NIBCO Inc.: Ahead of the Flow
We seldom use words like “sexy” or “unsexy” in business magazines. Because of political correctness, we relegate the terms to the tabloids and gossip rags; so I deleted them from the original lead (first paragraph) of this story. Yet profitability and durability (which is “sexy”) fascinate us all, regardless of the adjective. That’s NIBCO.
Profiling NIBCO Inc. offers a writer all the accoutrements of a successful company. Employee-owned, NIBCO has a long history and a track record of innovation with more than a dose of common-sense patriotism. A perfect company? Probably not. An impressive company? Very much so.
The bare facts themselves raise a business eyebrow. Elkhart, IN-based NIBCO is a well-known manufacturer of valves, fittings and flow control products for commercial, industrial and institutional construction as well as residential and irrigation markets. Founded in 1904, five generations of family leadership and employee ownership guided the company, which became an ESOP in 2004. They operate 10 manufacturing plants and seven distribution centers in the U.S., Mexico and Poland.
Judging from its durability and continued growth, it raises the proverbial question: Why NIBCO?
The macro view would suggest a legacy of strategic vision, putting the euphemism of being nimble into actual practice. NIBCO introduced the first practical copper fittings for residential plumbing use to the U.S. under Ross Martin (son-in-law of founder Casper Schweitzer) in 1927. Before 1937, all copper fittings were cast until NIBCO introduced the wrot copper fitting and soldered joint. In 1997 it was the first successful SAP implementation, allowing NIBCO to demonstrate a new approach to enterprise resource planning. It was also an early entrant into the plastic fittings market and took the innovation lead with its press fittings and valves and lead-free products, according to Canaan Lawrence, vice president, specialty sales.
While NIBCO sells many commodity items, its product choices are extensive, especially in its valve business, allowing the company to boast that they can meet various needs. For example, they have valves that are found in your home to others that are large enough to be used in buildings like the Freedom Tower.
While NIBCO is high on technology and expertise (they rely on engineers and scientists such as metallurgists to ensure quality), it’s how the end user views the product that really matters. For them, reliability is synonymous with NIBCO. No end user, especially at the contractor level, ever wants to put a valve in and rip it out later because of a product malfunction. Managing quality is in part why NIBCO kept its manufacturing base in the U.S. instead of moving to China, Lawrence explaines.
But if you had to distill the ultimate appeal for its products to a simple sentence? “NIBCO sells peace of mind,” says Lawrence. “Once you put a system in, the last thing anyone wants to do is go back and either deal with a failure or re-install something,” says Lawrence. “That’s really what we sell, the quality, the engineering. It was back in the late 80s, early 90s, when there was this huge push to China and many manufacturers went offshore. NIBCO made the strategic decision to stay right here in the U.S., continue to employ American workers and make an American-made quality product.”
If Lawrence’s observations appear like feel-good patriotism, it isn’t. He points to a hotel project, for example, including one well-known chain, that had to go in and pull out imported valves because they started to fail. While there are no public cost figures, the safe assumption is that it must have been enormously expensive. Part of the problem is that inferior products that some manufacturers (especially outside the U.S.) use to replace the growing demand for lead-free items simply don’t understand the metallurgy behind it.
But even with the issue of quality, reliability and durability, there remains a vexing question for every business. How do you know that what you deliver is in fact what your customers want and need?
Lawrence acknowledges that “voice of the customer” or feedback is hugely important. NIBCO spends a great deal of time talking to customers via focus groups, gaining distributor and engineer feedback and joining industry organizations. They also have a “robust” sales team that ensures face-to-face contact with wholesalers and end users.
Distributors matter to NIBCO. Lawrence describes its on-time completion rate as “second to none, with a 99 percent success rate.” With this background, the company is always on the lookout for distributors who meet NIBCO’s high standards for performance. “We look for strong distributors that are familiar with our technology,” says Lawrence. “Our distribution and our supply chain processes are strong. That really separates us from the competition,” echoing the refrain for every good business deal. “It’s got to be good for both parties to work.”
One recent industry association that has been particularly fruitful for NIBCO is its HARDI connection. With HARDI’s focus on HVACR, Lawrence understands that industry connections matter. NIBCO has a significant part of its business in the HVACR field and views potential there as a promised land for growth.
“Our business in the channel is up significantly right now,” says Lawrence. “I attribute much of that success to HARDI. They’ve been a solid supporter of NIBCO, introducing us to new distributors who we didn’t have exposure to before in that segment. John [Silwonuk, national sales manager] has done a great job of collaborating with them and actively supports the HARDI organization.
“In return, it has opened doors for us, with customers, and it’s reciprocated. They are appreciative of what we bring to the table to support their organization. So far it has been a great partnership between us and HARDI, and we’re poised to strengthen those ties. The more engaged we are, the more our businesses will grow.”
When trying to assess any company in microcosm, it often comes down to an elevator speech or a corporate summary in a brochure. When asked about NIBCO, Lawrence said: “We’re different from our competitors, especially our import competitors, because we’re a U.S.-based and employee-owned company. We’ve managed to grow our business, remain competitive and maintain that U.S. presence so you can count on us. You can put your trust in the NIBCO name which has been built upon a 110-year history of quality products, pride in workmanship and service excellence.”
The NIBCO Snapshot
Top Officer & title:
Rex Martin, Chairman and CEO
Headquarters: Elkhart, IN
Annual Sales: N/A
Year Founded: 1904
NIBCO in One Sentence: “The NIBCO brand stands for quality products, pride in workmanship and service excellence,” said NIBCO Chairman of the Board and CEO Rex Martin. (Source: 2011 ribbon cutting ceremony and press conference for the NIBCO Blytheville, Ark., plant expansion and new distribution center.)