Exclusivity, Specification Name of the Game at Allegheny Plywood

Art580_Huber_w150.jpgBased out of Pittsburgh, home of the legendary Steelers franchise, Allegheny Plywood has stayed in the building materials game by reinventing itself as necessary. When market conditions have changed, the company--like its NFL football team--has responded by simply changing the playbook. At one point in its history, which traces back to 1952, that meant essentially switching from a retail lumberyard into a regional wholesale distributor of specialty building products with branch locations in three major cities: Pittsburgh, Cleveland, and Philadelphia. 

The playing field has changed greatly from Allegheny Plywood's early years as a wholesale distributor. Matt Huber and his brother Don Huber--who is also the firm's president--now run the business started by their grandfather, George Beran. Since Beran's days, the cabinet and countertop business has regrettably seen small mom-and-pop manufacturers succumb to price pressure from chains like Home Depot and Lowe's. Once Allegheny Plywood's “bread and butter,” the small and medium-sized cabinet and millwork companies also have fallen to competition from kitchen and bath dealers, Chinese imported cabinets and, increasingly, Web-based sellers. 

Allegheny Plywood's modern-day game plan: start distributing new products that offer unique features and exclusivity in the company's trading area. “You can buy solid-surface on the Internet, you can buy cabinets on the Internet,” Huber says. “You can buy a lot of products on the Internet, and it all gets shipped directly to your house.” In response, Allegheny is launching an offensive drive, going after the merchandise that is not so easily or effectively procured in cyberspace. As an example, he cites LG Viatera quartz, recalling his skepticism five or 10 years ago that the firm today would be distributing 1,000-lb. slabs of the 3cm x 63” x 130” quartz. 

Meanwhile, knowing that it can't beat big-box pricing on commodity items that can be purchased from any of a wide range of providers, Huber explains that Allegheny aims to compete less on price and more on quality. To that end, he reveals the distributor's shift to Valspar finishes and other products that require more expertise and customer support. “You're not going to just buy a pale finish and get it shipped to you online,” Huber declares. “You need a distributor. We have people in place that have better knowledge to help customers and provide the kind of service that you just can't get over the Internet or the kind of service and products that you can't get at Home Depot or Lowe's. ”

Huber summarizes Allegheny's strategy in today's distribution arena in one sentence: “We're looking at more specialized items that can create specification at the commercial level with unique, exclusive products in our territory.” With orders that can't be fulfilled over the Web, along with specialized merchandise that demands higher touch, the final piece--as Huber alludes--is specification. It's key for the commercial field, where Allegheny Plywood is becoming more and more active. The firm has architectural spec reps at its headquarters in Pittsburgh as well as at its Cleveland location and its warehouse in the Allentown, Pa., area. Having these reps call on architects involved with hospital, universities, corporate, and store fixture projects and getting Allegheny's exclusive products specified for that work, according to Huber, “helps us to get better margins because it makes it more difficult for the manufacturer to change that spec or break that spec.” The distributor recently scored when one of its products was specified for a large project at a football stadium in Cleveland--home to one of the company's three locations. It proved to be a lucrative job, with Allegheny Plywood supplying more than 400 sheets of solid-surface material. Never mind that it went toward improving the playing ground for the Cleveland Browns, a longtime rival of Allegheny's hometown Steelers!

Commercial specification of products is likely to play an ever-bigger role at the distributor in the future, as it increasingly favors the commercial market over residential applications. In particular, the niche for store fixtures is looking to be a strong avenue of growth as stores and eateries invest in refacing their locations after putting rehab work on the back burner when recession hit the nation. Huber points especially to fast-food chains like McDonald's and Burger King, which he sees redesigning their interiors to replicate the appeal of trendier cafes like Panera Bread that attract today's younger and forward-thinking consumers.

A growing presence in the commercial segment also provides Allegheny Plywood with yet another opportunity to beef up its lineup in a way that distinguishes it from competitors. Specifically, Huber says the distributor increasingly is interested in recycled or sustainable products, as more architects and designers specify this type of material. For instance, one big change the firm has made through its distribution relationship with Columbia Forest Products is to now offer PureBond technology, a formaldehyde-free hardwood plywood.

Beyond the products that it provides, Huber says Allegheny Plywood is making the effort to adapt to an environment where it has become not so easy for small businesses--of any kind, not just distributors--to stay in the game. “To have five employees and pay the wages and the health insurance and the insurance for the building itself,” he explains, “it's just become difficult to run a small five- to six-employee shop anymore." To better compete with larger outfits, Huber says, “Our outside salesmen have to become smarter, faster, and more efficient; and we're looking at providing them the tools to accomplish that.” As a move in that direction, he has been charged with quarterbacking the implementation of CRM-type software that will arm sales reps with the tools they need to collect sales data and forecasts, for example, on a daily basis. “I'm focusing on getting that done so that our outside salesmen can use their smartphones and tablets to get information about a specific customer that they're ready to walk into,” he continues, “information about what that customer actually purchased recently, what his buying trends are – or maybe even what his trends aren't.” That effort is just getting going, but Huber expects to have the technology in place about six months out. 

Huber adds that Allegheny Plywood is tuned into not only the needs of its sales staff but also the demands of its customers. The distributor, he says, is committed to providing greater support for all of its customers through timely deliveries, open credit terms, a wider range of products, and new ideas from the sales group to help fabricators lower costs. For example, Allegheny Plywood offers custom laminated panels in any high-pressure laminate; this, in turn, helps reduce the cost the fabricator has in laminating those panels in-house.

Even as the company works to improve its support of the outside sales team and relationships with customers, Huber believes its ties with manufacturers need to be stronger than ever before as well. “There's so much competition to represent quality manufacturers. Distributors like ourselves that have three or four locations, we need to partner with our manufacturers and for them to support us with lead times and pricing, for example,” he remarks. By the same token, Huber notes that manufacturers need distributors, too, to help them move product to market more quickly and more efficiently than they can on their own – through its architectural specification reps, for instance. “We also need to align ourselves with what they see happening in the markets with what distributors see happening and make sure that we're all on the same page so that we can both react to it,” he continues. “If they have an agenda, we have to agree to that agenda and work together on it.” Allegheny Plywood is relatively new to NBMDA, but Huber says it immediately realized the benefits of membership. In particular, he cites “networking with other distributors of similar products and also networking with the manufacturers and getting to know their processes a little better and aligning our processes with them.”

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