Ferguson Enterprises President/CEO Chip Hornsby discusses the economy, wholesalers' role in the supply chain, and the company's new headquarters.

Chip Hornsby, president/CEO of Ferguson Enterprises
In the wake of the recent acquisition of Westburne by its parent company, London-based Wolseley plc, and with future expansion in mind, Ferguson Enterprises (Newport News, Va.) has broken ground for a five-story office building with about 150,000 sq. ft. adjacent to its current corporate headquarters.

"We broke ground for our current headquarters six years ago," said Chip Hornsby, Ferguson's president/CEO, in an interview with Supply House Times. "We thought we were providing sufficient space to handle our growth for the next 10 years, but our actual rate of growth resulted in us outgrowing the space in four years."

Ferguson sees its recent acquisition of Westburne as a growth opportunity.

"We are pleased with the talented people that we have in our combined organization," Hornsby said. "One of the most appealing aspects to the acquisition is Westburne's presence in the upper midwest as well as in Arizona. Through Westburne we have a much stronger presence in the Minnesota and Wisconsin areas, as well as California."

No additional acquisitions are immediately on the horizon, but Westburne represents the largest acquisition the company has ever made, Hornsby said.

"We will continue our growth through organic opportunities through our existing branches, as well as through acquisitions," he said.

The wholesaler is positive about the fiscal year just ended Aug. 1 but has some concerns about the economy and what will happen next, he said.

"I don't know how much more the Fed can cut interest rates to make mortgages any more appealing," Hornsby said. "Prior to the events of September 11, the economy was teetering back and forth. It will be interesting to see how individuals feel about investing in new housing in the months ahead.

"The elimination of jobs has to have an impact on housing starts," he continued. "We are cautiously optimistic for 2002, but we have to be more aware of what is going on with housing and commercial construction."

In addition to the economy, competition remains an issue, particularly as home center stores continue to address professional contractors with products and programs. Asked if Home Depot and other big-box retailers pose a competitive threat to Ferguson and other wholesalers, Hornsby said, "Absolutely. They are selling the same products that we do. But we feel as a wholesale distributor that we provide different services to the professional contractor than he can get by visiting a home center. We offer pricing, quoting, bidding, job packaging, delivery people at a specific time in a specific format and a support mechanism.

"We have a level of expertise in product and technical knowledge that enables us to respond to sudden changes in a project," he said. "We can get products to a job site when the contractor is there, first thing in the morning, delivered and packaged to his specifications."

Wholesalers still matter to the supply chain and one of the key factors is the relationship the wholesaler has with the contractor, Hornsby said.

"The contractor relies on us to provide him with the services he needs to get the job done," he said. "We are a critical partner, providing him with products and information in a timely format."

Since Hornsby's appointment last May the wholesaler has undergone some restructuring. Ferguson has named four additional regional managers, bringing the total to nine, three of whom have relocated to the headquarters office.

"This is not to say that all seven will serve at our headquarters office," Hornsby said. "We want to be certain that we have regional managers in the field as well as at headquarters," Hornsby said. "We have regional offices in Atlanta, Dallas, Cincinnati, Los Angeles and Washington, D.C."

New digs

The new building is expected to be completed in late 2002 or early 2003. Currently more than 800 employees who provide administrative and technical support to nearly 700 locations operate out of Ferguson's corporate headquarters and three other Newport News locations. At this time there are no plans to close any of those 700 locations, but some of the additional office space in Newport News is on a temporary lease basis and could be consolidated into the new expanded headquarters facilities in the future.

Ferguson plans to hire local people for its administrative staff, such as accounts receivable, accounts payable and marketing, and for technical support for its Tech Center, to work in the new building.

"We will continue to recruit nationally, bringing in more than 300 recruits during the next fiscal year in order to support our growth," he said.

Initial plans are to lease the top two floors of the new facility and use the lower three floors for Ferguson, he said. "We are building this for future expansion of our company, well beyond the next five years."