Hands-on owners, technical expertise shine at Neuco
BY MARY JO MARTIN
Editorial director
That old paradoxical statement, “The more things change, the more they stay the same,” is a pretty good way to describe Neuco Inc.’s philosophy and operations. As the times have changed, so have customers’ and vendors’ expectations. Neuco tries to balance the needs of all its supply chain partners — assisting its vendors in more ways than ever before, and ensuring the inventory and technical service necessary to support its customers.
Elaborating on the changes, president Paul Neustadt said, “Master distributors are assuming some of the responsibilities formerly held by the manufacturers themselves. They’ve cut back on the support they offer, but the demand from customers is still there. The manufacturers are trying to cut costs, so we’re assuming some of the responsibilities they formerly handled. Our job is to make our wholesaler customers look phenomenal — and do it from behind the scenes. The contractors are our wholesalers’ customers, not ours.”
One thing that has not changed is Neuco’s customer focus — hvac wholesalers in the U.S. and Canada. “Our management and sales team spend a good deal of time with our customers,” Paul noted. “We encourage our people to get out to develop and maintain those relationships. Customers sometimes ask how we want to receive their order. We tell them we will handle it in whatever way is most comfortable for them, whether by phone, fax or online. We just upgraded our website this past year that currently receives 15% to 20% of our orders. We incorporated all the good things from our old site, along with some new capabilities such as viewing product availability, tech sheets and customer submittal sheets without pricing. We took our customers’ input to heart in updating our site to make sure we served their needs. The new site is very interactive and also includes a very extensive cross-referencing system that we’ve been working on for many years. In fact, we pride ourselves on the fact that the system is not only technically correct but is based on personal experience.”
Among Neuco’s best assets are its loyal and well-versed employees. “Our people are very technically trained,” Paul said proudly. “We encourage manufacturers to come to our facility and put on training courses; we also send our people to factory training. When customers call in, they are often looking for some guidance or advice on a project. They ask us for our recommendations, which allows us to give them some options among our various manufacturers. It really increases our value to them.”
Another attribute of Neuco that increases customer loyalty is its focus on logistical demands and accuracy. “As a master distributor we must operate in a highly efficient and accurate manner to get product in and out the door,” Paul noted. “It is paramount that we serve our customers without fail. We’re fortunate to have such a hard-working and conscientious warehouse staff — they are dedicated to serving our customers and just won’t leave until all our packages are out the door.”
A look inside
Neuco Inc. operates out of a 38,000-square-foot facility in Downers Grove, Ill., with 68 employees. Most of the facility is dedicated warehouse space; much of that double-decked to hold as much inventory as possible, because in master distribution having inventory on hand is the name of the game.
After being solely owned by the Neustadt family for its entire existence, in July 2008, the current owners elected to invite a long-time employee, Tim Stelzer, to buy into the company.
“Tim started here back in 1981 when my cousin Joe Neustadt became ill,” said Paul. “Tim & I were just out of college, and Neuco was a very small operation at that time. Then when Joe passed away five years ago, Tim stepped up to the plate and hit the ground running with a lot of issues that needed to be addressed. He’s head of our sales group and oversees both our outside and inside sales teams. He also does a lot of our purchasing. We wear a lot of hats around here as is the case with most wholesalers.
“Our family had talked about the possibility of bringing in an ‘outside owner’ for several years and we struggled with how to do it. We had never done that before. There was not a question as far as who deserved it; we all agreed Tim was the perfect candidate. It was simply a matter of figuring out how to get it done.”
Now, in addition to Paul as president and Stelzer as vice president, Neuco’s owners include chairman Bill Neustadt, who handles key customer accounts, and vice president/secretary Jon Neustadt, who manages the it systems.
With so many sources of competition in the marketplace, it is important that companies be able to differentiate themselves from their competitors. One way that Paul believes Neuco has done that is through consistency: “Customers can rely on us. We know that we need to be great; we can’t be just good. We’ve got to continually raise the bar, be creative and do more things to serve our customers because we want them to know they can depend on us. Our people have been here a long time — the average length of service among our salespeople is 10 years — so the relationships that have been formed are very strong. Above all, what we want is a consistency of excellent service.
“Our ownership is very hands-on and customers often have direct contact with our owners when they’re placing orders. If they have a problem, we are very accessible. We take great interest in our customers and by doing so, we’re setting good examples for the people who work here. By being closely involved with customers and our employees, we can observe what is happening and be available to discuss concerns and idea. And we are small enough and flexible enough that we can make and adapt to changes very quickly.”
He also noted that the management believes so strongly in education that they very heavily encouraged everyone in the company to take some kind of class this year — and it doesn’t even have to be industry related. Paul, for example, took some Excel courses. “We want to encourage being a ‘learning organization’ so that our employees have greater skills,” he explained. “It helps to keep them sharp and well-rounded.”
A solid foundation
At a grand 102 years old, the Neuco Inc. of today bears little resemblance to the business founded by John M. Neustadt on Chicago’s West Side. Originally selling hay, coal and grain in 1907, Neustadt evolved into coal sales and delivery in the 1920s and 30s. But following the Great Depression and World War II, Neustadt moved into the heating installation and fuel oil business, forming Neustadt Fuel and Supply. Although that proved successful, by the 1960s natural gas had usurped fuel oil because it was cheaper, cleaner and easier to buy.
Once again, the company diversified, becoming Neuco Inc., a distributor of automatic controls. They began with General Controls as their only line — a far cry from today’s line card that features many of the top hvac controls manufacturers. Sales are a little more heavily weighted toward commercial, controlling about 65% of the total volume. “A lot of our lines have been with us for a long time, and we have added some new lines that have rounded out our offering,” explained Paul. “We really consider our customers’ recommendations when considering adding a new line. Even before we stock something, we track hits and requests for a product line. We’re active in hardi [Heating, Airconditioning and Refrigeration Distributors International] and do a lot of networking at their events. That has also led to us picking up some new lines. There are only so many inventory dollars, so you have to be judicious in selecting which lines you want to stock.
“Again, it all comes back to our team being responsive, flexible and hands-on. We want to be a solid partner for our vendors and customers — one they can always rely on. Our track record of service and the longevity of relationships we’ve built are true indications of the way we do business.”
For additional information, visit www.neucoinc.com.