The business world isn't all that complicated, according to incoming SWA President Joe Lawrence. He's been around the industry for close to four decades, seen good times and bad, but in the end it boils down to the Golden Rule. “Treat people the way you want to be treated,” said Lawrence. “We teach that to all of our associates.”
His associates work for Lawrence Plumbing Supply Co. (LPSCO), with headquarters based in Miami. A large central distribution center in N. Miami Beach serves a three-county area stretching from Key West to North Palm Beach. They also operate three offsite showrooms and three mainly pickup facilities in South Florida.
The company was started by Joe's father, Edward Lawrence, in 1954 out of the garage of his house. Like virtually all owners' children, Joe got a taste of the working world doing grungy stuff around the supply house, and hated it. “In high school, I had no desire to work for the business,” he recalls. “I was the world's worst delivery boy. It took forever for me to make a delivery, because I was always stopping to talk with my friends.”
Joe's career path instead took him to a business degree from hometown University of Miami, followed by a stint with the U.S. Army Corps of Engineers. “I benefited from the fact that I was the only non-engineer in my unit, because all I had to do was read how the Army wanted it done and do it that way,” he said with a chuckle.
His father started having heart problems around the time Joe was getting out of the Army in 1969, and asked Joe to help out with the family business. In line with his added education and maturity, he left grunge work behind while working the counter and answering phones. This time, he said, “It was more fun than I'd ever had in my life. I was doing things that were interesting and exciting, not just pulling stock.”
Edward Lawrence hung on for a long time with a bad ticker, retiring in 1984 and surviving until 1997. Meantime, the father and son spent almost three decades building the business into one of southern Florida's premier plumbing supply houses. LPSCO is now part of the Castle Group, encompassing our 2005 Wholesaler of the Year Castle Supply Co. in the central part of the state. Theirs is a loose organizational affiliation with cross-ownership that gives the affiliated companies effective coverage throughout the state of Florida, and enables them to share ideas. “It's really great to have experienced partners in the supply business to bounce ideas back and forth,” said Lawrence.
An affable personality quick with self-deprecating wit, Lawrence expressed his business philosophy as follows: “There's no magic to this business. It all boils down to people. If you have good managers, salespeople, counter people and warehouse people, and treat them right, then you've got a good business. The key is providing an atmosphere for them to grow and earn money.”
I asked the question that's in the forefront of almost everyone's mind throughout the industry. Where do you get good people? Joe responded, “I have a formula that I use to find people, but I've never found anyone who worked out using my formula. So mostly I rely on referrals from people on our staff who have to work with and manage them. It's just like taking on lines in a showroom. They have to want to sell the things in order to be successful. Well, they have to want to work with the people we hire.”
Joe Lawrence has participated in Southern Wholesalers Association activities for as long as he can remember, serving several go-rounds on the board and various committees, although this is his first stint in the executive ranks. We talked about various issues impacting SWA and the industry at-large. Here's how the interview went.
SUPPLY HOUSE TIMES: What's the biggest thing going on with SWA these days?Joe Lawrence:No one thing, although I do want to say that we're very pleased with our new Executive Vice President Terry Shafer. We've given him a travel budget to get out there and meet his constituency, and he's brought a lot of energy to the task. He's been talking to education directors and communicating at many levels with wholesalers.
Q: How and when did you first get involved with SWA?Lawrence:I went to my first ASA Convention shortly after the CSA/AI merger, and have been involved with SWA ever since. I'll never forget when Carter Horne of the old Horne-Wilson wholesaling chain called to invite me to serve on the board. That was a wonderful thing. I like being involved in my industry - talking to other wholesalers, getting their ideas and giving them some of mine.
Q: There are fewer wholesalers around nowadays, aren't there?Lawrence:It's not so much that there are fewer wholesalers, just fewer that come to conventions and participate in association activities. I can think of more wholesalers in southern Florida who are not members of SWA/ASA than who are. I talk to them about it, but all I hear is, “I don't have time,” or “I'm in a buying group.”
The ironic thing is some of them don't even belong to a buying group, but would like to. Well, the way to get into a buying group is to hang around with other wholesalers who are in one and get invited to join. That's how I ended up with WIT. But they don't see that.
It's very different from earlier generations. When my father started in the business, he would go to the SWA convention just to meet with manufacturers who wouldn't sell to him unless he was a member. As a member he gained credibility. Once you joined the association, you were considered a legitimate wholesaler and could buy almost any line you wanted. I also remember when certain prominent manufacturers wouldn't sell to you unless you had a major fixture line, which marked you as a legitimate wholesaler. If you were a PVF distributor wanting to break into plumbing, it was hard to do.
Today, there isn't that aura of legitimacy anymore. Now, just about anyone can buy any line as long as they have the money. In that sense, it's easier to break into the business than in the old days.
Q: It's interesting to hear you say that despite all the consolidation taking place, there are not necessarily fewer wholesalers around. The implication is that when people lose their jobs due to consolidation or decide to leave on their own, they are opening up new supply houses. Is that what's happening?Lawrence:I know that in the Miami market I can think of three guys who opened up in the last 10 years. I'm not sure where they came from, because we haven't had anybody bought up in that time. Consolidation is certainly picking up again, but it seems like it's the bigger wholesalers being bought up, like Parnell-Martin.
Q: How do you convince non-participating wholesalers of the need for joining your association?Lawrence:It's an ongoing battle. The biggest problem I see for both SWA and ASA is that buying groups have taken some of the need for trade associations away. Some, I want to emphasize, but not all. Because not all vendors participate in buying groups, and almost none of the education that's needed comes from buying groups. Buying groups as a rule just don't do education well.
We must convince wholesalers of the value of the education offered by our associations. SWA has a wonderful education program going each year. Anybody who has gone to it comes back saying it's worth the price of membership right there. We spend two and a half days, Wednesday through Friday, so participants can be back with their families for the weekend. People like Al Bates and Michael Marks offer hard-hitting, to-the-point management training. A lot of people have gone to it at least twice.
The value is there. I'm told Ferguson buys a tremendous amount of educational materials from ASA. A company that size has the resources to do it all on their own, but why should they reinvent the wheel? Ferguson also has been very supportive of SWA. It just goes to show that there is still value in association membership to companies large and small. We just have to figure out a way to sell that value.
Q. How much did last year's hurricanes impact SWA members?Lawrence:I know we raised $7,250, which is being distributed directly to 19 employees of three different member companies. These employees lost a lot and are in particularly dire straits. There's been a lot of media publicity about New Orleans, but not so much about what's going on in Alabama and Mississippi, which also were devastated by Katrina.
I do know recovery is going to be slow. I lost my home and our Homestead branch when Hurricane Andrew hit Miami (in 1992). We hurried to get the Homestead branch back into operation, but we got it back up too quickly, because business was slow for a long time. Probably we would have made more money delaying the opening, because for six months after a hurricane all that's needed are repair couplings and pieces of pipe. Nobody starts rebuilding right away.
One of the things I like about SWA is it just seems filled with nice people who like one another. We're competitors, but friendly competitors willing to help one another out, like we did after Katrina hit.
Q. What's your take on business conditions in the SWA region?Lawrence:The Sunbelt is the Sunbelt. It's going to keep growing and will continue to be a prime growth area of the country. I know the Carolinas are very strong with new construction.
In Miami, every time a leftist comes to power in South America, we see a growth spurt. The well-off people who live down there move here or at least hedge their bets by getting one foot out. This has been going on for the last 50 years, and it's a multi-ethnic phenomenon. Castro isn't the only despot out there. They come not only from Cuba, but Venezuela, Colombia, Haiti and so on. More than 50% of the population of Miami/Dade County is foreign born, and it's been a boon to the area.
At the same time, gross margin dollars are getting harder to come by. The trend is toward lower priced materials such as PVC and CPVC, which means you have to sell greater volume at the same margins to get the same dollars.
Q. Do you feel threatened by the proliferation of sales channels for plumbing products?Lawrence:It's always a threat, but you just have to deal with it. We'd like to be the only ones in the world selling plumbing to everyone, but that's not going to happen. Let's face it, our vendors are breaking the channel, and we wholesalers are breaking the channel.
I think we'll get our share because we do a better job of delivering services to our customers than anybody else. We provide the economic benefits such as breaking bulk and so on. If we stop providing the economic benefits, we'll dry up.
One of the most troublesome issues that has arisen, especially with our showrooms, is Internet pricing. People bring ads from the Internet into your showroom wanting to buy at that price. We've raised this issue with vendors and some are starting to come up with minimum advertised pricing policies. This is entirely legal, saying that if someone wants to use their name and logo, they can't advertise selling below a certain price. It protects their brand integrity.
If vendors want us to stock their products, we can't have this happening. Most have responded pretty well. I see more vendor letters going out warning of minimum advertised pricing. What I haven't seen yet are warnings saying that if it happens twice, we'll pull the line. Maybe that's coming.