Ferguson Waterworks Revolutionizes Buying Plumbing Supplies

I’ve written several articles on how to buy plumbing supplies and materials so it’s only fitting I write an article regarding Ferguson Waterworks. When Ferguson Plumbing Supply first came to the Chicagoland area we in the plumbing industry were skeptical. We had several large local privately held plumbing supply houses in the area and dozens of smaller ones as well. So if you ever asked yourself “do I have plumbing supply near me?” The answer would have been a resounding “YES”.

No one in our industry believed Ferguson Enterprises could make it in Chicago’s market. With hyper competitive prices, very old and very deep credit relationships and history with the major plumbing contractors only added to our skepticism.

Upon opening they did everything different. Their credit terms were set in stone, if you went past the agreed upon terms which were mostly 30 to 45 days, they cut off credit. They also didn’t play by the long established price cannibalizing game with local contractors either. They were here to run a business and to make a profit. If you didn’t like it move along, they would find the firms who would play along.

Ferguson, Lenz, and Smither Had a Vision of Customer Service

Ferguson Waterworks

Ferguson Waterworks

Before I go into how they managed to capture significant market share I think it’s only fitting we tell you a bit about Ferguson Enterprises. Ferguson Waterworks was founded in 1953 in two locations, Colmar Manor Maryland and Birmingham Alabama to service small plumbing contractors. Their 20-year expansion was pretty unique in that they let bright managers open their own branches. The entrepreneurial spirit was strong. By 1982 they had 76 locations in 11 states with $142 million in annual sales. In that same year a British company The Wolseley Group bought Ferguson. In the next decade Ferguson Plumbing Supply expanded to 13 more states bringing their total number to 200. Now Ferguson Enterprises has 1,350 locations in all 50 states and employs over 19,000 people. You get the picture right?

Ferguson Enterprises Enjoys Explosive Growth

You don’t enjoy that kind of explosive growth by doing things the wrong way. So let’s get into why they are the plumb supply company extraordinaire. They have built their business on some sound core principles that I believe should be a part of all business’ especially in the mechanical trades and they are:

  1. Give them killer customer service. If coverage isn’t good in a certain area and Ferguson can make money by increasing coverage or putting on more trucks it’s done, without customers screaming and yelling about it. Do you want to here about great customer service? If you have a mechanical service company and you have trouble with inventory Ferguson will take over your inventory control. In fact if you are big enough they will put an employee in your building to handle inventory. Yes it’s self-serving but owners can go about doing what they do best, working on the business.
  2. They stock A LOT of plumbing and HVAC equipment. Over the last 3 decades plumbing supply houses have shifted from stocking everything to stocking only things they really move which is fiscally smart but it can be a real pain to have to wait 3 weeks for an odd fitting or part when you want to start or finish a job. Ferguson doesn’t stock everything everywhere but they stock everything somewhere. In fact they stock more Kohler Plumbing Fixtures than Kohler.
  3. They are expanding their product offerings, to include lighting and appliances. So if you thinking “are there any appliance stores near me?” think Ferguson Enterprises.
  4. Ferguson doesn’t tolerate violating their payment terms and although it can be a bit harsh to a struggling contractor, there is no better supply partner to have when trying to collect your money from an owner or GC. They have no problem being the bad guy.
  5. They are in business to make money. This may sound like a bad thing but it is in fact quite the opposite. They have margins that they know will allow the business operate and allow for growth while giving the customer great service. They know that if those margins aren’t within a reasonable range things start to break down.

I realize some of you like the belly-to-belly feel of a small family owned supply house delivering your product and that is OK but sometimes bigger is better. Ferguson Enterprises continues to prove that statement true in the markets they enter. If you haven’t already given Ferguson a shot, you won’t be disappointed.

Sean Kavanaugh

The Plumbing Info

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