A company that viewed the downturn as a cup more than half full. Rampart Supply came on the radar screen serendipitously in the process of selecting our 2010 Wholesaler of the Year. I met a few of the company's purchasing staff during the annual WIT meeting earlier this year, and their response to a routine "How's business?" Conversation starter brought to mind the proverbial man-bites-dog story. "We're growing!" The first respondent chirped. His companions chimed in with details about new hires, a recent showroom opening and a coming branch expansion. It was a refreshing break from all the gloomy news about cutbacks that has permeated the industry the last few years. The enthusiasm with which these non-owners talked about their company marked Rampart as a supply house worth investigating. We did our usual research talking to manufacturers, reps and even competitors, who verified that this is a classy organization and eminently worthy of our Wholesaler of the Year honor. This isn't to say Rampart hasn't experienced the Great Recession.It was a little slower coming to their Mountain State than most other places but Colorado didn't escape the rough stuff.Housing starts in the state are about a quarter of what they were when the bubble burst and on a drive through its communities one can't help but notice numerous commercial developments stopped in their tracks. As a result, Rampart's sales dropped 7% in 2009, which sounds bad except in the context of the latest ASA Operating Performance Report, which found PHCP distributor sales dropping a median of 17.2% last year. Yet even amid the downturn, the company kept inventory and employment up. "Rampart has never been an extravagant company so there wasn't a lot of drastic cost cutting required," said President Colin Perry. During the depth of the slump - not knowing where the bottom might be - employment slipped just a little as Rampart decided not to replace a few people who left due to natural attrition, such as retirements, relocations, etc. "Everyone tightened their belts," Perry said, but they laid off nobody. "Instead, we became very aggressive. When the market started to turn down our sales team got together and began looking at new opportunities we never paid much attention to in the past," he told me. Thanks to that aggressiveness they are in line for about a 10% increase in volume this year, about to expand with a branch in the town of Pueblo, and are back in a hiring mode. Whereas many distributors got burned badly on the receivables side, Perry said theirs never got as bad as they had feared. "It was one of the first things we addressed when the economy turned down, and our 90 days column has actually gone down." He conceded it was also partly a matter of luck. "Some accounts we thought we really wanted four or five years ago we could never nail down. Now we've seen them go under and their distributors get beat for as much as a half-million dollars. We dodged a few bullets." Something else that kept the company afloat during the worst of times was its diverse market approach. Rampart's business includes plumbing, hydronic heating and industrial PVF, spanning residential-commercial-industrial markets. A slew of hometown military facilities (U.S. Air Force Academy, Fort Carson, Peterson AFB) absorb a steady amount of MRO materials. Plumbing and heating contractors are their core customer group, though they also sell to facilities maintenance accounts and mining companies.Sparkling showrooms in both locations keep them in the remodeling picture for projects ranging from modest to lavish.Their search for new opportunities has led to a push into water conservation and energy effi ciency products, “which have become a nice piece of our business the last couple of years,” according to Perry. Rampart from its earliest days has relied on a vibrant pickup business and that remains the case today. As many as a dozen countermen can be found working the Colorado Springs counter on a busy day and up to 10 in Denver, even though self-service is incorporated into those operations. At the same time the company has nurtured an array of value-added services, such as design expertise to its commercial and hydronic heating clientele, along with a machine shop for pipe fabrication.They operate training centers in both Denver and at company headquarters that stay busy putting on programs for local contractors, as well as in-house staff.Lately they’ve been humming with RRP certifi cation sessions. “We’ve gotten real good at being a wholesaler as opposed to a specialty house,” said Kevin Perry, Colin’s brother who heads up the company’s PVF business.“We’re not quite the A to Z guys, but more like B to Y suppliers.That’s our claim to fame.” He added, “Another big reason we’ve been successful is a division of responsibility.We put our heads together at times but all of the departments are held accountable.When reps come in with crossover lines, they know they have to make separate sales calls on various people.” WHAT MAKES RAMPART TICK? In a way, you could call Rampart Supply old-fashioned. Except for the Infor-based bar-coding technology they use, which is neither more nor less sophisticated than what most medium-sized distributors employ nowadays, nothing they do operationally would look much out of place in supply houses of the 1970s or ’80s.To the extent that they stand out, it has to do with a company culture based on one timeless intangible — relationships — and the most tangible thing of all in the distribution business — inventory. John McCallum, a 13-year Rampart veteran and Colin Perry’s brotherin- law, serves as the plumbing/heating sales manager in Colorado Springs and also functions as the company’s human resources manager.When I asked him to identify the company’s competitive edge, he observed: “As the economy turned down in our industry, many organizations decided to become brokerage fi rms. Ever since the 1960s Rampart has been about having inventory on the ground. When we saw the economy about to turn, we fi gured manufacturers’ lead times would be stretched out, so we kept our eyes on that and increased our buying going into a down economy. “Another thing is we never backed down on the caliber of staffing,” McCallum added. “We actually hired people during the downturn, though we’re very picky about who we bring on board. We look for experience but also know that great experience without an equally great desire to serve customers is like a library with the doors locked. All of the people who work at Rampart have to be motivated by a true sense of service to the customer.” The company relies on a large outside sales staff to stay connected with those customers. I was surprised to learn that the sales staff is compensated solely via salary. No commissions, no bonuses, except for a company profit-sharing program for all employees. This contradicts the spiel of thousands of sales motivational speakers, but it goes back to that corporate culture of Rampart’s. “It’s a challenge to keep salespeople motivated without commissions,” Colin Perry admitted. “Certain ones don’t fi t our model and we’ve lost a few over the years because they’re highly motivated by money. We just try to pay our people proper salaries and look for those with the character traits to fi t our culture.” Rampart’s industrial PVF business is project-oriented and not as dependent upon inventory as the plumbing-heating sector. Despite Rampart’s comparatively small size compared with some PVF giants, they supply materials to projects around the world thanks to relationships with some of the most prestigious global contractors and engineering firms. Kevin Perry explained: “When we call on clients, we don’t tell them this is the meeting where we’ll tell you about the guy you’ll be dealing with who’s at the branch that answers to the regional manager, who will get the district guy to call someone who can make a decision. They deal with Rampart because we’re known as people who can react fast, and they can trust us to get things right. That’s important when you’re shipping to a job overseas and it can cost more than the material is worth if it turns out to be the wrong product.” RAMPART SUPPLY: A CAPSULE SUMMARY Rampart is a medium-sized company by our industry's standards, placing 83rd among this year's list of our Premier 150 ranking of PHCP distributors by sales volume. They are somewhat unusual in that those sales are achieved with merely two Mountain State locations, headquarters in Colorado Springs and a second operation in Denver. (A third is on the verge of opening in the Mountain State town of Pueblo.) "Our philosophy is not to have a lot of branches, but major operations that service outlying areas from those locations," President Colin Perry told me. Denver is not a branch of Colorado Springs headquarters as much as a parallel operation amid different market dynamics.In most years the two facilities contribute about the same sales volume, though Colorado Springs now contributes about 60% of revenues thanks to slightly better market conditions than Denver.This owes in part to relatively steady business from nearby military facilities like the U.S. Air Force Academy, Fort Carson and Peterson Air Force Base, plus a robust metals mining sector served out of the headquarters facility. Denver operates with quite a bit of autonomy under the helm of General Manager Marc Robbins and Sales Manager Rich Burkhart.It has been part of Rampart Supply since the 1996 purchase of a company named Water Systems Inc., whose name Rampart still operates under as a co-identity due to a sterling reputation among local plumbing and heating contractors.(Water Systems' name is somewhat misleading in that they do not handle water well supplies or municipal PVF; nonetheless, the name resonates among long-time plumbing-heating customers.) Denver and Colorado Springs maintain somewhat different inventory positions based on local market demand. They routinely exchange materials as demand arises for skus more heavily fortified at the other location, though neither operates as a central distribution facility. Both locations boast lavish showrooms aimed mainly at trade customers. A LEGACY OF HANDSHAKES Rampart Supply was started in 1968 by Colin Perry's father, Joe Perry. Now 86, the jovial founder is well into retirement but still hangs out at company headquarters most days. "That way they don't have to call to see if I'm okay!" He explained with a twinkle in his eye. Rampart's history is one of our industry's classic entrepreneurial tales. Hailing from North Carolina and growing up in the Great Depression, Joe Perry left home at 17 and entered the army during World War II, serving as a medic in 10th Mountain Medical Battalion, which trained in the Colorado Rockies. After serving in Italy at the tail end of WWII, he was honorably discharged in 1946 and returned to Colorado in 1951 to work for an army buddy in the electrical business. Within a few years he gravitated to jobs with plumbing supply houses throughout the 1950s-'60s. "I spent a lot of time figuring jobs that required larger fittings the companies I worked for never had on hand," the elder Perry told me. "The market was changing but these companies never seemed to stock what my customers needed." Seeing a market need, he took a flying leap into the wholesale distribution business. Rampart Supply started operating out of an old building in downtown Colorado Springs, which the company finally vacated in 2005 to move to its present headquarters in what was once a shopping center. "I had no money. If trips around the world cost ten cents, I couldn't have gotten out of sight!" The founder quipped.What he did have were friends and a reputation for handshake agreements that could put lawyers out of work. "I like people," he told me, "and I don't think you'll ever outgrow the need for a personal touch." With support from various vendors, customers and a banker that knew his word was better than any contract, Joe Perry built a business that lasted. "Hard work and good luck were basically what it was all about, along with some good people who helped and encouraged me," he said. "The boys have done a much better job at running this business than I did," said the founder. The "boys" are sons Colin and Kevin Perry, the latter in charge of Rampart's industrial PVF business. Both had worked in the family business from the time they were youngsters. Colin came to work for the company full time in 1979 after graduating from the University of Denver with a business degree. Kevin joined him in 1981. "In a lot of companies the younger generation has to claw responsibility out of a parent, but my dad was just the opposite," said Colin. "He let us take on as much as we wanted to over the years. I took the title of president sometime in the early '90s, though there was never any official turnover. The founder has no official role with the company these days, but Joe Perry's values are very much embedded in the company culture that says you should take care of people and "don't try to sell from an empty cart." SUPPLY HOUSE TIMES WHOLESALERS OF THE YEAR HORSES BEFORE THE CART In one sense the recession has been a blessing in disguise for Rampart by making available top-notch people let go by competitors or dissatisfied with working conditions during the downturn. Their incipient branch in Pueblo is being managed by Frank Bartolo, who formerly headed a national chain’s branch in that town. According to Colin Perry, for years Rampart had been servicing Pueblo in piecemeal fashion from its headquarters 42 miles away, but had never been able to penetrate the market to satisfaction.Bartolo brought along several associates and, as of this writing, a 10-person “Pueblo branch” was operating from company headquarters, awaiting completion of a building in Pueblo that should be opening shortly after the turn of the year.Another recent coup was the hiring of John Rodeno, who has taken over as industrial PVF sales manager after leaving the Marshall-Rodeno rep agency he co-owned with an uncle. “That’s traditionally how we’ve gone about expansion,” said Colin Perry. “We don’t go to market saying we intend to have three branches opened in the next five years. We’ll find the right people first.” The esprit de corps that I witnessed at the WIT meeting was refl ected throughout the company. Visit any work station and you’ll encounter people who are effusive about their jobs and the company they work for. President Perry seems to be on a fi rst-name basis with just about all of Rampart’s 155 employees and vice versa.Quite a few of those people have been with the company for tenures measured in decades, one for 35 years.However, one also fi nds a blend of youngsters sprinkled among the old-timers. “That’s something we made a conscious effort to address,” Colin Perry told me.“About 10 years ago we noticed that all of us were about the same age, so we’ve made a real push to bring in younger people.” “At Rampart we try to create a culture of inclusiveness to serve customers and also to serve one another,” John McCallum told me while wearing his HR hat.“A shared vision throughout our company is that we have an obligation not only to customers, but also to our employees and their children.” That commitment is a big reason the company declined to lay off people during the worst of the business slump. Colin Perry noted that when times get bad a lot of companies use it as an excuse to get rid of poor performers.“We never went that route.If people are not performing, that’s reason enough to let them go whether the economy is good or bad, and we’ve dismissed a few people on that basis over the years,” he asserted. “During the downturn we’d been telling our employees that we’re doing okay even as they were listening to all the bad news coming from the media about the economy. It would have undermined our message if we had pretended the bad economy was forcing layoffs, so we never went down that road.” THE ROAD AHEAD Colin Perry is a staunch industry citizen. He just concluded a two-year term as president of his WIT buying group and served fi ve years on the ASA Board of Directors, as well as on the former WDA regional group’s board. While grappling with the day-to-day issues of running his own business, he keeps one eye on the larger issues impacting PHCP distribution as a whole. From that standpoint I asked him for a bird’s eye view of the issues facing the industry today. “I see the whole market changing with builders trying to buy direct, Internet selling and so on. One of the national chains has been very open about trying to market to builders. I’ve been keeping an eye on that and fi gure we’ll sit back and see where it all leads,” Perry said. “Technology is adding another layer of complexity to the dynamics of the marketplace,” he added. “For instance, we’re trying to fi gure out how social networking plays a part in our business of the future. We have not found anyone in our industry who has really fi gured it out and effectively utilized it, but we know teenagers are all into it and it’s something to keep an eye on.”
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