Once upon a time most Americans bought their groceries from the mom-‘n-pop store down the street. They filled up their car with gas at a corner station owned and probably named after a lifelong citizen of the town. Oh, and your family doctor used to make house calls.
Life has changed dramatically since way back when. Industry after industry has consolidated – groceries, gas stations, medical practices, funeral homes, etc. The people who run them by and large are no longer the persons who founded the companies and guided them to prosperity with large investments of sweat equity.
Now many local businesses are run by salaried employees who answer to a territory manager who in turn reports to a regional manager who must gain approval for major decisions from a district manager. You have to climb a long stepladder of management before finally reaching the Big Boss who operates out of a plush office in some big city. Even he or she is not really in charge, because BB must answer to a Board of Directors, which in turn responds to the whims of shareholders who want BB’s head on a platter every time their quarterly dividend drops a few bucks.
They tried to do this to the plumbing industry. It didn’t work.
A wave of plumbing industry consolidation was attempted in the late 1990s and early 2000s by some slick Wall Street types. They formed about a half-dozen different organizations to buy up successful plumbing and HVAC companies in markets throughout the country. Their vision was to put these companies under one corporate umbrella, standardize operations and achieve economies of scale, then reap big profits by selling the suddenly huge companies to some other Wall Streeters with visions of squeezing even more money out of them.
Virtually without exception, these organizations flopped. A few of the earliest investors made a bunch of money and some of the corporations are still around in name, but for the most part their business models have changed. Some of the consolidated corporations have been sliced and diced into different entities. In some cases units were sold back to their original owners for a small fraction of the price the Wall Streeters paid them to take over their companies.
Many plumbing industry veterans who were around during the consolidation craze were not surprised when consolidation failed to take hold as it had in so many other industries. Here are some of the reasons why:
When a customer or business issue arises at Dutton Plumbing, it usually gets resolved with a single phone call to the person in charge. It doesn’t fester for weeks or months while filtering through layers of management and office staff.
Dutton Plumbing recognizes our technicians as the most important people in our company, because they are the problem solvers who interact directly with you, the customer. Our office staff exists to support them to the hilt and we operate lean in the office compared with the field. The consolidators tended to treat their technicians as money machines whose job it was to generate enough revenue to cover the salaries of an army of managers and headquarters staff.
Dutton Plumbing recognizes that customer service is the key to our success. The consolidators worshipped at the altar of a monthly P & L statement and treated customer service as an afterthought.
Dutton Plumbing has received many inquiries over the years from people with wheel barrels full of money who would like to buy us and make us part of some larger organization. Our owner has always said thanks but no thanks. We are happy and proud to be an independent company, and our customers are better off for it as well.
