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Thread: Conflict of Interest

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    Default Conflict of Interest

    What's the best way to handle this situation?

    Through a series of acquisitions and mergers, a manufacturer of saw blades has now become the sole supplier for multiple machine types as well as a builder of one of the largest name, US designed, saw grinders that was independently owned. They are also the only distributor within Canada for circular saw blade production equipment

    I knew that the buyout happened, yet I wasn't informed that the new company was a blade manufacturer. When I spoke with a service rep earlier this week I informed him of my intentions to start producing my own blades. I have to repeat that I did not know that they manufactured circular saw blades.

    I had two of my primary machines (over $70K to replace new) breakdown on me this week and are, in their current condition, no better than paperweights. I cannot get a call back to get the replacement parts ordered and shipped out. After multiple calls and multiple messages I went around the normal people and got in touch with the service rep for the production equipment. I informed him of what is going on with regards to my equipment and that I need parts shipped out. I was told that I would get a call before today's shipping cutoff time. The call never came in.

    This feels like they are blocking and refusing service because I have "announced" myself as a competitor to them (guess they wanted in the Ontario market).

    Any advice or strategies that I can take short of calling a lawyer or a government regulating body?
    Brad Miedema
    Fulcrum Saw & Tool

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    Are they the only company with the parts for your machines? Can you get the parts from another distributor? If you have no other avenues to get the parts, you might have to sit down with the CEO and negotiate an outcome, but before you do that you should discuss the situation with your lawyer to see if their refusal to sell to you is legal within Canada.
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    They can't be the only game in the world. What about American or EU companies?

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    Perhaps I'm missing something or misunderstanding the whole situation, but I'm failing to see where there is any conflict of interest. Though I can definitely see where your situation is unfortunate.
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    The conflict lies in that they are competing directly (same name) as both a manufacturer of saw blades and distributor of machines and service parts that are used to make the blades.

    @Harold, they are not the only game in town when it comes to these types of machines (let's call these mid level machines) but the other main player for similar machines is a subsidiary of the company that holds 75-80% of the market that supplies sawmills (indirect conflict here but they don't really care as they buy out and shutdown the competitors). As for the European machines, they are the only authorized distributor within Canada. To the best of my knowledge, outside of custom built machinery, there are less than 6 machine builders globally for this type of equipment and due to proprietary designs no parts are interchangeable.

    @BizAdvisor, the conflict lies in that a saw blade manufacturer is also the sole distributor for machinery (especially the European production types) and service parts. I have figured out that the Ontario and Quebec based distributors were bought so they can expand into the Ontario market. I didn't realize this when I spoke to them earlier this week and effectively announced that I'm competing with them for the exact same market space. Interestingly, the saw manufacturer purchased, and closed on, both the machine builder and the distributor on the same day. The conspiracy theorist inside me says they did this in an attempt to bypass the government regulating authorities.

    @Freelancier, they are the only distributor within Canada for the 2nd largest US name machine builder and the world's largest (possibly only) machine builder for production equipment. I've tried bypassing distributors and going straight to component manufacturers but 1000pc orders don't make sense when I need 1 or 2 pieces. I am going to try and get the parts through the US facility, but I'm doubtful this will be successful. A few of them even called the distributor to let me know I was trying to bypass them (territory protection and I agree with this).

    I won't let this stop me. Worst case scenario I build my own machines. I don't play games and I'm not scared to punch above my weight class.
    Brad Miedema
    Fulcrum Saw & Tool

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    Quote Originally Posted by Fulcrum View Post
    The conflict lies in that they are competing directly (same name) as both a manufacturer of saw blades and distributor of machines and service parts that are used to make the blades.

    @Harold, they are not the only game in town when it comes to these types of machines (let's call these mid level machines) but the other main player for similar machines is a subsidiary of the company that holds 75-80% of the market that supplies sawmills (indirect conflict here but they don't really care as they buy out and shutdown the competitors). As for the European machines, they are the only authorized distributor within Canada. To the best of my knowledge, outside of custom built machinery, there are less than 6 machine builders globally for this type of equipment and due to proprietary designs no parts are interchangeable.

    Wow man. I think I understand and that is quite the conundrum. Dealing with regulations and international trade restrictions? Sounds like the kind of situation where you or a group of you will have to lead the way against this monopoly. I wish I had some advice but that is pretty much far out of my area of expertise or knowledge.

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    Quote Originally Posted by Harold Mansfield View Post
    Wow man. I think I understand and that is quite the conundrum. Dealing with regulations and international trade restrictions? Sounds like the kind of situation where you or a group of you will have to lead the way against this monopoly. I wish I had some advice but that is pretty much far out of my area of expertise or knowledge.
    I think it's outside of most people's area of expertise. If these guys are playing the game I think they are and push too hard, there are 2 manufacturers within 2 hours of me with deeper pockets then the company I'm having issues with.

    I'll stand my ground. I may prefer to not play games, but that doesn't mean I'm not willing to.
    Brad Miedema
    Fulcrum Saw & Tool

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    If a company's distributor is not doing right by you... go to the main company and tell them that you're getting poor service from the distributor. Distributors exist at the pleasure of the company they distribute for.
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    Quote Originally Posted by Freelancier View Post
    If a company's distributor is not doing right by you... go to the main company and tell them that you're getting poor service from the distributor. Distributors exist at the pleasure of the company they distribute for.
    I just realized that I wasn't clear on the machine builder. The distributor that I have been dealing with, as well as the machine builder whose machines the distributor sell and service, were bought by the manufacturer and merged under one name. There ain't no separate company left to get in touch with.
    Brad Miedema
    Fulcrum Saw & Tool

  10. #10

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    I didn't completely follow what you were saying, so if you answered this I apologize.

    Can you purchase the parts you need though a middle man? People want to purchase though us but they will not meet our payment terms, so they purchase though someone like Applied Industrial Technologies or Motion Industries. This way your "competition" won't know whose getting the parts.

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