Old school

An independent hose distributor in the San Francisco Bay area proves the old-fashioned, entrepreneurial spirit is alive and well.

by Rich Vurva

For every expert who claims small, independent distributors can’t compete against megadistributors, a company like U.S. Rubber Tech comes along to prove them wrong. The experts say an independent distributor lacks buying power to contend on price with national chains or buying groups and can’t employ enough staff to meet the service demands of today’s customers. Jim Janakes begs to differ.

“We’re not looking to be a Goliath and have branches everywhere. We’re happy with the size we are,” he says.

Janakes is owner and president of a South San Francisco, Calif., distributorship that specializes in hoses, fittings and conveyor belts. But titles don’t mean much when your company employs just two full-time people and annual sales hover between three-quarters-of-a-million dollars and $1 million. You have to wear multiple hats and do whatever it takes to get the job done.

Janakes serves as primary outside salesman and handles the company’s invoicing, accounts receivables and other bookkeeping responsibilities. Dan Allison is vice president and responsible for inside sales, hose and coupling assembly, and shipping.

The company employs part-time help as required, and farms out other administrative tasks to outside specialists. While Janakes is the primary contact with key vendors, Allison handles purchasing and order entry. Although Allison is the more experienced and skilled fabricator between the two, Janakes isn’t afraid to roll up his sleeves and assemble hoses to deliver an order to a customer on time.

“From day one, we’ve talked about our roles being interchangeable. That’s what we strive for. Eventually, Dan is going to buy the business from me when I retire,” says the 64-year-old Janakes.

He has no plans to call it quits anytime soon because he still enjoys running the business he started with two partners about 16 years ago. He’s been sole owner for seven years.

Customers notice the positive attitude and entrepreneurial spirit that Janakes and Allison bring to their jobs. It’s one of the primary reasons they do business with U.S. Rubber Tech.

“Some companies aren’t interested in solving problems, they’re just interested in selling you product. Jim is very knowledgeable and has a positive outlook. If I have a problem or a product that I can’t put my fingers on, he’ll research it for me and find the product,” says Robert Ray, corporate superintendent for Certified Coatings, an industrial painting contractor.

Ray recently needed to find a method to tether together a temporary floating barge used as a platform for a crew to sandblast pylons at an oil refinery dock. Janakes suggested improvising a solution by cutting conveyor belt to size.

“It worked perfectly. He’s pretty innovative,” Ray says.

Janakes knows that for a small distributor to compete effectively against much larger competitors, he must be responsive to each customer’s needs.

“We’re small and we don’t have a time clock, particularly after hours. We hand out our home phone numbers. If a plant has a breakdown on a swing shift or the midnight shift, they know they can call us. They can call us if it’s Saturday or Sunday or Thanksgiving or whatever,” he says.

When sewage from a local municipality’s sewage treatment plant spilled into a nearby creek, the plant superintendent immediately turned to U.S. Rubber Tech for help because he knew Janakes and Allison would respond fast.

“It was at the end of the day and we needed to get this stuff pumped out fast. Other people might have said, ‘We can get you the hose tomorrow morning but we’ll have to charge you more.’ Jim didn’t do that. They got it to us within the hour,” the superintendent says. “They were making the pieces and bringing them to us as we needed them. They didn’t wait to finish the entire order. You don’t often find suppliers who are that responsive.”

No room for error
Janakes admits there’s little room for error for a small distributor to survive these days. With no full-time crew to handle onsite repair work, he must outsource installation work when required by customers. In order to keep costs down, he limits inventory to top-selling items and drop-ships orders whenever possible.

“Even with regular orders, we try to utilize drop shipping whenever we can,” says Allison. “That’s how you can save costs. About 40 to 50 percent of our sales are drop-shipped direct to customers from our suppliers.”

The company occupies a small office and warehouse in a light industrial section of South San Francisco, which calls itself “The Industrial City.” Located near the interstate and within minutes of the San Francisco International Airport, it provides quick access to customers from a wide range of industries, including construction, manufacturing, mining and government.

A small staff and modest space requirements help keep overhead costs down, which enables the company to compete on price even when margins are razor thin.

“We have very low overhead, so we are extremely competitive on price. Most of our competition has much higher overhead,” Janakes says.

A low cost structure and the willingness and ability to conduct business with electronic data interchange (EDI) enable U.S. Rubber Tech to win its fair share of government business typically awarded to the low bidder. But Janakes says small independents that survive do so primarily because they provide a personal level of service that’s becoming harder for customers to find these days.

“Nothing will replace going out and making sales calls, shaking a guy’s hand and listening to his problems and helping him solve them. Most people can’t respond as quickly as we can.  We have a lot of customers that come to us because they tried to go to one of the larger, more well-known companies around but weren’t satisfied with the service,” he says.

Leverage relationships
Developing a strong network of business partners is another key to success for small distributors. Janakes values his membership in NAHAD — The Association for Hose and Accessories Distribution, where he picks up new suppliers each year and builds on existing channel partner relationships. He frequently buys product from United Pacific Distributor Supply, a master distributor in Los Angeles, as a way to expand his company’s product offering without adding more products to his shelves.

“We have to buy smart. To carry more inventory, we’d need more space, and rent in the Bay area is expensive,” Janakes says.

He spends marketing dollars wisely. A simple line card, regular advertisements in a daily publication read by contractors that posts major construction projects, a catalog developed in conjunction with United Pacific Distributor Supply, and an unpretentious Web site are his primary marketing vehicles.

He also established a small network of dealers to serve as resellers. For example, Coast Marine & Industrial Supply in San Francisco buys brass fittings, hose and other products from U.S. Rubber Tech on a regular basis. The relationship benefits both companies because Coast Marine gains an expanded product offering and Janakes picks up sales to customers he might not otherwise have time to call upon.

“I have so many product lines that I deal with on a regular basis that I don’t have the time to establish a direct relationship with hose suppliers,” says Coast Marine’s Ken Hicken. “They maintain our hose inventory for us and go out of their way with deliveries and follow-up. They treat me like I’m their best customer.”

In the end, the way for small distributors to compete today is to treat every customer special, says Allison.

“If you’re willing to keep your nose to the grindstone, go to work at night or on Saturdays if that’s what it takes, you can still make it today,” says Allison.

In other words, old-fashioned concepts like working hard, keeping your promises and treating people the way you’d like to be treated still have a place in today’s fast-paced business world.

Says Janakes: “We’re old school and proud of it.”

This article originally appeared in the March 2005 issue of Progressive Distributor. Copyright 2005.

back to top                                   back to cover story archives