Even in post-recession Las Vegas, selling tools is not a gamble for Cornwell dealer Mike Hendrix. “The tool business is always the same; the people who are working will always need tools.” So when about half of Mike’s customers lost their jobs in the 2008 recession, he made his own luck by finding people who were still working. All it took was knowledge of the game, some imagination and, of course, some hard work.

Mike had two aces up his sleeve. One is 31 years of experience, the last 16 with Cornwell. The company originally hired him as a DM, but when the territory became available, Mike grabbed it “because this is what I love.” He also said that being a Cornwell dealer made it easier to recover his lost business “because I have probably the largest territory in Las Vegas.”

A wider view

His territory does indeed encompass a big geographic area, but the population is not that different compared with other metropolitan areas. Before the recession, Mike stopped at only a few automotive shops; most of his customers worked at heavy truck dealerships and construction machinery companies, pretty much all in the same industrial area.

When most of these shops either closed or reduced staff (Freightliner went from 43 techs to just 16), Mike started driving a little farther to look for new business. He also began to check out the kinds of businesses “that other people don’t normally think of.”

“When dealers are trained in this business, we’re trained to think of automotive shops, truck shops, stereo shops and the like.” But, Mike said, his area has “a huge amount of industrial business,” and he pointed out that Cornwell depends on their regular dealers to service industrial customers.

Some of his lost business was replaced with a machine shop, an equipment rental shop, a new (much smaller) Freightliner/Ford truck shop and some new industrial accounts. But he really struck gold when he gained access to two Regional Transportation Commission bus garages. Because they work three shifts, Mike visits the RTC shops three times a week, and each stop generally takes about three hours. He estimates those three stops make up about 20 percent of his business, and there’s a potential for more.

Mike’s geographical territory also includes part of downtown Las Vegas, and that’s where Mike found two very non-traditional (and profitable) accounts. One is a shop that builds and maintains sets for several of the big shows in town. Another is the five techs who maintain the 1.3-million gallon shark tank at the Mandalay Bay hotel. Mike says they all buy the same kinds of tools he’s always sold, except for the shark tank guys’ air tools. “They go through air tools like crazy because they take them under (salt) water… They’re constantly buying air tools, but at prices I cannot compete with.”

Better than before

So while his days have gotten longer and he’s driving more than before, Mike figured out how to replace all the business he lost in the recession. In fact, he told us that 2010 was his best year ever in the tool business. “I’m in a position right now that when a new shop asks me to come by, I don’t know how I’ll fit them in.”

Today Mike’s route includes more auto technicians, but this being Las Vegas, the shops where some of them work are a little different. Mike calls on customers at Shelby American, builders of the famed Shelby Cobra and Shelby-modified Mustangs. He also has customers at the Manheim Auto Auction, the biggest auto “remarketing service” in the world. Mike said that when cars were being repossessed in big numbers during the recession, there were rows and rows of identical cars awaiting service and clean-up for auction. “There were literally hundreds of identical Land Rovers,” most sold to overseas customers.

But some of Mike’s customers are people he’s been seeing his whole career, no matter which flag he was flying. “Most of my customers are (also) my friends… people want to buy from people they like. If you’re treating your customers right and fairly, you really will get first shot at their business.”

Today Mike drives about 200 miles in a 5-1/2-day week to see 450 customers (240 are on the books). He says his average turn is seven weeks, and that skips are definitely an issue. “Vegas by its nature is a highly transient town (and) skips will be three to four times what they are in other areas of the country. (But) if you keep the percentage right, it’s not hard to deal with.”

Mike’s sales techniques are also influenced by his customers’ payment habits. “I tote-and-promote selectively. I’m a big believer, there’s no question that it will make sales for you, but (where I use it) will depend on a customer’s balance. Right now most of them are right where I want them.”

New or tried-and-true

In acknowledgement of his years in the business, we asked Mike about recent changes.

“Diagnostics has been one of the major changes in the tool business today. You can’t function without diagnostics.” Mike carries several scan tools from Launch and OTC, but “not the high-dollar ones,” only the basic models because they sell quickly. When it comes to the more expensive models, Mike makes sure he knows what the customer really needs before ordering the tool.

And the things that haven’t changed? “The basics…They expect you to show up regularly, take care of their problems, and if you do that you’re going to get business…You’re building long-range relationships. You want the guy buying from you today to be buying (from you) five years from now.”

In light of how the recent economic situation impacted his business, we asked Mike how he would know things are getting better. “By the mood of your customers. When they’re hopeful and optimistic, they’re freer with buying tools and making larger payments. If they’re scared or think they’re going to be laid off, you watch your own collections and sales go down. It’s pretty accurate.”

In fact Mike says he’s been watching those trends for years and feels it’s an accurate way to gauge the economy in almost real time. “If you want to know what the economy is like, tool men are a pretty good group of people to ask. The government is working with 120-day-old statistics, and sometimes they doctor that information. We’re out on the streets on a daily basis with working people. We can see what’s going on today.”

What’s happening in Mike’s business today is a result of experience, understanding the local economy, and an instinct for finding new customers. He considers himself a lucky man, but we think he’s winning purely on skill.

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