Rather than focusing on a single key skill and hiring everything else out, Whyte advised students to:
Stay vertically integrated, build and sell your own products.
Offer service and promote safety.
Plan long term.
And his biggest heresy: Sell your products through locally owned stores. Spurn the big-box retailers.
Stihl, a global company that leads U.S. sales of hand-held, gas-powered outdoor tools, can support those claims.
Based in a suburb of Stuttgart, Germany, Stihl remains privately owned, carries no bank debt and does business in 160 countries. Retailers selling the 240 models, including chain saws and weed trimmers, must be locally owned and push training, safety and service.
“We do not sell to anyone who doesn’t offer service,” Whyte said.
Stihl manufactured 1 million products in 1997, and last fall made 40 million units. Twenty-five laser-controlled robots carry raw materials to the assembly line at the massive Virginia Beach, Va., plant.
Through numerous color print ads per year, the company brags that customers can’t buy a Stihl chain saw at a big-box store.
Selling through the giant retailers can begin a vicious cycle, Whyte said. The mega-companies keep cutting your price. So you are forced to cut quality, eventually losing your profit margin and possibly your reputation for making a good product, he said. “Walmart has made us all much better retailers,” Whyte said.
But even Walmart, with $405 billion in yearly sales, has its problems. Walmart stores in business a year or longer have suffered seven consecutive quarters of declining sales, he said.
Levi’s jeans, designed during the California Gold Rush days, had 60 U.S. plants until it started selling through Walmart, Whyte said. The demand for lower and lower prices and the unanticipated refusal of younger people to buy their jeans at Walmart eventually forced Levi’s to close all 60 U.S. manufacturing plants, he said.
Stihl had enjoyed 17 back-to-back years of record sales until 2009 when the recession cut revenues 8 percent. Sales returned to record levels last year, and this year is looking pretty good, he said. U.S sales run $1.1 billion per year.
Whyte gave five executive-in-residence lectures at the Montana State University Billings College of Business and is visiting seven local retailers, including Billings Hardware and the Ace Hardware stores. The Stihl story was featured in a 2010 book co-authored by Tim Wilkinson, interim dean for the MSU Billings Business College: “The Distribution Trap: Keeping Your Innovations from Becoming Commodities.”
The pair apparently hit it off, convincing Whyte to make a rare college appearance.
“What I like about Stihl is they care about quality and they care about people and they work through a small family business,” Wilkinson said.
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