Hub of the wheel

By expanding in a spoke-like fashion around its main location, this distributor is able to capture business that competitors can't touch -- Industrial Distribution, 5/1/2001

Other articles from this Fasteners Report:
Application profile: Partners reduce costs

Manufacturers, trade groups provide more training

Viewpoint: Qualify your prospects to stop wasting inside sales' time

Rep's perspective: Achieving a comfort level

News: expect slow, steady growth

Hub Construction Specialities' management team, above from left to right, includes COO/CFP Ed Dainko, president Bob Gogo and vice president of sales an marketing Al Hannah.

By Bridget McCrea, Contributing Editor

Growth strategies
A look ahead
Company snapshot

To say that Corona, Calif.-based J.W. Contracting Corp. needs reliable vendors would be a major understatement. As a general engineering contractor, the company deals primarily with water treatment plants and covers a geographic area that covers all of Southern California.

At any given time, J.W. Contracting is working on eight to 12 jobs at once. The man behind the purchasing for those jobs is Bob Walsh, a materials manager who relies on a locally-based distributor to deliver the necessary fasteners, concrete accessories, tools and supplies that each site requires. Frequently those projects demand same-day delivery — a request that San Bernardino-based Hub Construction Specialties, Inc. never questions.

“No matter how small the order, they never question the fact that we want it delivered right away,” says Walsh, adding that the contractor and distributor work in tandem, ensuring that new job sites are ready to be served quickly. “When we start a new $2 million job, Hub will immediately institute a route for their trucks, based on our needs. If they normally run that route in the afternoon and we need it changed to the morning, then they’ll even do that for us.”

Such flexibility, combined with the distributor’s technical knowledge and service, is what keeps J.W. Contracting coming back to Hub. And while competitive pricing is an issue, Walsh says the real value lies in the service behind the sale.

“Hub’s major advantage is service,” Walsh adds. “We’re assigned our own rep who understands our needs and priorities and together we work as a team.”

That teamwork forms the foundation for Hub, a distributorship founded by company President Bob Gogo in 1958. Gogo’s family’s business was contracting, though he worked for a Los Angeles distributor for two years before starting his own company. At the time, he says the San Bernardino area was lacking a good industrial distributorship. To fill the gap, he began selling concrete accessories to contractors from a 500-square-foot garage on a 75-foot by 25-foot lot.

As Hub grew, Gogo added lines and moved his company into a 34,000-square-foot building on 2 1/2 acres. He also added customers, primarily by hitting the pavement and meeting with contractors on job sites. “As we called on job sites to sell those forming accessories, we found out that they were buying supplies from other distributors,” recalls Al Hannah, vice president of sales and marketing. “We asked them if they would also buy those supplies from us and ended up bringing in new lines for those customers – that’s how we expanded our base.”

Like its offerings, Hub’s geographic reach has also expanded. In 1966, the company opened a branch in Riverside by buying out a competitor. “That gave us a little more inventory,” recalls Gogo. Most recently, a branch was added in Chula Vista in 2000, bringing the total number of locations to 10 — all situated in a spoke-like fashion around the company’s home base.

“We started opening branches in a circle around the hub (note: the expansion strategy and the company name are a coincidence: the Hub name was chosen because the neighboring city of Colton – where Gogo originally planned to start his firm – is known as the ‘hub city’) in a 30- to 50-mile radius,” recalls Gogo. “We decided that in order to protect our turf we’d have to open branches in this fashion. That way, we’d be able to service any job in our area and be the ‘firstest with the mostest.’”

The plan worked. Today Hub’s 145 employees work from 10 locations. Sales last year reached $40 million, primarily from concrete accessories, fasteners, contractors tools and supplies, industrial tools and supplies sold to construction, highway, heavy engineering and wastewater customers throughout Southern California and Western Arizona.

One of those customers is Yeager Construction, a large highway, bridge and channel contractor in Riverside, Calif. With numerous jobs running at once, purchasing for the company is done by individual project superintendents – all of whom buy from Hub. “We always call around and check prices, but Hub always beats out the competitors,” says Tim Boyer, structural superintendent for the company.

Recently, Boyer found himself in need of cable clamps to use on a large bridge abutment in a hurry. He called on Hub, and the clamps arrived just a few hours later. “I can always call at the spur of the moment and even if they don’t have the item, they’ll get it for me right away,” says Boyer. “I just make the call and here they come.”

Hub’s own vendors have also noticed the distributor’s keen attention to service. “These contractors really demand good service and Hub has always provided it,” says Jack Orlando, president of Select Products, a manufacturer of construction specialty products in Costa Mesa, Calif. “They’re right on top of things, and that’s why they have long-time accounts that stick with them.”

Growth strategies

Over the years, Hub has employed a number of internal strategies to help stoke company growth, keep employees motivated and ensure that the distributor stays on the leading edge of technology and innovation. Ed Dainko, company COO and CFO, says one major milestone in the company’s history came on the day it decided to private-label its own product lines.

“We gained much notoriety in the industry by having quality products under the Hub label,” Dainko says, adding that the program focuses on the day-to-day, general use products required by job sites. “We also experienced sales growth and found ourselves able to travel much further distances with our products, especially after they were approved by architects and engineers.”

“We always call around and check prices, but Hub always beats out the competitors.” — Tim Boyer, Yeager Construction

Hub was also the first company in Southern California to sell construction lasers on job sites, and the first to introduce the Razorback Screen, a product that helps contractors pour large amounts of concrete in a short period of time.

“We’re always looking for time- and labor-savers to sell to our contractors — be it fasteners, concrete accessories or another product,” says Dainko. “We have a reputation for being a very leading-edge company that’s innovative with its product lines. When contractors look for new items, they generally will call us first.”

To get those products to customers, Hub relies on a fleet of 24 freightliners and a handful of smaller trucks that run on a daily basis. “We try to keep it under control as much as possible and not rely on freight companies,” says Gogo.

In addition to these operational strategies, Hub also leans on employee buy-in to keep up the momentum. A few years back, Gogo sold a portion of his company stock to an ESOP (employee stock ownership plan) trust that benefits employees, all of whom now own a piece of the company.

“Every one of our customers works with an owner of the company,” Dainko explains, adding that Hub makes annual contributions to the plan. As a result, employees watch their ESOP accounts grow, thus cementing the fact that they’re not just working a 9-5 job, but that they also own the company, invest in it and rely on it for retirement. “They take that approach to their jobs and it shows through in how they interact with customers,” Dainko adds.

Orlando says that employee buy-in has worked well for Hub, especially during the tighter labor markets when good employees were hard to find and retain. “They select their employees carefully and treat them right,” he says. “That fosters long-term employment – people don’t bail out too often at Hub because they’re good to work for.”

Along with the ESOP plan, employees also receive ample training. Dainko says the company has sent people to the best education programs in the industry, including those held at Texas A&M and through STAFDA and Evergreen Marketing Group. Dave Duewel, VP/salas manager for W.R. Meadows, Inc., a New Hampshire, Ill., manufacturer of highway paving construction products, says such training leads to a highly-knowledgeable staff — a key in today’s competitive distribution environment.

“If they don’t know our products, then there will always be some difficulties on projects,” says Duewel. “But Hub’s staff is well-trained, and is always willing to sit down with us to go over new products and review products that are in the pipeline.

A look ahead

Going forward, Gogo says he expects more slow, steady growth for Hub, be it through acquisitions, building or new branches or diversification into new product lines. He’s quick to point out that biting off more than the company can chew isn’t an option, and that adhering to Hub’s core competencies will lay the cornerstone for any such growth.

“We have a workable growth plan that doesn’t include forgetting about who we are and where we came from,” Gogo says. “If we were presented with a growth opportunity that took away our ability to serve our customers and forced us to spread our resources too thin, then we wouldn’t take it. Instead we’ll continue to be customer-focused by delivering the proper material on time and with few back orders — we won’t ever jeopardize that.”