• The Entrepreneurial Spirit Fuels The Habegger Corp.'s Growth

    Feb. 1, 2008
    It took an entrepreneur like Fred Habegger, Sr. to build an HVACR distribution business and a second generation of entrepreneurs his sons and daughter

    It took an entrepreneur like Fred Habegger, Sr. to build an HVACR distribution business and a second generation of entrepreneurs — his sons and daughter — to expand it. Today, this attitude continues to drive The Habegger Corp. With 23 locations covering five states, strong relationships with customers and manufacturers, and a well-trained, customer-focused workforce, a third generation is poised to lead the company toward even greater successes.

    Fred Habegger, Sr. founded the Cincinnati-based company in 1952. He began his career as a sales manager for a Bryant factory branch in Pittsburgh, but — true to his entrepreneurial spirit — he later took advantage of an opportunity to purchase a Bryant distribution office in Cincinnati. Seizing opportunities was a hallmark of Fred Sr. “It was inbred from day one, and it continues through to the second and third generations,” says John Dorr, president and CEO of The Habegger Corp. Upon Fred Sr.'s untimely death in 1970, Fred Habegger, Jr. became president, and his brothers, Jim and Tom, and sister, Sue Frey, joined the company.

    Over the next 30-plus years, the Habeggers aggressively grew the company from one facility in Cincinnati with sales of $1.5 million to 21 locations in Ohio, Indiana and Kentucky, and sales of more than $135 million. This aggressive growth started with expansions to central Ohio. Continued expansion came when Carrier Corp. selected Habegger to take over the Carrier product distribution in southern and western Ohio. Also, in 1996, Habegger acquired the Bryant distribution in Indiana and Kentucky.

    In November 2002, Fred Habegger brought Dorr in to lead the company and to coach his son, Brian (pictured), to help prepare him to lead the third-generation business. Dorr joined the company after a 27-year career with Ryder Transportation, where he built its school bus division. Habegger did not hire Dorr for his HVACR expertise. Instead, he brought entrepreneurial and business leadership strength to the company and a proven ability to continue growing the business. He is also preparing the next generation of the Habegger family to lead the company. Today, Fred Jr. is chairman, Sue remains CFO and his brothers are retired.

    As Habegger grows and establishes itself in new markets, it maintains its grasp on what Dorr calls the “three-legged stool” of distribution. Going to market involves blending the factory brand, Habegger distribution and the local dealer capabilities. Because it has built solid relationships with both the manufacturers and the dealers, Habegger serves as an important link to assist all parties in better understanding the markets that they're in and improving sales and profitability for all.

    That means Habegger interprets and passes along information from the manufacturers to the local dealers, while keeping its ear to the ground about what's happening in the local markets and sharing that information with the manufacturers. “We bring that local market understanding of our customer to the manufacturer,” Dorr says. “We become close to our customer, and we befriend our customer through an open dialogue and caring attitude.”

    They have built strong relationships with customers from the bottom up, with local people managing and working in the local branches. In the past three years, Habegger has continued its growth into Illinois and eastern Iowa. Instead of transferring managers to these locations, Habegger recruited local managers and salespeople. “We wanted to hire people who understand the local markets and the geography,” Dorr says. Customers, particularly in smaller markets, want to know the people they are doing business with.

    Habegger places a strong emphasis on its relationships with customers. Dorr estimates that he spends about 75 percent of his time on the road, working with managers and meeting customers. In fact, he manages an account himself. Dorr notes that the Habegger family name is extremely important to customers. Family ties with customers go back two generations. “We know our customers pretty well,” he says. Dorr characterizes the relationships with customers as “strong and open.” While this may seem warm and fuzzy, it has proven time and time again to be an important way for Habegger to differentiate itself from the pack, and earn and retain customers.

    Habegger's approach to aggressive growth has worked. In each market that Habegger has entered, its people have increased their market share. Habegger now has 23 locations in Ohio, Kentucky, Indiana and Illinois. Residential (which incorporates replacement and new construction), commercial, and parts and supplies comprise the business. Dorr says residential accounts for nearly 60 percent of the business, with commercial comprising about 25 percent, and parts and supplies making up 15 percent.

    Consumers continue to seek out higher-quality products that offer greater comfort, higher efficiency and enhanced technological capabilities. This suits the Habegger growth strategy. After all, becoming more profitable involves more than adding new customers. It's about creating greater margins (which higher-end products allow them to do) and reducing costs in the supply chain. One of Dorr's missions is to coach his managers and others within the company on these issues. To incentivize consumers, Habegger has conducted consumer promotions, offering large consumer rebates for deluxe models and providing Bryant and Carrier advertising on these models to the dealers.

    The local managers maintain a great deal of control to make the decisions that will best serve their local customers. Dorr characterizes this decentralized approach as “building a fenced space” for each manager so they have the leeway to run their own branch. But Dorr also spends time among the Habegger branches, working with the managers to help them become more effective and capable leaders. In addition to the personal coaching, Habegger provides managers with learning opportunities to address their specific needs.

    Training and continuing education are not limited to managers. In fact, they are Habegger's core competencies which they extend to their employees and dealers. From hands-on product demonstrations to sales and marketing training, Habegger has always made informed and educated employees and dealers a priority. Dorr says the company prides itself on having well-educated counter- and salespeople.

    In fact, this eagerness for product and technical knowledge is among the attributes that Dorr and his managers look for when they hire new people. It's not just about a person's technical expertise (although that helps), but it's about their personal skills and willingness to be part of a team. Habegger's more senior staff will often work with new employees to immerse them in the “customer-focused values” of the company.

    Recognizing that every company needs to have a talent pipeline, Habegger has fostered relationships with local colleges to recruit engineers, salespeople and future graduates. Dorr says Habegger is committed to finding the best “A” players for the continued success of the company.

    Now in its 56th year, the relationship between Habegger and Bryant remains as strong as ever. Habegger consistently ranks among the top distributors for sales in North America. Dorr says this market-leading performance has benefits for both sides. “They know that we're driven to increase our market share and that we want to take new things to market,” he says. Habegger works closely with Bryant to provide them with feedback on new products and to pilot new products with its dealers.

    Habegger has also forged productive relationships with other HVACR manufacturers and other Carrier Corp. divisions, most notably Carrier and Payne. In 1987, Habegger took advantage of an opportunity to acquire a Carrier distributor in Cincinnati and western Ohio, and the Carrier commercial business has grown “very successfully” ever since. Dealer training, programs and a specialized and talented staff that understands this segment of the business have made this work. Habegger's approach to business is why manufacturers often approach it first when they want to get into a new territory. “They recognize Habegger's growth culture and they see how we perform,” Dorr says.

    As part of this aggressive growth strategy, Habegger continually seeks new dealers that want to do business in new market territories. Managers are increasingly playing a role in helping the company target these dealers as part of the company's strategic planning objectives. “That's a key element of our growth planning,” Dorr says. “Who are they? And then we target them.”

    Habegger's mix of products drives it locally while the accounting and purchasing processes are centrally coordinated. This provides the branch managers with the ability to stock their stores to best suit their local customers, yet they have the purchasing power of the company behind them. Habegger trucks are on the road every day, moving between branches and dealers to ensure that products are where they need to be and on time. Branches are linked electronically.

    Habegger dealers have access to the company's marketing resources. Its marketing program is a multipronged approach that ranges from tapping into the brand marketing of the manufacturers to campaigns they tailor for a specific dealer. “The majority of our marketing is dealer-specific,” Dorr says. “We support them, and we help them market themselves with funds, tools and the talent.” Sales managers play a role in developing the marketing, and Habegger receives additional support from the manufacturers, who often provide advertising templates that the dealers can access. Dealers earn marketing funds based on the equipment models they purchase and sell.

    Listening to its customers has driven Habegger more deeply into e-commerce. Through a password-protected website, customers can order parts and equipment online. While it may seem that a successful e-commerce business may eliminate the need for people to interact with customers, Dorr says the opposite is true. Allowing customers to place orders online at all hours frees up Habegger's counter people to work more intensively to serve customers. The company is making plans for a more interactive website to make it even easier for customers to do business online.

    Listening to customers has resulted in other solutions for them. A perfect example of this is Habegger's new “crane truck delivery” service for customers who purchase commercial rooftop equipment. When a commercial customer purchases an HVACR rooftop unit, it requires that customer to carefully coordinate between the dealer and a crane operator that they hire to actually lift the unit onto the roof. Timing is very important and, all too often, there are delays. That costs the customers money.

    In Indianapolis and Cincinnati, Habegger purchased its own crane trucks to deliver the rooftop units exactly where they need to go. “We can package the rooftops and sell the crane delivery as one packaged service as opposed to our customer having to go to different places,” Dorr says. “It's another way to help our customers to cut costs and make their lives easier.”

    Being a Habegger dealer is demanding but very rewarding. Dealers can count on the company to provide them with the coaching, the marketing and sales support as well as the tools that they need to be successful. Besides, everybody wants to be on a winning team that continues to grow steadily and aggressively in every market they enter. For those dealers that achieve certain levels of success selling “best” state-of-the-art systems, there are other rewards such as a Bryant dealer Caribbean cruise and a Carrier dealer trip to Hawaii.

    “We're not about boxes in warehouses,” Dorr says. “We're about helping our dealers help their customers to solve problems and build solutions for their future.” Looking outward — toward what the customers want — has been Habegger's strategy for success. Dorr says the third generation has that same focus, and they possess the qualities of their grandfather. “The entrepreneurial spirit is the core foundation of our company,” he says. “I'm very confident about where we are heading.”

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

    The Habegger Corp. at a GlanceChairman: Fred Habegger, Jr. President & CEO: John H. Dorr VP & CFO: Sue Frey Headquarters: 4995 Winton Road, Cincinnati, OH 45232 513/853-6644 Operations: Wholesale distributor of Bryant and Carrier heating and cooling products, serving markets in Ohio, Indiana, Kentucky, Illinois and Iowa. Provides broad range of heating and cooling products, services, parts and supplies. Concentration on both residential and commercial products, including geothermal. Employees: 258 Major Product Lines: Bryant and Carrier heating and cooling products. Mitsubishi, Honeywell, Reznor and many other associated products and parts. Website: www.habeggercorp.com Year Founded: 1952

    Best Practice

    Definition and Example: The Habegger Corp. has built an aggressive growth culture that is successfully making the transition to the third-generation family- owned business. We have accomplished this by hiring the right people, putting them in the right positions and coaching them with good business practices, while prioritizing customer relationships and service excellence. We built our business model around aggressive growth, enhanced employee capabilities and customer focus blended into our entrepreneurial culture.

    Significance: Many companies today prioritize numbers and unit sales. The Habegger Corp. focuses on developing very capable employees able to work in an entrepreneurial environment to create positive relationships and to serve our customers by differentiating our value and responding quickly to local market conditions; the sales numbers will follow.

    Benefits: Our local customer friendship and service focus enable us to work closely with each customer in an open communications structure. This enhances the business assessment process by genuinely allowing us to understand their unique requirements. Therefore, it enables us to provide our customers with services and solutions specific to their individual business needs.

    Procedure: We develop companywide customer training and service processes and ongoing communications, from the president/CEO to the individual branch managers and staff. Our senior management team becomes well-acquainted and -connected with our customers.

    People involved: Territory managers and operations staff to branch managers and president/CEO, as well as corporate staff and chairman.

    Timing: Daily communications and development processes.

    Cost: We invest millions of dollars up front in employee development, customer training and service processes, including an e-commerce system and extra crane services, to make it more desirable for our customers to do business with us.

    Other considerations: Strong entrepreneurial business growth culture.

    Contact: John H. Dorr, 513/842-2641, [email protected]