Price cutters a significant threat, CIPH members hear
01/01/2009
What is the biggest threat to the plumbing and heating industry today? Why, that would be the margin-sucking maggots that continuously cut prices to make a sale. Those competitors can cause significant harm to well-managed businesses in the short-term, said Ken Wong, an instructor from the Queens School of Business. If price is the only thing you can do, youre going down the drain, he warned, noting that reducing price by one cent on a one dollar product typically results in an 11 percent reduction in profit if the cost remains the same. The price-cutter needs to cut cost by 1.4 percent just to remain even. However, that often begins a vicious cycle because the discounter cuts service and relationship building the very things that built and sustained the business in the first place, he told the 255 delegates and guests that attended the 75th Annual Business Conference of the Canadian Institute of Plumbing & Heating (CIPH) held at the Delta Prince Edward Hotel on the beautiful Charlottetown waterfront June 17-20. Plumbing and heating has traditionally been one of the worst offenders when it comes to price-cutting shaving a few points to make the deal, he added. You folks are so unprofitable that virtually anything will increase profitability. However, the industry is changing with more wholesalers and manufacturers competing for price rather than on price, he said. He said the key is to sell value and to understand that customers are buying solutions to problems. Most sales reps dont know what value really means because they have been lulled into the belief that they sell products and services. Achieving premium pricing is all about knowing the customer and helping them deal with the issues they face. If I am going to charge you 20 percent more, Id better be able to save you 20 percent on your cost, he added. We have to think of ourselves as problem solvers. Wong was just one of a strong speaker lineup that included former Newfoundland premier and federal cabinet minister Brian Tobin, author and Olympic performance coach J.P. Pawliw-Fry and grocer Pete Luckett a big hit with his no-nonsense and humorous approach to sales. Being in business today is not for the faint of heart. Youve got to dig deep, he says.
Continued growth
The organization continues to grow with 14 new member companies bringing the total to 266, reported outgoing chairman Ken Webster, Viessmann Manufacturing, Waterloo, Ont. This has been something of a challenge, added CIPH president Ralph Suppa. There has been much consolidation in the industry and this continues & As well, the Canadian Hydronics Council, a division of CIPH, now has over 90 installer/contractor members. Over 485 people have graduated from CHC training programs. The CHC outlined an ambitious marketing program designed to substantially increase the market share of hydronic heating in Canada. (Please see full report in The New Hydronics.) Webster outlined a number of strategic initiatives for CIPH including:
" To develop and nurture industry relationships to present a unified voice to government and regulators. " To improve awareness and develop a positive image for the industry. " A stronger focus on meaningful, relevant and affordable education programs. " Work with members on the integration of technology into their businesses. " Adjust member criteria where needed to adapt to changing industry realities (such as the decline in the number of manufacturing plants in Canada). " To attract youth and qualified workers to the plumbing and heating industry.
Attracting young people
The organization has already taken a number of steps to bring new people into the industry. CIPH launched a new youth recruitment DVD, titled Pipeline Pursuit, at the conference. Put together by the CIPH Youth Awareness Committee led by Adrien Pilon (Emco), it features young people that are currently working in the industry talking about their jobs and why joining the plumbing and HVAC industry has proven a wise career choice. The DVD will be shown in schools and at recruitment fairs across Canada. Over 30 secondary schools are partnered with members in co-op education, delegates heard. As well, CIPH is also offering 10 $2,500 scholarships at community colleges for students enrolled in industry-related programs.
New executive
CIPH members elected a new executive at their annual general meeting June 19. Barry Raycroft, vice president and general manager of Bardon Supplies Ltd., Belleville, ONT., became one of the youngest chairmen in CIPH history. He started his career in the Bardon warehouse at age 16. Cliff Sarjeant, president and GM, NCI Marketing, Aurora, Ont., was named first vice chairman. Paul Lachance, president and CEO of Wolseley Canada, Burlington, Ont., is second vice-chair. Kenneth Webster, director of sales and marketing, Viessmann, Mfg., Waterloo, Ont., moves into the past chair/treasurers role. Directors are: Adrien Pilon (Emco), Robert Whitty (Bartle & Gibson), Don Hambly (GSW), John Hammill (Moen), Bill McKinstry (Kamco) and Rod Andrew (MPH Supply). Former chairmen Case de Jong (Franke Kindred) and Rick Elliott (McKeough Supply) will serve as honourary non-voting vice chairs. Of course it wasnt all business. Participants enjoyed golf, sea kayaking, theatre and numerous other activities. CIPH will celebrate its 75th anniversary at next years Annual Business Conference to take place June 29-July 2 in Whistler, B.C.
