A fresh start after 40 - Sidney Port, Lawson Products Inc

A Fresh Start After 40

By the time Sidney Port hit middle age, he had abandoned one career, lost a second one, and had settled uneasily into a third.

First, he earned a law degree during the Depression, but he didn't like the work. Next, he started a publishing company, but prewar paper rationing in the late 1930s choked it off. He then went to work for his father-in-law, but he still longed to make it on his own.

Not that he didn't do well at his father-in-law's company, a distributor of auto parts. In 12 years, he rose from salesman to executive vice president. But he worried that the business had an uncertain future, a concern that weighed all the more heavily as he watched his three small children grow.

In 1952, when he was 41 and his oldest child was 12, Port walked into a major Chicago bank and asked for a line of credit to launch a company that would supply replacement and repair parts for business equipment. A bank officer dutifully took a full day to consider the request--then turned him down. In the bank's judgment, Port's venture would collapse in six months.

Little wonder. Port envisioned a service business where none had existed before. He looked at businesses' need for repair parts for their various types of equipment, and he asked, why not create a kind of door-to-door industrial hardware store? The bank looked at his idea and asked, why bother?

Port ignored the advice, secured his credit at another bank, and, with $30,000 in seed money from his father-in-law, went on to build a company that will generate an estimated $170 million in sales this year. He named it Lawson Products Inc., after Victor Lawson, a publisher and philanthropist in Chicago during the first half of the century.

The company's 1,300-member sales force now markets more than 20,000 repair and maintenance parts, fasteners, chemical supplies, welding rods and supplies, fittings, electrical supplies, and shop materials. Lawson Products today is the largest independent national company supplying repair and maintenance parts. The bank that said yes to a young man's dream earned a lifelong customer who, in recent years, has managed a gilt-edged balance sheet. Lawson Products has zero debt, more than $50 million in cash reserves, and net income that has doubled since hitting a three-year low of $12.5 million in 1986.

At 78, Port still puts in a full day at his office in Des Plaines, near Chicago. Although he shed the CEO's mantle 12 years ago, he remains chairman of the executive committee and an active participant in key decisions. He also has maintained controlling interest in the company he founded. The family's 39 percent stake in the firm's stock is worth about $130 million.

Although Port is generous in his praise of the company's management team, it's clear that Lawson Products remains very much his company. During a recent tour of the 60,000-square-foot Des Plaines headquarters and warehouse, he frequently paused to exchange greetings with employees. He knows most by first name. They know him as "Mr. Port." He calls himself the company's "elder statesman."

The hallway adjacent to the company cafeteria is lined with group photos of the sales staff,one for each year since the late 1950s. It's Port's way of paying homage to the people who make the company run. "Salesmen are the life-blood of our business," he says. "Until they sell an order, nobody does anything." Yet no one at Lawson Products is a second-class employee. Every department has a display board filled with employee recognition awards.

Port firmly believes in developing his employees' strengths, not dwelling on their weaknesses. And he strives to make them feel secure. "You want to give them the peace of mind that they aren't going to be out of a job the first time they do something human, like make a mistake," he says.

He still regrets an error of his own, which he made 12 years ago in the design of the headquarters building. It separates him and company officers from others on the staff. "In our previous building, every day when I walked from the parking lot to my office, I walked through the whole warehouse, and I saw the people who worked there. Here, we're at the end of the building, and you don't get to see the people on the way to your office. And that's a mistake."

Respect for individual talent and initiative has fueled Lawson Products' growth over the years. Port seems to have a knack for hiring the right people at the right time. He knew when he founded the company that he wanted to distribute more than auto parts, but he didn't know how to pick the inventory to begin. So he hired someone who did.

By 1959, Lawson Products was poised to break out of the Chicago area, but it needed an injection of top-notch sales talent. That's when fate delivered to Port's door Chester B. Lynn, an executive of extraordinary sales ability who had just been fired by a Cleveland-based competitor. Within weeks of Lynn's arrival at Lawson Products, six key salesmen from his former employer defected to join their ex-boss. That prompted a million-dollar lawsuit, charging that Lawson Products had enticed the men to breach their contracts.

Port lost the suit and signed an agreement not to poach in the executive offices of his Cleveland competitor again. But he avoided paying any damages, and, most important, he gained a cadre of pros who put real pizzazz into Lawson Products' sales. "From that point on, we really zoomed," says Port. Lynn, who became CEO, died in 1984.

With a winning sales force in place, Port concentrated on recruiting experienced executives to build the company's internal organization in engineering, marketing, and warehousing. It was this group that orchestrated the company's coast-to-coast expansion during the 1960s, when Lawson Products built warehouses in Southern California, Texas, Georgia, and New Jersey.

The company went public in 1970 on the strength of $12 million in annual sales. Now it exceeds that figure every month--which is a strong performance for a company that does not manufacture any of the parts it sells.

Port maintains that manufacturing and distribution are two separate businesses that don't mix.

Distribution is a service business, an area in which Lawson Products excels. The company concentrates on quality, convenience, and customer satisfaction; with nine distribution centers nationwide, it ships 99 percent of all orders within 24 hours.

While Lawson Products has made Port and his family "secure" beyond his dreams, he has never forgotten the lessons of kindness and charity learned from his immigrant parents. Three pages of Port's nine-page biographical sketch are devoted to listing his numerous philanthropic activities, ranging from funding various medical-research endeavors to supporting the widows and children of police and firefighters killed in the line of duty.

Says Port with characteristic understatement: "I've been very lucky. The least I can do is give something back."

Over the years, many have sought Port's blessing to buy the business. He has shown them all the door and reveals no interest in walking away from the company he built. Says Port: "I think it's important for me to stay where I'm happy, and to make a contribution."

COPYRIGHT 1989 U.S. Chamber of Commerce
COPYRIGHT 2004 Gale Group