Stick to the basics of what customers want and you’ll build a successful business. It’s a simple philosophy but one that has served ILLCO Inc. well for many years. Originally started in 1929 as Illinois Supply Co., ILLCO now blankets the Chicago metropolitan area with eight locations in three states, largely because of its commitment to getting the basics right and stocking a healthy mix of products for its diverse customer base.
“Doing the basics right … Jay has always instilled that,” says Bill Bergamini, president/COO of Aurora, IL-based ILLCO and Jay’s son-in-law. He’s referring to Jay Glass, ILLCO’s CEO who, along with his father, purchased the business in 1973. “You can’t do anything above and beyond or get clever or do anything fancy if you’re not stocking the right products, carrying the right quantities and hiring solid people.”
Glass negotiated the purchase of ILLCO after spending several years running the air-conditioning division of a family business. This was in the mid-1960s, and residential air conditioning was still a relatively new and untapped market that Glass was able to grow substantially. But running a division was not the same as running a company. So when an opportunity presented itself to buy Illinois Supply Co. in 1973, Glass left that family business to start his own. The purchase was made with borrowed money, which was plenty of motivation to make sure the business succeeded, especially given the high cost of money in the late 1970s and early 1980s. Glass’ brother Tom, joined the company later that year, and within a few years, his brother, Skip, also came onboard.
Together, the three of them were the management team that ran the company in the 1970s, 80s and into the 90s.
Today, the company is quite different from those early years. Bergamini is joined by Karen Madonia, Glass’ daughter and the company’s CFO; a sales manager and several product managers who oversee the various major product lines. Bergamini handles operations, and Madonia handles the financial
aspects of the business. Each of the product managers is responsible for purchasing and selling their respective product lines, and the sales manager coordinates their efforts in this regard.
“We’re fortunate that our original management team remains actively
involved,” says Madonia. “I continue to learn from them every day, and Bill and I are honored to work alongside them as we all transition ILLCO to the next generation.”
The early success of the HVACR dis- tribution business in Aurora led the
Glass brothers to open a second location in 1980. At that point, management
decided to change the name of the company to ILLCO in anticipation of expanding beyond Illinois borders. Over the years, ILLCO opened three more branches around Chicago, one in Hammond, IN, and one in Milwaukee, WI. Two years ago, ILLCO opened its eighth branch in Peoria, IL. The expansion outside of Chicago put the company in different markets, and Bergamini says that while each location takes on its own personality, they all carry a substantial inventory to support the diverse lines of business of their customers. Today, ILLCO is one of the largest distributors of heating, air conditioning and refrigeration as well as pipes, valves, fittings and hydronic supplies in the Chicago metropolitan area.
Opening a branch is a deliberate process for ILLCO, and starts with finding the right person to run it effectively. “We first identify a talented person to run a branch and then put him or her to work for six months to a year before we actually open a new location,” Glass says.
Having the right people in place is essential for any business, Bergamini says. “Anybody can come up with cash or borrow money for a building and fill it with products. There are not a whole lot of lines out there that are proprietary. You can get into this business. It’s what you do with it that makes a difference. It’s all driven by finding good people first and then growing and opening
locations for them.”
Glass and Bergamini would rather take a person who possesses the right people skills and then train him or her in the technical aspects of the job.
“A person can be trained technically,” Bergamini says, “but you can’t really teach someone how to effectively interact with co-workers, customers and vendors.” Identifying and bringing on the right people is an industry-wide challenge, he adds.
The focus on talent is why ILLCO prefers slow and steady growth to rapid expansion. “We don’t want to shake the foundation of who we are and what the company is all about just to have a lot of locations,” Bergamini says. “You can lose control if you grow too quickly and don’t grow the right way.”
ILLCO built its growth on what its customers want. That might seem like a basic premise for running a successful business, but Bergamini says ILLCO
is a “bit of a hybrid” with a diverse product mix. A typical ILLCO customer, for
example, is a mechanical contractor. Because the role of a mechanical contractor can include HVACR, piping, valves and fittings, plumbing and
hydronics, ILLCO, in turn, follows that lead and stocks all of the necessary products to complete those jobs.
The wide product mix is a reflection of the business that Glass first took over in 1973. “The business we bought was kind of a general store with refrigeration customers, air-conditioning customers, plumbing customers, factories and farmers. We had just about everything,” he says. While ILLCO had gotten out
of the plumbing side of the business over the years, they are now getting back into it on a selective basis because of customer demand.
Rather than having limited types of products and markets, Glass realized that having such a diverse mix of product was good for sustaining a balanced business, which has helped it to weather the ups and downs of the economy. The downside to this is the large investment in inventory and people. “The upside is that all markets are not going to be down at the same time or to the same extent,” Glass says. “The upside more than offsets the downside,” Bergamini adds.
While ILLCO’s markets range from the urban to the suburban, the economic recovery in the region overall has been slow. The largest portion of
ILLCO’s business is on the commercial side, which has remained stubbornly challenging. A more recent area of growth, Glass says, has been on the service side as building owners and property managers look to contractors for repairs and patches rather than replacements. “We adapt,” Bergamini says.
Another building block for ILLCO has been to offer services that customers would have traditionally had to seek elsewhere. This includes offering a full fleet of crane trucks to unload products and place compressors and equipment on rooftops for the service and replacement markets as well as design services, pipe fabrication and refrigerant recovery. In a mature industry such as HVACR where growth is hard to come by, having these specialty services represents some growth opportunities, Glass says. “Why not take that burden off the contractor and put that into our offering? It’s one less thing that he has to worry about.”
ILLCO works with customers in another significant way by offering training sessions from the fall through the spring. Bergamini says the training staff assembles a full slate of programs at a dedicated education facility at its Elk Grove, IL, location. “It’s been hugely successful,” he says, adding that they now have more customers wanting to attend classes than there is space. The sessions mostly focus on technical training, but they are not product-specific. “It is truly technical training,” Bergamini says. “That’s what our customers want.”
Distributors are supposed to have
local inventory that is available when the customer is ready to buy. This is
especially true for contractors who are often providing service to their customers who are without heat, air conditioning or refrigeration. They need parts and equipment right then and there. But the recent downturn has spooked too many distributors who focus more on maintaining a lean inventory and driving turns.
“That’s not our model by any means,” Bergamini says. “We believe in having a large inventory to represent our vendor partners well. We’ll continue to do that. That’s the role of the wholesaler, and the best way to serve our industry is to serve our channel by having the right product, in the right place and at the right time.”
ILLCO’s outside salespeople can easily access the large inventory through iPads that can be connected to its mainframe system so they can sit with customers, check inventory and put together and upload a sales order on the spot.
Going forward, ILLCO will keep its focus where it belongs: on its customers. Glass and Bergamini maintain that they will always adapt to the needs
of their customers, but they will never waver on their commitment to carrying a large inventory, employing well trained, knowledgeable people and
continuing to find new and better ways to make it easier for their customers to do business. Glass is quite confident that Bergamini, Madonia and their management team will continue the tradition of steady, controlled and profitable growth in the years to come.
Michael Maynard is a contributing editor based in Providence, RI. He writes frequently on HVACR, construction and architecture issues. Contact him at firstname.lastname@example.org.