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In celebrating Electrical Wholesaling's 85th year, the magazine's editors thought it would be interesting to talk with well-known folks in the electrical business about events in their careers that really stand out. Industry veterans told us about mentors who instructed them in the technical nuances of electrical products — or sometimes taught them a life lesson that they remember every day. Others enjoyed talking about a moment in their careers that made a difference for their companies, or in some cases, in the electrical industry.
What really caught our attention was the importance of people to these industry contributors. Sure, they talked about how computers have changed the business, or how it's tougher than ever to run a profitable company. But it wasn't the latest twist in electronic commerce or an idea that helped squeeze out another point of profit for their businesses that got most excited. It was talking about the people they have met in this business and how those people changed their lives. Here are their stories.
Laying Nemra's Foundation
As a student of American history, Jerry Haines, Haines Sales Corp., East Syracuse, N.Y., likes to ponder what it must have been like for the founding fathers of the United States in 1776 when they met in Philadelphia to lay the foundation for a new nation. As one of the founding fathers of the National Electrical Manufacturers Representatives Association (NEMRA), Tarrytown, N.Y., Jerry Haines made his share of history in the electrical business.
In 1969, Haines met with more than 30 independent manufacturers representatives at the Sheraton Inn near LaGuardia Airport in New York to create a trade association that would provide independent reps in the electrical market with the clout they would need to operate profitably and professionally as independent entrepreneurs.
Haines says he will always remember the incredible energy of that meeting, in which reps of all sizes and with a wide variety of unique insight into different aspects of the electrical business brainstormed for two days on how a trade association for independent electrical reps could help not only their companies but also the agencies of other reps in the future.
“So many ideas popped up in the first two hours,” he says. “It gave you a feeling like what the founding fathers of our country must have felt when they got together. There is no thrill compared to being at the creation of a new idea.”
Haines, who won Electrical Wholesaling's GEM Award for Independent Reps in 1995, says one the most satisfying aspects of his 51 years as a rep has been the opportunity to run his own business. He took over Haines Co. from his father, Elmer Haines, in 1969, and says being able to sustain and build the company as an entrepreneur is part of the American dream.
— Jim Lucy
The Power of People and Integrity
Chuck Steiner, former chairman of Branch Electric, gave Steve Cunningham a bit of insight into the electrical industry's values when Cunningham was first hired to lead the buying/marketing group that has since grown into IMARK Group. “He said, ‘You can be smart, or you can be stupid, and that'll be acceptable. If your integrity gets questioned, you're dead.’”
That advice has proven true throughout the 20 years that Cunningham has led one of the largest distributor buying/marketing groups in the industry. During those 20 years, the growing influence of buying/marketing groups profoundly changed the balance of power throughout the industry. The source of that growing influence has very little to do with the volume-purchase rebates buying groups were originally set up to capture, Cunningham says. It's the networking, education and sharing of ideas among noncompeting distributors that has made the difference.
“People aren't using the term ‘power’ much anymore,” Cunningham observes. “They have come to realize that we've got to figure out how to work together. People who use raw power today don't seem to do all that well.”
The spirit of working together has grown stronger in the rising generation of electrical executives, Cunningham says. That group also tends to be better educated, more literate with information technologies, and more impatient. “Their plans always have steeper curves than you would have seen before,” he says. “Every business has to do more with less today, and this generation of leaders was brought up and educated to do that.”
All this is what makes the electrical industry special, in Cunningham's view. He came into the industry as an outsider who had worked as a consultant in many industries. “This is basically a family industry. The personal relationships and friendships you see make it a lot easier to get through tough times,” he says. In good times and bad, “people have a lot of fun together — our meetings are sort of like reunions or freshman mixers — and in so many industries, that component is missing.”
— Douglas Chandler
Why Old Friends and People Still Matter
A brief conversation with Gary Brusacoram is all it takes to get a sense of the gratitude he feels at having been a part of the electrical industry for more than 40 years. He's watched the industry change in countless ways, from the impact of information technologies to the waves of consolidation that have changed the players at all levels of the business, but the side of the industry he focuses on most — the personal relationships — is as strong as ever, he says. In fact, the caliber of the young talent he sees rising through the ranks makes him more optimistic.
“Today, they want things faster, and they're bolder about asking for it,” he says. “They're not afraid of challenging you, which is refreshing. They just seem to be on a faster track.”
He also sees the increasing emphasis on education as a sign of the industry's bright future. But the rising generation needs the influence of seasoned veterans, with their own boldness based on their experience in the school of hard knocks, and their memory of the industry's roots.
Brusacoram has many stories about deals done on a handshake. There was the time he was caught in a blizzard in Minot, N.D., in 1976, and Dick Riedy of Bridgeport Fittings called to say Brusacoram should go to Philadelphia the next morning to get the Wheatland conduit line. Brusacoram drove 100 miles to Bismark, N.D., in the driving snow, caught a plane to Philly, met with Wheatland's Jim and Jack O'Donnell for one hour, shook hands and caught a plane home. He still represents the line 29 years later. “That's the part people play,” he says.
— Douglas Chandler
Solid as a Rock
Granite City Electric's Phyllis Godwin had little interest in her dad's electrical distribution business when she was young. In fact, when she helped out typing invoices, she couldn't imagine anything more boring. Besides, the electrical industry in the 1950s was no place for a woman.
She recalls visiting her parents in Atlantic City during an NAED conference when she was fresh out of college and working for a marketing firm in Philadelphia. She glanced at the program and expressed interest in attending a session on whether the role of the “jobber” was being outmoded. Her father told her that women weren't allowed at the meetings, but that she might be able to slip quietly in the back door after the session started and leave before it ended.
In the early 1970s, her father's health declined. He drew up a succession plan that made Phyllis the owner of the company. Rather than sell a business that had become part of the family, Phyllis decided to run it herself, and became a pioneer in the industry.
“In those early days, it was difficult to be taken seriously,” she recalls. “I would go on sales calls with one of the salesmen, and the customer would talk only to the man. It was like I was invisible.”
Godwin's visibility grew through involvement with industry associations, though that too was difficult. After the sessions, the men would go off to play golf and have fun, and she was left alone. “But I had the ladies' room to myself,” she says with a laugh.
Much has changed in the years since, of course. There still are very few women in the top levels of the electrical business, but Godwin is glad to see the new generation of men are far more comfortable dealing with women as peers than their fathers were. Godwin would like to see this continue, and misses no opportunity to encourage retiring owners to look at their daughters as successors.
Despite the difficulties, Godwin says the electrical business has been good to her — “there's always something fun to do.” That's been especially true over the past year, as Granite City Electric Supply has been the official electrical supplier to her beloved Boston Red Sox. “World Champion Boston Red Sox,” she adds.
— Douglas Chandler
Technology Marches on
With more than 60 years in the electrical distribution business, Meta Griffith has witnessed a lot change.
“The changes that have come about — the improvements in the electrical lines — have been outstanding,” says Griffith.
She and her husband, Bill Griffith, founded Griffith Electric Supply, Trenton, N.J., in 1938. Each had experience working for an electrical distributor, she as a bookkeeper and he in electrical sales.
The couple borrowed a little money from a friend and Meta's dad, obtained a few good lines, like Cutler-Hammer and Hubbell, and opened shop.
The Griffiths' car doubled as the company's delivery vehicle. “If you had to take pipe or anything like that, you'd have to tie it on and then climb in the window to drive the car,” says Griffith.
“In every aspect, you just don't do business like you did then. That's for sure,” says Griffith.
In 1971, when Bill died, Meta took the company reins. Today, at 95, Meta Griffith remains on the company's board, but Bill Goodwin oversees the company's day-to-day operations. In 2004, Griffith Electric opened a branch in Somerville, N.J. This summer, it will open a branch in Robbinsville, N.J., bringing its total of electrical supply operations to three.
Although the industry has transformed itself over the last 60-some years, Griffith believes electrical distribution remains a business in which a young person beginning his or her career still “can get somewhere.”
“In this industry, the technology will continue to change,” says Griffith. “This is a very interesting business. There's a future in it.”
— Sarah Tobaben Dolash
The Industry's Renaissance Man
“The word ‘panache’ was invented for people like Dick Noel,” said Tom Preston, Noel's good friend and one-time business partner. “He has taken on so many challenges in his business lifetime, been in so many places, done so many things with and for so many people for so long a time, with so much distinction, it boggles the mind.”
In his 50-plus years in the electrical business, Dick Noel was the founding force behind the National Electrical Manufacturers Representatives Association, ran a successful executive recruitment and placement business, helped launch Equity Electrical Associates, started up a distributorship and rep agency, worked for several blue-chip manufacturers — and still found time to work on the U.S.-U.S.S.R. Trade and Economic Council and produce, write, sing and act in the annual musical follies that were a big part of the NAED convention scene in the 1950s and 1960s.
— Jim Lucy
A Quest for Consistent Data
David Crum of Crum Electric Supply, Casper, Wyo., likes the looks he's been getting lately.
A decade ago, when he began talking to executives at all levels of the electrical industry about the importance of synchronizing data flow throughout the industry, “talking to some of the older executives, I'd look in their eyes and see these blank stares,” he says. “Now it's gratifying, with the new cast of younger executives and CEOs — I look in their eyes and see dollar signs.”
Crum credits past industry leaders for creating a thriving electrical supply chain that focuses on the customer, and he “couldn't be more impressed” with the caliber of young talent rising to lead the industry.
Much remains to be done in Crum's quest for ready access to standardized data, most pressing being the push to get ERP software companies to further integrate standardized data into their productivity applications. But the most critical issue for the future of the industry, in his view, is attracting and keeping talent.
“You've got to get the right people on the bus and the wrong people off the bus,” he says, citing one of the best bits of advice he got starting out. “It's difficult to attract talent in an improving economy. Today, we need people who cannot only develop and maintain customer relationships and understand the products we sell, but understand the technology.”
The industry's continuing shift from predominantly family-owned businesses to larger public companies, particularly at the manufacturing level, will be positive for distributors, he believes, because large companies have been pulling back their local representation in many mid-sized markets, creating an opportunity for distributors to play a larger role. And with improvements in communications and the sharing of data, Crum sees the relationships between companies growing closer than ever.
— Douglas Chandler
A Whole New Ballgame
This ain't your daddy's electrical business. Well, actually, it is for Brendan Powell and a whole host of rising second-generation stars in the electrical universe, but the game isn't played quite like their dads played it.
“I hear the stories from my dad's era — they were strong believers in ‘work hard, play hard,’” says Brendan, son of Bob Powell, the noted rep raconteur. (Brendan describes himself as “the quiet Powell.”) “That kind of thing still goes on, but customer dinners tend to be more like one drink and a lot of business. We're no longer out until all hours. In a way, it's more formal.”
As many starting out in a family business find, it's not always enough to just be good at the job, says Powell. “My dad wanted to make sure we kept family and business separate. He said as a family member coming in, you have to be better, just to be even,” Brendan recalls.
Powell served his apprenticeship under Mike Hickey, his father's long-time friend, who became a mentor and taught him the sales and organizational skills required to be an effective rep. “I got beat-up on a lot of the early calls, but I learned if you say you're going to do something, follow up quickly and get it done. Unfortunately, that's enough to separate you from a lot of people out there.”
Powell sees the role of the manufacturer's rep continuing to move toward closer work with end users to develop specifications and helping to create demand for products, rather than pushing distributors to load their shelves. “We're working with a lot of distributors in our area who were industrial-oriented, who now want to get more into commercial and residential work. Our role is to help pave the way for them to do that,” he says.
— Douglas Chandler
Still Sold on the Electrical Business
Jay Rains got his start in the electrical business out of necessity. Two days after his 1955 marriage to Ellen, the love of his life, he was laid off and needed a job. A woman in the Missouri unemployment office asked him if he knew anything about the electrical field, because there was an opening for a warehouse worker at an electrical supply house. Rains told her the only thing he knew about a switch was what his mother would make him cut from a peach tree when he needed some discipline, but he still got the job at Rossner Electric (today's Rensenhouse Electric Supply, Kansas City, Mo., a subsidiary of CED).
Fifty years later, Rains, now the principal of Rains Electrical Sales, Shawnee, Kan., knows quite a bit more about the electrical business. Before starting his own rep agency in 1988, he worked counter and sales positions for several Kansas City area distributors, including Kansas City Electric Supply, Shaw Electric Supply and Western Extralite. Rains also started up his first rep agency, Jamar Electric Sales, with his friend, Vern Marlo, and was a partner in another agency before going into business for himself.
Rains still laughs about making his first sales calls for Western Extralite in 1962 while on crutches and while carrying a 30-pound briefcase. (He tore up his foot playing basketball in a church league.)
Hundreds if not thousands of sales calls later, Rains still loves the electrical field because of all the friends he has made in the business. He has no plans to retire. He is proud of his long relationships with many of the lines Rains Electrical Sales represents, and in the fact that his son, Wes, and his grandson, Aaron Frame, are in the family business.
Rains credits several mentors with teaching him the business: Jim Rensenhouse, Rensenhouse Electric Supply; Jim Mullins, Kansas City Electric Supply; Firth Shaw, Shaw Electric Supply; and Western Extralite's Ernest Isenberg.
“I set some goals that I wanted to meet, and the good Lord willing, they will be attained by December 2005,” he says. “Attend my 50 year school reunion. Be married 50 years to the same sweetheart, and be in the electrical industry for 50 years. I have enjoyed every bit of it and still have that fire in my belly.”
— Jim Lucy
Finding & Keeping Good Employees
There's a world of difference between marketing the way it's taught in schools and the way it's done in the electrical industry. Lou Fromm learned this first-hand when he left a job at a New York firm developing national branding campaigns for companies like Snapple, and found himself working behind the counter at his family's distributorship, Fromm Electric Supply Corp., in Reading, Pa.
There were humbling moments, like hearing the laughter of customers who could see him at the back of the warehouse struggling to cut metallic cable with the wrong tools. But there was also the satisfaction of earning his place in an industry that had been good to his family, and the pride of seeing the family name on delivery trucks, he says.
Fromm believes the time is ripe for distributors to get more creative in dealing with customers. That means taking chances with new services and finding new ways to engage the customer without straying too far from the values on which the industry is built.
“Counter days, trade shows, customer appreciation days, those are the roots of our business,” he says. “Without that human contact, we would disappear. There are no billboard ads or commercials. The value we bring can only be communicated person-to-person.”
As former chairman of NAED's Your Emerging Talent organization, Fromm places great value on building person-to-person connections at all levels of the business — not just at the owner and top executive level — as a way to solidify the group of up-and-coming professionals. He sees the electrical wholesaling industry's proud history as one of its strengths, but he believes that to grow and prosper in the future, the electrical business must focus on attracting new employees from outside the industry. He says it's also important to offer attractive career paths to younger employees.
“We can't rely on my father's generation,” he says. “We have to rely on people moving up now.”
— Douglas Chandler
In a business where many senior executives don't remain at their posts long enough to make a mark on the industry, Hank Bergson, president of the National Electrical Manufacturers Representatives Association (NEMRA), Tarrytown, N.Y., stands out. Now at the helm of NEMRA for 19 years, Bergson is the man people call when they need a new rep in a territory, are looking for a job in the electrical business or need a crusader to promote the independent rep.
A born leader, his leadership skills have been honed by his years of experience as a fire chief and his tour of battlefield duty as a company commander in the Vietnam War.
Well over six-feet tall, he has a commanding presence that fills a room, and a quick mind that helps him articulate the role of the rep in today' market.
In his first speech as NEMRA president at NEMRA's 1986 Annual Conference in Washington, D.C., Bergson said he felt like a teenager who had just been given the keys to the family car. In the 19 years since, Bergson has driven the 34-year-old association many miles toward respectability in the electrical industry with a unique mix of leadership by example, occasional badgering and quiet diplomacy.
— Jim Lucy
Keeping an Eye on Sales
“I was always a sales and marketing guy,” says Bob Finley, the longtime president and CEO of Glasco Electric Co., St. Louis (now part of Rexel).
Finley reminded EW's editors that he and the folks at Glasco were named on Electrical Wholesaling's Top Performers Honor Roll as “Top Builder and Trainer of a Sales Force” in 1983.
Although technically retired, Finley continues cultivating relationships and extolling the virtues of good salesmanship in the articles he periodically pens for Electrical Wholesaling. Finley also passed his passion for sales and marketing onto his two sons, who own their own rep agency.
“They both said they learned the sales and marketing business by osmosis sitting around the kitchen table talking with their mother and me,” says Finley.
It's no great surprise that when asked about a memorable event from his career, this sales strategist recalled a particularly productive sales meeting Glasco Electric held in 1978 at a rustic resort near St. Louis overlooking the Mississippi River.
With GE Lighting the sponsor for the Friday night dinner meeting, GE's national television spokesman, “The Sheriff,” gave a presentation after dinner dressed in his uniform, including a sheriff's badge and white cowboy hat.
— Sarah Tobaben Dolash
Three industry consultants speak out on what the industry may look like down the road.
A New Breed of Computers
The enterprise resource planning (ERP) systems that electrical distributors rely on to operate their companies have evolved quite a bit in the last 50 years. Gone are the days where electrical distributors had to endure software built with complex multi-layered codes and “taped-together” computer systems that were expensive to install and maintain.
The future offering of ERP systems will provide greater efficiency through the adaptation of technology and tightening of business processes. These new efficiencies will drive the cost to distribute product down.
A new breed of ERP systems with open-sourced coding will give distributors more flexibility, and will mean that real-time exchange of data will become the norm rather than the exception.
Data synchronization through Industry Data Exchange Association (IDEA), Rosslyn, Va., will become the benchmark for the electrical industry. IDEA's other tools for previewing data and managing margins will become stronger. Electrical distributors will be able to create seamless orders that will flow through to the manufacturer, be shipped, put up electronically, billed electronically and imported directly into the distributor's accounts payable. Special pricing authorizations (SPAs) will be automated to the point where distributors can file electronically on a Friday and receive credit back the following Monday.
— Allen Ray, president,
Allen Ray Associates, Arlington, Texas
Tools for Future Growth
The electrical industry will become more segmented over the next five years because of the following drivers:
- Distributor growth motivation
- A willingness to invest in technology
- Manufacturer resources and distributor commitment
Growth motivation emerges from the company's culture. Does the company want to significantly grow its top and bottom line for its stakeholders, or is it content with a comfortable lifestyle? Are potential succession plans identified? The answers to these questions define the business' future. The first question is more important and affects the second.
Tied to growth is a willingness to invest in technology. Effective technological implementation can reduce the cost per line item to enhance a profitable operation, while at the same time provide sales and marketing with the tools to analyze the business and drive sales. Technology can also enhance and develop value-added services. A correlation exists between effective technological investments and net profit.
Manufacturers can only afford to invest in growing companies that help drive their growth. Co-op advertising is becoming obsolete. Many manufacturers now believe it's more effective to only invest in the distributors that have developed growth initiatives and committed resources to ensure their joint success. “Resource partnering” will become more prevalent, even though manufacturers will continue to authorize more distributors than they can adequately support.
If history is a predictor of the future, industry revenues (in 2005 dollars) will not grow significantly. These three issues will further drive the industry and separate larger companies from smaller ones. Opportunities abound, but distributors need to identify which opportunity they want.
— David Gordon, principal,
Channel Marketing Group, Raleigh, N.C.
Consolidation: it's Up and Down, but it's Still Happening
The $80 billion-plus electrical distribution industry is on a slow path to consolidation. It heats up and cools down based on the psychology of the buyer and seller relative to the health of the economy and the health of distributor earnings. As sales and earnings suffered from 2001 to 2003, the standard practice of applying five to seven times earnings to approximate 14 percent to 20 percent pretax return on buyer investment often yielded sale prices scarcely greater than the book value of assets and sometimes lower. That was disconcerting for many aspiring sellers. So they sat. A few sellers — not as many as expected — sold at distress levels or closed.
But what about the underlying fundamentals driving consolidation? It's getting more difficult to keep up with technology, and many electrical wholesalers are discovering that distribution economics are truly regional. Smart distributors that know how to automate back room processes and operate regional distribution centers that consolidate resources like inventory, staff functions and services can create a competitive advantage through leadership economics in a region. So it makes sense that consolidation will continue. However, the end market is still rather fragmented, leaving room for many small distributors to operate and thrive. As a result, consolidation will never be as swift as it was in pharmaceuticals distribution or medical products distribution, whose end market (hospitals and drug stores primarily) suddenly consolidated.
So what will probably happen given the rebound of the business in 2004 and the favorable forecast through 2007? Smart “financial buyers” average a company's earnings over a three-year period and use that number to apply their multiplier. They say they won't bite on a potential seller that expects too high a price based on last year's earnings and this year's forecasts. That scenario is the ideal, though, and few deals are actually decided that way. Smart sellers try to sell an aggressive forecast and get a bidding competition going, so buyers start weighting the forecasts more than history in their calculations. But they probably won't get out of control like certain large consolidators did from 1995 through 2000, overpaying and getting stuck with mountains of goodwill on their balance sheets during the economic slowdown that started in mid-2000 and continued through 2003.
That's what I think. I could be overestimating the ability of some to exercise restraint, however. I would advise these folks to examine the forecast for 2008 and remember 2000-2003!
I expect consolidation activity to heat up halfway through 2005, heat up even more through 2006, peak in early 2007, cool in 2008 if the market forecast for a slowdown is correct, and bottom out again in 2009. Expect at least three to four points of market share to shift into the top 50 distributors between 2005 and 2008. That's about $2.4 to $3.2 billion dollars, and doesn't include Rexel changing hands or being sold in pieces, either, or any blockbuster acquisitions by European or Asian corporations.
— Neil Gillespie, principal,
Channel Marketing Group, Pittsburgh