The only constant
Somehow in the last decade or so, the term middleman has been reduced to a four-letter word in the minds of many people. And perhaps no one has been caught in this pinch as much as the manufacturers representative -- the middleman to the middleman distributor. In this era of doing more with less and squeezed vendor lists, the future of manufacturers reps looks grim.
Well, maybe. If you define the manufacturers rep as the guy who drives from one distributor to another to discuss golf scores and buy lunch, he probably is an endangered species. But these days, any rep worth his mileage deduction knows that his job calls for a lot more than glib gab and steak sandwiches. Relationships are still the name of the game, but so are technical expertise and willingness to train distributors'own sales teams.
In fact, so much has changed for industrial-PVF reps in the last decade that some veterans almost feel like they've changed professions altogether. And in most cases, they have. Manufacturers reps are often "factory sales" graduates, themselves often the victims of the reorganization and downsizing of the 1980s and '90s.
That is the case with Tom McCormick and Frank Hills, partners in Mechanical Industrial Products of Marietta, Ga. They started their careers in PVF at Victaulic and Flowline, respectively. McCormick went on to work for Lavalco for five years. Hills, however, took Flowline up on an offer it made to all its regional sales managers in 1986. He left the company to start a rep agency selling Flowline and other product lines.
McCormick left Lavalco in 1991, and by the time the master distributor closed its doors for good in 1996, he already had five years of repping under his belt. It was just a couple years later that McCormick and Hills joined forces. They figured they were already covering the same territory -- the Southeast -- and even were on similar schedules.
"A couple of customers suggested we just ride together," McCormick recalls. "So we started talking about merging the two agencies. We finalized it after a two-hour lunch and a handshake."
Since that time, the companies represented by MIP have enjoyed a two-for-one bargain. McCormick and Hills both cover every state in their territory and every product in their lines. The advantages are that each knows his distributor customers equally well -- and vice versa. They alternate travel weeks to ensure that one of them is working in the Atlanta area at all times, available to handle phone calls, faxes and quotations or in case a customer or principal needs to reach them quickly.
A little help for their friendsHills and McCormick match each other on product knowledge, too. Perhaps their favorite aspect of their jobs is the opportunity to share the expertise accumulated in their collective 55 years in the industry.
"Training is one of the fun things we get to do," McCormick says. "You've got the young inside salespeople sitting with you, and you've got your product manual open, showing them the products and how one is different from another."
Hills agrees, adding that some distributors rarely have the time and resources to train new inside salespeople, especially when it comes to more complex products such as valves and other specialty products. "There are a lot of specifications: stainless steel, high-yield, chrome. The new inside salespeople often don't know what the specs are. It could be that the customers don't know, either."
Ron Drews, president of R.J. Drews & Sons Inc., Arlington Heights, Ill., is another PVF rep who enjoys teaching. He takes particular pride in the fact that new inside salespeople at his Chicago-area distributor customers often call him first if they have a particular question. He also is accustomed to making emergency runs to plants to help solve technical problems. The day before he was interviewed for this article, he had spent part of his day at a job site, coaxing a reluctant butterfly valve into cooperation. However, Drews is quick to point out that he is not an engineer. Perhaps more importantly, he says, this kind of service is not what rep wannabes might expect to provide.
"Being a rep today isn't just selling," Drews says. "You can usually take a look at your contract with a manufacturer to see what your responsibilities are, then just throw it out the window. We don't get paid for solving technical problems, but we have to in order to maintain the relationships with the distributors."
It's this commitment to service that will ensure the survival of the manufacturers reps, Drews believes. Manufacturers have cut their engineering departments to the bare minimum, and few distributors have the in-depth product knowledge necessary to deal with technical bumps in the road.
"If the rep's not there to help, the distributor is going to call the manufacturer," he says. "But the manufacturer doesn't want to put an engineer on a jet to spend 20 minutes fixing something. A small problem can turn into a catastrophe if not dealt with immediately."
Drews stresses that while product knowledge is essential, it's nothing without trust. "We can learn a new product in two weeks," he says. "But relationships take years to develop. We are only as good as our relationships are."
When is a rep not a rep?At Sunbelt Stainless Products, a division of Atlanta's Sunbelt Marketing, service also means stock. As a plumbing manufacturers rep since 1976 (see "Wholesaler's Wholesaler," Supply House Times, November 1998), Sunbelt Marketing is a buy-sell agency that frequently wades into master-distribution waters. But it made a full-blown triple-somersault dive into the deep end when the company brought Joe Clover aboard to start its PVF division in mid-1999.
Clover is another graduate of PVF manufacturing as well as master distribution through his work at now-defunct Consolidated Stainless. After leaving CSI, Clover was looking for a partner in his own fledgling master-distribution business. That path led him to Sunbelt Marketing and its president, Tom Menefee.
"We agreed that with so many supply houses selling both plumbing and PVF, it just made sense to add PVF at Sunbelt," Clover says. "It's all pipe and fittings. This was a way for them to get better market penetration."
Sunbelt Stainless maintains an extensive inventory of imported industrial-PVF products from around the world. In fact, the addition of these lines has pushed the company?s warehousing capability beyond its limits; both Sunbelt Marketing and Sunbelt Stainless will be moving next month to a new 160,000-sq.-ft. facility on 23 acres. Clover says the move can't happen soon enough.
"We're running two shifts here now, mostly because of space limitations," he explains. "We just can't get material in and out fast enough. At the new place, we'll have a big pipe yard and 15 dock doors."
Being able to ship quickly is even more crucial in PVF than in plumbing, where next-day delivery is considered excellent. If a plant is shut down until a necessary part arrives, next-day isn't good enough.
"With industrial PVF, the guy who places the order is likely to be waiting right outside with his truck," Clover says. "There's a greater sense of urgency. Industrial-PVF customers have contractors waiting for that material."
Whether or not Sunbelt Stainless is seen as a master distributor, the company affirms the value of manufacturers reps by using several agencies to promote its lines. Clover works with WRS in the Midwest; Circle D Enterprises in Alabama and Louisiana; and Focus Sales in the Northeast. He will add more as the company expands.
"We're a rep firm using reps," he says. "These guys are heavy hitters in industrial pipe and fittings."
Drews' company also maintains an inventory, albeit a smaller one, in a 6,000-sq.-ft. warehouse. The stock is primarily what distributors would consider C and D items that are too costly to keep on their own shelves but offer potentially juicy margins.
"It's not as dangerous for us to stock those items. We have a larger geographical area where we can turn them to other distributors who may have an immediate need for them. If someone who isn't a regular customer needs one of these products, it's 'Katie, bar the door!' I'm going to get whatever I can for it. In fact, if I sell to this guy at the same price I give my regular customers, I've just put a bullet in my own head."
Again, service comes around to availability of material, Drews says. Virtually instant access to these hard-to-find products can determine if a distributor wins a job. "If his competitor is quoting this item at 16 weeks lead time and my customer is quoting at 16 hours, he has a definite edge, even if his price is higher."
The rep in cyberspaceAll the reps interviewed for this article agree that the Internet is bound to have an impact on the industry. However, they also think that there will always be a place for the human touch. Drews points to the networking that is sometimes necessary when a customer needs a product fast and the manufacturer can't help.
"A good rep will call every other rep who handles that line in the country," he explains. "One of them may have a distributor who has had that item on the shelf for eight months and would love to get rid of it. So the rep can do everyone a favor and dodge a bullet at the same time. The factory will have no idea what he just did; he didn't even get them an order. But he saved the relationship, and that means everything."
Clover concurs. "We may end up with a combination of supersalesmen and the Internet. Much of the business will be automated. But the supersalesman -- the rep -- really knows what's going on out there, and he shares the information with the manufacturer. There's definitely a future for manufacturers reps -- even more so with the Internet."
How good a future will it be? That is largely up to the reps themselves, in the opinions of these four. They all agree the business has changed enormously over the last decade or so and will change more in the next.
"The industry is so much more fragmented than it used to be," McCormick notes. "Manufacturers used to make four or five different kinds of products. As time has gone on, they've sold off part of the company or gotten out of part of the business."
Hills and McCormick have responded by putting together packages for their distributor customers with products from several different manufacturers. They've also increased the number of firms they represent, both to complete those packages and stabilize income. Hills is confident that as long as manufacturers need to sell their products, there will be a place for the independent rep.
"It is very expensive for a manufacturer to put its own outside salespeople on the street," he explains. "They have the costs of salaries, benefits, travel, autos, office, etc. In many cases, the volume sold would never warrant the costs.
"A rep is only paid when something is sold," he adds. "And most rep firms today have more experience in the industry than you would find in the manufacturers' own sales teams. Most importantly, we know the people."
Drews is sure that manufacturers would be foolish to quit using reps, although he knows the subject comes up. He notes that some CEOs don't understand how their products get to the end user.
"They're moving up some conglomerate's ladder," he says. "In many cases they don't know the products or the customers. I heard about one top guy who asked his team what would happen if they got rid of the reps. When everybody's chins hit the table, he said, 'Well, if we did, would it be hard to get them back?' Getting rid of the reps might instantly improve the bottom line, but six months from now, it would be a disaster."
"The PVF business gets in your blood," McCormick says. "A lot of people think reps just have lunch and play golf and have a wonderful life. But if you're truly committed to working the way reps ought to work, you're involved in a lot more. People ask me why I like it so much, and I tell them it's because many sales calls are really going to see old friends."
That repeated emphasis on people guarantees a slot for the rep in the future of industrial PVF, especially combined with the dedication to the business. All four men profess a genuine love of their work, despite the constant change. That only results in constant challenge, and they all welcome the chance to learn even more about their industry.
"If the work's not enjoyable," says Hills, "we need to be doing something else."