46586The story would make a great folk tale if it weren't already true: An unknown contractor came to Erie Materials one Friday and asked it to deliver $25 worth of materials right away so he could complete a job at 4 p.m. that day. The contractor's regular dealer–perhaps because it was out of stock, perhaps because it didn't see the value–had told the guy it couldn't deliver the goods until Monday.
But Erie came through that day. The following Monday, the contractor returned–with $12,000 worth of business.
"We do things other people can't do or won't do," says Bob Neumann, owner of Erie Materials. That attitude has helped Neumann grow the Syracuse, N.Y.-based operation from a half-million-dollar-a-year business since its founding 35 years ago in what essentially was a garage into a nine-unit dealer that was on target to rack up sales of $175 million in 2008.
In a period that has seen the market swing from slow to lethal, Erie's 2007 sales were up 7% from the previous year, and as of November, it was on track to rise another 8% to 10% in 2008. Not bad for a dealer primarily operating in central and upstate New York and eastern Pennsylvania, not the most bustling of housing markets.
With such a track record of solid growth, continual expansion, and giving back to its employees and the community, Erie Materials has earned the title of ProSales Dealer of the Year.
Erie merits attention for several reasons. Since 1973, when its profit totaled just $1,152, the company has finished in the black every year. Unlike other large dealers, it hasn't closed any outlets or had to lay off any workers (although it has let its total payroll shrink by not filling open jobs). Erie has told its employees that, over the next couple of years, times might be tough but the focus remains selling and operating in a business-as-usual mode.
"Our competition is making decisions that continue to provide us with opportunities," says executive vice president Chris Neumann, Bob's son, who oversees much of Erie's day-to-day operations. "We feel we are gaining market share in all product categories."
Perhaps the most notable difference between Erie and other dealers involves a decision that Erie made years ago: It doesn't sell sticks. It's a sign that a pro dealer can set benchmarks with minimal to no touching of commodities.
Welcome to Syracuse
New Jersey native Bob Neumann first hit Syracuse in 1964 because of an unexpected detour. He had just obtained a degree from Bucknell University in Pennsylvania and was looking forward to a new life in San Jose, Calif., with Armstrong, the building products manufacturer. Then, just days before he and his wife Sally were scheduled to leave for the West Coast and sunshine, the company told Bob it was giving him his own territory–a promotion of sorts. The catch: It was in Syracuse.
Residents of the central New York city, located about two hours northwest of Albany, often joke that the sun disappears in October and, if you're lucky, re-emerges in late April. Along with that gloom comes snow–daily snow, in fact. Syracuse averages 116 inches of the stuff per year.
Bob says his wife was horrified as they arrived in Syracuse on a cold, rainy, dismal day. They certainly weren't in San Jose. Football legends Jim Brown and Ernie Davis had long departed the campus of Syracuse Uni-versity, and the days of Jim Boeheim's brand of basketball were still in the making. This Rust Belt city had better days behind it and more bad weather ahead.
Flash forward a few years, and Bob was working for an area dealer in a management position. All managers were required to take a psychological examination to better determine their capabilities in the company. According to Bob, his results showed that he was "unsuitable for management" and "only mildly suited for sales."
"They were probably right on based on his style," Chris jokes.
Bob's boss, leaving for a vacation, told him to sit tight for a few weeks following the test. When he returned, he would find a new position for Bob. Instead, it became the catalyst for Bob Neumann to strike out on his own, a possibility that had been lingering in the back of his mind for some time.
But it wasn't going to be easy. After several banks rejected him for a loan, Bob changed his name and disguised his voice over the phone. A bank manager who had rejected him previously agreed to a meeting that would last 30 minutes at the most. Neumann says he entered the bank around 2 p.m. and left with a loan around 4:30 p.m.
For a small loan, Erie Materials was his. (The name came with the building, too.) What else did he get in the deal? A single truck and forklift, both out on loan, along with some sizable debt and three employees.
"I was tapped out. I had nothing," Bob says.
To hear Bob tell the story, you begin thinking that 1970s television network executives might have missed out on a golden opportunity. At 9 p.m., Newhart. At 9:30 p.m., Erie Materials.
For instance, on his first day at the business, Bob heard a nearby firehouse blow the noon whistle, followed shortly after by the sound of the building's main garage doors closing. Bob then saw all of his employees depart for lunch, essentially shutting the business down for an hour. His employees told him they always left for lunch at noon. Not anymore. Neumann quickly broke up the routine, having the employees alternate their lunch hours.
What was sold also began to change. Under Bob's new direction, Erie Materials relied on roofing, insulation, pre-finished panels, and aluminum siding as its cash cows. Within the first 60 days, however, Erie ceased to sell panels and insulation.
"The chains were selling it cheaper than I was buying it," he says. From there on out, the company focused on roofing and siding for the next 15 years.
The company never tried to dabble in the lumber business, either. "You can't make any money in it unless you are big," Bob says. Today, overall sales at Erie Materials break down as 26% commercial roofing, 23% siding, 22% residential roofing, 17% windows and doors, and 12% ancillary products. Offerings in the latter category include decking and wood products, stone veneer, trusses and framing, tools and fasteners, seamless gutters, and steel roofing.