Doing it — the American Way!
BY JOHN MARTIN
PVF industry veteran
It is really an honor to have you locate the “Martin’s Corner” article this month again here in The Wholesaler! I thought I’d leave the month of February out this year to see if you all would come back! Thanks for being here and wanting to see what’s up in my effort to share some great stories with all of you about good solid independent wholesalers in our industry.
It’s old news for me to say “I believe in the power of independents,” but it is true! In the world markets we live and function in today, all types and mindsets of companies (large and small, independents and nationals) are required to cover all the needs all the time of all the end-user customers. That being true, it is still the strong and mobile independent that pays attention to their markets served; that makes sure that their niche markets are covered with steady, consistent and 110% care; and that are always there to fight another day.
Just like the companies I have written about in the last several issues of The Wholesaler, there is a great company headquartered in Birmingham, Ala., that fits that description in every way. I’m talking about American Pipe & Supply. Serving the mechanical, commercial plumbing, and industrial PVF contractors in their market area, along with the fire protection segment as well, this company is doing it — “The American Way” for sure!
With Jeffrey Beall at the helm as CEO (25 years of sales and finance experience under his belt), and Bob Kyle as resident, they are without a doubt among the top premier wholesale companies serving their geographic portion of our great industry. APS was founded in 1977 by a local Birmingham businessman who had departed another industry wholesaler to start the business. At the start up, it was located in one branch on the south side of the city.
The original customer bases included the local mechanical contractors and industrial accounts. The addition of the fire protection and utility contractors to their customer base was done in the late 1980s/early 1990s. In 1996 Mr. Beall and his business partner had an opportunity to purchase the assets of American Pipe and Supply.
That done, they set out to build a company that would provide reliable products and services to a broader market segment of the construction industry. With that effort, it became the company commitment to all of their employees, customers and vendors to become the “Supplier of Choice” in their chosen area! As usual, I get carried away in the opening dialogue each time I write, but when the story is unfolding, it’s difficult to stop the pure fun of putting it on paper. To all the loyal readers of “Martin’s Corner,” it is a great pleasure to introduce all of you to my good friends, Mr. Jeffrey Beall and Mr. Bob Kyle.
Martin: Good morning to you both, and thanks so much for taking the time to share the story of American Pipe & Supply. Your company’s success is yet another great example of independent ideas and plans, coupled with great creative management, people, and the financial strength to back up and support markets and market share growth. As the opening question, would one of you please give our readers a snapshot of how the company looks today including your management team, territories/market segments served, number of employees and current facilities?
Beall: Hey, I want to thank you, John, and The Wholesaler for wanting to employ valuable space in their industry magazine dedicated to the independent wholesalers across the U.S. It is a pleasure for us to take the time to share what we can about American Pipe & Supply. APS currently has 70 employees and we operate out of four branches serving the Alabama and Middle Tennessee markets. Aside from me as CEO, and Bob as president, we have Mr. Harry Hays who fills the role of VP of sales. I have taken the lead responsibility for setting the overall strategic direction of the company and evaluating new markets and branch expansion opportunities. Bob is and has been very key to our success. He spent most of his career as a contractor before moving into wholesale distribution nine years ago.
Kyle: Thanks Jeffrey, and my thanks to you as well, John, and to The Wholesaler for wanting to tell our story. I have the responsibility for the all operational aspects of the company including branch management, purchasing and inventory control. Jeffrey mentioned Harry Hays. He has been 40 years in the plumbing and PVF industry and is responsible for all sales activities for us. We are very happy to have Harry on the TEAM here at APS. We serve the mechanical, commercial plumbing, industrial, and the fire protection market segments in the territory, so even in slow times, we stay pretty busy.
Martin: Sounds like a great chain of command, Guys. Knowing you and Bob from activity in industry venues other than the American Pipe offices qualifies me to state that I feel the company is in pretty capable hands. Harry should be proud to be part of the TEAM! Now, would you share how your sales are divided among product categories (PVF, Plumbing, HVAC, etc.) and the break out of your sales between the residential, mechanical, and commercial markets?
Kyle: Sure thing. Over 50% of our sales are pure PVF being largely mechanical, with industrial sales averaging 20%, commercial plumbing around 20% and fire protection at about 10%.
Martin: From an old foundry pipe fitting mechanical type guy like me, that is a great mix, Bob, for companies like ours. What about special or major projects in your area that American has been involved in that are a particular source of pride for you and/or Jeffrey?
Kyle: These days they all are special, but one that is particularly special is the current Birmingham’s Children Hospital. At a cost of $500,000,000, it is a new replacement hospital which APS is supplying all the chiller plant and hospital HVAC piping, valves and fittings. We are also furnishing the plumbing drainage piping system. Our management team enjoys giving back to the community and Children’s Hospital is one of the pillars of our healthcare community that we support financially as a company and as individuals through the Crippled Children’s Foundation. We also want to express our thanks to the many vendors and reps who have contributed through the years.
Martin: My hat is off to APS not only for capturing such a great job, but for the acknowledgement of the nature of the job with a giving back attitude. I know children are very special to you and Jeffrey, as they should be to everyone — and when it comes to a child in medical need or a homeless/mistreated child of any age, my heart cries out for them. As a management TEAM, APS is right on the mark; Thanks for that great answer.
So, have you had to change the focus of your business or do anything differently at APS during the economic slump the industry has been involved in? Could you take a moment to describe the economic situation in your area, and when or if you see it improving?
Beall: I’ll tell you, John, as factual as I can. The current economic slump has presented many challenges (i.e. valley experiences) to our industry and APS is certainly no exception. In 2009 we focused most of our efforts on matching our organizational structure to the drastically changing market conditions. While we saw the revenue slide was adjusting with or without us in late 2008, we started focusing on all our controllable costs and made the hard calls where needed. We renegotiated rents and other leases, freight, fuel contracts and healthcare and P&C insurance, but hardest of all was personnel cost.
No stone was left unturned as we realized the distributor model was changing and we had to adjust. We shared with our employees what we were seeing and asked for their feedback in getting through this economic downturn. They made it happen. With their attitudes and determination we have been able to make the best of this very difficult environment. It has had a positive effect on our company as it has caused us to evaluate all aspects of our operations and challenged us to refocus on our true core values.
In 2010 we saw the market stabilize (i.e. opportunities), so instead of being focused on survival mode, we were able to re-center our efforts on sales to key customers and projects in our market areas. This targeted approach allowed us to pick up work with out-of-state contractors that had projects in our coverage area. It also helped ensure we maintained our market share with existing customers.
The outlook for 2011 in the Southeast is shaping up to be similar to 2010 with no real growth short term. While we see other areas of the country are showing signs of recovery, our market is still a year to 18 months from getting back on track. The challenge is to keep a sharp focus on sales and trying to find opportunities to protect margins while continuing to evaluate cost. As I referred earlier, I call this time “valley experiences” as they challenge us and make us wonder why. But I dare say we are a better company today because of working through this trying time in our industry and country’s history.
Together we will get from one mountain through the valley to the top of a higher mountain. It is hard sometimes to see the opportunities but I can say we have been truly blessed.
Martin: “Facing the forces of Change!” What a novel idea. That was written several years ago — before we all realized we’d have to buckle down and really do it. Seems you folks at APS got it right. Congrats.
So, how have your customers’ expectations changed over the years, and how has your company adapted to those changing needs/wants?
Kyle: Well, it should be of no surprise to anyone that our customers are under intense pressure of their own to reduce cost and shorten schedules. This means they are shifting some of their tasks to us. We are being asked to “bag and tag” more orders so the contractor spends less time chasing down material. We are also making more shipments to the job trending towards a “just in time” inventory approach. This costs us additional shipping cost as well as increased cost to carry additional inventory. We ask for and receive good feedback from our customers as they are trying to adjust to a new business model. In all cases, if we can justify changing our approach to help them with their model with out losing integrity in ours, we welcome being able to give that “value added” feature to them. That makes the partnership stronger!
Martin: You are right on there, Bob, about contractors/end users looking to cut cost and shorten their schedules. I see that all the time in meeting after meeting of the MCAA at their conventions and association meetings. All the things you talk about plus technology issues reference quarterly and annually commodity buying contracts awarded to distributors by some contractors so they do not have to make take offs or go out for bid on certain spends for commodity materials. Using manufacturers and wholesalers alike that subscribe to EDI and even VMI at some of their store rooms and job sites for certain products. — along with being “green,” and working to be “BIM” certified. The latter is a modern up to date method of looking at a “Building Information Modeling” process when it comes to the design and construction of new projects. Very involved, but money savings when pursued and done properly. (Sorry to be a bit long there, but felt this needed to be said to support your opinions as well.)
Martin: Does American have an affiliation with any of the several buying/marketing groups out there in the market today? If so, could you give the readers a couple thoughts about your experience as a group member v/s simply going it on your own in these times?
Beall: In reading the other profiles you have done in The Wholesaler on other distributor companies, I have noticed that not only do they all belong to a group, but they all had very positive comments to make about their group as well. It is no different with us here at APS either. You see, John, early on after we purchased the company we starting seeing the need to get involved with a buying/marketing group. We joined The Piping Connection, which was focused at the time on the PVF wholesaler. Shortly after that, C.L. Watt asked TPC to join them to really kick off their newly formed PVF division, and we did. Soon afterwards, C.L. Watt merged with Affiliated Distributors in 2000 and we joined the PVF division and have since joined the A-D Plumbing division also. Our association with A-D has impacted our company tremendously. The positive impact of being with a network of other independent wholesalers across the country has helped enhance our product lines and our level of service. It has brought us closer to vendors and helped provide education on how they get their product to market.
All groups, I’m sure, do have positive impacts in varying levels with all of the member/owner wholesalers that are involved in them, or they would not be in business —A-D is such a group for APS.
Martin: Very well said, Mr. Beall. Coming from a USA commodity vendor for the past 43 years, I subscribe to the fact that it is better to be with a marketing/ buying group today than to not be with them. It is a cost of doing business these days (just like some of the things you want to do or have to do for your best customers), so why not get involved and reap some benefits? A-D is indeed recognized as one of the best in the industry.
Just a few more questions, I promise. Does you company have any special events/activities that you sponsor to help build customer loyalty and relationships?
Beall: Customer service and customer relations are the cornerstones from which APS has built and grown their business. To build customer loyalty and relations we sponsor numerous events throughout the year. Each branch has at least one customer appreciation luncheon each year in addition to vendor sponsored counter days.
Kyle: We also sponsor various entertainment activities including a variety of hunting and fishing trips along with outings to both professional and college sporting events.
Martin: Would you describe the leadership philosophy today in your company, such as accessibility to customers and employees, and hands-on activity by you and your key management?
Beall: The leadership philosophy of our management team is based on several key elements — trust, continuous learning (self development) and feedback. Trust is the core element to leading and being an effective manager. It is one of the core values of our company. Winning the trust of others has two elements that have to be believed in — competence (that you know what you are doing and how) and character (that you want people to do well and your intentions are good). Lose trust and your out.
You know, it brings to mind one of my first decisions about the industry when my partner and I purchased American Pipe. Realizing that good leadership and management to me certainly meant at minimum I needed to get to know the industry in the area and across the country to even be able to set sail in a new company with a working knowledge of what it is really all about.
I think you know, John, how much I support and believe in supporting the American Supply Association, which to me is the best wholesale industry association for our kind of business. I know Anvil International (your company) feels that way because I see you and other Anvil folks at all national and regional meetings actually working for the association and the members both wholesalers and manufacturers.
For me, I felt I had to get involved back when we started because I wanted to know who was involved, I wanted to know the best manufacturers and vendors to connect with. I wanted to know first hand what the heart beat of the USA pipe, valve, and fitting business is really all about. I’ve been involved since that first connection back in 1996, and I have learned something every time I engage the company or my self into meetings and/or ASA group project and divisional work such as IPD, etc. I wanted to learn and I feel I have been able to be a better leader and build a really strong management team due in great part to the market philosophies and practices I have become part of because of ASA. It is about making friends and relationships that last.
Leadership is a journey of self development and continuous learning, with progress coming from “game” experience; observing and networking with others, trying and experimenting, and pushing your self beyond the bounds of your comfort zone. Everyone’s style is different; no one is perfect. Everyone has strengths and weaknesses so we look to develop those strengths and compensate for our weaknesses by each one having a specific role.
My role is to be a productive influence on others by making a difference not only in what they are responsible for, but in the emotions and ideas that drive/motivate their actions. In other words, it’s my job to coach and that is hard for me to do sometimes standing on the sidelines. I like the day-to-day interaction with customers, vendors and especially employees. It is a time management balance for sure, but relationships (one-on-one) are critical to truly building a fine-tuned total team that functions with a purpose. Finally, customers, vendors and employees (stakeholders) must trust you to give you the critical feedback you need to measure and assess your progress. Measurables are always important.
Martin: I’ll tell you, my friends, somewhere in the above that Jeffrey just stated so very well, there is an absolutely wonderful “Vision and Mission Statement” that I would bet you your “stakeholders” would really warm up to, know what I mean? Having seen you work and relate, your people skills seem to abound, your sudden comments on ASA were very timely and fit like a glove when talking about leadership and management education. It is indeed a great group. I just had an idea about that which I’ll share at the end of this article. Thanks, Jeffrey, for such a commanding answer.
So here we are — last question: With so many sources of competition in the marketplace, how does your company attempt to differentiate itself from so many other field locations of national companies, local, and regional independents?
Beall: It is great to end with this type question. For me, I see our sole focus to differentiate ourselves from our competitors, whether larger or small, is customer service. We have always recognized the need to improve customer service, so four years ago we performance standards for various activities and tracked our performance against the standards. We were able to see improvements in our performance and this was validated by our customers started a formalized program to do exactly that — to improve our customer service. We sent out a survey to all our customers and then benched marked the results.
Kyle: Jeffrey is right on, and I fully support it. After benchmarking the results, we then set when we performed a follow-up survey that showed dramatic improvement in all areas. We were very pleased at the outcome and at the continued total improvement.
Martin: I agree with both of you 100%. Striving to always increase your customer service performance (that is really what you want, right?), can never do harm. Keeping your focus on the customer so you indeed know his changing needs, is a natural market action to any pro!
Well, time’s up guys! Jeffrey, thanks again so very much to you and you, Bob, as it has been wonderful to spend time with you. — and to hear about American Pipe and Supply is a pure pleasure. I’m sure the readers will enjoy also. You know, sometimes I get the distinct feeling that God made some of the folks perfect or near perfect in our industry, and then the rest He made manufacturers/vendors, or industry related association people! I also believe that the Lord has blessed your company and that’s a good thing! Remember, good things happen to good people. Best of luck to you and your TEAM in 2011!
That’s it friends! Please join me in the April issue as I just decided (after hearing Jeffrey’s comments about his experience with ASA) that I am going to address “head on,” to the best of my ability — once and for all, to clear my head & heart, etc., just exactly how I see the pros and cons of associations such as ASA & MCAA v/s the buying/marketing groups — Look for it. Maybe I’ll call it “Why Do We Need Both,” or maybe “Why We Need Both!”
Until then, please know that “Martin’s Corner” declares 2011 as a calendar year to continue to be a better year than 2010 in most all areas of our industry except home building (home sales should be better). It is still a very good business practice to be cautious, yet look optimistically at growth opportunities when they present themselves. Things could still get derailed with rising cost of raw materials, steel products of all kinds, healthcare cost (who knows), federal spending, lack of private money spending, etc. So many variables, so be ready and stay ready to constantly flex and change to meet the needs of your business.
Blessings to you all, and thanks for reading!
— John
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.