Distribution center boosts company’s foreign salesFebruary 28, 2011 6:00 AM
by Joan Tupponce
Christiansburg-based Inorganic Ventures knew what it had to do to lower transportation costs for foreign distribution: open a center on European soil.
The Madrid-based distribution center, opened in 2003, provides materials for more than 50 distributors in Europe and Asia. “The center doesn’t do any sales or orders, just distribution,” explains Michael Scott, the company’s executive vice president.
The specialty chemical company chose Madrid because it had more Inorganic distributors than any other European city. “We had established relationships with those distributors,” says Scott. The center will move to a larger facility outside of the city later this year.
Since opening a location in Spain, Inorganic Ventures has cut transportation costs more than 50 percent. “Our costs are very high because some of [our products] are considered hazardous material,” Scott says. “We needed to put our products in vehicles rather than airplanes [to transport them].”
The Madrid center is about half the square footage (around 10,000 square feet) of the company’s U.S. headquarters. The four employees at the facility receive pallets and break them down for distribution.
Europe ranks second in sales of the company’s products, after the United States. Many of its foreign sales are in Germany. “That’s the big one,” Scott says. “When it comes to technology, it’s the powerhouse of Europe.” Foreign sales represent about 26 percent of the company’s total sales. That percentage is growing at a rate of 20 percent a year.
When it comes to doing business in Spain, Scott has learned that no person or company can be an expert on the nuances of doing business around the world. “You have to have distributors in a market because they know the market.”
You also have to personally travel to a country to establish business ties. “You have to go see everyone,” Scott says. “It means a lot to them.”
Face-to-face meetings are important to Spaniards just as they are to Inorganic Ventures. The company, known for a high-quality, precise product, wants to ensure that distributors are reputable. “You want to see who you are dealing with,” Scott says. “You want to see if they are working out of a garage or a 40,000-square-foot building.”
Inorganic Ventures lets its distributors deal directly with customers. “I very rarely meet a customer,” Scott says. “The only time we meet a customer is if there is an issue.”
The company sometimes holds conferences in Munich to teach distributors about a specific product line. Those one-on-one types of relationships are important to Europeans. “Those meetings are not always in an office setting,” Scott says. “Sometimes it’s just going to dinner.”
When he’s in Madrid, Scott likes to take in the city and the culture, which may mean watching a bullfight. Madrid has the largest bullring in Spain, Las Ventas.
Located in the heart of the country, Madrid is a cosmopolitan city with many cultural attractions, beautiful parks and an active nightlife. Popular landmarks include the Teatro Real, the city’s popular opera house, and the Royal Palace of Madrid. Many visitors also enjoy boating on the lake in Parque del Retiro, once the grounds of a palace.
The city’s economy
The capital of Spain, Madrid serves as the headquarters of the government and Spanish Parliament. A variety of products are manufactured in Madrid, including consumer goods and electrical equipment. Aircraft and automotive manufacturing also add to the economy. Madrid is a financial center housing the headquarters of many large companies, including Spain’s largest bank, Banco Santander, and Repsol-YPF, the country’s largest oil and gas company.
Where to stay
Hotels in Madrid include the hip-but-business-friendly Eurostars Madrid Tower in the north side of the city and the ME Madrid, located in the center of the city at Plaza de Santa Ana. The circa-1910 Hotel Ritz Madrid is a popular luxury property in Madrid’s Golden Triangle.
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