Jan 2018
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Taking Their Turn

Totten Tubes Inc.
West Coast tube specialist Totten Tubes is now under the third generation of family leadership.

By Dan Markham, Senior Editor

For the modern metals executive, inventory can be a dirty word. Mills and end users don’t want any of it. And service centers often want as little as possible, ideally sent out one door just moments after it arrives from the mill.

For a West Coast distributor such as Totten Tubes Inc., the challenge is even more profound. The West Coast market is heavily influenced by the import market, with its fewer domestic mill options locally, smaller manufacturing base, geographic obstacles between the region and the mills in the Midwest and Southeast, and relatively easy access to the market by Asian producers.

“Imported coil and finished products in tubing have a huge impact on the market,” says Greg Totten, co-president and CEO of Azusa-Calif.-based Totten Tubes. “It feels a little more volatile, and it makes it a challenge to us to do what we do and stay competitive.”

Besides the import influence, the market is decidedly different in terms of end use. Manufacturing is not the driver of economic activity out west. Instead, it’s construction. That results in a business model that’s largely transactional.

“We can’t depend on the big contracts that are going to fill our plate next year. It makes distribution like a job-shop model,” says Paul Totten, co-president and COO.

These factors make managing inventory even more difficult. Yet, the third-generation leaders are embracing, rather than shrinking, from the task. “We’re 100 percent committed to it. It’s the exciting part of the business,” Greg says. “We’re really evolving at managing the inventory. We’re interested in learning more and getting better at it, rather than running away from that model.”

Evolution has been a consistent element for the 62-year-old company. The company was founded in 1955 in Los Angeles by Marvin Totten. The company spent five years in South Los Angeles, then another 38 in East Los Angeles before relocating to its current location in Azusa.

Family patriarch Marvin gave way to his three sons. The last of his three boys, Tracy Totten, continued to oversee the operation until Tracy’s retirement at the end of 2016, when leadership was transferred to the third generation, co-presidents Paul and Greg Totten.

“We retired 125 years of experience over the last 12 months in just three people,” Greg Totten says. “We’ve been hiring new people, doing a lot of structural work to prepare for the years ahead.”

Over the decades, Totten has grown outward from its Los Angeles roots. In 1981, the company opened its second location in the San Diego area in Santee. A third facility followed in Phoenix in 2000, and the company moved into Northern California in 2011 with a location in Lathrop. “We’ve tried a lot of things, but branch expansion has been the most effective model for us to grow,” Paul says.

Growth remains the plan under the leadership of Greg and Paul Totten, though the men are open to new ways of finding it. One way is through the company’s development as a processing distributor In 2017, the company commissioned a new Mazak laser cutting machine, growing beyond its production sawing roots. The new machine, a 3D Fabrigear 400 II, can process about 90 percent of the inventory the company maintains.

The Mazak offers 40-foot infeed and outfeeds, enabling Totten to process longer lengths, and can handle up to ¾-inch walls. “Since we offer such a large range of structural sizes, it allows us to process larger sections that we don’t see the majority of our competitors doing. We wanted to deepen our niche rather than just dive into the increasingly more competitive smaller range of tube lasers,” Paul says.

Using the Mazak, the company can service customers straight out of company stock. “They (customers) have a job and they don’t have to buy full bundles. They don’t have to go to another service center. We become a one-stop shop,” Greg says.

Totten’s other branches can sell the service as well. A strong transfer system means anything processed in Azusa can be shipped to one of the other branches within a few days. In fact, all of the branches maintain a laser sales point of contact.

As Totten continues to improve its laser cutting operations, the company will explore acquiring a second machine, either to locate in Phoenix or San Francisco, or even placing a second in Azusa. “We have to build our reputation and people have to want the product we’re selling,” Paul says. “If we do a good job of that, that business will come.”

Other changes planned in 2017 include the introduction of a tag-on system for inventory, investment into additional material handling equipment, and additional yard space in Phoenix.

Expanding the business through processing improvements is only one avenue the company is exploring. Totten maintains sales representation in the Pacific Northwest, and the location is a logical choice for a fifth operation. The Tottens hope to complete such a project within the next few years.

If a new branch is located, the company will follow the same path it has taken in its previous efforts. “We had different reasons for starting each branch, but we’ve learned from each location so we’re comfortable with it. We have an idea what resources it takes to start of branches, and what sort of profit margins you’re looking at recovering. As we grow, it’s just an equation,” Greg says.

“Our goal is to tighten the ship so that all branches are operating, essentially, with the same procedures as the mother ship, with variations based on regional requirements,” Paul says.

And, the Tottens are open to a new way of growth – acquisition. The company wants to build some of its product lines, including mechanical tubing and stainless. The challenge is finding customers – hence the openness to acquisition. “It’s easier to buy a book of business than to try to take it or develop it,” Paul says.





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Thursday, February 22, 2018