Interview With The SWA President
Intermediary. That is how Mike Larkin describes his position as area leader, Eastern region for Dayton, OH-based WinWholesale. He works from the Regional Accounting office in Lawrenceville, GA.
“I work with our companies in the Carolinas, Georgia, Florida, northern Alabama, southern Ohio and eastern Tennessee,” he explains. “I have fiscal and fiduciary responsibility - I teach, motivate, encourage, mentor. I’m the go-to guy and the intermediary between the local company and corporate. My most important role is to help our local operations grow and succeed.”
Sounds like good qualifications for an SWA president, right? Independents represent the largest segment of members within SWA, and independence is what WinWholesale is all about.
“We have owners under every roof,” Larkin notes. “Each one of our companies is a separate corporate entity. The president (manager) is a corporate officer and has the ability to operate autonomously, make decisions, decide who to sell to, what to stock, what levels to stock and what price to sell it at.”
WinWholesale gets involved on the operations side, adding efficiency through automation and strength through national vendor relationships, he adds.
Larkin has been with WinWholesale 27 years. His entire working life has been spent in supply houses, starting when he was 15 years old, working for Masters’ Supply in Elizabethtown, KY.
During the summer of 1971 Larkin and a friend were hired to paint a building for Masters’ Supply. When the weather was too hot or rainy they were invited inside to stock shelves and pull orders.
“The branch manager took an interest in me,” Larkin recalls. “I fell in love with the industry.”
He opened his own supply house, Elizabethtown Winnelson, in April 1977.
Here are excerpts from a recent Supply House Times’ interview with Larkin:
Supply House Times: How did you get involved with SWA?
MIKE LARKIN: I joined SWA in October 1994. A brochure I received in the mail from them about regional training piqued my interest. I had always been involved with trade organizations - Homebuilders, PHCC, Chamber of Commerce. After calling SWA for more information, I felt I could learn something from them. I realized there was a lot of talent within SWA that I could utilize to help me grow my own company.
Supply House Times: What are the benefits of membership in SWA?
LARKIN: Networking and sharing of ideas are the largest benefits. The training that SWA offers is a close second.
Supply House Times: What strengths do you bring to your role at SWA?
LARKIN: WinWholesale’s local companies are somewhat akin to an independent. Having operated a supply house within the WinWholesale framework has given me a unique perspective. I believe that I can bring a bit of that independent mindset along with some of the efficiencies that come with a large company to the SWA.
Supply House Times: WinWholesale pulled off a blockbuster of an acquisition a couple of years ago with the Noland purchase. What’s your feel for the acquisitions market lately?
LARKIN: Logically you would think there will be more acquisitions, and I do think that the industry will continue to consolidate to some degree. There are acquisition possibilities out there. Unfortunately, many of them have been hit so hard by the current economic conditions that there’s not much left to merit an acquisition. Smart companies will pursue acquisitions that make sense to a geographic or industry gap in their structure. However, having said this I’m not certain we will see a whole lot of particularly large acquisitions. The credit market will have an impact on acquisitions - I’m not sure if there is money available to do big deals. Acquisitions may make sense for some companies at this point, but looking down the road, I don’t think we’ll see many in the short term. We are always looking, but haven’t seen anything that’s a good fit for us and our business model.
Supply House Times: What are some of the differences in the Noland Co. of today under WinWholesale’s ownership compared with Noland the independent company?
LARKIN: WinWholesale has always been a bottom-up company, where decision-making is pushed down to the lowest level. All revenues for WinWholesale come from the bottom up. Noland had a more traditional wholesale business model. Decisions were made at the top, then pushed down to the branches. That is changing under WinWholesale’s ownership. WinWholesale operates very efficiently for an organization our size. We have very few people at the corporate level. We have integrated Noland’s corporate functions into ours. Now more decision making is pushed down to Noland locations. This is probably the biggest change for the Noland locations today vs. prior to the acquisition, and the fact the Noland local company managers will be truly rewarded for their efforts with no caps. It has been a very good marriage. We took some of the best practices from Noland and applied them to WinWholesale. Noland has adopted many of our best practices as well. Both sides have benefited.
LARKIN: I will continue in my role as an Area Leader for WinWholesale while serving as the president of SWA. If something does come up and needs to be addressed while I am working with SWA, Ronald Bohannon, Eastern Regional Vice President, will help take care of my companies.
Supply House Times: What are the biggest issues facing WinWholesale and SWA?
LARKIN: At WinWholesale, the biggest issue is time - there is so much to do and so little time to do it in. But then we are all in this together. The market has shrunk and we are challenged to maintain our share and grow it. WinWholesale is over 50 years old and has enjoyed a very healthy record of consistent gains. It is our intent to continue this even in a down market. It is, admittedly, more difficult now but I have absolute faith in our people and our shared ownership business model to continue the legacy.
At SWA, the biggest issue is staying viable. SWA is a great organization and currently very viable, but if we are not careful, we run the risk of slipping into complacency. Membership and participation remain critical issues. When the market contracts like it has done, one of the first things people do is cut expenses such as trade association membership or something else they see as non-essential. As a viable organization we see ourselves as an essential part of the industry.
We are going to use a different format at SWA’s annual convention this year. Rather than have the committees make decisions regarding membership, education, the convention or member services, this will now be done in a strategic planning session that all members are invited to participate in. There is always a lot of talk about best practices. We will be having a “Best Practices” session where the membership can share their best practices and learn from others. We are polling our membership to see what they want rather than have the board and executive committee decide. We are not just doing what we have always done. We expect our convention to be much more meaningful.
Additionally, we have formed a Leadership Development Council that is charged with finding ways to keep SWA headed in the right direction and involve more new industry leaders in the association.
Supply House Times: What is the current status of SWA?
LARKIN: We are strong and holding our own. We have had some resignations but then added back in two or three new members. So the impact was neutral. There is an old adage that goes “you either grow or die” and the SWA will continue to grow.
Supply House Times: How serious a threat is consolidation to our industry’s future?
LARKIN: I don’t think it is that big of an issue now. I’m not sure it’s as much of a threat as it is the natural maturation of the industry. Economic cycles like the one we’re currently going through help provide a correction that every industry needs from time to time. This ultimately benefits both the wholesaler and our customers as we are forced to do a better job to survive. We may have seen the worst of it already.
Supply House Times: What is your view of business conditions in the SWA region?
LARKIN: Business conditions in the SWA region are tough. If you look at the housing permit survey in the front of each issue of Supply House Times you’ll see that new housing permits were off 54% at the end of January 2009. I have watched this statistic for 20 years. Half of the country’s housing permits - for both single and multi-family - are issued in the South in SWA territory. We are experiencing the same slowdown as everyone else, but still 50% of the housing permits issued in this country are issued in our area. Commercial construction has been strong here for the last couple of years, but there are some signs of this being affected by the slowdown as well. It is a great area that historically has outperformed most of the rest of the country and once we get back to some degree of normalcy we will benefit from the rebound. It is a great area with a lot to offer. Little wonder that there are people moving here daily.
Supply House Times: Nearly half of the wholesalers responding to the Supply House Times Premier 150 survey project a decrease in sales in 2009 and another 26% project flat sales. What’s your take on sales for the PHCP wholesaling industry overall in 2009 and beyond?
LARKIN: I’d like to think we are near the bottom of the downturn, but do think we will bump and drag along at the bottom for the next year anyway. Sales will be down, no question. Certainly residential construction continues to struggle. However, commercial construction remains fairly strong and we expect it to continue through most of the year. There is still business out there, it’s just a matter of the pie being smaller. So a strong focus on good selling can help you keep your piece of the pie or even get a bigger slice.
One of the best parts about being in this industry for a long time is that I have been through this before. This is the most severe slowdown I have ever experienced, but I know that it will end and we will recover. We may never see the level of sales we had in 2006, but there will continue to be strong demand for housing and infrastructure in our country.
Supply House Times: How can an independent wholesaler survive today?
LARKIN: Independent wholesalers can very easily survive - they are a tough lot. They have strong relationships in their regional areas. They are able to make decisions locally to adjust their market strategy. Basically, they can do whatever needs to be done to get the job done. Admittedly, they can be at a disadvantage with vendors because of size and volume, but most of this disadvantage has been negated by the buying groups. Independents can and will survive. Membership in a buying group is a key component of their success. These groups have filled a very important niche. I admire the independent wholesaler. I like to say that I operated an independent supply house and while I operated independently I always had WinWholesale behind me. This is something that many of my friends among SWA members do not have. It can be tough, but they’re tougher. I love the “no hill for a climber” attitude of most of the SWA members that I have met and got to know.
It is important to remember that the wholesale distributor is the grease or oil that lubricates our capitalist society. Our economy could not survive without the wholesaler. We are the proverbial middleman that everyone wants to go away, yet the entire system would collapse without us. We are here to stay.
Supply House Times: Is there anything else you would like to say to our readers?
LARKIN: Being involved in this industry has been an adventure for me. I did not wake up one day in high school and say “I think I’ll sell toilets and pipe for the rest of my life.” It was fate or destiny or just plain dumb luck that I ended up in this industry. I have never once woke up and dreaded going to work. What I like most about this industry is the relationships, which tend to be long-term and deep. I also like the fact that every day there is a new challenge. I was blessed early in my career to get involved with WinWholesale. The WIN business model of shared ownership, maximum responsibility and authority has allowed me to grow and prosper to a degree I could not have imagined growing up in rural Kentucky. Our founders believed in helping others achieve success. I am a product of that philosophy, which continues to this day.
About WinWholesaleWinWholesale, based in Dayton, OH, is comprised of the following:
Winnelson = plumbing
Winair = HVAC
Winlectric = electric
Windustrial = industrial PVF
Winfastener = industrial and commercial fastening hardware and tools
Wintronic = electronic parts and equipment
Winwater = waterworks
Winsupply = domestic, commercial and industrial pumps
Noland = a leading distributor of plumbing supplies, HVAC, and industrial equipment in the Southeast
There are more than 470 locally owned and operated Win companies in 43 states. Also, there are more than 70 Noland branches in 12 states. The Win companies and Noland Co. are collectively known as the Win Group of Companies. For more information, visit www.winwholesale.com.