PRODUCT TREND OF THE MONTH: Private Water Systems
At Preferred Pump, sales of water well supplies were very strong, although as predicted, seasonal and affected somewhat by weather in the last quarter, said Randy Lyne, president.
“Preferred experienced double-digit sales growth in same-store sales,” Lyne noted. “Margins stayed roughly the same, although we experienced some volatility with commodity items.”
One manufacturer said its sales were up “significantly” in spite of a flat national market for pressure tanks and attributed the increase to housing starts. The outlook is rosy for this product category because a significant percent of sales are for replacement of existing equipment.
Primary growth markets are in the Southeast and West Coast, the manufacturer said. Most other regions were flat, with a decline in the upper Midwest.
Four-inch submersible pumps have shown a steady increase and are expected to continue to grow, according to Steve Potts, pump product manager at A.Y. McDonald.
Preferred Pump’s Lyne also identified the 4-inch submersible pump and motor as the highest growth product.
“However, we are seeing a very large increase on electrical components for motor controls and are astounded at the engineering and manufacturing breakthroughs that are making their way to the water well contractor,” Lyne said. “Commercial and industrial markets are also opening up for us.”
He noted that commercial and industrial users have become much more knowledgeable in their purchasing decisions and realize the need for a dedicated specialist to handle their pump and pressure systems needs.
New DevelopmentsIn June 2006, A.Y. McDonald added the DuraMac pressure tanks to its product line. This durable line of pressure tanks has enabled the company to offer an extended warranty on its 4-inch submersible pumps, Potts said. When a DuraMac pressure tank is installed with a corresponding 4-inch submersible pump, the standard warranty is extended from three years to five years.
In 2006, Preferred Pump made some sizable investments to improve services at several of its branches with qualified employees and equipment, according to Tom Bowers, group manager, director of marketing.
A major contributor to the distributor’s success in the past year is its long-term incentive and loyalty program, which rewards customers with trips to exotic locations, Bowers said. Preferred Pump celebrates 25 years in business in 2007.
Challenges“We can control - or at least influence - many things when it comes to distribution,” said Lyne of Preferred Pump. “The wild card is and always has been the concept of the private water well vs. the municipal water system. In close second are land use issues, which are all local and therefore too numerous to deal with as a whole. Our biggest challenge is the influence of governmental entities.”
To address these challenges, Preferred Pump works with trade organizations to educate legislators and influence policy, Lyne said. Legislators who did not grow up on a farm or live in a rural area have little if any exposure to water wells. Some may not even know they exist. By working with effective trade organizations and political action committees, distributors can help legislators see the wisdom of the private water system.
“This is becoming a very specialized business, and the complexity seems to grow by the square each year,” Lyne noted. “If you are not completely and totally committed, you won’t like the results. Customers and vendors continue to have newer and higher expectations, and you have to be ready to meet them without question, even if it means learning new tricks or turning your back on your old method of operation.”