Roots don't clutch much deeper into this nation or the distribution industry than those of George Conyngham Jr., the incoming president of the American Supply Association. He is a descendent of Revolutionary War hero Capt. Gustavus Conyngham. A merchant shipper by trade, Capt. Conyngham lent his talents to the Continental Navy during our War of Independence, and was credited with capturing or destroying more than 60 British ships between 1777 and 1779. Afterward, he was twice captured and imprisoned in England, escaping the first time, then recaptured while aboard a ship returning to America. He got released for good in 1781 thanks to a prisoner exchange worked out by our fledgling country's Ambassador to France, Benjamin Franklin. Capt. Conyngham later assisted with the defense of Philadelphia during the War of 1812. Three U.S. Navy destroyers in service between 1916 and 1994 were named after him.
The Conyngham clan has remained prominent in northeastern Pennsylvania ever since. A street bearing his surname runs through George's home town of Wilkes-Barre, where for 116 years his family has prospered in the supply business.
The family's Eastern Pennsylvania Supply Co. (EPSCO) was started way back in 1889 by George's grandfather, William H. Conyngham, a brother John Conyngham and partner Woodward Leavenworth, as a mining supplies distributor - handling everything from rails and carts to picks and shovels to mule shoes and beyond. The region was a center of the anthracite coal industry until the post-WWII era, when oil started to overwhelm coal as an energy source. The local coal industry was buried for good, literally and figuratively, by a 1959 accident in which miners accidentally breached a thin seam beneath the Susquehanna River. A dozen people died and some 10 billion gallons of water flooded the 50 miles of coal tunnels latticed throughout the valley.
Long before that, EPSCO's distribution business had expanded beyond mining into a variety of other goods. A company catalog from 1920 describes its content as spanning “hardware, mine, mill, railroad, contractors, plumbers supplies & machinery.” (See images on page 38.) Today's company is still quite diversified, deriving about half of its volume from our industry's mainstays of plumbing/hydronics/industrial PVF, with the remainder spread among HVAC, electrical, water systems, building materials and industrial mill supplies. EPSCO employs around 125 people in 10 branches spread throughout a territory encompassing Wilkes-Barre, nearby Scranton, Allentown about 65 miles to the south, as well as some rural communities in the region.
According to George, the Wilkes-Barre/Scranton metropolitan area has been economically stagnant for decades, having lost about half its population since its mining heyday. EPSCO has scraped by through steady expansion into relatively prosperous rural areas and into Allentown, which is undergoing an economic surge. Still, theirs is not a trading area that would make most distributors salivate. George Conyngham lives this era's distribution mantra: “You can't always get the price you want, so the alternative is you have to drive costs out of the system.”
Remarkable LongevityThrough good times and bad, this is a company with a remarkable record of stability and longevity. George Conyngham represents only the third generation of his family to lead the 116-year-old business. His father, Guthrie, and uncle Jack, comprised the second generation, taking over shortly after WWII. Jack retired at the end of 2004, while Guthrie, after 58 years of service to the company, remains active as CEO, although George heads day-to-day activities as president. (Guthrie also is CEO and George president of a holding company, W. H. Conyngham & Co., which owns EPSCO and some farming operations in the area. Another uncle, William, headed the farming operations until his death in 2004.)
George Conyngham joined the company in 1979, and like most heirs to PHCP distribution companies, paid his dues learning the business from the bottom up. He recalls showing up for work the first day armed with an economics degree from Lafayette College and wearing suit and tie, only to be told to go home and change into jeans and a T-shirt, because he would be spending his time unloading trucks. Going to school at night, he acquired an MBA in finance by 1982. This entitled him to a promotion working the counter! He later served stints in sales, purchasing and computer systems before ascending through the managerial ranks as office manager, operations manager, vice president and then president.
Anyone who takes the reins as president of a trade association faces extended time away from his/her own business during the year at the helm. This requires a solid core of backup management, and EPSCO is fortunate to have an especially seasoned group in the persons of George's brothers Don (VP sales and marketing) and Malcolm (building materials manager); Reynold (“Ren”) Schuler (VP operations); Joe Kerestes (VP finance); Gary Jones (marketing manager) and David Haines (inventory control manager).
EPSCO personnel have given many years of service to the former Mid-Atlantic Wholesalers Association (MAWA) and its merged successor, the Wholesalers Association of the Northeast (WANE). Both Guthrie and Jack Conyngham served as MAWA presidents, as did Ren Schuler. George also is a past president of MAWA, as well as a board member of WANE, but is the first from his company to participate in an executive position with the national association. “In the old days, there were a lot of wholesalers tied primarily to the regionals, some of which had bigger conventions than the national ASA,” notes George. “I was on the MAWA Board when the White Paper came down recommending ASA reduce the regionals from 13 to six. It was very controversial, but I supported it.”
Just as Richard Nixon's sterling anti-communist credentials helped him open the door to China, it inclines people to listen when a faithful regionalist like George Conyngham speaks up on behalf of ASA. His background running a supply business in a problematic economic environment also should serve him well in light of the tough challenges facing ASA.
He speaks realistically about those challenges, some of which have no apparent solution. The most threatening one, of course, is declining membership due to industry consolidation, which ASA's leadership can do little about. Creative thinking will be required in the years ahead to cope with this issue.
Something else of value that Conyngham brings to the ASA table is his background in a longstanding family business. Business literature is filled with tomes describing why family businesses tend to fold after one or two generations. What's EPSCO's secret for sticking around so long? I asked him.
“A big piece of that has to be attributed to the second generation running this business - my dad, Guthrie, and his brothers Jack and William. They agreed long ago that whenever there was a disagreement of two against one, they would shake hands and present a united front to employees and the rest of the world. They also resolved not to let business decisions impact family relationships. My generation tries to maintain the same attitude in discussions involving myself, my two brothers in the business and other managers. Sometimes we have quite heated discussions behind closed doors, but we try to reach a consensus and unite in support of any strategic decision,” George explains.
This collegial attitude came out in a discussion of ASA's traditionally strained relationships with regional affiliates. According to him, one of the most positive developments within ASA during recent times has been a decline in internecine squabbling.
“Clearly, our trade association benefits most when both the regional and national associations are strong. I recognize the right of the regional associations to their independence, their right to bill and collect, determine dues and put on their own programs,” states Conyngham. “At the same time, the national association has a significant role to play that can't be done as well by the regionals. None of them can draw upon as many educational resources, for example. Also, at the regional meetings you network mostly with competitors, while the national ASA enables you to broaden your horizons.”
In his view, much of the historical discord can be traced to ASA's institutional roots in being cobbled together in the late 1960s from two very different organizations, the old Central Supply Association and American Institute, one an amalgam of regional groups, the other national in scope. “Squabbles come mainly from personalities, but if one were to start a brand new trade association, I don't think you'd go about it the way we did. Many of the original regional members of ASA started out not only with a high degree of autonomy, but outright hostility toward the national organization. They made up their minds from the beginning not to pay any attention to national. I think it was amazing they were able to get together at all.”
That is mostly water under the bridge, he thinks. “Years ago there was a lot more animosity than there is now. (ASA Executive Vice President) Inge Calderon has done a good job defusing a lot of it, and so have (outgoing ASA President) Dottie Ramsey and many other leaders at both the regional and national levels. Personally, I intend to continue the process already started of building trust between national and the regionals.”
Lack of trust may have played a part in the sudden, shocking demise of the WDA regional. “That was a shame, and it just kind of snuck up on us. If there's a regional in trouble and that might need assistance from ASA, we'd like to know about it earlier than we did with WDA,” George comments.
Education the KeyTwo issues dominate his business thinking and that of most PHCP distributors, says George. One is health care. “The cost of health care is crushing, whether you're a small business, a large corporation such as GM, or even a nonprofit organization. It's one thing to have five or eight percent increases year after year. Now, 15 percent is normal. That adds up to awfully big numbers if you have a couple of hundred employees,” he says. There's not a lot ASA can do about this, except to continue the good fight as part of a business coalition lobbying Washington for tort reform, health savings accounts, association health plans and any other legislation aimed at alleviating the expense. “It's also the responsibility of local business owners to push their own Congressmen and Senators,” George emphasizes.
“In the short term, I think health care costs are what keep most small business owners up at night,” he says. “In the long-term, the main issue is where can we get trustworthy employees and get them to stay with us. Here is where education comes into play. To me, the Education Foundation is one of the most important keys to being a part of the national association. We're just a little shy of the original $10 million endowment campaign, and we expect over the next couple of years to close that out.”
George also expresses enthusiasm about ASA's technology initiatives via the Center for Advancing Technology. He acknowledges that EPSCO is one of numerous ASA members that have been slow to participate in the association's Industry Data Base (IDB) project to establish a common product numbering system. “We don't participate mainly because it doesn't cover electrical,” he explains, “but we'll be revisiting this. The issue with IDB is not content, but getting your computer to interact. You need to have really clean data to be able to synchronize. Right now we have probably 75 percent of our stock mated up to the database we use.”
I asked George for his thoughts on what ASA will be doing differently five years from now. He responded, “We will have to run more efficiently. Just as we need to streamline operations in our businesses, we have to make sure the ASA office has the right number of people doing the right things.” To that end, the ASA Executive Committee had commissioned a study of association operations that was scheduled to be reviewed at a July Board meeting, too late for any information to be reported in this edition.
He added, “Consolidation seems to be picking up again, so I suspect we'll see a continuing decline in membership. I'm not sure how we'll deal with this. It may require changes in the way we deploy programs, perhaps toward Internet-based training, but that's down the road. I'm not sure if it will require a change in dues structure. That's not anything we're discussing right now.”
George made the point that many of the challenges faced by ASA are not unique to the PHCP industry. In light of their diversified product offerings, EPSCO personnel also have participated to varying degrees in several other trade associations, including HARDI, NAED and the old NIDA/SIDA group. All face many of the same issues as ASA.
Even though EPSCO is an active participant in Affiliated Distributors, Conyngham doesn't buy the argument that the buying groups have usurped the role of trade associations. “Increasingly I hear people say they get everything they need out of a buying group, which I don't believe. It's probably true as far as vendors you already do business with, but you don't get the opportunity to network with vendors not doing business with your group. I think most wholesalers would have trouble getting 50% of their volume through their buying groups, so it's important to spread out and get to know others. That's where I see a lot of value in the national association, and to a lesser extent the regionals.
“Let's be honest,” he adds. “The best thing a wholesaler gets from a buying group is the rebates. That's attractive, but in the long run you stand to benefit even more from expanded networking opportunities.
“That's why I am excited to be part of the leadership of ASA,” says Conyngham. “Many people say they're too busy to get involved with ASA. To them, I say, look again. I think it's a tremendous organization. It's given me a chance to mingle with some of the greatest people in the industry, and I'm looking forward to seeing many of them in Orlando.”