Incoming ASA President Jeff New is a happy guy. Maybe people who know him better have witnessed angry or sullen moments, but after numerous encounters, this reporter has trouble picturing him without a smile on his face. And it’s not just him. His Mid-City Supply Co., based in Elkhart, IN, teems with friendly faces, many of whom have been there almost all their lives. Something feels very right about this company and its leader.
It’s not pie-eyed optimism I’m describing. New is a realist about the problems facing this industry, and he’s experienced his share of economic downturns in his manufacturing-based trading area, including a minor slump in 2007. It’s just that he sees problems as things to be tackled and solved, or at least endured, rather than fretted over.
“This is a fun business,” he told me. “I have a great time at work and really enjoy what I do and the people I work with. Our customers are fun to deal with and our suppliers are good people as well. Heck, we sell toilets. What could be more fun than that?”
60 Years Of Mid-City SupplyThe company was founded by Jeff’s father, the late Sam New, and partner Mel Cohn way back in 1947. Both were sons of small business owners from South Bend - site of the famed Notre Dame campus in north-central Indiana - who wanted to stake their own claim. So they opened a plumbing store in the then sleepy little town of Elkhart 20 miles to the east. Elkhart, now a town of 45,000, grew up quickly in the postwar era as the manufacturing center of the mobile home and RV industry, a distinction that remains today. “They could have done all the market research in the world, but not come up with a better decision than to open up in Elkhart,” said New of the founders.
By the early 1950s the company had transitioned from retailing to wholesaling. One of their early customers was a company that made plumbing harnesses for mobile homes. Sam New and Cohn bought two-thirds interest in the company, and when plastic pipe started to make its move into the plumbing market, they bought an extruder to make ABS pipe, forming a company that became known as Bristol Products. In 1972, Bristol went public on what was then the OTC exchange (now Nasdaq), with Mid-City becoming one of several different divisions of Bristol.
Jeff New came to work for the company in 1976, a little more than a year after graduating from college. He spent that year working for Lee Supply in Indianapolis, where his girlfriend and now wife lived at the time. By then his father had pretty much retired from the business, which was led by the late Floyd Catterlin, who passed away within the last year. In 1979, Bristol decided to sell Mid-City Supply back to Sam and Jeff New, with Floyd Catterlin buying the Michigan City branch, which continues to operate as City Supply.
Jeff took over as president of the newly privatized company right about the time the prime rate zoomed past 20%. With self-deprecating humor, Jeff described his “claim to fame” as taking over a company that had never had a losing year, and presiding over $200,000 worth of red ink after his first year in charge. “The next year we did much better and only lost $180,000! Boy, was that a rude awakening,” said New.
Somehow they weathered the storm and the company has since grown to seven branches in a territory spanning various small towns throughout northern Indiana and southern Michigan. Mid-City’s revenues have more than doubled in the last five years. Besides Jeff New, key managers include Vice President/Administration Jim Nelson, Vice President/Sales & Marketing Jeff Stevens, Operations Manager Tedd Kronk, Purchasing Manager Bryan Keefer, Showroom Manager Gail Sager, Accounting Manager Anita Green, plus the seven branch managers. New has supreme confidence in their ability to run the business during his extensive travels on behalf of ASA.
He has three sons in their 20s, two graduated from college and working in other businesses, and the third in his junior year at Indiana University. The eldest son has indicated he’ll be joining Mid-City eventually.
Mid-City Supply distributes plumbing and hydronic heating to residential and commercial markets. Contractors are their core customer base, and the company operates in traditional wholesale-only fashion, a topic that seems as good a place as any to begin the interview portion of this article.
New: There’s money to be made selling retail, but also a price to be paid. We have survived without it, and that’s pretty much the model of our marketplace. Frankly, we don’t want to be the first puppy to soil the floor!
I guess you could call us traditionalists. I don’t like private labeling either. I don’t see that as our role in the market. Our role is to help manufacturers get to market, and help our customers buy good products and train them in the use of those products. I don’t think we can criticize manufacturers for bypassing us if we bypass them. We deliver value to manufacturers by promoting their name.
Supply House Times: What’s the biggest challenge you face as a wholesaler?
New: I’d say keeping focused on what we’re doing and on the future. My role has changed in about the last five years. When our company started growing, I decided to get out of day-to-day operations, and that was the best thing I could do. I have very good managers to handle operations, and when I had my hand in everything, nothing got done. My managers came to me and said I need to get out of their way. From that time on, things started happening for us.
There were times when I didn’t know what I was supposed to do day after day, and we made some mistakes. But it’s okay to make mistakes as long as you learn from them.
Supply House Times: Will companies your size continue to be viable in this consolidating industry?
New: As long as we can add value to the product and be a valuable resource to vendors and customers, then we will continue to exist. When we no longer add value, we’ll disappear.
The form of that value changes constantly. It’s not the same today as 20 years ago, and when my sons hopefully take over down the road, I’m sure it will be different then.
New: Training is much more important than it used to be, simply from the standpoint that plumbing and heating products are more complex, as is just the way of doing business. We do a lot of training for both customers and our own people, and six of our seven branches have training facilities. The seventh does not simply because it’s a space issue, and they’ll have one as soon as they move to a bigger facility.
Our customers are hungry for knowledge - at least the successful ones are. We had a ground water heat pump certification class a few months ago with a great turnout, even though it cost $500 per person. The good contractors realize things are changing and they need to keep up.
Supply House Times: What do you see as ASA’s biggest challenges?
New: The biggest challenge will be, as always, participation, and the degree will depend on how well we sell the value of ASA. ASA has so much to offer that people just are not familiar with. Membership in terms of locations is higher than it was 10 years ago. The problem is, those 4,000-plus locations now represent only a few hundred companies as opposed to around 2,000 some years ago.
We need to get to the branch managers, because most don’t come to the convention anymore. Either management doesn’t let them or they’re not interested. But the branch managers are functioning like company presidents used to among our membership.
I believe there is still a reason to have an ASA, but ASA needs to learn to survive in a changing marketplace. Buying groups have changed the game to a large extent, and conventions are not nearly as important as they used to be. So we have to find a way to deliver our value in a changing environment. I think consolidation will continue, which is why we need more participation from lower in the organizations.
Another area we’re addressing is our fee structure. We presently have a cap that has the big national chains paying a disproportionately low portion of dues compared to what companies my size have to pay. It’s simply unfair, and we need to change that. It’s not coming easily, but it’s a necessary challenge.
Another focus of mine will be on political action. I hate the idea that we have to pay to play, but that is the game, and if we are going to succeed in the political arena, it will cost us money. I’m very disappointed right now in the number of Capitol Club members and hope to stimulate more interest.
Supply House Times: What are the biggest political issues facing your members?
New: Estate taxes and union check-off legislation are the two biggest issues for now, although who knows what will happen after the next election. Our challenge is to educate congressmen about what it takes to run a business. Most of them are lawyers and far removed from it.
New: Our biggest strength is leadership. This is not a good old boys club. Our volunteer leaders are a bunch of smart people asking tough questions and challenging the status quo. I can’t recall one meeting of the Executive Council where they aren’t challenging what we’re doing and asking about the value provided. These are healthy conversations to have, though difficult at times. They’re also very committed and passionate about the organization.
The staff we have is all good as well. They’re very experienced and without a lot of turnover. And we have a good core group of members that support the organization and serve on the committees.
The Education Foundation is also a strength. That $10 million-plus fund we have is an incredible asset for any organization, and with Inge (Calderon) moving to the Foundation side, I know she’s very passionate about it and will do a great job.
As for weaknesses, our communication could be better, as could our relationship with the regionals. We’ve been working on that, but there’s also room to improve. ASA has an interesting structure and we need to continue to make everything more cohesive.
Supply House Times: A new executive vice president is supposed to be on board prior to the convention. How is that search going, and will there be any change in this person’s job description or focus? (Editor’s note: This conversation took place the first week of August. Shortly before we went to press, ASA announced the hiring of Michael Adelizzi as its new executive vice president.)
New: I personally would like to see this person get visible at the member level by delegating day-to-day tasks and spending about 25% of the time traveling and meeting the members. That in itself will help participation greatly. It’s like that old United Airlines commercial where the boss decides to take it upon himself to visit a former best customer.
Supply House Times: What else is happening within ASA that is particularly noteworthy?
New: (Current President) Joel Becker started the councils, which I think is a fantastic idea. The first one is the Training Council (see story on page 52), and ASA can continue building on that.
Training and education are not only about book learning, but networking. If we can continue to expand on that and bring the value of ASA beyond the president’s level to department and branch managers, our members will respond very well. Their people need training and peer groups for networking.
Supply House Times: Everywhere I go in the industry, people ask me what’s going to happen with ISH North America. So I’m asking you.
New: I can tell you that we are committed to the show through 2008. Beyond that it will be up to the board to decide whether to continue.
Supply House Times: Is there anything we haven’t covered that you’d like to say?
New: I love this industry. It grew up as a bunch of small businesses and there’s still a lot of that entrepreneurial spirit in this industry. As I’ve gotten more involved with ASA, I’ve encountered a lot of caring, giving people who have helped me immensely. So I’m excited about leading this industry and giving back to the organization.
[sidebar] Local Family Has Reason To Celebrate Mid-City's 60th YearIn celebration of Mid-City Supply’s 60th anniversary, the company decided to partner with Habitat for Humanity in building a Habitat house in Elkhart for a local family.
“We wanted to do something to give back to the community, and felt a Habitat House would be an appropriate project for us,” said Jeff New. The build was scheduled to take place Oct. 13-20, 2007. Mid-City planned to furnish 40 volunteers daily and pay for the cost of the house. The volunteers would include what New called “all of our partners” - customers, vendors, manufacturers reps and Mid-City associates. The beneficiary family also was expected to contribute “sweat equity,” as required by the Habitat program.