Along with Target and Best Buy, Northern Tool & Equipment is one of Minnesota’s most compelling retail successes. And it’s perhaps the hardest to explain—unless you’ve met its founder, owner, and CEO, Don Kotula.
Northern Tool & Equipment is kind of like Home Depot or Lowe’s, a little like Mills’ Fleet Farm. But what Kotula has built in a quarter-century is its own animal, a bastion of pure guyness, where arc welders, pipe threaders, and heavy-duty generators prevail over paint, window blinds, and light fixtures.
“There are very few stores that are related to men anymore, or men’s business,” Kotula says. His Burnsville-headquartered company—with 62 stores in the Upper Midwest and the Southeast, plus robust catalog and online sales—is all about selling to men. And its success and growth—$700 million in sales in 2006—reflect the man who founded it.
Kotula grew up on the Iron Range, between Hibbing and Chisholm. As a youngster, he worked for his father, whose scrap yard recycled industrial detritus such as old train parts and mining equipment. Thanks to the Range’s up-and-down economy or a lack of access to the right equipment, people there have developed a make-it-yourself mentality. While he was still a teenager, Kotula started his own business, refurbishing and selling used hydraulics components to loggers.
After earning a degree in finance and business from the University of Minnesota–Duluth, he came down to the Cities in 1972 and worked as an accountant for Montgomery Ward and Northwest Airlines, then took a sales job at Ziegler, a Bloomington heavy-equipment dealer. But in 1980, sales of bulldozers, loaders, and the like were slumping, and Ziegler laid him off.
Kotula responded to the situation with a Ranger’s resourcefulness. In fact, the economic doldrums—and a related trend to heat homes with wood-burning stoves—actually worked in his favor. He dusted off his hydraulics knowledge and began selling cylinders and valves for log splitters—along with a how-to manual for building them—by mail out of his garage. Northern Hydraulics took off, and Kotula added other products—tools, tarps, water pumps, snowplow parts, air compressors. In 1981, he opened his first store, renting warehouse and showroom space in Burnsville and doing more than $1 million in sales. A year later, a North Carolina friend invited him to open a Northern Hydraulics in Charlotte. In 1998, the company changed its name—and that of its stores—to Northern Tool & Equipment.
The bricks-and-mortar retail operation was able to grow thanks to developments that seemed in synch with Kotula’s vision of stores, which feel stripped down, more rough and ready than fussy. Barcoding and advances in computer technology made inventory control easier. So did advances in packaging. “In all of retail, you want to touch things less,” Kotula says. “Like gloves now: You cut the box off, there’s 48 pairs of gloves there. Before, you had to put them on peg hooks—small, medium, large. You’re going to be there forever.”
Along with good service and good people—factors that profitable retail businesses typically cite—Kotula points to Northern’s “creativity and chance taking.” To him, that’s meant “being the first with the heaviest stuff, the biggest stuff. Trying new things that you think your customer absorbs, too. Looking at a product that people are buying, and saying, ‘What if I put a four-way wedge in there, so you only have to split the logs one time? Or made a weed whip so you didn’t have to mix the oil with the gas, because most people goof up on that?’”
What Northern can’t get from suppliers, it often can make itself. In 1991, Kotula launched a manufacturing business that builds its own bigger, tougher NorthStar brand products. Case in point: rolling gasoline tanks with extra-large wheels. “A lot of times, you roll off site,” Kotula notes. “It’s easy to roll [standard tanks] on concrete, but sometimes you want to roll them on dirt. If you’re taking 25 gallons [of gas] down to your boat, if you’re on small lake, you have to carry a lot of five-gallon tanks.”
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