Strategic Purchase Fuels Growth
Charlie Jones founded his eponymous company in Kansas City in 1939, believing that contractors could benefit from purchasing wholesale heating supplies in one convenient location. He started out with three employees and a limited inventory, betting on a hunch that contractors would embrace his business model of buying products from one knowledgeable source.
His hunch paid off, and by hiring well-informed employees who focused on individual service, contractors flocked to Charles D. Jones Co. to purchase not only heating equipment, but refrigeration and air conditioning supplies for residential, commercial, and industrial applications as well. Residential and commercial controls soon followed, eventually becoming the company's core business, and in 1972, the company expanded westward to Denver.
Following the original business model of providing superior customer service, along with a broad inventory that features over 300 manufacturers and 10,000 line items, the company has grown to 17 branch locations in Missouri, Kansas, and Colorado. Just recently, the company expanded even further, acquiring 65-year-old, Colorado-based Empire Gas and Electric Equipment Co., which will give Charles D. Jones Co. an even stronger presence in the state.
GROWTH CONTINUESThe acquisition of Empire Gas and Electric was a first for Charles D. Jones, and it provided a way to expand the company's product lines, said Royce Henderson, president, Charles D. Jones. "Acquiring Empire gave us the York line, as well as Reznor, Breezair, and Rinnai. It was a great opportunity because the owners of Empire were ready to retire, but they had no succession plan in place. We were in a position to purchase their inventory and location and also keep their experienced staff."
The acquisition has gone very smoothly, said Henderson, because both companies have similar business cultures, which emphasize recognizing the importance of employees, customers, and vendors. Thanks to the new product lines and branch locations, Charles D. Jones is expecting to see 10 to 15 percent growth next year. "We plan to move those products into eight other branches as well, so our presence in the Colorado market will be greatly expanded."
Growth will also come about because construction is starting to pick up a little bit, said Henderson. "We're seeing more commercial jobs that were previously held up. We do a lot with the military, various institutions, and assisted living/nursing homes, and we also work with a fair number of schools. In fact, we've had a lot of success with Mitsubishi's City Multi VRF system, which we've put in about 10 schools. We're seeing an uptick. Nothing dramatic, but at least it's heading in a positive direction."
Henderson hopes that customers will begin expressing interest in green technology, as he sees this as an emerging market. "We stock a lot of energy-saving products, such as energy valves and setback thermostats. Nothing in solar or wind yet, but I am hoping interest will increase in these things. I've lived through three green movements, and they have always fizzled out. I am hoping that won't happen this time."
In order to support the expected growth, even more emphasis is being put on hiring and retaining the right people, said Henderson. "I think we have created a culture in which people like to work, and our customers benefit as a result. Most of our customers know that we maintain a broad and deep inventory, and if they need something slightly unusual, we are either going to have it, or we're going to find it for them. Our counter staff understands what it means to take care of the customer."
Taking care of the customer also involves providing numerous training and education opportunities. This includes holding regularly scheduled vendor lunches, where customers can come in and learn about new products, and offering open houses, which are held twice a year in all locations. "We also work really hard to make sure the classes are focused on technical and service information, and they're not just a sales pitch by the vendor," said Henderson.
ONLINE PRESENCEOne area in which Henderson would like to see more growth is in the number of customers who place their orders online. The company created an online ordering system two years ago, so that customers could not only order online, but also check invoices, statements, and inventory levels in real-time. At this point, only about 5 percent of customers use the online system, but those who use it, like it and consistently make use of its many options.
"I was hoping that more people would use the online system," said Henderson. "Most are still calling to place their orders or faxing them in. We're going to try some new things in 2013 to entice them to use the online ordering system. Maybe offer some discounts or something. If we could just get customers to try it, I think they'd find that they like it. We worked hard to make sure this is an easy-to-use system, and we update it all the time to make sure it's accurate."
In order to help those in the field, Charles D. Jones Co. will be introducing a mobile app within the next six months or so. Henderson noted that the app will allow contractors and technicians to check inventory, place orders, and capture signatures in the field.
Customers can also follow the company on Facebook and Twitter, although Henderson is ambivalent about whether or not there have been many benefits to using the social media sites. "Everyone says you need to use social media, and you're going to miss out if you're not involved. But while the original enticement to using it is that it's free, we're finding out that if you're going to do it right, it's really not free. You need someone handling that on a daily basis. We haven't seen much return on it, but we're getting better at it."
LINGERING CONCERNSWhile Henderson is looking forward to more robust sales in 2013, he sees several issues that could hinder some of that growth. The main one is Internet supply houses, which are becoming a little more aggressive. "I see that AmazonSupply.com is testing same-day delivery in some markets. I still think we have the edge when it comes to technical support and inventory in general, but when they can talk about same-day delivery, that's what we offer. It concerns me that they're getting more aggressive, although I think in the long run, people will come back to us because we can give them the personal service they need."
Regional efficiency standards, which are set to begin in May, are also a concern because they state that distributors cannot sell existing inventory of lower efficiency furnaces once the mandate takes effect. Further complicating the issue is the number of rumors floating around that DOE may delay implementation of the standards, which really leaves distributors in a bind when it comes to determining proper inventory levels in early 2013. Henderson is also concerned that enforcement of the standards will require distributors to track not only serial numbers, but the addresses where the equipment is being installed. "We don't currently collect that information, and it would be very difficult for us to do."
Other issues of concern include when the Environmental Protection Agency will issue its final ruling regarding R-22, and whether Congress will disallow the accounting method of last-in-first-out (LIFO), which would have a big financial impact on his company. Henderson is hoping these issues will be resolved quickly, but he remains enthusiastic about the future because business is picking up, and there are many new prospects brought about by the recent acquisition. "It's a big deal, and we are looking forward to growing our presence even further in the market."