Interview With The SWA President
Two words describe the current management style at Modern Supply: communication and involvement. Pace Robinson, CEO of Knoxville, TN-based Modern Supply Co., expects to apply that approach to his role as incoming SWA president.
“My key word is communication - with co-workers, customers, vendors,” he says. “Having a regular channel of communication makes things work better. It’s not just one guy saying, ‘We will do this.’”
Around 1994 Modern Supply underwent a management transition when Mitchell Robinson, the late company founder, turned control of the family-owned business over to his younger son, Pace. Pace Robinson became CEO and Dottie Ramsey became president/COO.
Under this management team, the company has grown to eight branches, of which three - Knoxville, Chattanooga and Johnson City, TN - also operate showrooms. Each of the other branches consists of a warehouse and counter sales area.
“Dad started this company from scratch - he could do everything himself,” Robinson says. “You showed up (for work) and he told you what to do that day. Dottie and I had a different management approach and we changed the culture of the company.” More employees are involved in decision-making and management, he says.
When Pace Robinson became CEO, there were several employees who had been with the company 30-plus years. They had supervised him when he worked in the warehouse during summers while still in school. Now he was becoming their boss. “That was a challenge,” he says.
Involvement and communication helped smooth the way for change. Robinson seeks input from employees, such as feedback on a new delivery charge the company is implementing. “We had to decide how to package and market that,” he notes. “We went to committee and kicked it around.”
Different teams of employees participate in the decision-making process depending on what is being decided.
Heating and cooling is Modern Supply’s biggest product category - it is a Rheem distributor. As the product line transitions to higher efficiency models and new refrigerants and as interest in tankless water heaters increases, Modern has had to decide what should be changed in its product mix.
“We had a couple of customer focus groups over lunch with Rheem contractors,” he says. “We asked what they felt were important products for us to have. Sometimes when we do this, the answers surprise us.”
Inviting customers to comment on the products Modern carries makes them feel more “involved” with the company, Robinson asserts.
Now Pace Robinson follows his father and Dottie Ramsey as the third person from Modern Supply Co. to serve as president of the Southern Wholesalers Association.
Supply House Times: Tell us something about your background and how you got involved in this industry.
Pace ROBINSON: I am a native Knoxvillian with a finance degree from the University of Florida. When I was going to college, I had no idea I would end up in the plumbing business with my father, but when I graduated, this represented the best opportunity for me. It took about five years for me to realize that this was probably where I was going to make my home. I have been at Modern for 28 years.
When I graduated, Knoxville was starting road construction for the 1982 World’s Fair. Those road improvements led us to relocate from five old-fashioned warehouses in a two-block area of downtown to our current headquarters, about 10 miles away. My father put me in charge of the move - a big job. Later I concentrated more on the cabinet part of the business and learned a lot about showrooms in the process.
This is a family business. My wife, Karen, is special events coordinator for Modern Supply. I have two sons, Eli, age 20 and Asher, 18. Eli is attending the Wharton School of the University of Pennsylvania and Asher plans to attend the University of Florida.
I have gotten really involved with the community. It’s taxing on my time but has helped the company in terms of exposure. The quality of the team here at Modern allows me to do this. The mayor appointed me to the Knoxville Utility Board and I also serve on the board of Webb School, a private school in Knoxville. Currently I’m president of the Knoxville Jewish Community Family of Funds and also serve on the East Tennessee foundation. Both are charitable foundations that have helped me meet people and learn more about the community.
Supply House Times: How did you get started with SWA?
ROBINSON: The conventions were always in Florida. I remember coming as a college student to see my father installed as SWA president. He and Dottie encouraged me to attend the meetings. I was in the Young Executives Group of SWA. That might be something we would like to reinstate at SWA.
I’ve been a board member for SWA off and on for the last 15 years and have worked on various committees, serving as chairman on some.
Supply House Times: What do you consider to be Modern Supply’s competitive edge?
ROBINSON: First, it’s the people. Most of what we sell you can buy at many other places. Our people make the difference as to why our customers buy from us. The biggest job Dottie and I have had is putting the right people in place.
Second, because we are locally owned and operated, we have lots of flexibility. We can make a decision on the spot regarding a situation or a vendor. Many of our competitors may not have that flexibility.
Third, longevity and consistency. We have spent 58 years in this market. Even if we lose some friends or make some people mad, being here for 58 years is still a competitive edge.
Supply House Times: How can a small independent wholesaler survive and remain successful?
ROBINSON: You either need to grow or find a niche and be really good at it. It seemed the best way for us to grow was to open branches.
One branch that we opened in 2007 is doing very well. We consider it part of our success story and want to try to do more based on that model. We have never acquired an existing business. We always start from scratch - I feel that is easier.
We remodeled the Knoxville showroom in 2005. It has paid great dividends.
ROBINSON: Consolidation is a threat but it’s a fact of life. You can commit yourself to being an independent wholesaler or join somebody. There is an older generation that may not have a succession plan and has no other option but to sell or merge.
Supply House Times: Are there really fewer wholesalers out there today?
ROBINSON: There may be fewer companies, but there are actually more wholesaler locations. Ferguson has just opened three or four locations in this area. They did not buy someone else.
There may be more wholesalers in the heating and cooling part of the business because of the proliferation of brands. Each manufacturer has several brands and needs wholesale distribution for each one. That creates more competition.
Supply House Times: Who is minding the store when you are away on SWA business?
ROBINSON: I could not ask for anyone better than Dottie. But we have been working on developing the next tier of managers to handle things when both of us are away. We have a great team to mind the store. We have worked hard to find the right group of people.
Supply House Times: What’s the biggest issue you deal with in business day by day?
ROBINSON: Personnel. That is always the biggest issue and it never changes. If we handle the personnel issue right, then my job is easy. They will handle things for me. We have three full-time employees who have 35 years or more with the company: Dottie Ramsey, Jack Brantley and Bud Stalyons. They are a great asset.
Supply House Times: What do you like about the PHCP wholesale industry?
ROBINSON: It is all-encompassing. As PHCP wholesalers, we are involved in transportation, material handling, inventory management, credit and collection, sales and marketing. There are plenty of opportunities for someone to grow in many different areas. This is a challenging and exciting industry, never boring.
Supply House Times: What strengths do you bring to your position with SWA?
ROBINSON: Lots of experience. I started in this business when I was a kid. I have a different leadership style: involvement. I like to get input from people. We participated in the Leadership Knoxville program to study learning, thinking and working styles. Exercises showed us how different people learn and work. We did this as a company so we could understand each other, be aware of our strengths and weaknesses and discover why we react certain ways.
I learned that I am not the impulsive guy. I am the “let’s sit down and talk about this and decide how to proceed” type.
Supply House Times: What are the big issues facing SWA?
ROBINSON: Membership and participation. I will continue to work on those, as the last few presidents did. The organization went through a dry period - lost members and participation waned a bit.
ROBINSON: SWA is really on the move and getting stronger participation. We added members in the last two years and more are joining in 2008. It’s really exciting. For the past five years we have held the convention in the summer and tried to make it more family oriented. Members can make a vacation out of it. There are some educational opportunities at the convention, but the biggest benefit is in the networking.
Supply House Times: How has SWA managed to grow when other trade associations struggle to survive?
ROBINSON: SWA is growing because of committed leadership. The past and current leadership have worked hard to keep it viable. It takes time and effort, phone calls and visits. I expect to be doing just that.
We have tried to get people to come to the convention. We invite them to attend an educational seminar for free and tell them if they like it, we hope they will join SWA. The value of the convention proves itself when you see the seminars, the vendors and the networking opportunities.
We have been in a buying group for 30 years: Wit & Co. We understand its benefits. A buying group is invaluable for the small independent. But a trade association is just as important because of the educational and networking opportunities. Some vendors that are not in the buying groups have no other opportunity to network with us except at trade association events.
Supply House Times: What is your view of the business conditions in the SWA region?
ROBINSON: We are in a down cycle, but SWA will continue to be a strong regional. We are in markets where people want to live. Meanwhile, this is a good opportunity to clean up, tighten up and look at your business in a different way. You may have to make some tough and painful decisions, but you will probably strengthen your company in the long run.
At Modern we have been cutting back a little on our labor force. We haven’t laid off employees, but we have not replaced people who left.
Supply House Times: Do you feel threatened by the proliferation of sales channels for plumbing products?
ROBINSON: We are still relevant. If we keep doing things to stay close to our customers, proliferation won’t matter. Plumbing is not so easy that everything can be sold through retail. Wholesalers have a function. We have the expertise.
Supply House Times: What’s the most profound change in wholesaling since you started in the business?
ROBINSON: Business and government regulations. For example, consider the changes in minimum efficiencies for air conditioners. A couple of years ago 80% of what we had been selling in air conditioners was not there for the next year. That is a profound change. Air conditioning is going to change again because we will have completely different refrigerant in two years.
Other changes have been more gradual. Look at the truck driver requirements, based on local or state regulations. Those regulations can encumber your business.
Supply House Times: Do relationships still count?
ROBINSON: We are a company about relationships. We have been offering incentive trips to our customers for 35 consecutive years. It is a fantastic tool and now we allow vendor participation. When you can get people away from their business in a relaxed atmosphere, that’s a great opportunity for networking. The incentive trip is the ultimate tool to build relationships. You never get to know people better than when you travel with them. This year we hosted 126 people for a Jamaica trip. In March 2009 we are offering a cruise to qualified customers and vendors on the new Carnival Freedom that will visit Cozumel, Mexico; Costa Rica; and Panama.
Supply House Times: How can an independent survive?
ROBINSON: If you keep operating as we do, maintain relationships and stay close to the customer, a small independent can survive. This is a great industry with lots of opportunity. The American Supply Association has produced a tool to help with recruiting and hiring that spells out many of the positive things about our industry.
Maybe PHCP wholesaling doesn’t have the sizzle or cutting-edge appeal of some other industries, but it plays a very important role in the everyday lives of consumers.