Growth through acquisition
Strategic acquisitions, an intensive internal training program and a 24/7 philosophy help Harrington Industrial Plastics stay on top of its game
By Bridget McCrea, Contributing Editor -- Industrial Distribution, 7/1/2002
Contractors working on underground retrofit projects never really know what they're going to run into. For example, John Yale, senior vice president, Southwest region for The Kinetics Group, a mechanical contractor in Santa Clara, Calif., recalls a recent project that he was working on for Motorola in Phoenix. The project involved dual-contained drain piping — and a few unexpected surprises.
"It was one of those jobs where you find yourself digging through a 40-year-old plant that you know little about," says Yale. "On such a job, you never know what you might run into, what needs you're going to have or how far those needs will deviate from the original retrofit plan."
Thanks to the Phoenix branch of Chino, Calif.-based Harrington Industrial Plastics, Inc., The Kinetics Group not only completed the project within budget and on time, but received accolades for the role it played in finishing "the best project in over 20 years" at that Motorola plant. Harrington Industrial Plastics supplied the project with piping and fittings.
According to Yale, Harrington Plastics' on-site presence and around-the-clock service played a vital role in Kinetics' success.
"Whenever we needed something that deviated from the original plan," he says, "they were able to get it for us and ensure that the project wouldn't be delayed or shut down, and that manufacturing wouldn't come to halt because we couldn't get the right fitting."
In retrospect, Yale says the project was a tough one for all involved, and adds that Harrington Plastics' communication, responsiveness and its status as a "very current company" all played a role in making it run smoothly.
"As a company, it not only embraces employee training but also understands the technical side of the business and the importance of service," Yale explains. "As a customer, we clearly benefit from those differentiators."
Years of serviceHarrington Plastics has been proving itself as an innovative distributor since it was founded in 1959 by Marv and Elizabeth Harrington. Initially, a new plastic ball valve that came on the market and was needed by local businesses provided the impetus that drove the pair to open the distributorship.
In 1967, the Harringtons sold their two-branch company to Cliff Springmeier, who immediately saw the potential in branching out and began adding locations. According to Bill McCollum, chairman and CEO, Harrington Plastics experienced significant organic growth in the 1960s and 1970s, and ended up with 21 branches and $59 million in sales by 1989.
It was then that the company's strategy changed. Springmeier sold the company to Birmingham, England-based Glynwed International, a public company that provided a segue into the acquisitions business. "We gained access to publicly funded money," McCollum explains, "which allowed us to start making strategic acquisitions."
In 1996 Harrington Plastics purchased CORRO-Flow Engineering, the largest Midwest-based industrial plastics distributor, and the fourth largest in the nation at the time. According to McCollum, the acquisition resulted in a significant growth spurt and moved the distributor — primarily a West Coast company at the time — into a lucrative new marketplace.
A year later, Harrington Plastics bought IPT, a company made up of Plastics Piping Systems, Carolina Plastics and Industrial Plastics Technology. A year prior, the three had merged into one, making it an attractive package for Harrington Plastics, which was able to add 12 branches in one fell swoop. Again, Harrington gained ground in a new market, this time in the Eastern U.S.
But sudden growth can prove challenging for even the most competent distributor, and Harrington Plastics was no exception.
"There are obstacles every time you merge the cultures of a large company like IPT, which was the third largest plastics distributor in the nation at the time," recalls McCollum. "We worked hard to get through the cultural issues and lost some people over it, but have also gained some very good people because of it."
Challenges aside, the acquisitions have paid off for the company, which has stuck with its goal of being a nationwide distributor while keeping its commitment to well-trained employees and superior customer service.
"Our goal is to act like a small business while being a big one," says McCollum.
Today, the company's 500 employees work from over 40 locations, 11 of which are in California and range in size from 7,000 sq. ft. to 50,000 sq. ft., depending on the market. Having come a long way since its original founders started selling ball valves, Harrington Plastics brought in $150 million in sales last year.
Curtis Mellon, operations manager at Murray Co., a mechanical contractor in Rancho Dominguez, Calif., has been doing business with Harrington Plastics for 20 years, long before the distributor embarked on its aggressive acquisition hunt. Through it all, he says the company has remained one of his most valued vendors, especially when it comes to excellent service and competitive pricing.
"They always have a very good supply and high levels of inventory," says Mellon. "And they always respond well in emergency situations."
Moving on upMcCollum, who joined Harrington Plastics in 1973 as a truck driver, knows the value of employee longevity. Having worked his way up through the ranks and into a management position in 1982, McCollum first became executive vice president, then was promoted to chairman and CEO after the company was purchased in 1989.
According to McCollum, every Harrington Plastics employee is given equal opportunity to make such impressive moves.
"We're definitely a 'promote from within' company," he says, adding that the company's in-house training program, officially known as "University of Harrington," is available to all employees — from the receptionist to the salesperson to the engineer.
Run by Al Smith, the company's director of marketing, the training program comprises week-long courses for employees, rigorous testing, and rewards that include President's Club rings for accumulation of points during testing, training, outside education and on-the-job accomplishments.
"It's not just about selling more," says Smith. "It's about becoming a better person for yourself and for the company. For example, our system even helps employees out with the costs of going back to college because their knowledge is our company's biggest asset."
"Most all of our branch managers and regional VPs were promoted from within," says McCollum.
The company is also innovative in that it utilizes a team selling concept: an inside and outside salesperson are both held accountable for a sales territory and are both paid identical sales commissions on those territories.
"This is pretty unique in our business, where very few companies pay inside salesmen the same commission as outside salespeople," says McCollum. "We've been doing it for about eight years now and feel that both types of reps hold equal importance in our business."
More growth aheadIn addition to acquiring companies, training employees intensively and using a host of other innovative success strategies, Harrington Plastics also puts technology to good use in its operations. About five years ago, the firm installed a Prelude enterprise software system combined with new IBM hardware in an effort to streamline its internal processes.
McCollum calls the implementation a "major undertaking" and says going from a basic computer system to a sophisticated enterprise-wide program has paid off for the company, primarily in the areas of inventory control and customer service.
Looking to the future, more change and growth is ahead, according to McCollum, who says right now the company is working to adapt to market changes and shifts in its core business. "We see the market and our people growing non-stop," he says. "We don't really see that slowing."
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