Setting the Stage: Sager 1980s-1990s
An excerpt from "Celebrating 120 Years of Distributing Confidence. A Look Back from the Beginning."
Written by Barbara Jorgensen
By 1979, Cramer, one of the industry’s biggest distributors, went out of business. A period of recession in the mid-1970s had taken its toll on the company, which Arrow Electronics had once offered to buy at $6 per share. Cramer turned the offer down and by the end of 1979 the company was being acquired piecemeal. Product lines that had been supported by Cramer were looking for new distributors, and Sager stepped in to fill a piece of that gap. It also bought Cramer’s Bud and Switchcraft inventory, which helped create a major expansion opportunity.
Cramer customers were also looking for support, so Sager and local competitors such as Gerber, Electrical Supply and DRW were ready to meet that need. Sager gained both customers and market share: within 18 months of moving into its Hingham facility, Sager had to add on 10,000 feet of space. Not only was its business growing, but adding suppliers and new customers required carrying a lot more inventory. “With Cramer’s inventory we could hit the market running,” says CEO Ray Norton III. Overnight delivery and shipping hadn’t been widely used to date, so distribution warehouses were located in close proximity to major manufacturing centers and/or key customers.
Having product in stock when the customer needed it was key, so in those days “if you had the product you got the business,” says Norton, “We used to have a truck that would deliver into Boston and Cambridge and up and down the 128 belt.” Employees would also use their own vehicles if necessary.
In the electronics industry, stocking product had become a differentiating factor for many distributors. Component suppliers weren’t good at planning for supply and demand cycles. So distributors acted as an important buffer zone between customers and suppliers, having inventory on hand when customers needed it. Sometimes, customers would come and pick up products at a distribution center; other times, distributors would deliver to the customer site.
As Sager’s customer base expanded, the company began thinking about expansion of its own. Norton had selected the Hingham site with expansion in mind – it could hold and process a lot of inventory. Customers were looking to distributors like Sager to regionalize. So in 1981, the company opened a branch in Connecticut, which would serve as the model for future expansions. Sager would retain its culture no matter where a site was established. At least one person that had been trained at the company’s headquarters would help open a branch and train the other employees in turn. Sager was able to establish a number of sites this way.
In 1984 Sager opened a branch in New Hampshire followed by New York in 1985. By 1987, areas such as the Research Triangle Park in North Carolina were becoming technology hubs and both Sager and its suppliers wanted a presence there. Sager made its first acquisition to gain a foothold in a geographic area – Service Plus in Raleigh, NC. Norton recalls how the deal was hammered out at the home of one of the lawyers in the small town of Zebulon, NC where the lawyers offered a true southern breakfast to celebrate the document signing.
By 1992, Sager had established locations in North Carolina, Pennsylvania, Maryland, Florida and Georgia. Sager’s expansion was carefully planned and methodical: the company opened facilities in areas it considered strategy and prime for customer service and support. Occasionally, Sager also would open in areas where talent was available as the result of the burgeoning period of industry consolidation. In fact, the acquisition of ALMO by Bell Industries led to the availability of a number of quality employees – some of whom are still with Sager today.
Most suppliers demonstrated their confidence in Sager’s success at its expansion endeavors: as Sager opened a new site, suppliers franchised the distributor to sell in that area. “Suppliers liked that we had an office in the area and they put us in touch with customers to call on and introduced us to their manufacturer reps. Manufacturers reps were a powerful influence and suppliers wanted their reps to work with Sager,” says Frank Flynn, president of Sager.
Sager was now a multi-regional distributor and had proven it could move out of the New England comfort zone.