Reflecting on Distribution

Cook, president of Johnson Supply (Houston, Texas), said his greatest achievements during his year-long tenure as HARDI president were simply listening and learning. But he also noted that “being part of the transition in leadership and the acquisition of staff will probably be the most important legacy over time.”

While Cook noted that distributors in the HVACR market are facing many challenges, he shared his belief in a bright future. He specifically noted that challenges include the following: acquiring and keeping talent at the human resource level, ensuring at both the supplier and customer level there is recognition of the value provided, and developing and modifying business models that are flexible, growth driven, and have good succession plans in place.

Furthermore, he said, as the dynamic of the global economy emerges, distributors must learn to ask themselves, “How do we fit in the global supply chain, instead of just the U.S. supply chain?”

Despite these challenges, Cook said, “Most of the distribution out there is pretty smart and focused on their business, so keep doing what you are doing but be sure to measure and quantify those values and services.” He also urged distributors to become involved in industry organizations, particularly HARDI, and pay attention to the regulatory environment. “I have been very impressed this year with all of the distributor’s initiatives for improvements. I think it bodes well for the future.”

Facing the Future

Bud Mingledorff, chairman of the board for Mingledorff’s Inc., shared his outlook on the HVACR distribution market as president-elect of HARDI. While he acknowledged that the industry is currently facing many challenges, especially due to the current economy, he believes there are great opportunities ahead.

“I believe the greatest challenges facing distributors is keeping a positive attitude in the wake of the seemingly overwhelming pressures on our businesses,” Mingledorff said. “As if a slowing economy wasn’t bad enough, we must also deal with dry-ship R-22 units further eroding our margins, ever-changing government regulations and interference, proposed tax increases at every government level, contractors with cashflow problems despite two decent years back-to-back, the financial problems in Greece and the unknowns that brings, and on and on.”

Reminiscing, he added, “And to think we only used to worry about our competition and marketplace consolidation. You don’t appreciate what you have until it becomes a memory.”

To face these challenges head-on, Mingledorff said distributors must become “more analytical in our long-range planning, more dependent on the measurement tools available for our businesses, and more intent on staying focused.”

Moreover, Mingledorff pointed out that the best opportunities for distributors “lie in selling new products into the channel that have been sidelined in the past.” For example, he cited IAQ products, add-on zoning systems, standby generators, energy recovery ventilators, and solar and high-efficiency upgrades. “The age of up-sell or die is upon us,” he said.

“In addition, distributors manage inventory better than any other in the channel, and they have the opportunity to gain market share in the near future,” Mingledorff continued. “However, if the consumer goes to ground as they did in ’08 and ’09, it will be very tough to downsize in order to survive. Some businesses are good at this, but I fear most are not.”

To aid distributors in meeting these challenges, Mingledorff hopes to get members more involved in using the tools HARDI provides, such as market analysis, benchmarking, and educational products. “I also want to drive home the need for our members to get engaged with our government relations effort to help deal with the challenges of government regulation of our business,” he said.

Publication date: 10/17/2011