Interview With PMI's President
The Plumbing Manufacturers Institute elected Todd Talbot as its president for 2002. Talbot, a native Californian, is president of Alsons Corp., which is a Masco company. Supply House Times had a chance to sit down with Talbot and discuss the business of Alsons, the role of PMI and other issues concerning the industry.
Supply House Times: What's the future of the plumbing distributor? Is he going to be around 10 years from now? Or are there going to be two or three of them left?
Talbot: I've always stated that the plumbing wholesaler is a viable source of the future. Demographics work in favor of the plumbing distributor and the plumbing contractor of the future. There are a lot of people who a few years ago were willing to do it themselves, but as the population becomes more mature you're finding fewer and fewer people that are willing to do it themselves. They might buy it themselves, but more and more likely they are not going to do it themselves. That's where the contractor, and our industry as a whole, stands in being able to provide the services consumers are looking for. We all have to look at how we change our business in order to deal with the changing attitudes and needs of the consumer. Manufacturers, wholesalers and contractors that don't understand where their position is in the value chain won't be here 10 years from now. I don't think anybody would disagree with that.
Is the plumbing contractor going to be buying it from the plumbing wholesaler? Or is he going to be buying it from the Home Depots of the world who are now becoming plumbing wholesalers in their own right?
Talbot: I think a little bit of both. It's going to be the one who can service the needs of that contractor. Simply look at the geography of our country. The Home Depot is not in every town, so how are people in those communities going to be serviced? The reality is there are huge opportunities, and wholesalers need to understand where their customers are.
Let's talk about PMI. PMI has centered on four "focus issues" in recent years. One is water conservation. What's happening with it?
Talbot: The Knollenberg Bill continues to be a major item within that focus issue. The role that PMI played and continues to play is extremely important for the industry. I think a lot of people in the industry don't realize how close to a nuclear meltdown our industry came should Knollenberg have been successful in repealing low-flow restrictions.
It's not just Knollenberg. We are focused on OSHA and EPA rules, ergonomics and record-keeping issues, elements of the Safe Drinking Water Act and the impact of potential arsenic legislation. You've got all these things going on that make our focus on all the legislative issues extremely important. This is what we provide to our members. We have a very strong position with PMI government affairs consultant Fred Ames of Balch and Bingham LLP. They are servicing our needs daily in Washington to deal with the continuous flow of issues that are created by legislative change.
I attended your meeting in Chicago a couple of months ago and I heard your briefing on trade show consolidation. You're momentarily, at least, unhappy that ISH North America has really added, not subtracted from the shows. Do you think it will eventually succeed in consolidating all these other shows?
Talbot: I will not use the word "unhappy." We continue to be concerned about the proliferation of shows in this country. I applaud the efforts of Messe Frankfurt and the former NEX partners, to try to do something. It's a step in the right direction, but it's not there, yet.
We want to find a way to help our membership and industry compete in an ever-so-competitive global market. Right now the dollars that are being spent on trade shows are not delivering what we expect as a return. Finding a cost-efficient way for us and our customers to meet and learn face-to-face is the opportunity. Our goal remains a single North American annual show that can provide that opportunity for contractors, kitchen-and-bath dealers, wholesalers and manufacturers. Until that point we have not succeeded in providing a competitive environment for our industry.
Companies can vote with their feet. Will there be a day when Alsons is going to have to take a stand and say, these shows are the most valuable ones to me and I'm going to cast the others aside?
Talbot: Manufacturers are between a rock and a hard spot. As much as we might not want to participate in the shows, our ultimate responsibility is to our customer. If we have even a subset of customers that are attending a specific show, then we have a responsibility to be there. Where we have been speaking is through a reduced presence at the show. At Alsons we continue to have presence in select shows, but you can see the presence is downsized substantially. I think you can see that throughout our entire industry. People are not participating to the extent that they used to, and I think that will continue. It's up to these shows to show us that their existence is justified.
Would you rather ISH NA had not gone to a yearly schedule, at least for the first few years?
Talbot: I'd have to say yes, but I understand they are competitively trying to position their show. If they are going to get to a point of strength where they can discuss the potential inclusion of other trade show partners into a single program, they have to develop real strength, so I understand the position.
Another of PMI's focus issues is Universal Conformity Assessment. Tell us where things stand.
Talbot: Again, this is one of the places where a trade organization is extremely important in our quest to maintain our businesses' local competitive abilities and to compete around the world. We are still strong in our desire to see some form of harmonization of the codes and standards. There are a lot of people in our industry that just don't realize how burdensome it is to our entire business structure and our competitiveness as a manufacturer in an industry.
Can you give me an example of all the hoops you have to jump through?
Talbot: Each city, county, municipality and state has the freedom to exercise their own right as to the products that may be used in construction. This may require manufacturers to test products to multitudes of standards and also pay the local governments to "register" our products accordingly. As we try to provide leading edge products to consumers, this process places significant burdens and delays in bringing new developments to market; noting that many of these products or concepts are already in use in other parts of the world.
Next we see the burden in manufacturing and distribution to deal with unique items for specific markets. As an example, we produce a product with a vacuum breaker, an anti-siphon device to meet codes exclusively in Southern California, Florida and Wisconsin. My cost to produce the item in part is driven by the volume and the efficiencies I can employ. Low volume is paid for by the consumer.
The cost is then exaggerated by the distribution channel. If Ferguson Enterprises, Hughes or Lowe's, for that matter, all have warehouses servicing both the Georgia and Florida markets through one warehouse - they will require stock of two products, and hence added cost.
We are 100% behind codes and standards and think they are vital to our industry to maintain the confidence of the public, but we need conformity or they will price us out of the global market. We've made some progress. PMI is continually promoting codes and standards that are becoming a reference point throughout industry, but we have a long way to go.
PMI came out with a statement saying you were looking to the issue of self-approval. Where does that stand?
Talbot: It remains on our agenda and will be discussed at our spring meeting. Obviously we understand that in essence we'd be creating another certification program, but if it can be a point of centralization that can be built upon by other groups, then yes, it has value. We're trying diligently to work with all the groups in the area of codes and standards.
The fourth focus issue?
Talbot: The fourth focus issue is fair trade. We're no longer isolated here in the United States. In fact, we're probably more open than any economy. PMI's involvement allows us to work with the Federal Trade Commission and Department of Commerce, where we've been successful for our members in dealing with the elements of trade or unfair trade when the balances are tipped against domestic suppliers. Our industry is growing. We are a very viable economy for manufacturers outside our borders to come into, and we have no problem with that. In fact we promote that type of competitiveness. But we also want to make sure it's on an even ground.
Outside of these four issues, what else is close to the top of your agenda as PMI president?
Talbot: When you look at the economy that we are in today, I think this is where the value of the PMI membership really starts to show. We're all strapped with the resources within our own business's budgets, yet legislation keeps pouring in, issues of foreign trade keep pouring in, lack of standardization continues to get thrown at us and it hits our bottom line. PMI can take our core competencies in providing these services to our members and assist them through this little bit tougher time. I've urged our membership that if you look around your very own office, it's hard to find the diversity of resources that we have at PMI to offer them assistance.
Is there anything we haven't discussed that you think ought to be noted for our readers?
Talbot: Not unlike our customers' business, our industry from the manufacturers' perspective is changing. Our change is coming from a global perspective. PMI's cause is to create a broader awareness of these issues to ensure that all plumbing manufacturers and our domestic wholesale customers are aware of all the challenges that need to be addressed to maintain a competitive industry.
Supply House Times and its wholesaler readership are important partners. I specifically point to the relationship between ASA and PMI, where we have and will continue to support each other on key industry issues. We specifically appreciate ASA's efforts on the Knollenberg bill. It proves that as we work together throughout our industry, the better off we will be.