Sunday, November 10, 2002

Vehicle dealers showed the way

2001 shocks failed to dent top 100 firms

By James McNair
The Cincinnati Enquirer

The tech bubble burst, the U.S. economy slumped, and consumers ducked for cover from terrorists.

[photo] Kurt Kaeser, is president and CEO of Kaeser and Blair, a distributor of promotional items like the pens in his hands.
(Tony Jones photo)
| ZOOM |
And Cincinnati's 100 biggest privately owned companies rolled on in 2001.

While 2001 will generally be remembered as a year that left a lot of holes in people's wallets, it was a pretty fair year for the companies in the Greater Cincinnati 100, which is compiled by accounting firm Deloitte & Touche using revenue figures reported by the companies. It took less money to make the list in 2001 - $36.5 million versus $41 million in 2000 - but the 100 companies on this year's list lifted its combined annual revenue by 2.8 percent to $14.8 billion.

Leading the way in almost breakneck fashion in 2001 were companies in the automotive market, mostly car dealerships. The auto portion of the Greater Cincinnati 100 comprised 14 companies in 2001, up from 12 the year before. Their $3.3 billion in sales made it the biggest category. In 2000, automotive was third, behind manufacturing and construction-real estate.

The addition of two companies to the list partly explains how the auto sector took the lead in the Greater Cincinnati 100. But 2001 was a record-setting year for new-vehicle sales, and dealers performed the feat of thriving during a recession.

Robert Reichert, president and CEO of Kenwood Dealer Group in Deerfield Township in Warren County, attributes the sales gains of 2001 to financial incentives given consumers by the factories. Incentives, he said, are still making a big impact on sales in 2002.

"We're a little behind 2001 year-to-date and it looks like we're going to finish the year a little behind in volume," Mr. Reichert said. "Without the incentives, I don't know where we would be. Zero percent financing - free money - is driving the market and is moving cars more than anything else. There was a huge buying surge two or three weeks after Sept. 11."

Kenwood moved from eighth to seventh on the Greater Cincinnati 100 by virtue of a 17 percent increase in sales to $445.5 million. Two acquisitions helped Kenwood pass United Dairy Farmers on the list. Kenwood combined the acquisitions into its Fairfield Lincoln-Mercury and Volkswagen.

Performance Automotive Network, a dealer group based in Fairfield, likewise benefited from strong sales in 2001, mainly because of factory incentives and greater demand for Toyotas and Hondas. But it's back to earth in 2002, said CEO Michael Dever.

"Our year-to-year sales are off about 6 percent," he said. "I think a lot of people who go through the normal course of buying every four years moved it up a year last year. You can't have a record every year."

Another climber on the Greater Cincinnati 100, Clarke Detroit Diesel-Allison in Sharonville, enjoyed a run up in 2001 revenue because of a downturn in a different segment of the auto market, that for trucks and buses.

Clarke, an exclusive distributor of Detroit Diesel engines and Allison transmissions in parts of the Midwest and South, posted $127.2 million in sales in 2001, up from $116 million the year before. It moved from 39th to 36th on the list.

Clarke CEO Mark Andreae said his company has done well since commercial truck sales began falling off in 1999.

"The parts-and-services business is countercyclical, so when the economy goes down a little bit, this part of the business improves," he said. "As long as the market doesn't tank like it did in '74, '82 or '91, when they parked their trucks and cannibalized them, a downturn is good for our business."

All cylinders are humming at Clarke. The company sells engines and transmissions for the recreational vehicle market - a market that has been booming. It also designs and sells engines that drive pumps for fire sprinkler systems, a business that now accounts for a fourth of Clarke's sales, Mr. Andreae said. Odds are, if you have a new sprinkler system, it's powered by a Clarke motor.

One would think that any company that relies on advertising dollars would shrink away from questions about their business in 2001 and 2002. Not Kurt Kaeser, president and CEO of Kaeser & Blair in Batavia.

Kaeser & Blair made its Greater Cincinnati 100 debut last year in the No. 73 spot. This year, the distributor of promotional products slipped to No. 75, despite a 3.5 percent revenue increase to $59 million. Mr. Kaeser said sales are up 5 percent so far in 2002. Its employment has remained steady at 129.

"Our niche is doing business with independent dealers across the country," he said. "We're doing business with a lot of medium and small businesses, and those folks are still buying advertising promotional products."

Even though Kaeser & Blair doesn't sell directly to consumers, its products end up in consumers' hands - or on their backs. Its top products are shirts imprinted with company logos. It also cranks out pens, pencils, calendars and other items given away at trade shows, during sales visits or as an incentive for purchases.

"Promotional products still have a tremendous value," Mr. Kaeser said. "It's the only kind of advertising medium where people say, `Thank you.'"

Economic swings have different effects on different industries. For the temporary staffing companies, business is anything but flat.

"In any downtick, the temporaries are the first to be laid off," said Frederick Kohnke, president and CEO of CBS Personnel Services in downtown Cincinnati. "It (2001) was a tough year for the whole industry. Couple that with the events of Sept. 11, and it put our client companies in a catatonic state."

Mr. Kohnke said his 2002 business is slightly ahead of last year. He said he sees signs of an economic rebound.

"We quite often are a leading indicator of a recovery," he said. "With 1.5 million jobs lost last year, we're finding that our customers are more prone to use temporary staffing during this period of murkiness."


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