the upturn in the economy to expand its business base.

The company, trading as Gorham's True Value Home Centre, is the 22nd largest in volume of the 7,000 member stores of True Value.

Many of the top 21 have multiple outlets.

Visiting Bermuda this week was Dan Cotter, the CEO of Cotter and Company, the corporate name for the giant cooperative which wholesales merchandise and services to the True Value stores, principly in the United States, but increasingly internationally.

Gorham's has been a shareholder/member of True Value for 15 years and they make the point that they and the other more than 7,000 outlets collectively own the 15 distribution centres and the factories and actually employ the staff of Cotter and Co.

The US company was founded by Mr. Cotter's father as a small group of hardware stores in Chicago, which pooled their orders to command better prices from suppliers and give better prices to the consumer.

But when paint manufacturers and makers of lawn mowers failed to discount the prices for volume orders, Cotter and Co. bypassed them altogether and started manufacturing their own lawnmowers and paint.

Today, the company channels $2.3 billion of merchandise at cost to their members each year.

For Bermuda, there are problems which are not experienced by North American stores. Because US stores have standing truck deliveries, there is no need for storage space as items are inventoried and go right on sale.

But as an offshore participant, Gorham's has to ship its merchandise through the docks and keep a large inventory of stock in their warehouse.

Gorham's general manager and company director, Mr. Roderick Ferguson said: "Stores of this size in the States would have a delivery twice a week. They have no warehouses. We have giant warehouses because we are afraid of the boats (container ships) sinking, or longshoremen going on strike or any other problems.

"On the mainland, the store's space utilisation might be 95 percent retail and five per cent back-up. We are over 100 per cent back-up. We have 16,000 square feet of store and about 35,000 square feet of storage.'' Gorham's True Value store has also seen its customer base change.

"The business has shifted more than it has grown,'' Mr. Ferguson said.

"If you go back to four years ago, we were selling a lot more to contractors when there was a lot of house construction going on. With the recession, house construction eased right back. People are not just building a house on spec, anymore.

"Where we lost that business we had to go into the home repair and maintenance and home centre or more consumer items. So we had to move across.

Our sales grew modestly, but the exporting of expatriate labour and the general downturn meant that we didn't get the kind of business expansion we had anticipated. A lot people who left the Island in those days were our customers.'' When the company planned their new building, the building that houses True Value and Gorham's offices on their roughly four acre St. John's Road lot, they intended to obtain a second base, apart from the contractors they had been basically dealing with.

Now the company is hoping to get back some of the constractors' business which was lost in the recession.

"We are going back, doing special offers and we are aggressively courting their business again. They still need to buy quality merchandise and the economy is picking up.'' It is part of a change for Gorham's that includes an expanded advertising campaign and possibly leasing out space in the company's old retail building that is currently being used for storage.

Mr. Cotter was in Bermuda to chair the AGM of Cotter Member Insurance Ltd., True Value's captive insurance company. The mutual has total assets of $69,706,263. Net premiums earned were $44,174,745.

"The insurance company was created to lower the cost to the retail hardware stores,'' Mr. Cotter said. "Insurance is a big part of running a retail establishment. It was recommended by our insurance consultants that Bermuda would be the place to domicile the company.'' As for True Value, every other member, apart from Gorham's, can insure their buildings, inventory and obtain health and life insurance for their staff at a lower cost than taking the business to the mainstream insurance industry.

The same way Cotter and Co. shares its profits with its members, the insurance operation keeps premiums at lower levels and pays its profits back via dividends to the participating members.The dividends totaled $2,940,000 paid to shareholders/members at the end of the last fiscal year to December 31, 1993.

The company insures its own distribution centres, its manufacturing plants, inventory and staff with Cotter Member Insurance.

Cotter and Company, headquartered near Chicago in Cary, Illinois have stores in 28 countries including Greenland, Iceland, the Middle East the Caribbean and the Pacific rim.

Mr. Cotter is working on a plan to install a superior communications network that would substantially link all the stores over the next two years.

Gorham's was chosen as the True Value company where the software is being tested.

LOOKING AROUND -- Mr. Dan Cotter, chief executive of Cotter and Company, the distribuor for the True Value chain of hardware stores, is shown around Gorham's True Value Store by, from left, Mr. Ian Murdoch, Gorham's assistant manager and Home Centre manager, Mr. Roderick Ferguson, Gorham's general manager, and Mr. Henry Durham, True Value floor manager.