Master distribution pioneer thrives under third generation leadership
BY MARY JO MARTIN
Editorial director
Shortly after founding Industrial Valco as a valve repair house in 1947, Charles (Nick) Nichols recognized the market potential for a company that could perform the function now identified as master distribution. Nichols was a true pioneer of the master distribution niche, getting his start reselling surplus valves and fittings to wholesalers only.
Based in Rancho Dominguez, Calif., Industrial Valco now operates six other warehouse locations -- Concord (Bay area) and Bakersfield, Calif.; Denver; Houston; Harvey (Chicago area), Ill.; and Bridgeport, N.J. (Philadelphia area). These regional locations were designed to best serve wholesalers throughout the country. A regional sales manager is based out of each of these locations; these seven call directly on IV’s customers. The company also works with rep firms in areas of the country that the sales managers aren’t able to frequent.
According to Rob Raban, IV president and grandson of the founder, Industrial Valco is a “one-stop shop.” The company carries the gamut of weld fittings, flanges, forged steel, valves, strainers, gaskets and studs. In addition, IV provides a full-service machine shop capable of segmenting fittings, taper bore, flange facing, drill and tap, valve modification including bypasses, cut and thread nipples and many other services.
Cultivating relationships
Like many within this industry, Industrial Valco prides itself on the long-term relationships it has developed with key suppliers. IV has been affiliated with Bonney Forge, tfa, Walworth and Mills Ironworks for more than 30 years, has been supplying Boltex, Sureflow and Crane for nearly 20 years, and has been a Kitz distributor for about 10 years. Of course, IV is continually looking to enhance its lines with new offerings; three recent additions have been Stonetown (butterfly valves), Beric (cast steel valves) and Milwaukee (iron valves).
Raban noted that there are three key questions the IV team asks when evaluating potential new suppliers:
- “Have our customers expressed interest in the new product or line?”
- “Does the new line have a demonstrated advantage within its product segment? “
- “Can we add value to the channel and be profitable with the line?”
Industrial Valco uses a number of strategies to market itself to potential customers. Valve manager Norm Kepner works with IV’s manufacturers to provide customer lists to the regional sales managers, while national sales manager Ron Stevens regularly travels to the various regional facilities to make joint sales calls. Industrial Valco believes in trade advertising, as well marketing flyers, and is currently testing a company informational newsletter in the Southwestern regional market to see if that adds value for customers.
Filling a niche
Whereas traditional wholesalers call on a wide range of customers -- and personnel within those customers’ operations -- Raban said that master distributors tend to deal primarily with wholesalers’ inside salespeople.
“Our primary niche is offering a quick, one-stop shop resource for wholesalers’ short-buy needs and that responsibility usually falls in the lap of the inside salesperson,” he said. “That reach occasionally extends to purchasing agents and even the owners.”
Ongoing training of employees is extremely important to master distributors such as IV, so they can provide the best possible assistance to customers.
“Ron Stevens, has put together courses for our inside salespeople utilizing some of the asa Education Foundation’s materials in customer service and inside sales,” Raban said. “And Norm Kepner has put together training seminars focusing on valves. All of our salespeople have gone through the ASA’s valve courses. In addition, we regularly have manufacturers put on seminars at the branches when they visit.
“Just as they did back when Industrial Valco was founded, customers expect timely, helpful, error free service at competitive prices. The biggest difference between now and then is that with today’s technology, we can deliver information more quickly than ever -- and customers expect that. All of our managers have phones that enable them to respond to both voicemails and e-mails immediately. Ups computers and signature capturing devices for will calls tell who picked up the order and when, and deliver real-time tracking information. The challenge with technology is not speed but accuracy, and if you’re not investing significantly in seamless i/t solutions you will have frustrated customers.”
Raban believes that Industrial Valco’s one-stop shop offers customers the “best total cost” for their immediate buying needs. He describes the best total cost as all costs related to an order -- not just the price on the invoice.
“In order to deliver the best total cost, you must invest significantly across a wide variety of product segments,” Raban said, “and commit to inventory, locations, and the supporting personnel, systems and management to make it all run smoothly. We save customers’ money by reducing the transactional costs associated with making multiple purchases.”
A bright future
The strategies employed by Industrial Valco have proven highly successful as the company continues to grow and expand. In the past five years, Industrial Valco has averaged over 15% annual growth.
“I believe the project market for industrial, including oil and gas, power and chemical will take five, if not 10, years to complete,” he noted. “Although demand for petroleum products has been flat in this country for the last four years, we’ve seen what has happened at the pump. Our slack, national demand for petroleum has not dropped the price of a gallon of gas.
“This is a new world reality, and with China’s and India’s continued industrialization and onward trek to ‘the first world,’ their consumption needs will continue to grow. As long as this is so, energy will be busy in the U.S., prices for energy will be high and demand for pvf products in support of industry should be robust. All of this could lead to product shortages, of which we’re already seeing in the weld fitting market.”
Raban also said that he sees private labeling taking on a greater role in master distribution, with some master distributors bringing in prIVate label product from overseas and selling in bulk as a traditional manufacturer, although Industrial Valco hasn’t engaged in that practice.
Overall, Raban sees a bright future ahead for Industrial Valco, and is pleased to continue his family’s tradition as the third generation of family ownership and management. However, he cautioned that Industrial Valco must continue using the best business practices in building customer relationships and fulfilling customer orders.
“Our vision is to be our customers’ dream warehouse in the Americas,” Raban said. “That leaves a fair amount of room for growth!”
For additional information, visit www.industrialvalco.com.