Frank Nisonger, who takes over as president of the American Supply Association at its annual convention in October, has spent his entire career with California’s Slakey Bros. organization. It began in 1974 when, armed with a degree in business from California State University at Chico, he was hired by the company as a sales trainee and put to work learning the business from the bottom up, starting in the warehouse at the Modesto branch. He hit the road as an outside salesman in 1977 working for the Lake Tahoe branch, and in 1982 was promoted to branch manager of Slakey’s Fairfield branch.
Three years later Frank joined the marketing staff at company headquarters in Sacramento, and served in various executive positions for the next 10 years, culminating in being named chairman, president and CEO in 1996, positions he has held ever since. This up-from-the-bootstraps rise through the ranks gives him an ideal perspective on the industry and its problems, which you’ll see come through in the interview that follows:
Supply House Times: What have been some of your most notable experiences while holding the top spot at Slakey Bros.?
Frank Nisonger:Over the past 10 years we have had several restructurings to accommodate growth and take advantage of economies of scale. We’ve centralized purchasing, established a distribution center and hub logistics system, consolidated branches into areas and then regions, established focused sales management for plumbing and HVAC, and consolidated credit management.
Q: How do you define your company’s core values and approach to the PHCP distribution business?
Nisonger:Our core values are integrity, reliability and employee involvement. Our approach has focused on implementing processes to efficiently get product to our customers when and where they need it. We have invested heavily in our warehousing and logistics capabilities to provide superior customer service. We also target the leading brands to distribute and offer numerous marketing programs to provide added value.
Q: What are some of the major differences in your business today compared with when you first started?
Nisonger:From a company perspective, we operate much more from a total company approach vs. the historical autonomous branch method. As for outside influences, the amount of onerous regulations to adhere to is definitely more than when I started. They add complexity and cost to the business.
Q: How has Slakey Bros. weathered the economic storm and do you have any advice for fellow wholesalers on how to cope with these dreadful marketing conditions?
Nisonger:Our sales have declined significantly over the past three years primarily due to the drastic slowdown in new construction. We have made numerous painful expense reductions and are challenged with rising semi-fixed costs - such as occupancy - and the need for adequate staffing levels to maintain superior customer service. Our success is due to our many long-term committed employees who are also bearing the financial and workload burden.
The best advice I can give is simply to communicate the financial reality to your employees so they can better understand the difficult expense reduction decisions.
Q: Is further consolidation of the industry inevitable, and what do you see in the future for independent wholesalers - both regional chains like your company, as well as smaller, single-location distributors?
Nisonger:Consolidation in the industry will return after the consolidators improve their balance sheets. The short term may cause some consolidation due to some companies needing to cash out for fear of not surviving this severe economic crisis.
I believe independent distribution will remain for years to come for both regional chains as well as single-location firms due to their ability to connect with their customers and provide great service.
Q: What’s the biggest challenge you face as a wholesaler?
Nisonger:A huge challenge we face as a wholesaler is to find new methods of operating which will lower our costs yet maintain or improve our service. We operate on razor-thin margins, and when sales decline rapidly it is difficult to reduce expenses fast enough. Contractors are accustomed to lots of service and immediate inventory availability with competitive prices from multiple sources.
ASA status reportQ: How is ASA doing today with regard to membership, finances, programs and so on?
Nisonger:ASA has really stepped up its game over the last few years. We’ve expanded our role in Washington, D.C., trying to protect the interests of the industry from unfavorable legislation and regulation. Over the years we’ve been monitoring 13 key issues, and once President Obama was sworn into office, virtually all of those issues became active.
It was truly visionary for ASA to decide over a year ago to locate this year’s NetworkASA 2009 in Washington at a time when many of those issues will be coming to a head. Our objective is to bring a critical mass of members to the convention.
Fundamentally, we always want to give the manufacturers the opportunity to bond with a great number of their customers and prospects during the meeting. But being in Washington this year allows us to bring all of the attendees up on the Hill, an experience not available during any other association’s meeting. ASA will have the ability to impact many of these key issues using our strong collective voice.
With the economy having put a real strain on our members, I am most proud that ASA has expanded our services. Take, for example, benchmarking. We have added two new monthly reports designed to provide market analysis to the membership. Overall, we expanded our programs and services while reducing operating expenses, allowing us to provide many of these services at little or no cost to our members. They need that from us this year - support to be successful without increasing expenses. That’s an important role of an industry association, and I’m very proud that ASA has done what it takes to fulfill that role.
Q: What do you see as ASA’s biggest challenges?
Nisonger:The biggest challenge is being able to engage the entire industry in our efforts, whether it be education, contributing data to our reports, or supporting our efforts to impact what is happening in Washington. There is no question that business is facing some serious challenges in Washington. Unless we can get a majority of the 75,000 industry professionals who earn a livelihood in this industry engaged, we will find ourselves with a diminished capacity to run profitable businesses.
Q: Competition from buying groups often has been cited as a factor in diminished participation in ASA. What can ASA do better than the buying groups?
Nisonger:I believe that the real reason we had a diminished participation in ASA in the past was a result of us not aggressively reaching out to engage wholesalers and manufacturers. Many did not see the association as being relevant to their businesses so they stayed away. That’s changed as we have done a great job of expanding our programming and services in some vital areas. In addition, we have done a much better job of reaching out to bring everyone together, including the buying groups.
This past year, we approached all of the buying groups to work more cooperatively with us in key areas such as education and advocacy. With advocacy, if we are to be successful, we need everyone involved. The greater the number of people speaking out, the greater the impact. Buying groups can add expanded participation beyond our membership base to our efforts at passing or defeating legislation in Washington.
As far as what ASA can do better than the buying groups, I don’t look at it that way. Instead I look at it as what we can do better together and how we can combine our strengths to the benefit of the industry.
Q: Looking five years into the future, how will ASA be different than it is today?
Nisonger:ASA’s Long Range Strategic Plan really outlines where ASA will be in five years, in 10 years and even in 20 years. Our big audacious goal is for ASA to be indispensable to achieving prosperity in our industry. We will achieve that by helping members be more profitable and sustainable with the best trained, educated and professional employees in the industry. We achieve that by becoming entrenched in the success of our members.
Q: What will be your main priorities as ASA President?
Nisonger:Continue the emergence of ASA’s Long Range Strategic Planning process, which has been a catalyst for ASA’s resurgence as a powerful and influential industry association. One of my priorities is to continue our leadership’s focus on planning and thinking strategically in building our road map for directing and managing the association’s future, and at building a stronger industry.
Q: Tell us about ASA’s new approach to the annual convention now that there is no more partnership with PHCC and ISH North America.
Nisonger:One of the greatest changes in the ASA convention is the focus of the program. In addition to building stronger partnerships between wholesalers and manufacturers, we go beyond that to provide information and programs that look into the future. Attendees will get a glimpse at the challenges our channel partners will be dealing with. It’s information that they can’t get at any other industry meeting.
Q: What else is happening within ASA that is particularly noteworthy?
Nisonger:I am particularly excited about the direction of the ASA Education Foundation and its initiatives. Two areas of interest include moves to launch ASA University, and another toward certification.
ASA University is our emerging online training program. This new initiative is in response to the realization that our membership is in need of more cost-effective education that is available on demand.
Certification was identified as a priority in the association’s Long Range Plan. More and more, wholesalers are looking for a way to judge skills of existing and potential employees as well as to provide them with a way to differentiate themselves. A certification program can elevate professional standards, enhance performance, identify professionals who demonstrate the knowledge essential to the practice, and enhance the stature of the profession. We are forming a task group to begin the process and look more in depth at this issue. I am excited about how certification will be able to drive the demand for greater education and professionalism.
Q: What’s the best thing about being ASA president?
Nisonger:Being selected by my peers to lead our association, especially during a challenging time. While many organizations cut back during tough times, I am excited that ASA has actually expanded our services and programs to help our membership survive. That excites me as I move into my new leadership role.
Q: Is there anything we haven’t covered that you would like to say?
Nisonger:Just to ask wholesalers who don’t already belong to join ASA and participate in its activities. We are a strong association right now. We can be significantly stronger and more effective with more active members.