PHOENIX — Change was a major theme at Heating, Air-Conditioning and Refrigeration Distributors International’s annual conference.

Its official name was Evolve ’13. Its slogan was “New pathways to success.” And the group used the Dec. 7-10, 2013, meeting to introduce a number of initiatives designed to lead members along the road to business prosperity.

 

Among them was Distributor Performance Analytics LLC, a limited liability corporation that will compile and share information through the development of custom software that will make it easy to report and after near-instant benchmarking feedback.

Working with four non-HVAC groups: the Industrial Supply Association, the Power Transmission Distributors Association, the ISSA-the Worldwide Cleaning Association (formerly the International Sanitary Supply Association) and the NAHAD-The Association for Hose and Accessories Distribution, the company will provide members with easy-to-access and continuously updated business performance information.

“The plan is to develop a data warehouse and business intelligence application to perform distributor benchmarking for all these areas,” said Greg Borr, the manager of corporate operations and purchasing at the O’Connor Co. in Lenexa, Kan., and co-vice chair of the Management Methods Committee, where the venture was introduced Dec. 9. “The goal of this project is to provide a solution that will not only increase participation by providing industry benchmarking that is modern, timely and actionable, but by also providing cross-industry benchmarking capabilities.”

Information, please

It’s the kind of information HARDI members need, Borr said.

“The ability to ad-hoc report and filter dashboards will enable HARDI members to have a completely customizable performance benchmarking application,” he said. “That combined with the increased frequency and timeliness of the outputs will help HARDI members develop measurements and key performance indicators that effectively drive business strategy and goals.”

For years, Borr said he was frustrated by the way industry benchmarking data was gathered and reported back to members. Participating companies compiled their data on a spreadsheet, sent it in and waited for results they could use to compare themselves with the rest of the industry.

Sometimes, Borr said, it was months before they heard back.

The data contained in reports was somewhat outdated by the time it got into the hands of members. Over time, participation levels among HARDI members had been declining in what would ultimately reduce the overall value of the final reports.

Another important debut at the conference was the “emerging leaders” program. It’s designed to help association members combat the long-term survival rate for family-run companies.

Family dynamics

The odds that a family-owned HVAC distribution business — or any business — will make it past the founder’s generation are not good.

And they only get worse.

According to the Family Business Institute, while 88 percent of owners say they believe their companies will still be in their family’s control in five years, the reality is only 30 percent make it to a second generation. Twelve percent make it to the third and just 3 percent reach the fourth generation.

Statistics like those, along with the ever-creeping average age of HARDI member company executives, are why the group held the Dec. 8 program. After consulting with members, the association realized there was need for guidance in an industry where many people with the same last name are executives or on track to become company president or CEO, said Emily Saving, HARDI’s director of education and liaison to the task force.

Ensuring up-and-coming employees are prepared to take on leadership roles can help companies survive, she added. But it’s not uncommon to find people thrust into positions that they weren’t wholly ready for.

“Whether they are in our target demographic because of their last name or because of their high potential … there are still some competency gaps within their skill sets,” Saving said. “They still need to know how to make executive decisions and how to lead from the executive’s chair.”

During the meeting, mentors Bud Mingledorff of Mingledorff’s Inc., Bill Shaw of Standard Supply & Distribution Co. Inc., Nancye Combs from HR Enterprise Inc., and Dave McIlwaine, of HVAC Distributors Inc. lead a roundtable discussion where younger HARDI members could talk about concerns and share experiences.

Participant Dan Lauterhahn, vice president of sales for Packard Inc., said he was impressed with the program.

“Being part of the emerging leaders will be an incredible gateway into understanding and experiencing what it takes to be an effective leader within our own organizations,” Lauterhahn said. “All emerging leaders should gain priceless knowledge about who they are and have them discover their own leadership talents. This new program HARDI has developed will be a tremendous asset to all HARDI members.”

Steel nerves

2014 could be a very interesting year for HARDI members that purchase sheet metal or otherwise keep track of the steel marketplace.

That was the opinion of experts who spoke Dec. 8 at the Sheet Metal/Air Handling Materials Committee meeting. The Sunday afternoon session was very full, a fact that the committee said they appreciated.

David Boggs, chairman of the committee, reminded attendees that the price of metal is constantly in flux.

“Steel is a commodity,” Boggs said. “It goes up and down, just like any commodity.”

That point was underscored by Tim Quinn of Majestic Steel USA. In his speech, Quinn told attendees that several factors are likely to affect the prices they pay for materials. One is the amount of steel that mills are processing.

“Inventory levels today are very low,” he said, adding that may mean some mills are going to soon announce price increases.

Another is that a number of mills now have new executives in place.

“There has been a major shift in leadership at the mill level,” he said.

One issue that has constantly been in the news is the allegations of “dumping” of steel by Chinese manufacturers at prices below its manufacturing costs. Quinn compared it to the steroids scandals in sports during the last decade, in that the public seems to no longer be shocked by the allegations.

Allegations of dumping by Asian steelmakers are similarly viewed by the marketplace, he said.

“The import market is not going to destroy the domestic market,” Quinn said. “It will influence it.”

He recommended buyers invest in zinc testers and even mobile applications that allow the testing of metal to ensure its gauge and metallurgy is as advertised.

“Let’s get everybody aware, let’s do the right thing so together we can learn and we can grow,” Quinn said.