Discussions With A Distributor | Feat. Crescent Electric Supply Co.

Introduction

Adam: This is the Wisconsin Lighting
Lab podcast. My name is Adam Rupp, and my guest today is Jeff with Crescent
Electric out of Racine. Jeff, welcome.

Jeff: Thank you.

Adam: How are the roads coming up? Too
bad?

Jeff: Just wet, mainly.

Adam: Yeah, well, it is winter in
Wisconsin — I guess that's to be expected. But Jeff, it's great to have you.
You have a unique perspective on the lighting industry. You kind of came into
the industry on the tail end of HID, saw the transition to LED and the LED
boom, and have worked in a variety of roles, both at factories and now in
distribution. Tell me a few more specifics about your background and what
you're doing now.

Jeff: After college I started with a
company called Ruud Lighting. They made some LED fixtures, but they made a lot
of fluorescent, a lot of HID stuff. I started there in an electronic technician
capacity — fixing assembly lines as they broke and went down. After a while
that grew into an engineering role, where I was designing test equipment for
fixtures and whatnot. From there, I kind of understood how everything worked
electronically and wanted to get a more practical idea of how the fixtures
work, so that grew into an application engineering role where I was doing
lighting layouts and design work. Then one of my friends I worked with pulled
me aside and said, “Hey, you should go into sales.” And I said, “Well, I went
to school for engineering, I'm an engineer. I'm good, thanks.” He kind of
convinced me, and I went that direction — and it was a really good thing for
me. I'm really happy I did that. I eventually had a three-state territory with
Cree at that point, because Cree had bought Ruud Lighting, and it went really
well. At that time, I was selling everything through Crescent Electric. So now
I work for Crescent. It was a good transition because I already knew the
Crescent industry, I knew how they worked, and I knew a lot of people in the
industry.

Adam: What was that like in the early
days, when Cree, the publicly-traded company, bought the privately-held, kind
of small to medium-sized company? Was it kind of fun to maybe have a bit bigger
budget and be able to play around with some new designs? What did your role
look like specifically during that transition — 2012, I believe?

Jeff: Yeah, it was right around there.
At that time, my group was designing various things to help aid production, and
we were told, “Hey, we need you to build a new line to manufacture what was
then the CR troffer.” We kind of heard some rumblings about potentially a
merger — you could call it that — with Cree. So we got together and designed
this thing, spent long days, 12-hour days, 13-hour days, seven days a week,
getting it done, because it had to be done by a due date. After that, we got
the word that Cree was going to buy Ruud Lighting and everyone here was going
to be Cree employees. As you can imagine, when something big like that happens,
there are good things and bad things. From my perspective it was all good. I've
always liked working for larger companies, and for me it worked out really well
in my favor. Other people had mixed opinions.

Adam: Right.

Jeff: Yeah, but it was good.

Lighting Design & the Sales Process

Adam: Cool. I know you have a lighting
design background as well, so you were supporting production, assembly,
prototyping. Was the lighting design component kind of that interim period
between the hands-on engineering and sales?

Jeff: Yeah. I supported a number of
different distributors with what I did. Grainger was one of them — I did a lot
of work with Grainger at the time — and I did a lot of automotive-related stuff
as well. That's kind of what drove me more toward the lighting industry. What I
was doing downstairs didn't have to do with lighting; it was more automation
type. So that's really when I realized this is what I want to focus on. I think
that transferred really well to when I was doing sales, because I was kind of a
one-stop shop — I could do everything from layout, design, to pricing, and so
on. I think that really helped me be successful.

Adam: One of the things I've noticed
being in the industry for about a decade now is, you can just tell when
somebody's a lighting geek — and that's often a good thing. On the customer
side, when people really put the products first and make the products the hero,
a lot of the other stuff just becomes less important. Ultimately, giving
customers the right solution for the job and something that's high quality — if
that's your main interest and main focus, it's good for everybody.

Jeff: Yeah, I would tend to agree with
that.

Doing Sales Differently

Jeff: It's kind of — I was thinking
about it a while back — salesmen kind of have a bad stigma surrounding them.

Adam: Oh, come on. I've never heard
that.

Jeff: Yeah. So when I first got in
sales, I was thinking, I want to be different. I don't want to be the guy that
tries to fit a square peg in a round hole just to make it work. The biggest
thing, I think, is you've just got to be truthful with people. You have to tell
them if what they want to do is not going to work. You have to explain why. And
at the same time, if you don't have a solution for it, but you know maybe
someone else does, share that information with them.

Adam: I think the other thing I've
noticed too is taking a little bit more of a medium- to long-term view on a
relationship or on an account. People that are trying to close a certain order
that day and then move on to the next customer, the next account — they really
aren't invested enough to really care about doing it well.

Jeff: Correct.

Adam: It doesn't mean that you can't
hustle to service the customer and that type of thing. But just knowing that,
hey, if the relationship doesn't work now, if we keep doing the right thing,
keep supporting the right products — if the solution is to have the products be
the hero — eventually it's going to work out.

Jeff: Correct. I think in a lot of
cases with sales, people that are always chasing — it makes it difficult to
really develop those roots with the customer.

Adam: Yeah.

Jeff: In my role right now — when I
was at Cree, I was a new business developer, but I was also an account manager,
because I had a Crescent account that I was managing. Now I have like 40
accounts that I work with. It's similar but different.

Adam: Is that a lot, or is that a
little, or is that kind of the average?

Jeff: It's kind of the average. Some
of the guys have been there a lot longer; they have fewer accounts but they're
doing more with those fewer accounts. Where I'm at in my career with Crescent,
I think that's probably a good number, because you do have to feel out who's
going to be a good fit for you and who's not. Accounts move around all the time
because some people fit better with other people. But my time at Cree, if it
taught me anything, it was that you really have to be there for those people.
If you say you're going to do something, you have to do it, and you have to do
it quicker than what you say you're going to do it. If you do those things,
your accounts are going to want to stay with you. They're going to like you.
That's really the main thing, because they have a choice to work with five,
six, seven different distributors. If they're coming to you, they're coming to
you because they like their account manager. It doesn't necessarily always have
to do with the business — although it does help that Crescent is such a good
company.

Adam: Absolutely. There's something to
that local face-to-face sales. It's a little bit easier to over-promise in some
cases when you're more removed from the customer. But if there's a contractor
or an end-user account that isn't happy with a product or service, they know
where to drive to.

Jeff: Correct.

Adam: It probably makes it even more
important to get it right.

Jeff: It's true. Yep.

Crescent Electric Supply Co. & the Role of the Distributor

Adam: So Crescent is a large
electrical distributor, correct? It's funny — we work with a number of
different distributors as customers, and while their title in the industry
might be “electrical distribution,” there are a lot of different ways people do
things. Some might be more lighting focused, some might be more electrical
focused. Some might focus on stock-and-flow business where they want to have
simple luminaire part numbers in stock for contractor pickup. Some might be
more project-management focused. Where do you think Crescent focuses, maybe
within southeastern Wisconsin or company-wide?

Jeff: Company-wide, I'd say we're
pretty diverse — we don't like to have all our eggs in one basket. So we have
kind of all those things you just said; we do a little bit of all of those. We
just built a new facility in Racine, which has been a game changer for sure. We
went from a really little building to our new building — 135,000 square feet.
About 45,000 of that right now we're actually utilizing. That's warehouse and
office space, primarily warehouse. All our wire cutting operations are now out
of there. We're able to stock product that we couldn't stock before, so right
now, for the most part, anything a customer needs coming through the door, we
have in stock for them. That's really been a game changer.

Adam: Where does the stock lighting
fit within that? Is there a completed fixtures ready-for-pickup option as well?

Jeff: Yeah, we have select SKUs of
completed fixtures in stock for our customers. If it's anything spec or
anything like that, typically that has to be ordered. But the normal day-to-day
stuff that everyone's coming and asking for — “We need one of these, we need
two of these” — we have it.

Adam: Cool. Make it easy, right?

Jeff: That's right, yeah.

Adam: So as a factory, how can we do a
way above average job of supporting electrical distribution?

Jeff: From my perspective anyway, the
two most important things to us are competitive price and lead time. And when I
say lead time, it doesn't necessarily always mean having the shortest lead time
— it means being true when you say, “Hey, we're six weeks out on this.” Okay,
that's fine, I'm going to tell my customer that. It has to be here in six
weeks, though, because they're going to have boots on the ground, they're going
to be ready to install it. If you're late, then my customer is not happy. That
means they're not happy with me, which then in turn means I'm not happy with
you.

Adam: Yeah, the downstream ripple
effect gets crazy.

Jeff: The old saying — under-promise,
over-deliver. That, I would say, is the biggest thing. Communication.

Adam: That makes a lot of sense. As
you know, Crescent has so many value-added services for their contractors. You
guys have the lighting design services, you have other design services. The
things that aren't always the easiest to control for distributors probably are
the factory's lead time and the factory's price. If those two boxes can be
checked as well, it kind of makes it a one-stop shop.

Jeff: Yeah. Things happen, you know,
we get that, but if you can communicate to us as early as possible when you
find out — that's key. Communication.

Jeff's Unique Perspective

Adam: When you think back over the
last decade or so, and your accounts have changed — they've gone from OEMs and
distributors and people that are closer to the production of the product to now
contractors, general contractors, and probably some end-users as well — how
does that change the closer you get to the contractor and the end-user? What
are OEM customers and distribution customers looking for, versus contractors?

Jeff: I was thinking about that the
other day too. It's really not a whole lot different. Those core values still
play there: making sure you're doing what you say you're going to do, when you
say you're going to do it. That really hasn't changed a whole lot, to be honest
with you.

Adam: I think you're a hundred percent
right. What I tell our engineering and production team a lot is, there are
three main things to focus on: hit the spec, hit the quality metric, and hit
the lead time. And repeat. There's the cost component in there, and it gets a
little bit noisy when you start to overthink it. But you're right — regardless
of the account type, from OEM all the way to end-user, there are probably three
things that people really want and everything else is just noise.

Jeff: Exactly.

Adam: That's a great perspective.

Lighting Industry Trends

Adam: Lighting industry trends — there
are some things that have happened the last few years, whether it's
tariff-related, companies entering and exiting the space, large mergers, that
type of thing. Do you guys focus on that, or do you see a lot of other things
to focus on day-to-day that are more important? How important are some of the
trends that are happening right now in the industry?

Jeff: I think all of that really does
affect us. The tariffs and whatnot — obviously, pricing went up. With that, I
think people kind of understand it, so it's not anything that's really
precluding us from doing any business. But you do have to explain it to your
customers and let them understand that, hey, the price you got 90 days ago is
not the same price anymore. All of that stuff does play a part in the
day-to-day business, but as long as you're communicating with your customers,
you're good.

Adam: There's some major development
happening in your part of Wisconsin right now.

Jeff: There is.

Adam: I'm sure that's an exciting
thing for Crescent.

Jeff: It is, yeah. Foxconn is down in
Racine, and there's another large project that's going to be happening next
year. A lot of people tend to focus on that, but really there's a lot of other
business stemming from that — supporting business, infrastructure, new roads,
new everything. So it's booming right now down there. That's, in my opinion,
probably one of the reasons they decided to put a new facility in Racine — to
handle all that business. And it's been a good thing. We've gotten some chunks
of that big Foxconn business already, and I think it's only going to continue
to get better from here.

Quick-Fire Questions

Adam: Cool. A couple of rapid-fire
questions to end things here. You don't have to answer these, but I'll ask
anyway. Your favorite lighting design software?

Jeff: AGi32.

Adam: Maybe a market that you think is
undervalued, that you're surprised more people don't get into within the
lighting space?

Jeff: That one I'd have to take some
time and think about. The things for me — I like factories, I like designing
factories, warehousing, automotive lots. I like cars a lot, so I like doing
automotive work.

Adam: Well, maybe we can show you some
cool cars later. I really think I'd have to take some time and think about
that.

Jeff: Yeah.

Adam: It's almost like treating the
entire building project as a product, rather than going in and saying, “Here's
a 200-watt replacement for this HID wattage.” Think of the whole thing — the
electrical design, the lighting design, the ultimate LED fixture. It's more of
a solution-focused sale versus just purely —

Jeff: Well, you have to think of it
that way, because back in the old days when they were designing with metal
halide, they were designing with failures built into that design. So everything
was over-designed to account for that. Now people wonder, how can you get down
that low in wattage from where we were? Well, it's because we can design now —
we know we're not going to have failures, this fixture is going to last — so
you can design to spec without having to build in redundancy.

Adam: Yeah. Controls — when will they
be ready for primetime on the LED side?

Jeff: I would say they're ready right
now.

Adam: What applications do you see
where more than half of the jobs are controls enabled?

Jeff: I think controls are playing a
bigger part in everything — anything from daylight harvesting sensors to even
wireless. That's been something I've been using a lot, wireless controls, in
places like schools where they don't necessarily want to rewire. A lot of times
it's your block foundations and it's really hard to get — use the wireless
controls in there. That way, instead of dimming or having to wire switches to
do the dimming for an overhead, the teacher can configure her room however she
wants. You can put that anywhere, you can have one switch dim any fixtures you
want. So I think that's been a big thing for them, because the teacher then, if
they want to change around the room, doesn't have to rewire anything. They're
not stuck with the overhead being right here — they can move it anywhere they
want, just reconfigure that setup.

Adam: Do you or Crescent see
distribution providing that controls Geek Squad that's needed? It's one of the
things I think has been lacking up until this point. The controls technology is
there, but in the customer's mind, if there's an issue with one particular job,
they kind of become gun-shy to do more. Who do you see in the marketplace as
being that local support for control systems? Is it the contractor, the
distributor, the agent? Who is noticeable?

Jeff: I'd say it's a mix of both —
distributor and maybe the agent they're buying the product through. I think
both of those tend to go toward that. Agents obviously deal with that all day
long; they have a specialist that all they do is controls. So if it's something
I know really well, I'll help the customer with it. If it's something that I'm
not as sharp on, I'll bring in that controls expert.

Adam: Okay, that makes good sense.
Anything else you want to go through?

Jeff: You know, I'd like a tour of
this beautiful place out here so we can make that happen — that's probably the
biggest thing. I've been here for a while.

Adam: Well, cool, man. I very much
appreciate it. Thanks for braving the weather and getting up here. We'll
definitely have you back.

Jeff: Yep. I appreciate it.