Butler Supply's John Duda sees Home Depot Supply and imported products as some of the top challenges facing the electrical industry.
The ancient Chinese proverb, “May you live in interesting times,” would certainly apply to John Duda, this year's chairman of the National Association of Electrical Distributors (NAED), St. Louis, and CEO/chairman of Butler Supply in Fenton, Mo. He has helped steer NAED's efforts to eliminate waste from the electrical channel through initiatives such as the Industry Data Warehouse (IDW) and special pricing authorizations (SPAs).
In addition, during his tenure as NAED chairman, Home Depot Supply has emerged as a real challenge for NAED distributors. He believes Home Depot Supply is a bigger threat to the electrical industry than its parent company has been. “In the future, Home Depot Supply buying up distributors is going to be a bigger threat to us than we can imagine because of what they can do with installation,” he says. “If you start thinking out of the box a little bit about what they could do, it's pretty scary — hiring contractors, installing product and offering warranties. I think it's very important for distributors to stay as close as we can to our customers.”
Although Duda views Home Depot Supply as a serious threat, he says electrical distributors will continue to learn much from the company. For instance, electrical distributors have studied Home Depot's merchandising techniques over the years. “Hopefully, we have learned that advertising, signage, merchandising and marketing are all very important, and that our customers are consumers and they respond to things that are retail-oriented,” he says.
Home Depot has also taught electrical distributors about loss-leader pricing, he says. Because contractors are most familiar with the pricing of fast-moving products such as ground-fault interrupters and building wire, Home Depot prices these products very low. But it prices impulse items and other products that customers don't order as frequently much higher. When you merge all of the prices in Home Depot's electrical department, average margins are much higher than the average electrical distributor's stock margins. “So hopefully we can learn a little bit from how Home Depot and Lowe's have priced their products, incorporate some of those things in our businesses and raise our margins,” he said.
One of the biggest threats Duda sees on the horizon for NAED members is the increase in imported products. Although counterfeit imported products are a glaring industry-wide concern, he is also worried about situations where offshore companies manufacture quality products and flood the market with them at prices much lower than those produced by traditional manufacturers. “That could be a real problem for the manufacturers if distributors in our business start buying these products and flooding the market with them,” he said. “Where does it end?”
He says NAED members face plenty of challenges from within the industry, too. It's a top priority to work with other industry associations to reduce redundancy and increase efficiency within the electrical channel. Along this line, NAED has been working with the National Electrical Manufacturers Representatives Association (NEMRA), Tarrytown, N.Y., on getting point-of-sale and point-of-transfer information to manufacturers so they can fairly compensate their manufacturers' reps. Other initiatives have included supplier and distributor scorecards that both can use in booth sessions to score each other at NAED conferences. These report cards were developed by a task force made up of NAED distributors, electrical manufacturers and the Affiliated Distributors buying/marketing group.
The NAED has also worked with the National Electrical Manufacturers Association (NEMA), Rosslyn, Va., on the Industry Data Warehouse (IDW).
Duda says he recognized the importance of getting involved with industry trade associations early in his career. One of Duda's first volunteer positions was serving on NAED's regional council. He has also been president of the Missouri River Club; chairman of the NAED Education Foundation; and vice president of NAED's Central Region.
Duda is the third NAED chairman from Butler Supply, but he jokes that volunteering for NAED's top post is not a prerequisite for working at Butler Supply. Ed Butler, Butler Supply's founder, was NAED chairman in the mid-'60s, and his son, Dick Butler, chairman emeritus, was chairman in the mid-'90s. Duda became chairman earlier this year.
The current wave of distributor merger-and-acquisition activity has had its impact on NAED membership, but Duda points out that while the number of NAED main-house members may go down, the number of branches go up. Duda says NAED must be able to serve distributors of all sizes. “I think one of our challenges is to raise ‘the level of the lake,’ to help the industry for everyone, the large distributors and the small distributors,” he says.
Profitability and channel efficiency remain key concerns, too. Although NAED's Performance Analysis Report (PAR) has shown some increase in the net profit of the average member, a 2.5 percent net margin doesn't always enable distributors to make all the necessary investments in their businesses to remain successful over the long-term. Electrical distributors need to operate profitably if they are going to remain the channel of choice for electrical manufacturers, Duda says.
More on John Duda
Industry experience. Started working at Butler Supply Feb. 1, 1968 in Butler Supply's accounts receivables. Positions included credit manager, office manager and chief financial officer. Duda later became vice president and president. He was named chief executive officer approximately two years ago. Previous experience included working in the accounting/credit department of Emerson Electric's motor division.
Job highlights: “Helping to build a company — moving forward, opening stores, finding stores to buy — it's a real challenge, and it's a lot of fun.”
Education. Bachelor's degree and master's degree in finance from St. Louis University. He earned his master's degree as a night-school student while working at Butler Supply.
Family. Duda and his wife, Beth, have six children; three boys and three girls ranging in age from 22 to 34. Their daughters are: Becky Duda, a salesperson for Philips Lighting; Amy (Duda) Proctor, a stay-at-home mom; and Katie Duda, a flight test engineer for Boeing in Seattle. Their son, Phil, is a senior at the University of Missouri-Rolla majoring in computer science and computer engineering; Tim is studying at the police academy in St. Louis; and Matt works for a local grocery chain, Dierbergs. The Dudas have four grandchildren.
Favorite hobby. Duda and his wife own a cattle farm named Udders Galore LLC. They raise Hereford cows, a black limousine bull and, hopefully, a nice herd of calves every spring. When his work schedule slows down, Duda says he will be spending more time on the farm tending the cattle and maybe a few chickens and pigs. “It will be our version of ‘Green Acres.’”