Smith-Cooper International continues impressive growth

BY MORRIS R. BESCHLOSS

PVF and economic analyst

Smith-Cooper International Inc. was formed in 1993 as an importer and master distributor of pipe fittings, having purchased the assets of the former Daniel Smith Company, originally formed in 1946. Smith-Cooper International was fortunate to purchase a company that was revered as a leader in the piping industry. They currently operate from six locations: Commerce, Calif.; Vancouver, Wash.; Pennsauken, N.J.; Northlake, Ill.; Memphis, Tenn.; and the newest warehouse in Atlanta, Ga. Additionally, Smith-Cooper has established a consignment warehouse located in Houston, Texas.

The company buys from a diverse worldwide manufacturing base, including companies in Korea, Taiwan, China, Thailand and India, in addition to the U.S. The products of Smith-Cooper International are sold to a diversified customer base of wholesale distributors, and used in a variety of industries, including: plumbing, petroleum, chemical, fire sprinkler, irrigation and water works industries, just to name a few.

Smith-Cooper International’s management is marking 60 years in business by doing what it has always done: supply its customers with the products and service they’ve come to expect from this Commerce, Calif.-based plumbing and PVF master distributor. While much has changed at Smith-Cooper, two things remain the same: management’s pledge to maintain well-stocked product inventories, and its belief that service, not just its products, is what keeps customers coming back.

It is these fundamental business values that have helped transform Smith-Cooper from a regional supplier to an international master distributor with wholesale supply customers worldwide. Today, the company has more than 400,000 square feet of storage space nationwide, housing 22,000 inventory items. Smith-Cooper warehouses a comprehensive inventory of industrial pipe, valves and fittings in carbon steel, iron, bronze, and now stainless steel.

What has contributed most significantly to the growth of Smith-Cooper is its expanded product offering. While not abandoning domestic product, management switched its emphasis to imported material. Today, more than 95% of Smith-Cooper International’s offering is from its overseas manufacturing partners in Europe and Asia. Typically, Smith-Cooper engineers all of the tooling for all of its products which includes its trademarked SCI logo while adhering to required specifications, and then searches for a manufacturer.

“We aren’t out to sell just one product, one time,” said president Bob Cooper. “We have a program of fittings that addresses the wholesaler’s need to consolidate vendors and streamline their operation with an emphasis on material logistics.”

To continue its growth in the future, Smith-Cooper is looking to expand on its rep network as well as its product offering. However, management won’t grow just for growth’s sake. “We won’t grow too big that we can’t maintain our service levels,” said CEO Ron Kurstin. “Service is what sets us apart.”

Further growth is anticipated through the ongoing development of new product lines, including product tailored specifically to the fire sprinkler industry.

During the period of 2002-2003, Smith-Cooper experienced growth in many areas including gross revenue. In February 2000, Kurstin purchased Flo-Rite Products Co. Ltd. in Vancouver, Wash. This acquisition allowed Smith-Cooper to enter a new market, and expand its product availability to include valves and accessories not previously inventoried by Smith-Cooper.

Additionally, Smith-Cooper introduced cast iron threaded fittings aimed primarily at the fire sprinkler industry. By securing critical approvals, including Underwriter’s Laboratory and Factory Mutual, Smith-Cooper is now able to enter a market that was previously unavailable without these highly sought-after “Seals of Approval.” The introduction of 125# cast iron threaded fittings and later the 300# ductile iron threaded fittings, has had an immediate impact in increased sales, along with an expanded market place for this product type.

Adding further to the lines they can offer the fire sprinkler industry are two trademarked fitting lines: COOPLET weld outlets and COOPLOK grooved couplings & fittings, both of which carry the ul and fm listings.

Smith-Cooper will continue to penetrate the fire sprinkler industry through further introduction of new product lines they are currently developing. With the impact that was seen in 2001-2002 as a result of new product lines used in the fire sprinkler industry, they anticipate further increased sales and marketplace share after the introduction of these new fittings.

In April 2003, Smith-Cooper purchased the assets of S&R Manufacturing, a company formerly located in the state of Iowa, manufacturing steel and brass nipples.

In July 2007, Smith-Cooper acquired the assets of Sharon Piping and Equipment Inc. and its valve manufacturing division, Sharpe® Valves. This East Coast acquisition adds stainless steel fittings and valves to an already comprehensive product offering.

In October 2007, Smith-Cooper purchased the assets of master distributor Fine Stainless Piping and Equipment. This West Coast-based stainless steel master distributor rounds out a powerful nationwide stainless steel distribution network.

Currently, Smith-Cooper maintains a website at www.SmithCooper.com. This website is scheduled for expansion, to include product pricing, technical information and product availability.

To provide more insight into the uniqueness of this West Coast-based national master distributor, we engaged president Bob Cooper in our monthly Q&A focus:

Beschloss: Bob, what seems unique in the composition of Smith-Cooper is its aggressive foray into the acquisition of well-known manufacturing brands. What motivated this significant step?

Cooper: To fully answer this question I must begin with the formula for our success, which lies in the tenacity and drive of the major principals of Smith-Cooper International, in addition to myself:

• Ron Kurstin, CEO, is the futurist whose vision and foresight established the roots for the plan that would ultimately drive the Smith-Cooper brand into the marketplace and define being a master distributor. Ron’s desire was to form a group of experts who would utilize their individual talents to create the unequivocal management style for which Smith-Cooper is now known.
• Ed Beetschen, executive vice president, is at the helm of overall systems and operations, responsible for day-to-day functioning at all levels of the organization. Ed brings, along with his expertise in systems and accounting, a sincere passion for the success of the individuals at the company.

For many years, Ron, Ed and I agreed to focus on organic growth, with the idea we would only consider an acquisition if it would complement the products and marketing strategies of Smith-Cooper. In the case of S&R Manufacturing, it was a way for us to seamlessly integrate pipe nipple manufacturing into our existing business model.

As for Flo-Rite Products, the allure was the opportunity to expand our product line by quickly introducing valves. Flo-Rite was a company well known for many of our existing products with the emphasis being on valves, which at the time, we were not distributing. I’ve used the term “We don’t need to re-invent the wheel,” meaning that we didn’t want to waste time developing new material sources, searching for experienced staff, etc. What we got in buying Flo-Rite was its existing supply channels and industry and employee expertise.

Most recently, as many are aware, we finalized the acquisitions of first-class stainless steel master distributor Fine Stainless, as well as Sharon Piping and Equipment and its valve manufacturing division Sharpe Valves. To understand the reasoning behind these acquisitions, it is important to understand the culture and the depth of our company. Stainless steel was a logical enhancement to our existing products and customer base, but it also expanded our ability to offer a much broader range of like products to the PVF industry, thus expanding our logistical value to our customers.

Beschloss: How have you maintained the separate marketing approach of products that maintained their own distribution channels and the master distribution for your manufacturing partners, both domestic and foreign?

Cooper: Well, diversity plays a major role in our ability to market and sell products into any given geographic area, domestic or foreign. The range of products that are available through Smith-Cooper International today are able to be sold into industrial PVF, residential and commercial plumbing, waterworks, underground, plant maintenance, irrigation and fire protection industries, to name a few. This wide range of products allows us to incorporate a group of products specialized for each specific target market.

Beschloss: Since master distribution has become the accepted link in the mainstream distribution channels, what aspect of Smith-Cooper puts you in the upper tier of this sector’s practitioners?

Cooper: We believe we added a whole new dimension to master distribution when we decided to trademark our products 17 years ago. Historically, a brand recognized trademark was only available through domestic manufacturers. It was a revolutionary idea which today has become our company standard. Our intention was to bring the same reputation for quality, brand awareness and traceability to an import product, with an emphasis on quality.

Some have tried to imitate our success with trademarking and packaging, not realizing that without making a full commitment they end up with a fragmented program and approach to the industry. This is a feature that takes many years to implement.  SCI branding enjoys a 17-year history of success. To ensure the quality of our products we employ six full-time mechanical engineers company wide who oversee the manufacturing process from design all the way through distribution, and offer support for installation challenges, as necessary.

The evolution of our company is quite unique. We have taken almost a fanatical approach to addressing the logistical and operational hazards that are common in the pipe, valve and fitting business. Ten years ago, we embarked on one of the most aggressive changes to ever be considered in our industry, resulting in the first of its kind new packaging standards. We developed a simple, comprehensive color-coded approach to packaging that we call ProPak. Sometimes, before you can grow, you have to take a step back to basics. Some call this “Going Back to Basics.” I call it “Going Back to the Box.”

We listened to our customers’ comments regarding the unmanageable size and weight of most product packaging and we made a decision to change it. The idea was to reduce the size and weight of each master case and at the same time fill it up with product -- not air, color-code all packages by product line, and clearly identify its contents by displaying a picture of the product inside. Sounds simple, but the real trick was coordinating all our manufacturing partner factories to conform to the same sci Pro Pak packaging standard.

Some people ask, “Why Pro Pak?” The logistical savings incorporated in this new system allows Smith-Cooper to enhance its inventory and ability to process orders on a timely basis, enabling customers to receive material in a fraction of the time and inventory approximately 30% more material in the same cubic space in the warehouse. As we all know, the most valuable commodity in a warehouse is space.  I’ve often said that if I didn’t initiate this new packaging concept when I did, it would be almost impossible for Smith-Cooper to consider it today due to the size and complexity of our company and inventory.

Lastly, it’s our employees who are the largest contributing factor to our success. Their commitment to customer service, their work ethic, their expertise and loyalty to Smith-Cooper International and their respect for each other make the difference. They are people of integrity, compassion and intelligence.

The relaxed environment at Smith-Cooper lends itself to a culture that encourages employees to thrive and grow, to experience the recognition for a job well done, to be fulfilled and appreciated. There is a feeling of family and a sense of unity. There is mutual respect between management and the staff. These are the things that put Smith-Cooper International in the “upper tier.”

Beschloss: Please tell us about the makeup of your marketing organization. Is it purely rep-driven, or do you have regional sales managers in addition?

Cooper: Our company has always believed in utilizing the services of manufacturers’ rep agencies with specified territories. Many of our firms have been with Smith-Cooper International since its inception. As our company has evolved, so has our network of representatives and our need to have regional managers involved.

Smith-Cooper employs regional sales managers, all of whom bring many years of industry experience and knowledge. An excellent example is Frank Connelley, our vice president-national sales. Frank is a veteran of 30 years in the industry with a diverse background in both carbon and stainless sales and marketing.

Beschloss: It’s obvious that you are an active advertiser, strong believer in public relations, and provide superb promotional material. What led to this advanced sensitivity to utilization of comprehensive marketing techniques?

Cooper: Seventeen years ago we established our branding standard and have not deviated from that. We are proud of our association with The Wholesaler. For over 13 years we have been advertisers in this publication, and believe The Wholesaler has helped promote our brand to our industry. The Wholesaler complements the work of Smith-Cooper by targeting a diverse readership through a nationwide account base. We have a story to tell that we are excited about and The Wholesaler helps us tell it.

Beschloss: Your purchase of well-known Sharon Piping, and its valve manufacturing division Sharpe Valve caused quite a stir. Do you expect this stainless steel valve manufacturer to grow significantly under your direction?

Cooper: With new acquisitions, the first question that could be asked is “Why”? In the case of Sharon Piping and Sharpe Valves, we were looking at an established manufacture, offering domestic assembly of high-performance valves as well as import valves. We were fortunate to find an organization of employees and management that are willing to embrace the concept of blending two very different, well-known companies, and bring together the dynamics of two very diverse product lines.

We now have the ability to utilize our overseas contacts, and combined with the expertise at Sharpe Valves, it is our belief that we will be able to apply the systems and concepts that have made us an industry leader. We believe we have the perfect formula for success in engineering, packaging, marketing, advertising, systems and procedures that will be required to bring these companies together and expand our market share.

Beschloss: Since you’re in the front lines of the PVF sector’s growth, what regional areas offer the most significant growth in addition to the obvious West Coast position?

Cooper: In January 2008, after many months of evaluating our market, we expanded our distribution network into our new, state-of-the-art Southeast distribution center in the Atlanta metropolitan area. With our 93,000-square-foot facility, not only do we enhance our ability to serve the entire East Coast in a more efficient way, we have addressed one of the largest markets available to Smith-Cooper. This is another example of our almost fanatical commitment to better serve our customers.

Beschloss: Although the PVF sector in general is experiencing a boon period, are you concerned about the shaky nature of the general economy at this time?

Cooper: Absolutely! This is all the more reason we should stay on course with target marketing to diverse industry sub-sectors and products that make us valuable to many industries. Our acquisitions have expanded us into more products, which in turn put us in a position to enhance the overall value of our company to our customers. Who is going to be in a better position than Smith-Cooper to serve the broadest range of products to the marketplace in the most efficient way possible?

Beschloss: Which end-use sub-sectors are generating the greatest demand for your comprehensive product line?

Cooper: It is more of a “specified” market, the market that meets the requirements of those who are looking for products that are brand-specified; the industries that require brand-specific products as they relate to product liability and meet all applicable industry standards; the professional trade that requires contract-approved products such as consulting engineers and architects. Smith-Cooper complies with all applicable industry standards. In the case of Sharpe Valves, we have a highly engineered product that will be specified on a job or in a contract, and we will seek out those ‘specified’ contract jobs through our distribution channels.

Beschloss: From your point of view, do you believe the present PVF boon has staying power well into 2009?

Cooper: Those who have the foresight to navigate and see through the changes we are all faced with will find that they will be forced to re-evaluate how they fit into a distribution process. Commitment to the customer with emphasis on value-added services will allow most companies to sustain themselves through the current uncertain times in PVF industry.

Beschloss: Since Smith-Cooper is well endowed with internal management and generational staying power, is there any thought to bring outside investors into the picture?

Cooper: This was a question several years ago that resulted in a welcome partnership with a private firm that assists the company in forging its way to continued success and growth.

Beschloss: Since your growth pattern has shown great commitment to expansion, are there any worlds left to conquer for you in the short term?

Cooper: We are currently marketing our company outside the U.S. through several methods. It is only a matter of time that we will expand our company’s branding throughout the international marketplace. The possibilities are endless. From our humble beginnings as a regional distributor, it has always been my dream to establish a company of worldwide reputation deep-rooted in quality and excellence. I am so excited to be a part of a company that constantly redefines what it means to be a master distributor.

Morris R. Beschloss, a 51-year veteran of the pipe, valve and fitting industry, is PVF and economic analyst for The Wholesaler.