MDM Supply is a big success story
BY JOHN E. MARTIN
PVF industry veteran
Hello Readers and welcome back once again to “Martin’s Corner” to help me kick off the new year of 2012 in a big way! I’m hoping that everyone had a wonderful Holiday Season — and enjoyed all the time that you could with your family and friends. No better way to have a good attitude about business and life than coming off a restful time with the folks that mean the most to you.
Even though there are still several big issues all of our companies face going into calendar 2012, I feel it is a pretty sure thing that the new year will be better than last in most markets, and the stage set to see the economy and the world demand (commercial, industrial, mechanical, HVAC & PVF) roll into 2013, 2014 and beyond that will be an exciting growth period once again. Yes, by the way, I feel that the single family housing market (plumbing) activity will be back on a greater growth pace also, just at a several-month lag behind of commercial business due to such a great amount of developed land currently available, used houses on the market for many reasons, and the uncertainty right now of the home mortgage system. Have faith, and just keep in mind that it can’t last forever, and that this country is still the best place to work, play, worship and raise a family. ”Get involved and stay involved!” Those five words always motivate me.
Speaking of “motivation,” when I see a company in any industry that is born by rising out of the ashes of another company in the same market, I always think about what might be the motivation behind the new management team of the new company to feel that they can make it, when the others (for what ever reason) did not or could not. The wholesale distributor that I want to spotlight this month in “The Corner” to kick off 2012 is, in my opinion, just such a company. I’m talking about MDM Supply Company with their HQ in Helena, Mont. MDM was founded in July 1990 when a couple of gentlemen acquired two Iron Oak Supply Co. branches (formerly known as Amfac Supply.) These two locations were located in Helena and Kalispell, Mont., where they are to this day, some 21 plus years later! The gentlemen that purchased these locations — Mr. Lou Dumas and Mr. Craig Skinn — were actually employees of the locations acquired, and when they saw all the changes that appeared to be coming in those years with regards to Amfac continuing to own and operate this huge group of companies that they had managed to acquire over a very short period of time actually, Mr. Dumas and Mr. Skinn felt it was now or never if they wanted strike out on their own, so the “offer” was put together, it was presented to Amfac, and in July, 1990 MDM Supply was born!
I have known Craig Skinn personally for some 30 years and known Lou Dumas for quite a while but he did not travel and run around the industry market place like Craig did for the prior owner. Craig was in the role of Western regional manager I believe for them at that time, and so was I for ITT Grinnell. Lou was the area manager for them in Montana. We hit the same customers and towns in the mid to late 1980s from Alaska to Denver and all points in between. We were customer/vendor driven and competitive competitors in those days as well. Nevertheless, like so many people that I have known which I had sort of lost track of over the many years of territory changes, ownership change, promotions, etc., we drifted apart. In late 1996 early ’97 I once again became more involved in our company’s Western region through our salespeople working the territories and through some of our rep. agencies. I was also heading up the buying groups and national accounts nation wide for our company, when I learned that MDM was a member of the WIT-CO group. (I’ll have more on WIT later in this story.) Well, as they say, the rest is history, as MDM (Craig and Lou) have become great friends and customers, and we see each other often. A great success story it seems, and I always have wanted to ask them what did “motivate” them in the start up days to do this deal and make it work, when it was indeed not working.
The wait is over faithful readers, so let’s get this show on the road, huh? As I sit here in Helena this morning with a cup of coffee in my hand and pen and pencil ready to go, Ladies & Gentlemen, allow me to introduce you all to Mr. Craig Skinn and Mr. Lou Dumas, co-founders/owners of MDM Supply Co., located across the state of Montana and headquartered here in Helena.
Martin: Hey, Craig and Lou! Thanks to you both for taking the time to do this article with me, and for allowing me the time to come visit you in this absolutely wonderful and beautiful part of our United States, the “Big Sky” State of Montana! How are you both?
Skinn: Thanks, John. I speak for myself and Lou when I tell you it is an honor to have The Wholesaler in “our State and our House” and for wanting to allow the readers of “Martin’s Corner” to hear the story of our company MDM Supply. We are extremely pleased that you are conducting all this, and we are proud to tell the story and experience that we have lived for the past 21 plus years. Welcome to Helena. This is Lou’s home, and the company headquarters. I make my home in the Kalispell area and have my main office in our location there.
Martin: Thanks to you both, and believe me it is our pleasure to do this.
My first thought and question is a multiple one. I told just about all I know above in the introduction of you fellows and your company, so if I missed any details about the start up of MDM, please tell the readers, and would you please comment on the original market segments serviced, and product lines carried? One more thing, just exactly how did the name MDM originate?
Dumas: I’ll take that, John. You did a good job in telling the story of our company from all the key points. I’d like to comment on that word “motivation” that you hung out there early on in your comments. What did motivate us to do this? Mostly it was a feeling of excitement to possibly and finally get the chance to do something totally from our ideas of what a wholesale house should be in our business, and to hopefully make that happen with our families and names tied to it! I know that Craig was getting pretty tired of running all over the western half of the U.S. and Alaska — and to tell you the truth, we felt that so much more could be done then and in the future if we could be making local decisions that had a positive impact on the local industry, that the sky could be the limit. We wanted to try it, and while trying to figure out how, the opportunity to acquire these two locations from the prior owner as you spelled out came up, it was like a dream to us really. I mean land, buildings, inventory, rolling stock, customer base, and people — and ready, set, GO! We just could not afford to let it go by — so we jumped in!
The two locations serviced residential and commercial plumbing contractors, excavation contractors, and well drillers, along with the industrial market segments which included, underground mines, aluminum smelter, lead smelter, timber processing facilities such as sawmills, plywood plants, MDF plants and fiberboard plants.
The major product name brands carried at the time of acquisition were Kohler, Moen, Delta, Aqua Glass, State Industries, Burnham, along with pipe, valve and fitting lines to support the industrial customers in the markets we served such as all the products that were the trade mark of your old company at the time — .and now Anvil products as an example.
At the time of acquisition the two locations employed 15 people including myself and Craig. We purchased the inventory and fixed assets of the company with our savings, borrowed funds from family and an SBA loan. The acquisition process began in March and was completed at the end of June 1990, making that July 1990 the start up date. I’d like to point out that after these 21 years in business 40% of the original employees are still with us. Besides Craig and myself those employees are Mike Larkey, Becky Martello, Larry Giovanini, Dale Person. We really appreciate and value them greatly. Also at this acquisition time, my wife Renee and Craig’s wife Erlene stood right with us, so with their strong family values of working and pulling together, their support & understanding, it was indeed possible for us to build MDM.
Skinn: Lou is right! We had to get a ton of issues ironed out that started coming head on at us pretty quick just to get to a solid start date for the new company. Along with the arranging for business financing he told you about, we had to select an enterprise system, negotiate insurance and medical/health coverage, and convince building landlords we could pay the leases, we also realized we had to name the business to make it our own. The names of our children were considered, so their initials became the name of the company, Megan, Danielle and Matthew became MDM Supply Company. (It is notable here to tell you that right after 1990 another child came to the Skinn family, a young lady by the name of Malory.
Since the “second “M” in “MDM” is for Lou and Renee’s son Matthew, and since Craig’s wife Erlene refused to name the new arrival “Supply” just to complete the new company name, one can suppose that in reality, we could have had a company by the name of “MDMM Supply”. Instead, Malory was just happy to find out that her name indeed was not “Supply!”
Martin: I can see already that “motivation” was very evident with you guys from the start. Just sharing the base outline of the financial structure and deals you had to do to get it all together shows that both your families were involved and “motivated! Now, the way the name “MDM” came to be sure has meaning and to me shows a strong partnering relationship that is second to none. Blending your children’s names (three of their initials to create the name) is simply outstanding. Thanks for all that honest input.
Now, gentlemen, would you share with us a current snapshot of the company today, including the footprint of coverage, facilities, leadership/management team, number of employees, market segments served, etc.?
Skinn: Today MDM Supply serves western and central Montana from its four branch locations — Helena, Kalispell, Bozeman and Missoula. This geographic market area is roughly 85,000 square miles with a population of approximately 650,000 people. Three of the company’s facilities have been built by the owners in the last 11 years. The Kalispell warehouse was our first new facility. It is 16,000 square feet with a 2500-square-foot Kohler showroom. This facility was built in 1998. The Helena facility is 25,000 square feet and was built in 2006. This facility houses the corporate functions, and has 3,000 square feet roughed in for a showroom. The Bozeman facility is 20,000 square feet and was built in 2008. It, too, has a 3,000-square-foot area roughed in for a showroom. Missoula’s 43,000-square-foot warehouse was purchased in 2004.
The company is still directed by its founding partners, Lou Dumas and I. We also share administrative and management responsibilities. Mike Larkey, who is director of purchasing and IT, has been with the company from its inception. Bozeman manager Bob Gaughen was hired to open the branch in 1994. He came from the industry and had 10+ years of experience prior to his hire. Harry Newman, the Missoula manager, was hired to open this branch in 2004. Harry had 20 years with one of the large national chain wholesalers in this market prior to his hire date. Dennis Bennett, the Kalispell sales manager, has been with the company since June 1991. Jerry Miller, our Helena sales manager, came on board in 2001 and had 15+ years in the business. Corporate accounting is under the direction of Bill Bradford, who has been with the firm since 1992. Becky Martello oversees accounts payable and manages the Eclipse system. Becky was one of the original employees who came with the acquisition. Pam Trettin is the corporate accounts receivable supervisor. MDM currently has 75 employees in its four locations.
Today the company’s market segments are very similar to those from the date the company was founded. The industrial markets have changed considerable with the closing of many of the timber industry plants, an aluminum smelter, a custom lead smelter, and a fiberboard plant.
Martin: Here’s a two-part question:
• How are your sales divided among your market segments served, and
• Do you have a specialty market niche?
Skinn: You know, John, we have always been really strong in the plumbing, heating, commercial, residential, repair and remodel segments. Today, our sales into those segments wrapped together covers about 75% of the company’s total volume. The remaining 25% comes from industrial business sites and plants in the geographic areas served. Now to the second part of the question reference a market niche. Within the heating side of our business, we are known as the “go-to people” for help/support in a system design, inventory, parts and technical support needs of that segment our employee training programs are second to none with the intent to service the products that we sell. Three out of four facilities have dedicated training centers in them which are used for employee, and customer product training events and are also utilized by the State of Montana plumbing code trainers for their continuing education programs.
Martin: You’ve hit a key point on the training portion of the value added services you appear to offer. All across the country as I travel around and speak with contractors and end users, the key today is still training, and on hand application of products and systems. I commend MDM on that, my friend.
Lou, has there been any special or major projects over the years in your market service area that you guys have been involved in which is a particular source of pride?
Dumas: Nothing specific really, however our list is long when it comes to the commercial market. Our company is very active in the commercial market and has been involved in the majority of the commercial projects in our market areas for the past 20 years. In addition to this, when the “trophy home” market started to develop in our area we were really excited due to the fact that we had been involved in past years with custom home projects that were in the $30-million-plus range in total construction cost.
Martin: How anyone could spend in the $30-million range for the construction of a home simply blows my mind! One or two of those a year would be plenty, huh? Wow, what a story line!
Have you had to change the focus of your business or do anything differently over the past say 24 months or so due to the economic slump? Could you describe the situation in your market area now v/s the so called “good times,” and when you may see it improving?
Skinn: The great recession did finally show up in Montana, it just came about 15 months later than it did in the rest of the country. Our residential construction has dropped well over 60% from its peak and the “trophy home” market went the same way. The commercial market did the same as well, and along with all of that our industrial base began closing up. Timber plants closed, along with the aluminum smelter plant, lead smelter and fiberboard plants. All of this added up was a huge hit to MDM. We simply had to dig in deep, look at what our real customer base was, and just went back to the basics. Identify it, Sell it, Deliver it, and Service it! That strategy really saved us, I think. The relationships we developed with that core customer base then, and totally over the past 20 years, has allowed us to maintain our market position during the slowdowns, the peaks, and the valleys.
Martin: That response I could feel as you were speaking Craig. Thanks. Now, being a strong market-driven independent in this industry must be a very good feeling with a lot of pride attached. Having said that, I know that MDM is also a proud member of WIT, a marketing/buying group in our industry, which is member owned and completely made up of strong local and regional independent players. Can you share with the readers of “Martin’s Corner” the reasons MDM became a member/owner in WIT, how long has your association with them been in place, and has it been what you thought it would be?
Skinn: One of our many industry friends suggested to us in 1993 that we should look at joining a buying group. WIT was the group he recommended and so off we went to find Wit as well as looking into others as well. The late Karl Neupert of Consolidated Supply out of Portland, Ore., was a great ally for us in our application to join WIT. We have been extremely fortunate to be involved with this group. The networking opportunities have brought so many things to our company and have helped us to become who we are today. We have been active within the group by serving on its heating, technology, and education committees as well as on its board of directors. It is a great group of companies who are focused on their businesses and all share common values.
Martin: There are many good groups out there today in our industry that serve the wholesaler and industry well. When it comes to plumbing, I would think that you made a good choice with WIT. Their member/owner body of wholesalers does well in total with our company today, and we appreciate you being a part of that.
How have your customers’ expectations changed over the years, and how has MDM been able to adapt to those changing needs/wants without major learning curves, operational differences, etc.?
Dumas: You know, John, from my point of view, I believe our customer expectations today are the same as they have always been. They demand that we have the inventory of products they need on hand, employ knowledgeable people, deliver their orders correctly and on time, and invoice them at the prices that we (our people) agreed to. Doing these things consistently allows us to succeed in our daily efforts. This may sound like so much “Customer Satisfaction #101,” but it truly has worked for us here at MDM.
Martin: Hey Lou, if it works and is proven to do so, why not preach it? Great evidence to me that honest hard work pays off! Now Sir, Do you have any special events/activities that MDM routinely sponsors to help build your customer loyalty and relationships?
Skinn: This is a fun question to answer and close to my heart. Let me jump in here, Lou, and give some detail, okay? The short answer, John, to your question is yes, and we are really proud of the success we feel we have annually with a couple events our customers really look forward to. We have an annual MDM Customer Classic golf tournament. Believe me when I say it has become the event of the summer for our market place industry. 2012 will be our 18th annual and we field 186 golfers on this Saturday event. Along with this event, we also have sponsored The MDM Marlin Derby in Mexico. This two-day fishing derby, held in either Mazatlan or Cabo San Lucas, provides the opportunity for 80 contractors to get in some major fishing time and win some major dough at the same time!. Our most recent event paid out in excess of $36,000 in cash prizes. I must tell you also that the vendors that attend and participate have a ball, and the opportunity to get some real quality time with “key contractors” that use their products. These events are very successful for us.
Martin: I agree with you Craig. I have never done the fishing trip (not really a fisherman), but I have made several of those 18 golf outings, and it truly is a fun and good time with some great customers of yours and our industry. Keep it up Pal.
Just a couple more questions and we will wrap this up, okay? How would you describe the leadership philosophy at MDM, such as their accessibility to customers and employees, and if there is strong hands-on activity by Lou and yourself?
Dumas: Our philosophy is and has always been to have strong relationships with those that we do business with. With our customers, they know us and we know them. We have made this our focus to develop these relationships. We also believe the same thing is true with our vendors. We are partners with our vendors. As a distributor of a manufacturer’s products it is imperative that we know their expectations and they know ours. Building these relationships and maintaining them, with both our customers and vendors is our core belief Craig and I are “in it” — every day!
Martin: Lou, strong and solid on your response here. Combine this with the simple fact that it boils down to it being a people-to-people business, no matter how you cut it. Make those relationships and maintain them.
With so many sources of competition across the country, how does MDM differentiate itself in your local markets?
Skinn: This comes pretty easy for us, John. We are very active in our business, with our customers, vendors and employees. Being involved as we are allows us to react to the needs of our customers and keep them coming back to do business with us. In most cases, we know their families and all the key people in their life and in their companies. We feel we are a big family.
Martin: Based on my 40-plus years in the business, I have seen a lot of good companies, great companies, and struggling companies, I’ve seen companies go out of business over night it seems. I have seen and know many successful companies all over the country like MDM. Common sense will tell anyone that all things are not always what they seem and that there have been tough times. In the early days of MDM start up, did you guys ever wonder, “why in the world are we doing this? All work, no play & not much to show for it!” When did times get “good” for MDM and real growth and success were staring you in the face? The company obviously did most all the right things as the years and the success of those years have been good to you and your partner.
Skinn: From the first day that we began to operate this business, we have been fortunate and successful with our efforts. Our customers, employees and vendors have truly been partners with us and the success of our company is testimony of this. The market place is very challenging today but our partnerships are stronger than they have ever been and with this, so is our success.
Martin: No argument with success here. Lou, any comments on this question?
Dumas: No, nothing, except to say that Craig is right. It is not brag, just facts. Sure we’ve had some breaks a long the way, but they are most always available to everyone. We just try to be the first to take advantage of then when they come by. It has been a long, hard, fun and good ride thus far.
Martin: Okay, Gentlemen, this is the last and it, too, is a two-part question. If we don’t find a stopping place, we will run out of magazine!!! Here ya go — First of all, based on MDM currently being an independent and assuming you remain an independent, where do you feel the company will be or should be over the next five years. And second, would you venture to offer a forecast of what calendar 2012 is going to look like based on your knowledge of what is taking place in the foot print that you cover here as MDM. Maybe a rolling forecast for 2012, ’13, ’14, and 2015?
Skinn: Very good, John. You don’t miss too much, do you? We will continue to build on our relationships and look for new products to bring to market, new customers to service. Our commitment to technology will enable us to meet the needs of the next generation of customers for years.
Secondly, as I stated early on in these questions, when Montana dropped it really dropped, so I’ll speak in terms of growth from where we have been and are on record as of 2008 and forward. We ended 2009 just about flat in total for 2008. We were up about 4% 2010 v/s 2009. Now we expect to end calendar 2011 just about flat v/s 2010. When you consider that the Pacific Northwest and the state of Montana came late to the party and therefore is slower than some of the other parts of the country to recover, it confirms that the past three years or so have been pretty tough, so this performance in these times is not bad.
We certainly hope and plan for 2012 to be on the upside overall, but frankly speaking, not sure how much or how to put an educated guess out there. If indeed 2012 even slow starting turns into a pretty good year, then we may be through it up here and 2013 could be good. That is just about as far as I care to go for now. Let’s talk again in a couple years and prepare an up-date, okay?
Martin: That’s fair, Craig, and thanks for being open and sharing those market thoughts. believe it is a pretty fair assessment. In fact, thanks to both you and Lou for making this a fun and easy success story to put together and share with the readers. I wish MDM continued success. As another one of my favorite country singers, Terry Laurence, proclaimed in his #1 hit record of a few years ago: “Time Marches On!”
That’s it for now. Hope you all enjoyed this story coming at ya from the Big Sky State of Montana! It is true, and it is real. As we close out another “Martin’s Corner” article for January 2012 , please remember I’d love to hear from any of you with questions of me on most any matter, or about anything I’ve said in any issue that you need to know more about. Love ya’ll and see ya next month at the corner! Blessings now, John.
Starting in our industry in 1968 at Anvil International (formerly Grinnell Company), John Martin has been with them over this 43-year span through at least five different owners! Currently serving as vice president of national account sales for Anvil’s mechanical products division, he has worked in every phase of the company from warehouse to sales (inside and outside) to the branch manager’s job in the 1970s and 1980s, regional vice president for their West Coast units, and since about 1990 in this national role with contacts and customers/vendors coast to coast. He also is responsible for Anvil as their lead person at ASA & MCAA. He says, “I’ve been blessed and had fun and been productive for my entire career, but I believe the most energizing time or times in my life have been (still is today) working with all the folks at Anvil and seeing the young ones in the field ‘get it’ on almost a daily basis... Anvil is a great place for me to be right now.” He can be reached anytime at jmartin@anvilintl.com or his cell phone at 303-588-9806.