You hear so much these days about mega-distributors buying family-owned electric supply houses that it's really refreshing to hear about someone getting into this industry because they believe it's a good time to start up an independent electrical distributorship. And when those people doing it have already built one of the 250 largest electrical distributors in the United States, their words carry a lot of weight.
During the 1980s-1990s, Steve and Mike Blazer built Colorado's Blazer Electric Supply into a four-location $48 million company that ranked amongst the fastest-growing distributors in the United States before they sold their company to Westburne in 1999.
Some people might call it a career after achieving that level of success, but after being out of the game for about 10 years the two brothers missed all the action. Says Steve Blazer, “I just missed the game, the thrill of the hunt. For us to come in the marketplace as an unknown and build the business up to the leadership position in southern Colorado was fun to do. It's fun to start at the bottom and claw your way to the top. Having the opportunity to do that again was appealing.”
Along with the thrill of the hunt, another appeal of getting back into the business with Blazer Electric Supply 2.0 was continuing the family's tradition of being in the electrical supply industry. Their father, Fred Blazer, Jr., and grandfather Fred Blazer, Sr., had owned Judd Co., Austin, Minn., where they got their start in the electrical business, and Mike and Steve wanted to have a family business where their children could work and grow, too. Steve's daughter Casey, her husband Josh, and Mike's son Trevor now work at Blazer Electric Supply, as do Mike's wife RaeAnn, the company's controller, and Steve's wife Carolyn, the company's accounts payable manager.
Back in the Biz
Mike Blazer says after selling the business to Westburne (which was acquired by Rexel soon after the sale) they had a “wide open window” on different business opportunities. But before too long, they missed working with customers, watching employees grow and seeing them and the business they created thrive. Slowly but surely Mike and Steve Blazer came to the same decision: Let's do it again. The timing and logistics of the relaunch were interesting, because Rexel was still leasing the original Blazer Electric Supply branch facility in Colorado Springs, and the lease was expiring in September 2009. Once Steve and Mike decided to move forward with the launch, they told Rexel they were getting back into the business and planned to move back into that facility once the lease expired. By Sept. 1, Rexel had moved its electrical supply operations into a building across the street that was a former Westburne plumbing supply branch. Back at home in the same building, one of the most notable changes (along with the happy presence of Steve's golden retriever, Sophie, the company's “mascot”) is the new “Blazer Electric Supply 2.0” logo proudly displayed on the sign outside the building, on business cards and on the company's website, www.blazerelectricsupply.com.
The Blazers see several things about the local market that make them believe Blazer Electric Supply 2.0 will succeed. The competitive landscape really hasn't changed too much since they left, with the exception of QED Inc., a large independent that has expanded throughout the Intermountain-West region and added branches in Colorado Springs and Pueblo. But the other competing electrical distributors are pretty much the same.
The Blazers also believe in the old industry saying that there's always a place for a strong independent in any market. “That was one of the primary drivers,” says Steve Blazer. “If you look at any major market, the leader is usually an independent. There is a reason for that, a different approach to the way the business is run.”
The Blazers point to several other independent distributors that were started up either by former Rexel employees who wanted to run their own business like Scott Schieffer, president, Hill Country Electric Supply, Austin, Texas, or Al and Gary Russello of Granite Electrical Supply Inc., Sacramento, Calif., who sold their company, Pacific Electric Supply, to Rexel in 1997 and in 2003 started up Granite Electrical Supply with Jim Flynn and Bob Powers.
Mike Blazer says chains have their strengths in terms of sheer critical mass, resources, number of locations and national account contracts, but local independents can leverage their local decision-making and local relationships with customers and independent manufacturers' reps. Steve Blazer says independent reps have been some of their most enthusiastic supporters in the re-launch. “From a rep standpoint, it's hard to call on a chain and bring in new product because so much of the decision-making is done somewhere else and it's hard to even talk with a purchasing person in a lot of cases. Reps remember how we did business before. We were always very receptive to adding new products, having our salespeople carry samples and making joint calls.”
Mike and Steve Blazer also believe the collective purchasing clout the buying/marketing groups offer puts independents on a level playing field in pricing. They also factored in a feeling that customers in the Colorado Springs and Pueblo markets prefer to do business with local companies, and what they saw as a negative perception in the overall U.S economy toward big business because of the recent Wall Street corruption and mass layoffs. One more recent factor that plays to the strength of the independents is the move by some national chains to private label some of their own products, which the Blazers say is not being accepted by manufacturers or local independent manufacturers' reps.
Before the launch, they factored the short-term and long-range business prospects of the southern Colorado market area into their plans. Colorado Springs and Pueblo were far from immune from the recession, but the two cities are in better economic shape than many other markets across the United States. Plus, Colorado Springs regularly makes the listing published by various magazines of the most desirable cities in which to live or work. Driving south down I-25 along the shoulder of Colorado's magnificent Front Range to Colorado Springs, you can see why so many people fall in love with this little slice of paradise, which enjoys approximately 300 days of sunshine per year, crisp, clean air at 6,035 feet in altitude, close proximity to some of the finest skiing on the planet, and the millions of acres of nearby Rocky Mountain wilderness laced with hundreds of miles of hiking and mountain biking trails.
These benefits have fueled a huge surge in population over the past two decades for a 130-mile stretch along Colorado's Front Range, from Fort Collins, Colo., south through Denver and its outlying suburbs to Colorado Springs. Steve Blazer says the population of the Colorado Springs metropolitan area has doubled to approximately 500,000 since they started up Blazer Electric Supply in 1984.
Unemployment in both cities is approximately seven percent, three points below the national average. The housing market is hurting, but the decline is not quite as horrendous as in other markets. As home to Fort Carson, Peterson Air Force Base, North American Aerospace Defense Command (NORAD), and the U.S. Air Force Academy, Colorado's economic fortunes are closely tied to military spending, which while subject to occasional cutbacks in Congressional spending isn't subject to the same economic restraints as overall business spending.
Says Mike Blazer, “Colorado Springs and southern Colorado operate differently than Denver. Historically, Colorado has run kind of contrary to the country — we don't have the huge spikes of growth or the huge troughs of recession, either. We are on a little steadier plane here. Denver, Colorado Springs and Pueblo are really three very distinct markets. Pueblo is a little bit more of a working-class, blue-collar town. Denver is a pretty good mix of high-tech, industry and service. Colorado Springs is very heavily based on the military. It's about 55 percent of our GDP in Colorado Springs, so as the government and military go, we go. It's been a popular retirement town for officers and military people who have passed through here at one time or another. A lot of our residential growth, especially on the higher end, is with military people that end up back in Colorado Springs.”
Starting up Blazer Electric Supply 2.0 also took the right people and product lines, a new computer system and financial support from banks. The people part of the start-up equation fell into place pretty quickly — of the 34 people now working for the company, 30 had previously worked for Blazer Electric Supply 1.0. Diane Waller, data processing manager, was one of four employees who had worked for the Blazer family at Judd Co. and moved her family across the country to help Steve, Mike and Fred start Blazer Electric Supply in Colorado Springs. She says reuniting with other employees has been like a family getting together again (see sidebar, “Happy Wholesaling” on this page).
“They were smart businessmen and they knew that loyal employees were important for a successful company,” she says. “As employees we felt valued and appreciated, and we had fun while working hard.” Waller says when the Blazers sold their business in 1999 they did everything possible to make sure their employees would be cared for. She eventually took a job with NxTrend (now part of Infor), which is based in Colorado Springs. Other employees stayed with Rexel and some found jobs outside the industry. “Some of us were laid off, some moved onto other things and some of us were able to stay on with the new company, but it wasn't ‘Blazer’ anymore,” she says. “Most of us quickly realized that we had lost the best company we had ever worked for.
“When Steve and Mike decided to reopen Blazer Electric Supply, there was no doubt we could do it again, and that it would be better than ever. This was the third time around for me, and I was happy to see our family coming back together. The truth is, we're all damn glad to be here, and happy employees are happy to serve their customers. That's good for business.”
Mike Blazer said when they sold the business one of the biggest concerns was how their employees would be treated by the new ownership. “That is the one thing that stuck in my gut worse than anything else when we sold the company,” he says. “There is a lot of euphoria but there is a lot of emotion, too. You look at the people that work for you like family, and you are walking away from that family. You are also severing a succession plan that had gone back two or three generations.
“From a personal perspective, to recreate that again is very gratifying. The employees left careers where they were doing very well. They took a risk and, in some cases, pay cuts to come back to us. It's a commentary on our staff that they have accepted the next generation as well as they have. That has gone better than we could have ever expected.”
Many of the employees who came back to Blazer Electric Supply were working for one of national chains in the area and were eager to get back to a more entrepreneurial work environment. Mike Blazer says others like the culture better with some of the nationals and weren't interested in going back to a start-up. “For some, working for a national it's the security,” he says. “That structure fits better with their personality, skill sets or personal objectives. People know when they come over into this environment, the expectation bar is very high, it will require that they wear a lot of hats, and that they won't be pigeonholed into a position. If you are an inside salesperson, then you better be willing and ready to wait the counter. If you are an outside salesperson you may have to help in the warehouse to get us caught up on a Friday afternoon. Some people work better for a larger company, other people work better for an independent. Those are the ones that we focused on. We would have asked more, but there is only so much room on the bench.”
Adds Steve Blazer, “Everybody has a lot of flexibility in how they handle the customer. Everybody treats this place like they are a business owner. In the Colorado Spring branch for example, it's almost like you have 17 people who are business owners making decisions like it is their money.”
Credit Gets Crunched
Perhaps the biggest surprise in the start-up process was an unforeseen challenge in obtaining financing. When looking for a loan of approximately $2 million for inventory, a new Eclipse computer system and office furniture and other expenses, their previous banks weren't interested in helping fund a start-up venture, even though the Blazers had great credit and the ability to offer several buildings they owned as collateral. A local newspaper, The Colorado Springs Gazette, featured the Blazers in a recent article on the challenges small businesses now have in getting bank financing. “It was a real eye-opener,” says Mike Blazer. “It was, ‘We will listen to your story, but we can't do anything for you.’ It just floored us, given our credit history and relationship. We wound up going to two regional banks that were very receptive to the story and very excited to get the opportunity. It's not the best time to generate capital for a start-up.”
“The small bank, locally owned, was very willing to take a chance and do something,” Steve Blazer said in that newspaper article. “The bigger banks, it was just a complete turnoff. Zero interest.”
The Blazers had a much easier time getting backing from vendors. The word got out fast that they were getting back in business, says Steve Blazer. “As soon as you tell one vendor everyone knows. Pretty soon we were getting calls from people saying, ‘Hey, we want to be part of it,’” he says.
Many of the local reps and factory salespeople hadn't changed much over the past 10 years, and the majority of the companies they wanted to take on were glad to support them. They had their first round of meetings with vendors in May 2009. The Blazers rented out a hotel suite for two days and had 45-minute meetings with every vendor they thought was a possible partner moving forward. Two notable changes for the Blazers regarding vendors is that they are now a member of the IMARK buying/marketing group, Oxon Hill, Md., instead of Affiliated Distributors, King of Prussia, Pa., and that they now carry ABB for industrial controls instead of Allen-Bradley/Rockwell Automation. They will join the National Association of Electrical Distributors (NAED), St. Louis, as soon as their mandatory 12-month waiting period for membership expires. In the meanwhile NAED has been very helpful in letting them take advantage of association resources, they say.
While the Blazers agree it's a tough time to launch any business, they say the economic conditions may actually work in their favor because they can build the business on a solid foundation, get any new business processes implemented, learn the new computer system and take advantage of all its functionality. They see themselves eventually taking orders online, but since so much of their business comes from smaller electrical contractors, that hasn't been a top priority. Heck, Mike Blazer says they still get electrical contractors coming up to the counter with orders written on pieces of 2×4s.
Their Eclipse/Activant package is quite different than what they had used in the past. Says Steve Blazer, “We were on SHIMS before, but we were on the character-based not the GUI side, so from a complexity perspective it's much more advanced. We are on Eclipse now, but we talked about NxTrend. It really could have gone either way. There is not a whole lot of differentiation. That has probably been the toughest part of the reopening. Everybody is on a new system together, and we are trying to come up with all of our policies and procedures on the fly.”
They are now focusing on carving out market share so they can grow once the economy improves. Even in a down economy they are finding opportunities in MRO business, addition/modification work for building owners and tenants and construction projects at nearby military facilities. Says Mike Blazer, “You have to kick the rocks a little harder and bang on the door a little louder and get what you can. We have contractors who historically were never below 20 to 25 electricians out in the field who are now running eight-to-12 electricians for the first time ever. You are not going to grow your business by depending on your key customers to grow. They are stagnant right now, so you have to gain market share.”
As the company grows, the Blazers say they will probably mirror the business mix they had in the past, which was pretty evenly split between contractor, industrial, MRO and government/military customers. In the early going their business is about 60 percent electrical contractor, but they believe the mix will even out as they penetrate industrial accounts. The Blazers say they may eventually add additional branches, but that will depend on market conditions and availability of capital. As before, Steve Blazer manages the Colorado Springs operation and Mike is based out of Pueblo. Any visitor to the company can see the two brothers get along great, but they like to joke that they benefit by the 30 miles of separation. “If we had to have offices right next to each other, it might last about four hours and one of us would be lying out in the parking lot,” jokes Steve Blazer.
“We actually complement each other well,” says his brother. “We have much more in common than not. Steve has more of a tendency to be more free-flowing and free-thinking and creative in nature. I am more conservative and look at things more pragmatically.”
Managing the two locations independent of each other works well because the markets are so different, says Mike Blazer. Each branch now has four outside salespeople and its own operational specialties. The Pueblo location handles purchasing, accounting and human resources, while the Colorado Springs location has data management and accounts payable.
“That may change as we grow, but for now it works pretty well,” says Mike Blazer. “We have to play both markets independent of each other. It's reflective of the communities we live in. Even though Pueblo and Colorado Springs are only 30 miles apart, the difference is quite dramatic. Pueblo is a steel mill town and historically is very tight-knit. In Pueblo, the tap roots go to the center of the earth. Because of the military, Colorado Springs is more free-flowing and transient in nature. Colorado is a different market, as most of population is based on the Front Range. Outside of that you are drifting into fairly small communities. Your metropolitan markets are limited in nature. We have to own what we have in our own backyard first and move forward from that.”
Steve and Mike Blazer know they have a challenging road ahead of them to get re-established in the market. But they love the team they have assembled and are excited about having the opportunity to build a business again. The national chains they are competing with have the same advantages in resources they had back in 1984 when Blazer Electric Supply 1.0 started up, but Steve Blazer says it still comes down to people and relationships with customers, vendors and employees.
“We are taking this thing back to basic blocking and tackling: strong inventory, good people, flexible hours, a flexible business model that's not just built around how we see things, but how our customers see things,” he says. “`We always had an approach before that we worked toward our customers' success. If our customers are successful we will be successful.”
Mike Blazer is ready to take on the chains, too. He likes the odds. “You have to leverage your flexibility and local decision-making. In the end you see who does that the best,” he says.