Sharing our competitive plumbing/PVF/mechanical/HVAC industry today!
BY JOHN MARTIN
PVF industry veteran
What’s all the mystery and intrigue? The U.S. — and this industry — needs them all. After all, it’s only business!
Thanks for turning to Martin’s Corner. It is very interesting to spend some quiet time just thinking about the plumbing, mechanical/HVAC, industrial PVF and specialty wholesale distribution industry today. It really touches my heart because when I started in the business, there really was one major concept — the independent wholesaler, period. Yes, we had a couple or three noteworthy big national companies in those days, but nowhere near the concept in which our certified “national companies” of today operate.
I suppose that the “marketing/buying group” concept that is so popular today was merely a twinkle in someone’s eye back then. Today, due to mergers, acquisitions, roll ups and start ups all across the U.S. and Canada — which have been a response to the fast-paced growth in the supply and demand market needs over the past 10 to 15 years or so — we now have several huge and successful national wholesale distribution companies that stretch from coast to coast. In addition, there are several very well-known and well-positioned marketing/buying groups made up of small, medium and large independent and regional wholesale distributors working together for their common good. There are also many more wholesale houses that have taken the grass roots approach to a specific niche in a market segment area, and created special divisions — and yes even new stand-alone companies to operate within that niche. Some are members of groups, some are not.
The above approach to serving our market is not just left to the wholesalers that cover the identified commodity and specialty markets. No sir, this move to expand and grow via roll ups, buy outs, mergers, consolidations, etc., has deep roots in the contracting business and plumbing/piping end-users as well.
Drilling a little deeper
So what do I mean by that? Look at what has happened over the past few years when it comes to good solid union and non-union contractors. Diversification, mergers and roll ups have played a big part in that market as well.
It is not uncommon today to see a West Coast contractor working in the Midwest, or an East Coast concern in the South or Southwest. This is a free market and everyone is free to seek exposure and profits in any sector they want to work in. Contractors are very mobile and not only can they open fabrication shops and job site operations most anywhere, they can and do offer joint ventures with smaller, more niche, players market to market. If they are involved in a roll up or holding company with operations from coast to coast, it is much easier to expand.
Traditional wholesalers in market A, B or C cannot easily fold up their tent and move with a favored customer. They can open branches, they can acquire someone, they can sell to existing national companies, or they can become active in one of the many national marketing/buying groups. All this to serve that special customer and to gain market share!
Within the Mechanical Contractors Association of America (MCAA), the vendor person who chairs the vendor/supplier committee each year also serves a one-year term on the MCAA Board of Directors. On one occasion, I was at the MCAA board meeting and there was an open discussion in which each board member what the biggest hurdle was in the coming years standing in his or her company’s way of growth and prosperity.
As I listened to several big contractors pouring their hearts out about positive and negative issues that will affect their company, it seemed that the one thing they all had in common was that competitors from all sectors of both union and non-union competitors were coming from all parts of the country to bid work. What could be done about it?
As time drew closer and closer for me to speak, I was twisting in my seat a bit trying to think of what could I say (representing all vendors and suppliers) that might indeed mean something to these folks from across the country. For a moment I felt a bit small in a land of giants, and then it hit me!
So when they handed the mike to me, I cleared my throat and firmly stated: “On behalf of all your vendors and suppliers of products through your distribution of choice, I tell you we all feel your pain. As a single U.S. manufacturer that is commodity foundry product oriented, I also confirm to you that we have our own tough, and sometimes unknown, competitors to deal with, and they are called imports.”
The room fell quite, and I continued: “None of us mind competing and can compete with most anyone or any country as long as it is apples to apples and the playing field is level, know what I mean? Sometimes specs aren’t even the same. Sometimes products are not even approved by the specs, and sometimes government issues from other countries makes it impossible for all of us to service you or the wholesaler at all and be profitable.
“You can help us help you by not being so quick to pull the trigger when you see spreads in products that does not seem to be real or even right. There are many great U.S.-made products out there today to serve all segments of your business, and yes, there are some pretty darn good import products as well. Just think about what is really good for the U.S. and your industry, and for your company! We will follow you in your needs!”
It’s just business
You see, my point is this as stated earlier: It’s only business, and we all must try to direct business as best we can that (at the end of the day) is good for the producer/supplier, the wholesaler and the end-user/contractor. These national contractors and installers work coast to coast, and they like wholesalers and vendors that do the same. They also work in their own back yards, and need local support as well.
National wholesalers have to show profits locally, just like a marketing group’s independent members, or a single location independent — and contractor/customers know and expect that. All they want is for their suppliers to be fair, to go an extra mile for them when need be, and to support getting them on and off projects.
Bottom line is that everyone has favorite people they like to deal with. Some have a comfort zone dealing with the national companies from past support, and some still like the flavor of the local distributor. This is the people factor, and the market needs and thrives on that. Everybody in the industry knows that “It’s only business!”
One contractor tells me that suppliers who tend to be nimble and show willingness to “flex” to support needed activities for certain jobs gain his favor quickly. He said, “The process for some jobs requires you to step back, shift gears and proceed a bit out of the norm when needed. We like a company that is willing to help us get over the hump at times!”
To that I say, whether you’re a national or independent you gotta know how to flex for this guy within your system to garner his business. Nimble and quick on your feet to serve — great ideas!
In the old days (prior to our current sales and marketing structures of chains and groups and independents doing work nationally), I worked in Dallas. It was sort of like a milk run every other Wednesday that I’d go by my favorite mechanical contractor’s office to visit a buddy of mine and see what was happening and what was on the books.
It was so normal in those days for folks in positions like he was to visit awhile about the Cowboys or bird hunting, etc., then he’d hand me a list of product on a purchase order for a local job and say, “Here John, take this by ABC Supply and get them to put their PO number on it for you and ship them to the job for me. Everyone has been so busy fighting over the big equipment or the big ticket items, they keep forgetting product like this.”
How much fun is that? Problem is that for the most part, those days are gone. If that contractor is part of a roll up, they have a corporate office to work with, and if the wholesaler he wants me to take the order to is a national chain and is not favorable to that product of mine — or if the buying group or independent wholesaler has the same issues — it can be a difficult process with multiple steps. Yes, “It’s only business,” but it is different.
In today’s world, “milk runs” hardly exist for outside sales folks; little is easy and there sure are not many — if any — secrets. Just because a national company is connected coast to coast with a string of very nice operations loaded with product does not mean they will get — or even want — every order or project. (They may think they do, but it’s not true).
Just because a very strong marketing/buying group has associated members and locations coast to coast with the same type of nice operations and inventories, that does not mean they will get every order or project either. (They, too, may think they do, but not true either).
I believe that unless some of these locations have a very unique and special product for a market segment that others don’t have due to distribution territory rights, that most all products — and certainly hard-core commodity products — are priced on a competitive par. What does that mean? To me it means that since every wholesaler (large or small, national or local) should plan to make a reasonable margin for their efforts, it boils down to relationships and people-to-people connections. Wow, “It’s only business!”
Through the customers’ eyes
No matter what position your company or company location(s) hold in the supply chain’s wholesale grouping, the value of what you do (or negative value in what you don’t do) is seen in the eyes of the customer. Remember the old saying, “Beauty is in the eye of the beholder”? It has been indicated to me several times (in several ways) from pretty strong wholesalers that completing the supply chain at the end user customer (contractor) level is the end game.
To get that contractor what he wants/needs when he needs/expects it is the objective, know what I mean? One very good wholesaler friend of mine indicates, “It is the manufacturer’s production success, then the wholesaler taking that product to market, that typically makes it happen for the contractor.”
When that contractor looks up or down his supply chain, all he wants to see is his product needs moving through that chain from start to finish with his job in mind. At that point, he is not wondering if the wholesaler is part of a national chain, or a national group of independents, or in fact if he is a stand-alone local independent that makes a good solid competitive customer service commitment and keeps it.
No sir, all he is thinking about is getting his job done on time, correctly, and moving on to the next one. When your service level makes that a reality for him is when he comes back to you. It boils down to how your company (large or small) appeals to this customer.
Another friend tells me, “You know John, at the end of the day, we feel at our company that we are not simply competing with another wholesaler. For the most part, we feel we are competing with all the supply chains out there used in today’s market for value-added service. We look at every product we would like to supply on an active project, and actually try to demonstrate and identify service that goes beyond the supply of the product — services included that continue to help the contractor (customer) eliminate as must of the hidden cost on the job as possible.
“The more ‘opportunities’ we can include in a package bid for the customer —detail-ridden areas that can get expensive if not addressed — the better total service we feel we are providing.”
It is my opinion that every segment of wholesalers that make up in our industry gets a bad rap at times. You know that the wholesale distributor and commodity manufacturing bone yard is full of defunct companies that had good intentions but were low bidder most of the time!
I don’t care how big you are, how “national” or “group oriented” you are, or how “independent” you are, you simply cannot be low bidder as a rule in this business and make it up on volume. This goes for manufacturers and contractors as well. I know you all have heard that old line many times, but I feel it is worth repeating again and again until we all get it right! During the decade of the 1990s when the M&A explosions were taking place in our industry, how did the big national companies get so big so quick? They did it (for the most part) by acquiring and pulling into their families some of the best independent wholesale houses in the U.S.
A matter of survival
I’m not sure about all the readers’ opinions today, but for me that fact tells me the business structure of the successful independent wholesaler, no matter the size, is the fundamental reason (in all markets) that the very foundation of our supply chain exist as it does today. As far as I can tell, when the markets get tough — real tough as all of them are today — it causes troubles and issues to the large and successful national wholesalers, just as it does with independents.
No one is shielded from this by some magic due to size. We are all faced with surviving. In all cases it is easier for a sales guy to blame a competitor for losing a project than it is to face the fact that maybe, just maybe, had you worked the supply chain up and down the line a little smarter or harder, the results might have been different. Believe me, I have done the same thing a few times over my 40-plus years.
Help and support your customers. Don’t back down from a challenge; look for ways to go beyond what they need to add value.
Don’t curse the market segments you have chosen to work in during hard times; embrace the need to be strong and supply the need.
Don’t worry so much about your competitor and what he may or may not be doing. Instead, try to figure out what it is that you must do to get the job for you and your company.
I tell you this, and I quote: “Some of the finest guys that I personally work with in organizations like ASA and MCAA and PHCC through any calendar year, I consider as great friends — and they are competitors each and every day in the game of selling and serving customers.” When the contractor sees (and wholesalers as well) a couple of guys working together in a public forum on training committees, education foundations, etc., with efforts that are collectively good and fair for their industry and its people, it makes them see their supply chain pulling together. They like that.
The heart of the matter
Well, here is my summary opinion on the issue as a whole. I feel strongly that (as a manufacturer of products to the industry), all U.S. producers see all the distribution channels that I have been discussing as vital avenues to our joint market success, and we applaud the wholesale distribution trade in all areas to include national wholesale distribution chain companies, national marketing/buying groups and their associated members/owners, and the single independent wholesaler.
It takes all of this (in my opinion) to consistently give our end user customers (the mechanical and plumbing contractors, the industrial PVF piping contractor, the HVAC and commercial guy, the competitive position market-by-market to process and complete projects and keep coming back for more.
Look at it this way: The national companies in the U.S. have 2,000-plus locations (estimate), the recognized multi-market major buying groups have 500-plus members and then there are a multitude of single and regional independent players are still out there. The union contractor association has some 1,700 member firms and the non-union PHCC contractor group has more than that!
As a manufacturer, how many can you touch in a single group or corporate meeting in a week’s time? Doesn’t take a real bright guy to figure out that making relationships and keeping relationships within all areas of the above is just plain smart. Never burn a bridge is another clear “Lessons Learned” that I mentioned in January’s article.
For all manufacturers that are truly distribution channel-oriented to get to market, contractors pursue many to sell them direct on a lot of occasions. That wholesalers care for the key vendors they use is the only really true reason that your channel is the way to go to market as discussed.
The “Buy American/America” issue and how well-positioned most U.S. manufacturers are with support of distribution makes the combination a tremendous tool for leverage in the daily game of competing. With reference to people and decision makers, you just never know where they may go next, know what I mean? It most likely takes less energy to be a nice, positive person as it does to be a negative force!
Although the first order always has to appear, I never really want just the first — I always want all the come-back business. That tells everyone that whatever you are doing is working, no matter if you are a national company or an independent group person, or a local independent. After all, It’s only business!
Until next time, be careful and keep a positive attitude. The customer is always watching!
See ya ‘round the corner —Martin’s Corner!
Born Johnney E Martin in Venus, Texas in 1944, he is one of nine children raised 100% on a cotton and grain farm that his father share-cropped. After high school, Martin went into the Army and then Reserves. From there he joined what was then Grinnell Co. in 1968 and has been with them every day of his life since then through four different owners, now Anvil International, A Unit Of Mueller Water Products. He currently serves as vice president of national account sales for the Anvil Mechanical Unit. Holding various sales and management positions for the company over the years, Martin has received numerous industry and association awards and has been involved with industry education foundation boards, and the Board of Directors of both ASA and MCAA. Martin currently resides in Castle Rock, Colo., with his wife Kathy of 27 years; they have a daughter Kayla who is 25 years old. He is committed to staying involved in the plumbing and PVF industry (which he loves) for many years to come.