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D i s t r i b u t i o n B u s i n e s s

Supplement to Penton Publications

August 2008

The Offic

ial Maga

zine

of HARDICAMBRIDGE-LEE

INDUSTRIES

WHERE COPPER IS KING

SUPPLY CHAIN EXPERT

BRYAN JENSENREVEALS THE SECRETS OF CONFIGURATION

HARDI’S 2008 ANNUAL CONFERENCE

HIGHLIGHTS PREVIEW

ALSO IN THIS ISSUE

The Offic

ial Maga

zine

of HARDICAMBRIDGE-LEE

INDUSTRIESSUPPLY CHAIN EXPERT

BRYAN JENSENHARDI’S 2008 HARDI’S 2008 ANNUAL CONFERENCEANNUAL CONFERENCE

A Mission Statement That Includes the Customer

The Offic

ial Maga

zine

That Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the Customer

Distributors Inc.A Mission Statement A Mission Statement A Mission Statement Distributors Inc.cfm

T H E S I N G L E V O I C E O F H A R D I D I S T R I B U T O R S A N D PA R T N E R S

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C O N T E N T S


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From the President’s Pen ....................................... 4Editor’s Page ........................................................... 6News ....................................................................... 7Smart Products and Literature ............................. 11HARDI New Members .......................................... 48HARDI Member Services ...................................... 49Marketplace .......................................................... 50 From My Viewpoint .............................................. 51Ad Index ............................................................... 52

DEPARTMENTS

FEATURES

ALSO IN THIS ISSUE


The Offic

ial Maga

zine

of HARDI

WHERE COPPER IS KING

BRYAN JENSENREVEALS THE SECRETS OF CONFIGURATION

HIGHLIGHTS PREVIEW

ALSO IN THIS ISSUE

The Offic

ial Maga

zine

of HARDI

BRYAYAAY N JENSEN

A Mission Statement That Includes the CustomerA Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement A Mission Statement That Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the CustomerThat Includes the Customer

Distributors Inc.Distributors Inc.cfm

ON THE COVER: (Left to right) The faces of employee ownership at cfm Distributors: Spencer Bell, Cal Berry, Tom Roberts, Paul Flora and Kevin Morris, selected by their co-owners for this photo.

12 Loyalty Starts at Home. At Kansas City, KS-based cfm Distributors Inc., the employees, who own the company, have a vested interest in its success. See how this ESOP can spell profits for “owners” and employees alike.

18 Being Cool about Copper.Cambridge-Lee has gained a reputation as a leading manufacturer of copper and copper alloy products. Learn how this Reading, PA, company keeps growing based on a company philosophy that takes the high road in its business dealings.

24 The Real World of VRF. Pittsburgh wholesaler David Heckler has a grand opening for his variable refrigerant flow living lab.

30 Where the Classroom Ends and the Internet Begins.

We already know some of the advantages of online learning. Here’s how to apply it to HVACR.

32 Economic Forecasting. HARDI has a new relationship with Alan Beaulieu of the Institute for Trends Research, who answers the question: Are YOU in a recession?

34 Legislative Update. HARDI Vice President Talbot Gee keeps us in tune with legislative issues that affect wholesalers.

36 Confused about Configuration? Supply chain expert Bryan Jensen explains why the configuration issue is so important and yet often overlooked.

39 Inbound Freight. Don’t take it for granted. Greg Toler, vice president at Gustave A. Larson Co., offers a checklist that helps to rein in freight costs.

40 New Refrigerants? Ammonia and carbon dioxide might be the latest alternative refrigerants, but as Pete Grasso tells us, they really aren’t that new.

44 Is Your Contractor Immune from a Recession?

Is your contractor recession-proof? HVACR marketing expert Blaine W. Fox explains.

46 HARDI’s 2008 Annual Fall Conference.A preview of the best conference yet!

WHOLESALER’S SPOTLIGHT

SUPPLY CHAIN TECHNOLOGIES

REFRIGERATION

A PENTON PUBLICATION

MANUFACTURER’S SPOTLIGHT

Copyright © 2008 Penton Media, Inc.All rights reserved. Printed in the U.S.

To change address or cancel subscription to HVACR Distribution Business, fax notice to

913/514-6623 or e-mail [email protected].

2HVACR DISTRIBUTION BUSINESS, AUGUST 2008

DISTRIBUTION/LOGISTICS MANAGEMENT

MANAGEMENT METHODS

Editorial Advisory BoardGary Daniels

presidentJohnstone Supply Inc., Portland, OR

Don Frendbergexecutive vice president/COO

HARDI, Columbus, OH

David H. Heckler vice president

Comfort Supply Inc., Pittsburgh, PA

James F. Lucevice president

Luce, Schwab & Kase, Fair� eld, NJ

EDUCATION

HVACR SYSTEMS & EQUIPMENT

GOVERNMENT & TRADE RELATIONS

MARKETING

HARDI CONFERENCE

Correction: In the June issue, we misidentified the chair of HARDI’s Supplier Members Committee. The chair is Hal Kivlan, with Carlisle, PA-based Dynatemp International Inc. We regret any inconvenience.

808cstm2hv.indd 1 7/25/2008 2:26:32 PM

B Y M I C H A E L M A Y N A R DWholesaler’s Spotlight


The customer is at the top of the chart, but cfm Distributors has a 39-year track record of forging close relationships with its employees as well as its suppliers. Tom Roberts, cfm Distributors’ president, proudly points to the company’s mission statement that describes what the company is all about: cfm Distribu-tors is devoted to delivering success to our customers, our employees, our suppliers and our company with warmth, integrity and spirit.

Define cfm Distributors’ Customer-Focused Approach

“Warmth, Integrity,Spirit”

The organizational chart of cfm Distributors looks a little

different from the structure of most companies. At the top

of the chart is “the customer,” and every other position

within cfm Distributors is designed to support each and every person

who places an order or comes to one of the five stores in Kansas,

Iowa and Missouri for HVACR equipment and parts.

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13www.HARDInet.org

“That’s what we do every day,” Rob-erts says of the mission statement that was developed in 1993. “Work in ways to help our customers succeed. We also think heavily about employees and their situations and their success. We don’t think win-win is a tired buzzword with suppliers. We think we can all help each other get what we need: customers, em-ployees, suppliers and the company.”

Roberts is the third president of cfm Distributors, which was founded in 1969 by Roberts’ father, Amos, and his business partner, Bruce Huffman. Rob-erts and Huffman were manufacturers’ sales reps, and they were approached with the idea to open a wholesale dis-tribution business in Kansas City, MO. “They thought it was a good idea,” Roberts recalls, and it certainly was. In their first year in business with one supplier, revenues were $486,000. The business grew from there.

Tom Roberts joined the business in 1981 after three years of working for York’s engineered machinery divi-sion selling large commercial HVACR equipment. By then, cfm Distributors had become a York distributor. “It all kind of fit together,” says Roberts, so he moved from Atlanta back to Kansas City to join his father and Huffman.

With the country in a recession, 1981 was not a very good year for business – or for consumers, for that matter. But economic difficulties also proved to be something of a revelation for the com-pany. “In those tough economic times, we, in turn, were struggling and had to do something,” Roberts recalls. Amos Roberts and Huffman called their employees together and said they would vote on whether to take a 10 per-cent cut in pay or reduce the work force by 10 percent. The employees voted to cut their pay. By the end of the year, business had improved, and the company repaid them.

Beyond there was a large lesson of employee loyalty to one another: the importance of getting buy-in from all employees. For the past 12 years, the management team has held twice-

supplier, revenues were $486,000. The business grew from there.

in 1981 after three years of working for York’s engineered machinery divi-sion selling large commercial HVACR equipment. By then, cfm Distributors had become a York distributor. “It all kind of fit together,” says Roberts, so he moved from Atlanta back to Kansas

Training – Internal/External

Definition: Offer the best training oppor-tunities for staff and customers. Be recog-nized for leadership in technical expertise and training classes. Encourage broad and deep participation in training at all levels.

Examples: Internal – Utilize HARDI training for counter personnel and front-line customer service team. Reward completion with cash bonus. Encourage attendance at University of Industrial Distribution – (three attendees last session). Utilize desktop training (PowerPoint e-mails) on new product offerings, complete with tests and rewards (gift cards), and drawings for completers. Encourage and support lifetime learning. External – Provide technical training throughout the service territory that also qualifies for NATE®, state and county licensing continuing education credit. Provide technical training at county-required contractor licensing continuing education training sessions. Provide online training opportunities for NATE testing and employee screening.

Significance: Internal – Education leads to knowledge which leads to expanded opportunities to assist others inside and outside of the company, creating leaders in organizations to show by their example the value of education. External – By making our training meet the qualifications of other agencies, we simplify the training choices of the contractor and reward them more broadly for their participa-tion and attendance in our programs, wherever and whenever they are offered.

Benefits: Internal – The best technicians seek the qualified counter for answers to daily problems. Highly qualified customer service personnel can provide answers to system questions that help sell correctly matched systems and reduce costly errors in system selection and option choices. External – Greatly simplifies the overall task of technical support. Increases the communication effectiveness between contractor installer, service personnel and our technical support team.

Best PracticeProcedure: Internal – Identify areas of desired improvements and fundamental knowledge, then utilize HARDI resources to build competencies. Encourage the store managers to attend UID (Univer-sity of Industrial Distribution) training.External – Determine the requirements of other continuing education entities in the service area, and include those re-quirements in the creation of the syllabus and training program materials. Maintain the relationship with submission of new training courses to the oversight bodies for approval. Promote the qualification in all training materials and fliers.

People involved: Internal – New products by product managers as appro-priate, HARDI training monitored and supported by managers. External – VP of Sales and Marketing, Technical Support Manager, Parts and Refrigeration Manager, President, Marketing Staff at annual meeting to modify training opportunities, schedule training for new product offerings or strategic directions. Marketing staff develops annual schedule for training, inserting new offerings, etc.

Timing: Internal – Continuous with emphasis on UID schedule. External – Set annual calendar and publish on website. Avoid May–Sept. dates for classes.

Cost: Internal – Training is a moderate development cost. External – Training charged at a level to recover all costs. Excellent training is well worth the cost. We provide discounts for multiple students and prepayment to encourage broad attendance and commitment.

Other considerations: Internal – Provide incentives for those who par-ticipate in training. External – Provide incentives to those who provide training. Distribute a percentage of the net income of the class to those who prepare and deliver the training curriculum.

Contact: www.cfmdistributors.com

(Left to right)The faces of employee ownership at cfm Distributors: Spencer Bell, Cal Berry, Tom Roberts, Paul Flora and Kevin Morris, selected by their co-owners for this photo.

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monthly meetings, the first on the company’s sales, profitability and general financial performance, and the second on the fast-growing replace-ment parts, supplies and store opera-tions performance.

With its employees so clued in to all aspects of the company, the next logical step was to turn the employees into owners. Roberts’ father had retired in 1993 (although he still works about 12 hours a week in customer technical support as the author and provider for the company’s internal job-quoting software), and Huffman was prepar-ing to retire in 2001. “For us, it was a natural evolution,” Roberts says.

“We had taken the employee culture established to the point that it seemed like this is where we were heading,” he says. Planning for the change to em-ployee ownership began in 1998 and took effect in 2001. Employees own 39 percent of the company, while Roberts owns the remaining 61 percent. While employees had always felt a responsi-bility to the company and to one an-other, becoming an employee-owned company has “crystallized” the culture of cfm Distributors, making what they do even more relevant, Roberts says. “It’s given people a reason to fill in for the person who is sick or who has a family emergency.”

But the customer-focused ethic that is evident throughout the company is not

Wholesaler’s Spotlight

just a result of employee ownership. Remember the mission statement? “Warmth, integrity and spirit” are important elements that help to define the company and make employees want to stay. In fact, the aver-age employee has been with cfm Distributors for 12 years. This sense of family and fun translates into easy and enjoyable customer experiences, like freshly baked Otis Spunkmeyer cookies and ice cream in the summer at cfm Dis-tributors’ stores. “There’s always some-thing new going on at the stores, and there’s always a good reason to want to come to us, hopefully, instead of our noble competitors,” Roberts says.

When Roberts refers to his competi-tors as “noble,” he means it. Distribu-tors in cfm markets are regional play-ers – there are no national distributors, he notes. “For the most part, we have good competitors who have the best interest of the customer at heart. It’s a good industry to be competing in – it’s a small world – and your reputation and integrity are everything,” Robert says. “We’re fortunate in the Midwest to have the kind of people who take the long view on a lot of different issues.”

That long view has certainly ben-efited cfm Distributors. Look at the

company’s growth rate since 1969 and you’ll see a nice, steady, upward curve. “Our average annual growth rate has been about double digits since 1969,” Roberts says. Being involved in diverse market segments has helped buoy the company during the times when certain markets were flat. In fact, cfm Distribu-tors is involved in practically every mar-ket that an HVACR distribution could be in – from all aspects of commercial and residential to applied equipment, replacement parts, and tools and test instruments and supplies.

In the Midwest, new residential con-struction sales are also somewhat weak, but there remains a relatively strong commercial market. “So we can shift resources and shift our emphasis over to those markets that are continuing to be successful, while the other mar-kets are recovering,” Roberts says. The relatively flat and flexible management structure has helped the company to easily shift gears into different markets.

The flat organizational structure means that customers don’t have to go through layers of managers to get is-sues resolved. All cfm Distributors cus-tomers have a VIP card that contains the cell phone numbers of all the key people within the company, including Roberts, the tech support people, sales-people and parts people. Roberts says he’d rather resolve an issue at 10:30 p.m. on a Saturday than have to hear from a customer Monday morning who has had an entire weekend to stew about not being able to talk to someone.

The company has maintained such a flat structure even through its expan-sion to new markets in the late 1990s and 2000. Upon Amos Roberts’ re-tirement in 1993, Huffman and the younger Roberts convened a strategic planning session that led them to con-clude that they needed to be more than

cfm’s Annual ESOP Celebration is a place for employee-owners and their families to learn about the business.


President & CEO: Tom Roberts

Vice President: Cal Berry, VP Sales & Marketing

Headquarters: Kansas City, MO

Operations: Full-Service HVACR Distributor with Applied Equipment Kansas City, MO Des Moines, IA Lenexa, KS Springfield, MO Wichita, KS

Employees: 55

Annual Sales: $30 million

Major Product Lines: York, Coleman, Bohn, Reznor, CES, Johnson Controls, Honeywell

Website: www.cfmdistributors.com

Year Founded: 1969

cfm Distributors at a Glance

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sive. It’s just been a mutually rewarding relationship. The York people in Wichita and Norman operate state-of-the-art facili-ties and deliver a top-quality product with class,” Roberts says.

But it’s not just the local ties that bind. Roberts says there’s a Midwestern work ethic that plays a major role in this. “So hav-ing that management team in place at York in both Norman and Wichita doesn’t just mean that they’re close to us; it means that they think like we do and they have the customers’ best interests at heart, and are ready to do the things that are neces-sary to maintain the integrity of their brands,” Roberts says.

Training remains a mainstay of cfm Distributors for both customers and employees. Technical and business training courses are held at all the stores throughout the year, custom-izing materials for the needs of its customers – whether they are installers, technicians or salespeople. Some programs, like its Masters of Sales course, have become multisession pro-grams. cfm Distributors has also been heavily involved in contractor training and continuing education that has since become mandatory in Kansas. Technicians can use most of its training courses as continuing education credits.

The company also invests in training its employees. Susie Smith, manager of the Kansas City store, holds the distinc-tion of being the first HARDI-certified counter specialist. Roberts says she would have taken the training even without the certification offer. “She’s a good example of someone who constantly wants to better herself and offer better service to her customers.” There are now more than 25 employees enrolled in HARDI continuing education programs.

Such training is just one of the benefits of being a HARDI member, Roberts says. “It’s excellent, and it’s another great re-source and reason to be involved with HARDI.” As the presi-dent of cfm Distributors, Roberts appreciates the benchmark-ing conducted by HARDI. “It’s really the best benchmarking in our industry by far,” he says. “It allows distributors to see how their financial performance compares to their peers across the nation. I consider that to be part of my training.”

He knows that change will continue to be the constant in the HVACR industry and, by extension, among wholesalers. “I’m beginning to think that management’s primary respon-sibility is the management of change,” he says. “And once you get past establishing and reaching financial goals and recruiting and retaining the best employees, you wind up with change being the biggest continuous challenge.”

Michael Maynard is a business writer in Provi-dence, RI, who writes on issues related to HVACR, construction and architecture. Contact him at [email protected].

a local player. From 1997 through 2000, cfm Distributors opened one new store a year. In addition to the original Kansas City store (cfm Distributors does not call them branches), there are stores in Wichita and Lenexa, KS, Des Moines, IA, and Springfield, MO.

All are within three hours of the Kansas City head-quarters and along major highway routes. Being in dis-tinct markets yet close enough to the company’s 85,000-square-foot central headquarters allows it to leverage resources and gain the economies of scale that a multistore operation can bring to a company. Roberts notes the im-portance of the store locations. Springfield is the regional market center for southwestern Missouri and northwestern Arkansas, Wichita is the largest city in Kansas, and Des Moines is the market center for Iowa.

Roberts says the location of its Wichita store is especially fortunate as two of its major suppliers – York and Coleman – have significant bases of operation in Wichita, and York’s Commercial Unitary Products Group is just three hours away in Norman, OK. “We’re the hometown distributor of the hometown brand, and that provides us with the opportunity to have a great relationship with really great manufacturers,” Roberts says. Such proximity gives cfm Distributors’ engineers and technicians access to top engineering people so they can collaborate on customer needs. “They are incredibly respon-

Circle 14

cfm’s Store Manager Susie Smith assists a customer with warmth, integrity and spirit. Susie was HARDI’s first Certified Counter Specialist.

Wholesaler’s Spotlight

A Different Kind of Moving Box

888-443-7937www.Dryerbox.com

1.6 Million Installed

Builders take one look and knowcollecting the fl ex hose neatlyin the wall behind the dryerjust makes sense.

Be certain to stock this higher margin alternative.

It’s one box that really moves.

A good idea combined with aggressive marketing helps it fl y off the shelves.

Heavily advertisedin more than 15 major

building trade magazines.

Model 425

Model 4D (Downward Venting)Proud Member

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Documents

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