Louisville Slugger: SWH Supply

Readin’, Ritin’ and ‘rithmetic are no longer the basic three Rs, at least not in the HVAC/R industry.

No, the three Rs today, as nearly everyone knows, are recovery, recycling and reclamation. And it seems as certain as anything can ever be that on July 1st the crusade these three words represent will become a major force in the day-to-day livelihood of virtually every wholesaler in the U.S.

Accepting this new activity as necessary part of doing business in the nineties, let us consider a fairly typical, average-sized wholesaler who has perhaps moved a little faster than some others. This wholesaler has been set up not only as a leading source of recovery equipment, but also as a local center for DuPont’s new Small Quantity Reclaim Program (SQRP).

The firm is S.W.H. Supply Co. of Louisville, Ky., and before we examine the way they are handling the three Rs of this business, we should take a closer look at the company itself. It was formed in 1937 by Sam Slomoe, George Weikel, and William Hutchison, hence the name S.W.H.

In 1950, Robert Anderson Sr., who had married into the Hutchison family, became president. This then, is an enterprise which has reached the ripe old age of 55 years, clearly placing it well up among the veteran wholesalers of the HVAC/R industry.

Today, the senior Anderson is chairman of the board, and his son, Bob, is president and CEO. Bob’s mother, Elizabeth Hutchison Anderson, is assistant corporate secretary and his wife, Linda is treasurer. It’s quite apparent that this is truly a family business. There are two important non-family managers, Jimmy Crawford and Richard Carroll, directors of operations and of sales, respectively. Bob Anderson makes a special effort to point out that all S.W.H. executives and managers spend a good deal of their time interfacing with customers at the counter. Altogether, there are some 40 full-time employees and, according to Bob, nearly 25 are involved, one-way or another in sales. Three of these are outside salespersons, and one is a consulting engineer who works on both outside and inside sales.

S.W.H. Supply is a full line wholesaler, but its major emphasis is on parts and supplies. Principal lines include DuPont, Copeland, Sporlan, Honeywell, Barber-Colman, and Robinair, and for equipment, Comfort-Aire. S.W.H.’s territory covers a 50 mile radius around Louisville, and the customer mix is fairly well distributed between large mechanical contractors, smaller independents, local manufacturing companies and institutions.

The firm operates out of a turn of the century structure, which, while it has been improved over the years, is totally unpretentious. This building covers some 30,000-square-feet, and there is now an adjoining 20,000-square-feet of warehouse space that was purchased more recently.

One of the more striking aspects of the S.W.H. operation, and certainly a unique and dramatic expression of the hands-on philosophy to which the company professes, is Bob Anderson’s long standing determination that just as his father had done, and still does, he would not have an office, and as a matter of fact, would not even have a desk. Bob explains, “My office is simply a clipboard and a shirt pocket.” He goes on to say that, “The people who do the accounting, and purchase merchandise, and write up invoices, all need desks, but I try to spend my time with customers, or if not that, then I’m looking around to make sure everything is going smoothly.”

What he is really saying is an almost classic example of Management by Walking Around (MBWA), and while some wholesalers will merely give lip service to the concept, and other wholesalers may try to some extent to practice it, very few ever go to the lengths that Bob Anderson does.

Sales training at S.W.H. Supply is a combination of an extensive video library, factory sponsored evening sessions, and special programs designed in-house. A recent meeting on recovery equipment, for example, drew nearly 130 people, impressive for an after-work affair. The sales counter area displays a number of impulse categories, such as tools, instruments, and so on, and nowadays, a lot of recovery equipment, but as Anderson points out, “Self-service has practical limitations. Everyone who comes in here gets waited on.” He is outspoken in his belief that there is no substitute in the HVAC/R business for expert fact-to-face service. All told, and as a ballpark figure, the company carries about 14,000 stock keeping units.

As for data processing, S.W.H. has computerized all of its accounting functions, but not its purchasing and inventory control. “We’re exploring in that direction because we know that it’s inevitable,” observes Anderson, “but we’ve made no decision yet, and anyway, we seem to be doing just fine the way things are.” As part of his walking around management, Bob says, he looks for “empty boxes,” and in a one-store operation, that can be a useful adjunct for any type of inventory control.

Now let’s get down to the real reason we are watching S.W.H. Supply here in Louisville. It’s because this company has gone all out to make recovery, recycling, and reclamation an integral part of their business. They are selling a wide variety of recovery units, Robinair, Sercon, DuPont’s RRU 30, and others. So too, of course, are many wholesalers, although S.W.H. has carved out a sizable chunk of the market for an independent company its size. Even back in April, Anderson says, their backlog was more than 60 units.

But the new operation of particular interest at this time, is the DuPont sponsored Small Quantity Reclaim Program (SQRP). The way it works is something like this: A contractor obtains an appropriate portable recovery unit, and a few 50-pound DOT certified drums from S.W.H., or another wholesaler, Out on the job, instead of venting refrigerant into the air – which is, we all know, totally against the law as of July 1, 1992 – the contractor pumps the gas, regardless of its condition, into his drum. He then brings that drum to S.W.H., and receives a special receipt. S.W.H. tags the drum, and quickly off-loads it into a DuPont half-ton tank, using a Recovered Refrigerant Transfer System, a special large capacity machine that it recently purchased. This unit, by the way, which costs around $15,000, can handle up to five 50-pound drums at a time. When the half-ton tank is full, it is trucked to DuPont’s Reclaiming Center for processing. DuPont credits S.W.H. at so much a pound, and S.W.H., after taking a modest markup, credits the contractor.

We have made all of this sound somewhat simpler than it actually is. There is still a good deal of paperwork, but it will undoubtedly be simplified as time goes on. Some effort must be spent explaining to S.W.H.’s customers exactly how everything works, but this too will get easier. The SQRP, as described, covers refrigerants 12, 22, and 50. R-11 is loaded in barrels which are sent directly to DuPont, and the paperwork is handled differently.

Thus the salvage of used refrigerants has become a long, but logical, continuum. First, recovery from the original customer’s machine into a drum by the contractor; next, transfer to a large tank by the wholesaler; then, to a DuPont center for total reclamation, and finally, reintroduced into the refrigerant distribution stream. What could be easier and more efficient? But that, as the government and the industry will agree, remains to be seen.

To get back to the story of S.W.H. Supply, when asked what he thought was the company’s most important competitive asset, Anderson quickly responded that maintaining ample inventory levels, and concentrating on super service was the no-so-surprising answer. But then he goes on to say that “keeping in step with the times” may be the ultimate answer. Bob Anderson firmly believes that besides the reclamation of CFCs, and the pressures for greater SEER, and all the other alphabetical movements we’re experiencing, even greater changes are ahead for the HVAC/R industry. “I think we’ll see more new things happening in the next few years than we have seen over the last 60.” He observes. He goes on to state emphatically, “But this company intends to survive and grow, and we will handle those changes with all the confidence and professional skill that we know we possess.”