HVACRDB

American Metals Supply Lean and Mean in the Midwest

In 1962, Al Hassebrock left his sales job at a building materials distribution company in Springfield, IL, to begin his own sheet metal sales company — American Metals Supply. One year later, Al's former employer waved a white flag and conceded its sheet metal business to him. In a letter to his customers, Al's former employer wrote: “We sincerely hope you will continue to give Al Hassebrock the same loyal support you gave him over the past year while he was getting his business established. We have always considered him the top sheet metal salesman in this area.”

That framed letter hangs on the wall in the lobby of American Metals Supply's home office in Springfield, IL. It's more than just an historic artifact. The letter serves as a reminder to all those who pass through the doors of the company that its success began with Al Hassebrock.

Al's granddaughter, Christine Nardini, now runs American Metals Supply. She joined the company as CFO in 1997, became president in 2006 and continues to take her grandfather's legacy very seriously. The company remains focused on selling its core products — sheet metal, steel and HVACR supplies — a philosophy cultivated by Steve Hassebrock, Nardini's father and the company's CEO. While its competitors may stock 5,000 SKUs or more, American Metals Supply stocks about 2,000. There is a narrow range of bread- and-butter items that cater to the sheet metal shops. And that's the way American Metals wants it. “We're focused on doing the best job with the items that we sell,” Nardini says. “We're not trying to do a little bit of this and a little bit of that.”

American Metals Supply sells primarily steel and sheet metal in both coil and sheet forms. That makes up about 48 percent of its business. The remainder of its sales comes from HVACR supplies. Unlike most of its competitors, American Metals Supply offers no lines of equipment. Nardini volunteers a statement she once read as the company's guidepost: “The essence of success is a narrow focus. You become stronger, your vision clearer, your resolve deeper when you reduce the scope of your options. You can't stand for something if you chase everything!”

When Nardini speaks of growing the business, she talks about expanding its geographical reach, not adding new products. “Our growth will be through other cities and additional geographies,” she says. “Not through expanding our offerings or adding all kinds of new items.” Springfield remained the company's only office until 1990, when Steve Hassebrock opened a St. Louis location. Its Kansas City, MO, branch opened in 2003, and the company opened its Springfield, MO, office in 2005. American Metals Supply covers all of Illinois outside of Chicago, most of Missouri and parts of Kansas and Arkansas.

“Growing to compete” is how Nardini terms the need for expansion. With the consolidation of so many midsize wholesalers and the growth of national service centers, expanding its reach has been an important element in American Metals Supply's formula for success. Nardini's father has been the driving force for growing to other cities, and she assists in implementing those plans. Nardini says the company's vendors and customers provide them with valuable information about possible locations for new branches.

As the company has expanded, management has ensured that knowledgeable, experienced people from the local area staff the new branches. “We try to find somebody who is strong in that geography and interested in a new opportunity so we can partner with them and get our branch up and running and get our name out there,” she says. That's how Jim Morton, American Metals Supply's executive vice president and a minority owner in the company, first joined them. When American Metals Supply was looking to open its St. Louis branch, Steve Hassebrock worked with Morton to make it successful. Today, Nardini says Morton has been an important part of the company's growth.

Between expanding its geographical reach and keeping its focus on selling metal and supplies, the company has thrived. Nardini speaks of maintaining a “focused” company. The results speak for themselves: With 60 employees, American Metals Supply will generate $42 million in sales in 2006. That works out to about $700,000 in sales per employee. Nardini cites a recent HARDI report that shows the average distributor generated about $468,000 in sales per employee.

American Metals Supply stays as lean as possible because the company is so sensitive to the ups and downs of the residential and commercial construction market. Unlike most of its competitors, American Metals Supply can't augment their volume with equipment sales. “We need to be able to fluctuate as the economy fluctuates,” Nardini says. When interest rates are low and contractors are busy, they use more steel and metal. “My father endured the days when the interest rates were at 20 percent and nobody was building anything in the 1970s, and that lean and mean philosophy paid off for the company and its employees — no employee lost their job.”

Because of this lean and mean philosophy, employees can perform a variety of tasks within the company. Everyone learns about the metal business, too. “Because we focus so strongly on metal and steel, we try to educate our people from the warehouse to the inside and outside salespeople on the industry and what's going on in the marketplace,” Nardini says. “We try to educate people on what's causing the fluctuations of prices.”

Understanding the steel industry helps American Metals Supply employees better serve their customers. They see the pricing trends well before their competitors and can advise customers on whether to buy now before the prices rise or hold off until the prices recede. Armed with this knowledge and the company's reputation, American Metals Supply salespeople work with HVACR, mechanical and architectural contractors to generate business.

That specialized knowledge of the industry is one important way that American Metals Supply has been able to differentiate itself from competitors. Service is another way to set the company apart. Whether it's delivering metal and supplies directly to job sites or providing customers with technical advice to solve a particular problem, Nardini is proud of the service that American Metals Supply's employees deliver.

“I would put our people up against any of our peers in the industry,” she says. “We try to get the best and the brightest, and they are our biggest strength.” Employees understand that everyone is a salesperson — from the driver who delivers products on time and in good condition to those in the warehouse who get the order right. “We are pretty upfront with our customers that we won't always be the lowest price in town, but we have other things that compensate for that,” Nardini says.

Customers also rely on American Metals Supply's deep inventory. Because the company is so specialized and carries fewer SKUs than other distributors, it can stock more of those particular products. “We don't put it in our inventory unless we're going to concentrate on it and turn it,” she says.

More recently, national service centers have been competing with American Metals Supply by shipping directly to customers or working with its local competitors. While they sometimes offer a lower price, it comes with no local service or expertise. Contractors are on their own, in effect. With American Metals Supply's service, you're working directly with the best in the business.

Nardini says the two-step distribution system remains important for all parties in the supply chain, particularly in the metal, steel and HVACR supply industries. But she says wholesalers, particularly the smaller and medium-sized ones, must understand the landscape is continually shifting, and that requires them to make necessary changes.

Keeping a narrow focus while expanding its geographic base are two strategies that American Metals Supply has employed to remain competitive. Joining a buying group is another way. American Metals Supply is a member of Affiliated Distributors, the largest national buying group. For medium-sized wholesalers, it's an important way to compete against national wholesalers, she adds. “We've found it to be a good experience for us, both in terms of its purchasing power that it affords us and the sharing of best practices,” Nardini says. “We're one of the smallest in our group, but we've learned a lot from our peers.”

Because of its more narrow scope, American Metals Supply works with a select number of vendors, creating what Nardini calls a “very strong” relationship. She estimates that about eight manufacturers make up about 80 percent of its business. “We view it as a partnership with customers and suppliers,” she says. “We try to be loyal to our vendors, and in return, we expect loyalty from them.” For suppliers looking to get business from American Metals Supply, that can be frustrating. But Nardini says the company only adds new products to its inventory that will add value to a contractor's business and that fit with their niche market.

When Nardini asked her father if she could join the company, they both saw it as an experiment. If she didn't feel an enthusiasm for the work, she could leave. It turned out to be a good fit for everyone. Her previous work in public accounting paid off. Conducting audits of other companies exposed her to the business practices of other companies, and she saw what worked and what didn't. She used that experience to update American Metals Supply's accounting procedures and to implement a new computer system that helped to prepare the company for its expansion.

As the company has expanded, American Metals Supply also has developed a more formal management structure to keep up with the growth. Years ago, all of the personnel and hiring decisions were on the shoulders of Nardini's father. She marvels at how he was able to do it all. Today, he shares that responsibility with Nardini and Morton. In addition to Nardini, her brother, Greg, joined the company in 2000 and works in sales out of the Springfield, IL, branch.

Nardini says she is both lucky and grateful to be working for a successful company that her grandfather created and her father grew and developed. She says American Metals Supply will continue to grow by building on their work staying focused on what has made the company what it is today.

Michael Maynard is a business writer based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at [email protected].

American Metals Supply at a Glance
President & CEO Steve Hassebrock, CEO
Chrissy Nardini, President
Vice Presidents Jim Morton
Headquarters Springfield, IL
Operations/Branches Springfield, IL; Fenton, MO; Lenexa, KS; Springfield, MO
Employees 60
Major Product Lines Galvanized steel and coils, Hart & Cooley, Champion, Atas Architectural Metals, Ductmate, Duro Dyne, Johns Manville
Annual Sales $42 million
Website www.americanmetalssupply.com

BEST PRACTICE

Definition and Example: We distribute information to employees at all levels to educate them on trends in steel pricing and availability.

Significance: All employees understand the company's strategy on increasing or decreasing inventory and spikes in sales. There have been some significant price fluctuations in steel and other metals in recent years, causing many peaks and valleys.

Benefits: Everyone in the company is on board with the same message. Our customers look to us as advisors and partners rather than just vendors.

Procedure: We conduct procedure meetings several times a year at all locations.

People Involved: All employees.

Timing: Throughout the year.

Cost: Cost of time involved for those that are in meetings.

Contact: Chrissy Nardini at 636/349-5560.

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