Distributor consolidation in New England is forcing Johnson & McGill to redefine its role as an independent manufacturers' rep.
Ask the average Joe what he thinks about New England and he may start gabbing about the Boston Red Sox, brisk fall days colored by red maples and yellow birch trees, rocky beaches and mountain vistas that stretch for miles.
It's a different conversation when you ask Matt Scarborough, president of Johnson & McGill Inc., a 36-year-old independent manufacturers' rep based in North Abington, Mass. One word comes up most often: consolidation. The mergers and acquisitions that have swept through the New England region in recent years show no sign of abating, and they have changed how his 14-person rep agency does business.
In the past few years, Sonepar USA, Philadelphia, has built up a sizable presence in the market; US Electrical Services, Exton, Pa., has made a number of key acquisitions in the area; and Rexel USA, Dallas, has become an even stronger player in the region with its purchase last year of Capitol Light & Supply (CLS), Hartford, Conn., and GE Supply, Shelton, Conn.
With acquisitions often come changes in where the purchasing decisions are made. Scarborough says it has become more common for some of the larger national and regional distributors to make purchasing decisions at their headquarters' outside New England.
That's a fundamental change in the market for a rep like Johnson & McGill, which was launched in 1970 by Paul Johnson and Herb McGill out of Johnson's garage. But it also gives the company the opportunity to showcase its other skills to vendors, distributors and end users: training and customer service.
“Our role as agent is forever changing,” says Scarborough. “It's changing quicker now than ever. I think our role is going to be more focused on service, training and technology, and not as much on being the ‘deal-maker.’ The larger distributors are often making deals that go outside of our boundaries, many times outside of our region.”
Scarborough sees the day when the New England market will have two types of electrical distributors: large companies with at least $200 million in sales, and smaller niche players with approximately $20 million in sales. He sees a similar “tiering” underway with electrical manufacturers, with bigger manufacturers offering diverse packages of brands and product lines, and smaller regional or niche manufacturers focusing on a narrower range of products. He says the size of the manufacturer will determine his company's relationship with it. With the larger manufacturers, he sees Johnson & McGill focusing on providing service, training and technology in the local market for end users, buying influences such as electrical inspectors, engineers, architects, as well as distributors. For smaller vendors with more limited product lines that focus on smaller distributors, Scarborough sees a more traditional role for Johnson & McGill, with the company still functioning primarily as the vendor's sales force in New England.
Taking on an enhanced training role plays to Johnson & McGill's strengths. Scarborough, who has a degree in electrical engineering from Northeastern University and several years of experience working for Alcan Cable, relishes the opportunities he gets to teach customers and buying influences about the products he sells. He has taught seminars to local electrical leagues, vocational-technical high schools, and as part of joint sales calls with his vendors. More than 200 contractors, electrical inspectors and engineers from 50 firms have attended recent Johnson & McGill seminars.
“I am always there to educate, not necessarily to sell,” he says. “I always emphasize my background as an engineer. I tell the classes, ‘I am here to educate you, not to sell you a product. If you happen to buy my product because of what I did, that's great.’ What I teach is not always unique to my manufacturers.”
The focus on education is also apparent on the company's Web site at www.johnsonmcgill.com. Scarborough built the Web site, which is getting about 500 hits per month, as a resource that offers not only links to manufacturers' Web sites and cross-referencing information, but also allows users to select the proper products for their jobs. For instance, when Johnson & McGill's customers need cable tray, they can build a bill of materials on the Web site using an intuitive, step-by-step program, and then with a click of a button create a submittal package. The site is also loaded with links to vendors' catalogs, cross-referencing information and other resources. “Our Web site is unique at the rep level,” he says.
While Scarborough is proud of the advances his company has made with technology, he says the company's future success will also depend on his employees, which includes Hollie Scarborough, the company's vice president. She has more than 30 years of experience with Johnson & McGill, and Scarborough says his wife has been the backbone of the company for years. He has a seasoned crew of employees with decades of experience in the electrical industry, and jokingly includes himself as one of the eight employees whom he calls “repeat offenders” because they left the company in the past to pursue other career interests, but came back to Johnson & McGill. “I am very proud of that,” he says. “It means we have a real strong team.”
Scarborough says some manufacturers in the electrical market used to see reps as a “necessary evil,” and, ever the teacher, he wants to dispel that myth and explain the value of the independent rep in the local market. “I have emphasized to my manufacturers that at the end of the day we want the same thing — We want to create purchase orders,” he says.