ligenGe Speed dating, Ferguson style

By Carla Waldemar

DERGUSON Lumber, launched in L' 1868 in rural Rockville. In.. is the oldest family-run lumber company in Indiana, says Joe Collings, the fifthgeneration owner. (His great-grandma was a Ferguson, he explains.)

But not much happened in the 132 years that ticked on by before he took over as president in 2000. That very same year, he opened a second yard in a nearby town. Two years later, he inaugurated a hardware store in Plainfield, an up-and-coming suburb of Indianapolis, and in 2004 another one in Danville, also on the beltline. And that's not the end of the story, he says with a gleam in his eye that lights up the telephone wires.

Joe was quick to see the writing on the wall-expand or expire-and to act on its message. "We were in a very rural community: no industry base, no growth potential. To keep employed, we needed to expand." And closer to the action of the city.

He shifted a wary eye on the local economy and what he envisioned wasn't pretty: "semi-stagnant. A formidable challenge." So, he heeded another entrepreneurial maxim:

Diversify. Thus, two of his operations are hardware stores, geared for the walk-in consumer. and two are lumberyards, organized to serve the pros -a schizophrenic combination that requires him not only to visit each store twice a week. but bring along a change ofhats.

"There's some overlap," he allorvs, then proceeds to note the differences. "We'd been our own best customer (rve did contracting as rvell), so rve knerv what the pros want; we included services like quotes and takeoffs. And the yards are set up for their convenience. The minute they rvalk in the door. it's 'What can rve do to help you?"'

The suburban hardrvare stores. on the other hand, are larger, with a layout "conducive to the consumer. because the pros rvill adapt. These are geared to the female. the decisionmaker."

And they came about in record time. Although Joe carries the larvnand-garden basics, he probably wouldn't know what to do rvith them because no grass grows under this man's feet. "We were able to grorv very quickly because, for one thing. rve had the staff available; they rvere working under-capacity. And stores three and four only needed managers. there was already an employee base."

Nonetheless, the Danville operation set something of a record: a 10,000-sq.-ft., ground-up store, completely stocked and ready for business in under 90 days, thanks to "very dedicated people-plus, with our previous experience in the contracting business. we knerv what it takes. One crew gutted the building and created the new interior-nerv floor. nerv walls, new ceiling, nerv entry-rvhile another rvorked on merchandisins.

"We identified a pocket of demand that rvas not being met, and it's proven itself." he testifies.

As a member of co-op Do it Best. Joe could lean on its expertise in layout, stocking and analyzing the market. He was able to qualify for the coop's RetailSrenrl Program. designed to assist members rvith multiple sites to add more new locations: it also provides support rvith start-up inventory and placement of merchandise. "It helps to have a floor plan laid out. so you don't walk in cold and stand there rvondering. 'What's next?' Plus. the annual purchasing rebates were a big help in moving ahead." Joe says. allorving him to invest in items like a new computer system. "We're dependent on rebates to move from red to black." he states.

Orvning four stores enables him to get better deals on commodity purchases. rvhich all can share. and also allorvs them to share inventoryavailable through a glance at the computer screen-and centralize all accounting procedures. There's a dorvnside. though. simply because Joe cannot be cloned. "lt means I'm traveling a lot-but somebody has to." he points out. "to keep a finger on margins and to offer an outside vierv vs. being too close to an issue. I'm as objective as possible-but." he's got to admit. "sometimes I have a hard time biting my tongue."

His best tool is communication. "We have managers meetings bimonthly to look at issues and projections and what it takes to stay in business. relative to the bottom line."

He also promotes an open-book policy. sharing stats of profits and margins rvith his 40 employees to use as gauges and forecasts and to fuel sales initiatives. ("Are there rewards for meeting goals?" asks an innocent reporter. "Sure!" he fires back rvith a chuckle. "They get to keep their jobs!")

That's actually no laughing matter in rvhat he repeatedly cites as a "stagnant economy." He's combating that challenge by decreasing inventory and increasing turns. "We're watching our buying so there are shorter cycles: more just-in-time, because it's not price as much as it is turns," he notes the make-or-break factor. "We have to keep looking for rvays to change. or the consequences rvill be unpleasant."

"We don't charge for delivery. but rve've had to add a fuel surcharge. rvhich the contractor can then pass on to his customer. It was either that or increase margins, which would cause us to lose business. .."

Demanding pros are after three key factors. he reports: an accounts-receivable program, high-quality products and of course, "pricing never goes away. It's very difficult for an independent to do a good job on all three-two out of three you can deliver," he allows. "So if something slacks off, you have to make adjustments."

He's uncovered other ways to retain and grow his primary customer base, made up of smaller remodelers. Joe has launched a series of seminars in which manufacturers' reps introduce new products-decking, roofing, foundation insulation and such-along with "some fluff' like faux paintingfor the consumer.

"We also provide jobsite calls by our outside sales staff, which the contractors find very helpful-maybe stop by to pick up their materials list. It provides a value-added service that saves them time."

Another new venture is offering rentals at all locations, although he quickly learned that the sites respond quite differently. "The metro stores of Plainfield and Danville are very active-everything from tents and inflatables to hand-held tools, which both the contractors and consumers use-so we're very satisfied-but the small, rural communities there's a lot of good-old-boy stuff. They come by to 'borrow' something, but there's a stigma to actually renting it."

So he complies to cement loyalty. "What goes around, comes around-at least"- another laugh-"we hope so!"

Both breeds of customers go overboard for Ferguson's annual sander race, held in Plainfield the first weekend in August. This annual drag race collects "quite a crowd. We grill on the Weber and have live radio coverage, too."

What about the future? Some of it is unsure; some readers may remember that Joe lost his only child, a son, several years ago, "but the business will continue," he vows. And some is easy to map out. "I'm always looking to expand, to increase our presence." So make that four, and counting.

- A former award-winning LBM trade magaTine editor, Carla Waldemar writes frequently on the lumber and building material industry. Contact her at cwaldemar@mn.rr.com,