Metropolitan Industries - A Business Unlike Any Other
Buckingham Fountain. Sears Tower. McCormick Place. Navy Pier. Field Museum. United Center. John Hancock Building. Millennium Park. Arlington Park Racetrack. O’Hare Airport. These are among the landmarks most familiar to Chicago tourists, and they are a source of pride and delight to us native Chicagoans.
Most of us, out-of-towners and natives alike, never get to see beyond the facades and activities taking place inside these attractions. Exceptions include a few thousand people associated with the Chicagoland plumbing and mechanical industry. These folks hang out in the bowels of these facilities to install, maintain and service the equipment that keeps water flowing for comfort and convenience - or, in the case of Buckingham Fountain, just for show. All of them deal in some manner with the products and personnel of Metropolitan Industries, a company involved with just about every prestige project one can think of in the Chicago area.
Based in suburban Romeoville, a few miles beyond the city’s southwest border, Metropolitan describes its business as “the pumping world’s one-stop shop.” Founded as Metropolitan Pump Co., the company began as a specifications rep firm 50 years ago specializing in pumping equipment. A lengthy article on that company appeared in the August 1977 edition of this magazine.
Despite a 1994 name change to Metropolitan Industries, they are still widely known as Metropolitan Pump, a name that occupies equal space on their building with the Industries designation. However, the name change recognizes that the business has evolved and grown well beyond the scope of the 1977 business. They design and engineer pumping and testing systems, they manufacture pumps and controls, they operate a service and repair arm, and provide a variety of other services in a “whatever it takes” approach to satisfying customer needs. That includes extensive training of customers in all the markets they serve, which spans municipal, commercial, industrial and residential projects ranging from the tallest skyscrapers to single-family homes. The owners track P&L statements for nine different profit centers.
On the municipal side, they have gone well beyond purveyors of pumping equipment to employing their own computer engineers on staff capable of designing and computerizing a town’s pumping system. They also provide weatherproofed pumping stations - building enclosures that house standby generators and all the controls needed for a municipal pumping system. Metropolitan’s staff also has developed wastewater treatment expertise to the point where they can design, build and provide complete water filtration capable of removing radium, iron, manganese, fluoride and arsenic contamination, all via customized controls.
Metropolitan has obtained testing certification for pumping systems, which they provide as a value-added service to customers. Not only are they UL certified, they built UL’s testing system, as well as a faucet testing system for Chicago Faucets.
The vast majority of the company’s $40 million revenues come from the greater Chicago area, although the owners believe that market is pretty close to saturated in terms of what more they can get out of it. So future growth mostly will come from a national sales division that has made the most inroads thus far on the East Coast and Midwestern regions where basements are prevalent.
“What kind of company are you?” was the first question posed to company Chairman John Kochan Sr. in covering this story. “Good question!” he replied with a chuckle that acknowledged the difficulty in categorizing this firm.
Kochan has been with the company since 1965 and has been the owner, along with son John Jr., since the 1980s. It was started in 1957 by the late Marty Martinson and in the early days operated mainly as a rep firm, although from the beginning they were heavily into the design and engineering services that remain a forte. Son John Kochan Jr. joined the company in the 1980s when they bought out Martinson, and now serves as president. His father credits him with designing many niche pumping products that led the company into manufacturing. These products get sold through other manufacturers’ reps in markets outside the Chicago area. Another Kochan son is a computer expert who heads up the company’s IT department - ironic in that Kochan Sr. is about the only Metropolitan employee who doesn’t even operate a computer.
Although neither Kochan Sr. nor Jr. has an engineering degree, their pumping system expertise hardly needs to be validated by letters after their names. The company holds around 16 patents and has consulted with major engineering firms such as Kansas City’s Black & Veach. Impressive for a company their size, Metropolitan employs four full-time R&D people. That’s more than you’ll find at a lot of billion-dollar industrial companies.
Taboo-Free ZoneA company like Metropolitan would have a hard time coming into existence in many parts of the country. They would run afoul of the unwritten taboos that exist throughout most of the industry restricting who sells what to whom. For instance, although they quote jobs for distributors from time to time, they sell mainly direct to contractors. That would mark them as beyond the pale in most areas, but not in sweet home Chicago.
“That’s just the way the industry has always been in Chicago,” explained John Jr. “In other parts of the country you see wholesalers heavily involved with commercial projects, but not here.” On occasion a distributor will ask Metropolitan to quote a job, and when that happens, they’ll do so and get out of the way. For the most part, though, Chicago area distributors don’t chase that business and tend to view Metropolitan as a partner rather than a competitor.
Conflicts also would seem to exist between their own manufactured goods and the lines they represent for other manufacturers. Don’t their principals see them as a competitor? “To some degree,” answered John Sr., suggesting that the topic arises from time to time. On the other hand, most of the equipment Metropolitan manufactures are niche products that fill gaps in principals’ lines. Principals also have to weigh the value of the company’s sterling reputation and service capabilities against the possibility of losing a sale here and there.
About half of their rep business operates on a buy-sell basis, which arguably also puts them in the distribution business to some extent. In particular, Metropolitan keeps a large inventory of Hydromatic products. “We try to grow smaller distributors,” said the company president. “Once we grow them, we’ll hand them off to Hydromatic as a direct account, because then it no longer makes sense for us to sell them. Sometimes if there’s a flood and a bigger wholesaler needs a lot of product in a hurry, we’ll just loan them the product and they’ll give it back to us. We try to help everybody accomplish their goals,” said John Jr.
Metropolitan also operates a large service and repair division using its own technicians. “We service all types of pumps and controls,” explained John Sr. “That’s specialized work and the contractors count on us to service what we sell. We have over 70 vehicles dedicated to sales and service.”
Anyone who hangs around the Chicagoland plumbing industry as I do knows that this company is held in high esteem by contractors, distributors, local reps, plumbers and the engineering community. If there’s any grumbling in their ranks about competitive intrusion, it is so muffled as to be inaudible.
Mastery Of The BasicsAlthough the business is diverse in terms of markets served and services rendered, from another perspective Metropolitan’s success has stemmed from a simple game plan. “We pump water, we heat water and we treat water,” said President John Jr. “We don’t sell faucets or bathtubs. We try to keep it in the box and not spend time on stuff not related to our core business. That’s why we don’t represent a lot of lines compared with most rep firms. It’s not fair to our manufacturers for us to take on a line just for a paycheck.”
Their approach to business also is a simple one. It’s based on providing value-added expertise and service, and charging accordingly. “We’re probably the most expensive company in the business,” said John Sr., “but customers like us because we’re there for them when needed. They like our service capabilities, which is another reason they do business with us.”
That service includes plenty of training for personnel ranging from plumbers to inspectors to engineers and anyone else willing and able to learn the intricacies of pumping systems. Many of the courses they conduct carry CEU credits.
Leadership Counts“What’s contributed most to the success of this company is good people,” John Sr. told me at one point. Out of his earshot I spoke with some of those people, who told me of a two-way street. Good people develop because of good leadership.
A business dictum that I believe originated with Peter Drucker says that managers gain power from above while leaders gain it from below. Since they own the company, the Kochans automatically inherit managerial power, but the way they have wielded that authority has created a workforce willing to run into brick walls for these guys.
During my tour of their facilities, I ran into about a half-dozen people who were with the company during our first story coverage 30 years ago. Most employees in both the office and factory were dressed in shirts bearing the Metropolitan insignia, which I took to be a company dress code. Not so, I was informed. It’s just that the company gives out gobs of those shirts, they’re comfortable and practical, and people take pride in wearing them. It was an expression of loyalty speaking louder than words. Speaking of loyalty, the company still deals with the same attorney that incorporated it and has been with the same bank for more than 40 years.
Metropolitan builds loyalty and esprit de corps in part by sharing the wealth. They offer top pay and generous benefits, including 100% hospitalization. They spend a lot of money on company family day celebrations and other perks. When an employee doesn’t work out, instead of instant dismissal, they first try to move people around to other positions to take advantage of hidden talents. When people do leave to go to work for someone else, they leave with a wide open door to return. John Sr. noted that about a half-dozen of the company’s employees left and came back. “There’s nothing better than to have someone leave and then come back with the message to fellow employees: ‘Hey, don’t leave this place!’” he said. The company also abounds with personnel from two generations of the same family.
Most of all, Metropolitan’s people like working there because the Kochans listen to everybody. They run an annual managers’ meeting in which around a fifth of the company spends the day analyzing problems and figuring out ways to make the company better. It’s not just a feel-good affair. Reports are written up and action plans generated.
Day-to-day the Kochans delegate authority like monsoon clouds dumping rain. People are trusted to do their jobs right. The result of all this paternalism and trust is a long string of growth and unblemished record of profitable years stretching back a half-century.
It all translates into an old-fashioned way of doing business. John Sr. remarked: “Our philosophy is that if something goes wrong out there, take care of it at all costs. It will pay big dividends in the future.
“So many big companies today reduce engineering, R&D, advertising and many other items so they can boost the P&L. Many managers don’t have a five-year or 10-year program; it’s all geared to the next 30 days.
“We look one year and five years ahead, and reinvest funds into engineering and research and development to assure the future of Metropolitan Industries.”