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Contractors Describe Pain Points, Value In Distribution

What do contractors think about their skilled labor shortage?

How about the increased use of technology in their relationships with distributors?

What do they think of new products?

And how about Amazon?

Attendees at the NAED National Meeting in Chicago got answers to all of those questions, and more, as a panel of four Chicago-area contractors answered questions for more than an hour.

Members of the Contractor’s Panel at the NAED National Meeting discuss the value of distribution and what can be improved (left to right, Mark Barthel, Springfield Electric Supply Company, John Barger, B&Z Electrical Contractors, Luke Fenner, Maron Electric Company, Gary Misicka, Lyons & Pinner Electric Companies, and Jeff Weir, Kelso-Burnett.

Hosted by Mark Barthel, President of Springfield Electric Supply Company, the four contractors provided frank answers to questions that impact how they run their businesses, and how distributors can help them.

Right out of the gate, the topic of a skilled labor shortage came up.  Its impact on their businesses is being felt, and they are looking to their distributors for help.

“A lot of qualified people are retiring, and feeding off that is technology,” John Barger, President of B&Z Electrical Contractors explained. “We are trying to keep up with it.  I see so many of our distributors and manufacturers reps struggling to keep up with technology just to help us keep up with the process.

Gary Misicka, Vice-President of Lyons & Pinner Electric Companies, agrees.  He says while manufacturers are coming out with new technology, his long-time employees are retiring. As a result, he is not only learning the new technology himself, but a good percentage of his employees needs to learn it with him. “The workforce and manpower is certainly an issue,” Micicka explained. “Finding a qualified workforce is really tough. I spend a lot of time in apprenticeship programs. We are rapidly trying to train people, and it’s scary.”

All four of the panelists pointed out their labor costs are very high, especially in Chicago.  A union electrician makes about $1.50 a minute while on the job (including benefits).  As a result, owners are always looking for help from distributors to cut down the amount of time on the job.  As Luke Fenner, Director of Operations, Maron Electric Company, pointed out, “We struggle with systemic, repeated bottlenecks.”

Misicka explained his company is constantly looking for pre-fab help from his distributors as a way to cut down the number of hours on a job site. “We do a lot of pre-design prior to actually being on the job. What can we pre-fab in our shop before taking it on the job?  Our labor cost is $1.50 a minute.  So we are looking at ways to reduce costs.” Jeff Weir, Vice-President, Kelso-Burnett, explained that he is not have a logistics company, so he may not have the proper trucks for pre-fab projects. He often looks to his distributors to see if they can deliver a large pre-fab project. “If I can start leveraging the services of our distributors coming out of our pre-fab shop, that would help us with the delivery of the products we make in house,” Weir said. Weir added he he would like to limit the number of distributors he partners with. “We are trying to do partnerships with our distributorships rather than looking for the lowest price. It’s not worth the lost time on the job to search for different distributors to supply products,” Weir said.

When it comes to technology, e-commerce, websites, and apps, all four contractors say they would use them, but they aren’t good enough for daily use.

“There’s value in it. Our service trucks will use your app to order products,” Fenner told the crowd. “But in a $4-$5 million project, the app is unreasonable.  We want bold amounts of products.  It’s a good solution in some areas, but it doesn’t make complete sense yet.”  Weir and Misicka agreed.  They don’t want their people on the job site making $1.50 a minute searching their phones, pads, or laptops for products. “You are looking for technology to save time, convenience, and an experience.  And right now I am not seeing that. For time and convenience, our foremen don’t want to get onto an app and search for products. And as far as an experience, we haven’t had a good one because the first two don’t work for us, so we don’t use it.”

Barger agreed, but only to a point. He says he has found some good apps and websites, but he has also come across some that are not as good. “We do use the app, because it allows us to search across the country.  If its not a price sensitive item, and we just need to get it. But for day to day, nothing beats a purchasing agent. We can e-mail or text back and forth and get what we need.”  Weir added that the technology he likes best is actually FaceTime. When a shipment arrives on a job site and there is a problem, he can have his foreman FaceTime the warehouse at his distributorship to fix the problem right away and go through the shipping labels or how it was kitted.  “It cuts through a number of steps and makes everything right,” Weir said.

For all five of the contractors, your outside sales staff is key.  Two of the panelists said they don’t need bagels delivered to their office.  They need experts in product knowledge.

“Outside sales people need to be a technical experts.  I need a person who knows what they are selling,” Fenner told the crowd.  He added he wants the sales person around for the entire project, especially while a pre-fab product is being built.

Misicka says the worst thing an outside sales person can do is place an arbitrary amount of time it will take to get a product delivered.  He doesn’t want to know it will come in “8-12 weeks” because he knows he is leaning toward 8 but the reality is it may be a lot closer to 12. Then when he tells the customer about the wait time, he doesn’t want to look back when they have to wait longer than expected. “Don’t over-promise and under-deliver. We get that they don’t have what we need in stock, or that a special part is needed. But don’t say it will be there in a certain amount of time if it’s not,” Misicka explained.

And when it comes to Amazon, all four say they are not ready to climb onboard the online giant.

“It hasn’t impacted us much,” Fenner reported. “I see an Amazon box or two at a job site. But that’s usually an ‘out of stock’ situation.” Fenner worries about the accuracy of information on Amazon Business, and wonders if it comes from a viable source. “I want it to show up correct, and then we can talk about getting it there fast.”

Weir points out that Amazon cannot provide the value added services that distributors provide. “We order amazon because things come right to our door,” Weir pointed out. “But we already have our distributors delivering to our door.  And most of our job sites can’t receive shipments from UPS or the U.S. postal service.  There are too many things that our distributors offer us that Amazon doesn’t offer.”

“There is no pre-fab from Amazon, and we want that,” Misicka said. “I hope they don’t put brick and mortar distributors out of business, because we don’t use it.”

Barger was pretty firm about his future use of Amazon.

“We use it for obsolete parts or parts that no one is stocking.  But to replace our local distributors, that’s not going to happen as far as I can see in the future.”

 

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