichlin, chairman; Henry Bossard, CEO; Bossard Group management: Henry Bossard, CEO; David Dean, CFO; Julius Brun, chief of staff; Peter Furrer, CEO Europe I; Peter Erlangsen, CEO Europe II; Peter Vogel, CEO USA; Scott MacMeekin, CEO Asia-Pacific; Martin Kaul, CEO, assembly automation. H
• eadquarters: Bossard Holding AG, Steinhauserstrasse 70, CH 6301 Zug, Switzerland. Tel: (41) 41 749 66 11 Fax (41) 41 749 66 22 E-mail: investor@bossard.com Web: bossard.com .©2002/2012 Fastener Industry News
For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

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