Just over one year ago, in May of 2005, Confluence changed the face of the paddlesports industry by acquiring one of its largest competitors, Watermark. Overnight, the company more than doubled in size, with distribution centers, warehouses, corporate offices, and customer service facilities scattered across the country. Today, after a very difficult process, the new Confluence is nearly finished with the bulk of the integration. During a rather candid interview with The BOSS Report, Kelley Woolsey, Confluences VP of sales and marketing, laid out the challenges and pitfalls the company encountered in becoming the countrys largest paddlesports manufacturer.
So far, the biggest challenges have been staffing and producing the boats, although the company has been working on its warehousing and distribution facilities. Confluence also implemented a new computer system to manage back-end operations because the existing systems at both companies were not adequate to handle the complexity or volume of the new merged entity. While many retailers have yet to see the benefits of the merger, Confluence management has made considerable progress and Woolsey says that the integration process will be complete by the time the company shows up at Outdoor Retailer Summer Market this year. “Demand is incredibly high for all of our boats,” said Woolsey. “Thats the good part. The bad part is that we havent been able to supply anywhere near the demand.”
The integration process has taken time and Woolsey admits that the challenges have been painful to all of their business partners. “Anyone whos been through these, they all take time. Thats not to say we shouldnt have done things better. We definitely should have done things better, but its a constant learning curve. Its kind of like juggling, youve just got to move, move, move, move, and fix things as you go. Unfortunately thats extremely painful to our retailers, our employees, and our vendors,” Woolsey said.
The company sees an end to these painful conditions in the near future. So far, Woolsey said that the company has been able to retain the vast majority of their dealers. “In a perfect scenario, integrations like this can take six months, to-Ive been in certain situations where it takes two years,” said Woolsey. “Some companies never recover. So, were definitely working through it. The light at the end of the tunnel is there. We still have to work to re-build confidence in the marketplace-even with our employees.”
Perhaps the biggest challenge for the company has been in staffing and manufacturing. Confluence consolidated two factories into one, and ramped up its workforce by a factor of five. For any company this could pose extreme challenges. In addition, there is a relatively large Hispanic population in Easley, SC, and because of this, the workforce in the Confluence factory has its share of Spanish speaking employees. On top of training a new workforce, Confluence needed to translate all employee manuals and station operation manuals into Spanish. The company also tried to hire supervisors and floor leads that were bi-lingual and to keep the people with experience on the floor to maintain some level of manufacturing expertise. However, even the experienced employees were challenged. “We brought down the ovens from Trinity (North Carolina) to Easley. So, even the people with experience in Easley had to re-learn all of the processes with the Trinity ovens,” said Woolsey. “When you have this many people learning how to build boats, your level of quality slips, so that was a real challenge for us and for our retailers.”
Manufacturing issues were not the only ones caused by the staffing challenges. Warehousing and distribution also faced considerable training and education obstacles. “We moved the Trinity warehouse, the Watermark warehouse in Memphis, and another warehouse from a group that we contract with in Minnesota, all down here to Easley. That all happened overnight and it happened right as we were finalizing and negotiating our lease on our new distribution facility.” said Woolsey. “So all of those boats should have gone onto a racking system immediately, but the racking system wasnt there. So, they went on the floor as that warehouse facility was being completed. Then we had to go in and build a racking system with 20,000 boats on the floor. Everything went into the new racking system, but it was put in by people who didnt know the difference between a Pungo 150 Duralight and a Carolina Airlight. Well, we havent been able to slow down to take a physical inventory and we wont be able to slow down until the end of July. Come the end of July were bringing in a new racking system, that will be totally installed and then all of the inventory will be physically counted. Its taken us a full year to get that one mistake rectified.”
From a customer service standpoint, Confluence has been fielding more calls from dealers than ever before, mainly because of their issues with warehousing and quality control. However, as systems and process get up to speed, these issues should fix themselves, according to Woolsey.
While all of these challenges had a significant impact on operations over the past year, Woolsey is extremely confident about the brands under the Confluence umbrella going forward. The primary issues have been addressed, and by the time the company shows its new line at Summer Market, it will be focusing on growing the business instead of fixing manufacturing, staffing, warehousing, distribution, and customer service issues.
Woolsey is also quite pleased with Confluences majority owner, American Capital. He was quick to discount any rumors or speculation in the market place that American Capital is holding the company back. “American Capital is extremely engaged in the company,” said Woolsey. “Resources have never been a problem American Capital has always been extremely supportive of Confluence. A lot of what you may hear in the market place is stuff that goes out in the media. If they werent supportive, we wouldnt be here. They are completely behind us. And this goes from the chairman of the board down to accountants we work with on a daily basis.” In fact, American Capital is funding market research initiatives that will help Confluences brands move forward following the integration. Woolsey said a recently-contracted market research group found that Perception is the primary brand in the marketplace as far as consumers, retailers, and other vendors are concerned. Moving forward, Confluence will invest in re-building any brand equity that Perception may have lost during the past two years.
