Our MD Andy Scott spoke to International Boat Industry (IBI) magazine in January 2020 about how best to manage the growth of a small business. Here is the full report.
How to increase sales
In two years, managing director Andy Scott has doubled MCI's turnover. His methods include a solid product base, avoiding debt and hedging the currency markets for a stable price list. Jake Kavanagh reports.
Marine Components International (MCI) is a marine distributor based on the UK’s central south coast. This prime location places the company very close to its major European customers, which include leading OEMs such as Sunseeker, Oyster, Princess and Bavaria. Around 50% of MCI’s turnover comes from supplying Bennett Trim Tabs, now produced by US-based Yamaha Marine Systems. The rest comes from a small portfolio of other high-quality products including the all-bronze Groco seacocks, forward-looking sonars from Echopilot and ‘A60 rated’ fire-dampers from BSB.
MD Andy Scott has been with MCI since 2017 but has been selling to OEMs since 1988 when he joined Sowester, arguably the largest marine equipment manufacturer in the UK at the time. As we talked inside his 5,500ft2 modern warehouse in Poole, Dorset, he was happy to explore the methodology behind MCI’s steady and sustainable growth.
“Success comes from having a good business plan, a proper budget, good cash flow and tight stock control. MCI was established as a warehouse for the European distribution of Bennett Trim Tabs, although it did stock a couple of other products. When I took over in 2017, I wanted to move the business forwards, so we added to the product portfolio. I also realised that the price list was inconsistent, and that we were actually losing money on some of the lines. We adjusted the price list and explained to our regular customers that this was necessary to keep on supplying them. Most understood the logic. The other major area we developed was customer support. I learnt very early on that one of the greatest assets you have as a salesman is your ears, not your mouth. By listening to the customer, you can establish what they need. You may even find a product that is better suited to them than the one you are trying to sell. Your customers need to know that they can count on your support. For example, we increased an order for our Dr Shrink polyethylene shrink-wrapping product by jumping on a plane to meet the customer rather than just chatting on the phone. So, keep listening to them. They will tell you their concerns, whether it’s about price, delivery times, product range or any number of other issues. If you don’t hear what they need, you can’t help them.
Choosing the right products
“You get to know certain products by reputation, and personal experience. Then you can look at the distribution channels they already have and see if you can give them a better route to market. Most of the products we now distribute were not particularly well known in the European leisure market and yet have so much to offer. “A good example would be Duarry Liferafts. The leisure versions are 30% smaller and lighter than their nearest rivals, so are ideal for the owners who want to haul them on and off a boat. Similarly, we took on Groco. This US manufacturer has been making skin fittings and seacocks from pure bronze since 1919 and is now one of the only manufacturers to do so. It has surprised me how many OEMs still fit DZR products, a move made after problems with brass fittings. However, in most cases DZR is only marginally cheaper than pure bronze, and whilst Groco is well known in the US, it is less recognised in Europe. As around 60-70% of US-built boats imported into the EU have Groco fitted, there is a good aftermarket for sales. Also, the Groco range are ideal for new builds, with a remarkably wide product range.
“Another recent brand for us has been Echopilot, well known in the market and acquired by Daniamant in 2016. The forward looking, full-colour 3D sonar may seem pricey at around £10,000, but its nearest rival is £50,000. The route to market for these more advanced models is less clear. This is where we can help, especially with OEMs that build larger yachts or superyacht tenders.
Control the stock levels
“Flexibility is the key. Most manufacturing now is to Just In Time (JIT) practices, so customers only want a short wait for their orders. We chose BSB fire dampers for this reason and secured global distribution rights this year. Fire dampers fit into ventilation ducts and slam shut automatically when excessive heat is detected. This stops a fire spreading between bulkheads. Turnaround within general industry is usually 6-8 weeks, but BSB make their marine versions in 8-10 days. Similarly, with our main brand, Bennett Trim Tabs, MCI used to stock complete kits, which limited our ability to meet specific orders. Now we stock components in-house, so instead of ordering from the US, we can now assemble a custom kit ourselves and despatch it the following day.“
"The amount of stock being held is a conversation between the market and the dealers to find which products (or models) are more interesting. As a distributor, we don’t just want to be a box shifter. We want to understand the USPs and make sure we market them properly to a target audience. This way we don’t waste effort and keep our prices competitive."
For consistent prices, hedge the currency
“Because we deal a lot in imports and exports, buying and selling in dollars and euros, we keep a close check on exchange rates. We actually ‘hedge’ these rates through Western Union, one of a number of good currency dealers available for business. We take their advice and hedge the currency by pre-ordering ‘x’ amount of dollars at ‘y’ exchange rate for a set period. This allows us to know what our margins are. The advantage for customers is I can keep the price list stable. I don’t need to charge different prices as the currency fluctuates. We take a view on expected rates at the beginning of the year and then by using hedging we maintain the prices, providing the rates don’t go crazy. This has worked well for the last three years despite the instability of the pound against the dollar. If we hadn’t been able to do that, our prices would probably be 10 or 15% higher.
Beyond Brexit and looking ahead
“I am not overly concerned about Brexit. The US and EU will both need to continue trading, so the only problem may be some extra bureaucracy. In the marine market, strong businesses survive and even thrive, but those lacking a good plan, good cash flows and robust budgets will struggle. As such, I have a three-year plan for turnover, profits, warehousing and so on but will not expand beyond what is sustainable. The key is listening to the customer and picking the right products to distribute.”
Andy Scott's background
Andy Scott has spent 32 years in the marine industry
TRAINED AS AN ENGINEER, Scott spent two years working with hydraulic systems. He then spent the next seven years servicing anaesthetic equipment OHMEDA, part of BOC. He began his marine career with Sowester Marine Factors in 1988 and then worked as a sales manager for Craig Craft. From there he moved into the marine safety sector and spent several years with ML Lifeguard, RFD (now Survivtec) Ocean Safety and International Safety Products (ISP) respectively. MCI supplies OEMs and trade customers but avoids ‘consumable’ products. Scott notes that his early years were spent looking after Mercruiser dealers as part of his Sowester brief, where he recognised the friendly nature of the marine industry and how well it was connected. He also notes that unlike other industries, the end users, the boat owners, chat freely with each other so there is a greater sense of community.
MCI WAS FOUNDED in 1990 by UK-based Eric Cave and US-based Blake Bennett, and is located in a warehouse complex in Poole, Dorset, UK. The business was established to become an EU distribution hub for Bennett Trim Tabs but has since evolved to stock several other brands. The current product portfolio now also includes Echopilot 3D Sonar, Rocna Anchors, Duarry Liferafts, Groco Seacocks, Lasdrop Shaft Seals and BSB Marine Fire Dampers. Another non-marine specific product is Dr Shrink, which is used to protect products for shipping. Since 2017, the turnover has increased from £770,000 to £1.35m, with one annual order for Dr Shrink rising from £40,000 to £330,000 alone. There are five full-time and one part-time staff members and the company celebrates its 30th anniversary in 2020.