ASA Roundtable 2013: Part 2
PHCP distributors discuss staff growth, e-commerce issues, buying groups and ASA’s value in the second of a two-part series.
In last month’s issue, a panel of leading PHCP executives made its feelings known on a variety of issues related to government regulation and how the current political climate is affecting the industry.
In the second of this two-part series, the group delves into issues related to the everyday workings of its companies, including staff growth, e-commerce and attracting young talent into the industry. The five-person panel also shares its thoughts on the importance of buying groups and the American Supply Association’s value to the industry.
This roundtable discussion, a joint collaboration between Supply House Times and the American Supply Association, was conducted during NetworkASA 2013 in October at the Renaissance Marriott DC Downtown Hotel in Washington. The panel consisted of:
- Pat McGowan, President, http://www.tsomerville.com/Thos. Somerville, Upper Marlboro, Md.;
- Bill Condron, COO, http://www.thegranitegroup.com/The Granite Group, Concord, N.H.;
- Todd Ford, President/CEO, http://www.centralstatesgroup.com/Central States Group, Omaha, Neb.;
- Stan Allen, President, http://www.morsco.com/Morrison Supply Co., Fort Worth, Texas;
- Jeff Worly, President/COO, http://www.worly.com/Worly Plumbing Supply, Columbus, Ohio.
Question: Are you looking to add staff in the coming year?
Panel members said the search for quality employees is a constant process. “We always look to add good people regardless of the economic environment,” Worly said. “If there are good people out there, you have to take a chance and talk to them and see if there is a fit.”
Ford added: “Our average tenure is 15 years, which is great. But that means a lot of people could retire at the same time. Our focus has been on the bench. We’ll add this year and we’ll add people next year, barring a complete collapse similar to 2008 or 2009. Our focus is to have people onboard and trained so when we know people are leaving, we can start moving positions up.”
Allen described Morrison Supply as being in a growth and acquisition mode. However, he cautioned that does not mean “we do not have to be cognizant of our headcount growth.”
“You have to be prudent about hiring,” he noted. “You cannot go overboard. You have to run your business lean to the point where you can handle the spikes, but not be heavy on labor when business normalizes to avoid headcount reductions. You should have just enough.”
Question: How great is the need to attract young workers into our industry and do you have any programs/initiatives in place to move forward on this subject?
Condron noted The Granite Group has placed a particular emphasis on training to address this need.
“We’re recruiting 12 months a year now,” he said. “We have a bonus program for anyone who refers new people to our company. We also started a sales training program to bring in additional talent. We brought in four people last year and we plan to bring in eight more this year. We’re constantly looking for good people to fuel that future growth. Finding good and talented people is the biggest challenge and it needs constant focus. I’m not sure there is anything more important if you want to continue to be a sustained, growing organization.”
Some panel members agreed there has been an overreliance in recent years on hiring from within the industry.
“You cannot continue to hire other people’s people,” Allen said. “It is what the industry has done for years and we are guilty of it, too. We started a training program last year and brought in several new people. This is how you strengthen your company. How do you build a championship team every year? You get the best people and put them in the right positions and let them run the playbook.”
Worly stressed keeping young executives in a company long-term goes beyond an initial training program. “You have to give people the ability to advance,” he said. “If they feel they don’t have anywhere to go, they get stagnant and may decide to go do something else. Sometimes we train somebody and for a couple bucks more they go to a competitor. You just helped out your competitor. Try and find the right people and move them forward.”
Ford said a key to attracting those young executives is to properly explain the benefits of working in the PHCP industry. “When we recruit graduates from community colleges and/or universities, the students are not aware of our industry and the effect on the economy,” he said. “We have to explain the benefits such as longevity and sustainability and how the industry has provided for our employees and their families. We don’t stand up and talk about ourselves enough like we should. We are head-down, grind-it-out and take-care-of-business people.”
Condron added: “We can offer a lot of the same things larger companies can’t. We have managers in their early 30s running branch locations and are responsible for profit-and-loss, hiring and retaining people, controlling inventory and managing credit. That’s business. You can come in and learn all this at an early age. You don’t have those responsibilities at that stage in many larger companies. It’s an opportunity for people if they join our industry that we don’t promote enough.”
Question: How has your company adapted to the proliferation of e-commerce?
This question spawned a more broader-based discussion on the massive advancement of technology in recent years. “Technology has moved more in the last five years than it did in the last 25 years,” McGowan said. “It will continue to move fast. The younger generation communicates in a different way and we have to be ready for it.”
Worly added: “Technology has certainly changed the way we do business. It’s very important that companies look to the future, whether it’s thinking outside the box or changing as their customers change.”
Condron said technology advancements create a trickle-down effect in terms of efficiency. “Before, a salesman would sit down with a customer and get an order and then go out on the phone and call that order in,” he said. “That tied up the inside sales guy who then had to type it or write it out. Now that process can be done much more efficiently and we’re able to serve the customer better. Customers want to see inventory and pricing on their phones and possibly place an order that way. They want mobility and that’s a critical function we need to offer.”
Worly still sees a divide in the industry in terms of embracing new technologies. “The industry, as a whole, still is behind the times,” he said. “I have some customers who write down orders on napkins and 2-by-4s. The e-commerce technology has not been fully embraced yet. The consumer is a lot more educated now than they ever have been, however the trade still wants that personal interaction.”
Ford added, “It’s hard for a guy who is trying to weld a 12-in. piece of pipe to get out a smartphone and order a coupling.”
Condron doesn’t see a situation where e-commerce will leap above face-to-face customer interaction. “To the extent that we can help customers with e-commerce, we will,” he said. “It still comes back to people. We value the quality of the people we have and the customers we serve.”
Question: How important are buying groups in this industry?
There wasn’t much debate on this topic. Panelists agreed buying groups play a vital role in the operation of their companies. Allen addressed the need for a company as large as Morrison Supply to be part of a buying group (Morrison is an Embassy member).
“At the size we are today, why would Morrison need one?” he asked. “We value buying groups because of the relationships and the camaraderie. I can pick up the phone and call someone and bounce ideas off them. You are talking to peers who are involved in similar situations just like you and can help you. Plus, there is the training support you receive.”
Condron added: “Buying groups are critical to our success both for the networking and for the chance to learn best practices. Shared buying power is important to help remain competitive as the distribution channel continues to narrow. Buying groups provide a lot of value and they will continue to do so.”
Ford said the opportunity to meet with key vendor decision-makers during buying group meetings is invaluable. “We are seeing the major players from the manufacturers,” he said. “These people care and they want to know who they are partnered with. The buying groups give us that forum.”
Worly added: “When you are able to talk to 60-plus companies in one place, that’s a pretty great thing. That’s 60 trips the manufacturer doesn’t have to make. Buying groups put you on a level playing field with the national chains. There are so many things you can gain from talking to noncompeting distributors.”
Question: What big game-changers are coming down the pike in this industry?
Condron feels wholesale companies must be cognizant of a better-informed customer going forward. “A guy goes to a homeowner’s house and says, ‘I have to switch out your heating system and it will be $10,000,’” he said. “That homeowner says: ‘Wait a minute. I want to know more about it.’ The customer then goes online to research.
“Our customers need to be more knowledgeable and our people need to be more knowledgeable as the end user is becoming more aware. We need to continue to drive training to our customers and our people as much as possible. To be able to train our people and customers on new technologies is a big value we need to provide. It also helps differentiate us from an e-commerce play. The technology change in our products and the ability to train ahead of it is huge.”
Ford sees a continued changing landscape in the PVF-related energy sector. “You have the coal initiative and the fracking in Pennsylvania, Ohio and the Dakotas, and the Keystone Pipeline,” he said. “Those all will change the landscape. A lot of PVF business is done in the energy sector with renewables, solar and wind. The energy policy could change our industry good or bad. It’s 50-50.”
Question: What are your thoughts on the current state of the American Supply Association?
McGowan has a much different opinion about the association than he did about a decade ago. “Five or 10 years ago, ASA was floundering,” he said. “I was sitting back asking the question why should I pay these dues I pay? What do I get out of it? That’s a hard question to ask. They have come miles and miles from where they were. They have the right mission and vision. They have focused on advocacy and training and are getting better with forecasting. If they stay in those three areas, ASA will be an invaluable organization for this industry.”
Ford has been pleased with the advancements the ASA Education Foundation, in particular, has made. “The education part of ASA is fantastic and you can use it to help your people,” he said. “It’s nice to be able to pick up the phone and ask about hiring or finance and get a true, honest answer that will help you.”
Condron said nonmembers should take a step back and look at what ASA is doing for the industry. “This is your industry association,” he said. “You are in the industry and ASA is advocating for you and providing education for you and providing a resource for networking. This group is representing you on Capitol Hill. It’s something you really should take a look at for the value it provides.”
NetworkASA 2014 takes place Sept. 9-11 at the Bellagio Hotel in Las Vegas where Supply House Times and ASA will host another distributor roundtable discussion.