There are 415 employees scattered across five states at Mingledorff’s Inc., and every single one of them receives a note in the mail from Chairman Bud Mingledorff every year on their anniversary with the company. And it’s not just a pre-printed thank you card with a rubber stamp of Bud’s signature. It’s a hand-written note, in which Bud takes the time to say something personal and encouraging to each one — and to express his gratitude for their loyalty to Mingledorff’s and the difference they’ve made in helping the company grow.

“One of the things that has shaped our company is the value that we place on its employees — something that goes back to literally the formation of Mingledorff’s,” Bud shared. “Without our people, there is no company. Great leaders recognize the value of their employees. And they know that their words can either bring people down or build them up.

“You can make speeches all the time about how much you value your customers, but the real speeches you need to make are how you value your employees. The way you treat your employees will be reflected in the way they treat your customers. We are a company that values every employee. Leaders should fall in love with their employees, and make sure they know and understand their significance within the company, because ultimately people will behave as you treat them.”

And these efforts are truly treasured by Mingledorff’s employees. Bud tells the story of one who recently retired after 30 years. He had saved every card that Bud had ever sent him, and put them in a scrapbook to share with his grandchildren, because he wanted them to know he had made a difference.
And General Manager of the Gulf Coast Division Rick Center commented, “Some of the most meaningful things that have ever been said about me during my career have been said to me by Bud in those cards. They are very special to me.”

Encouraging Greatness

Cultivating an environment of empowerment starts at the beginning with the hiring process.

“We make good hiring decisions and then give our people the tools they need to excel in their roles,” President David Kesterton described. “Even if we have to search for a long time to find the right person to hire, it’s worth the wait. Then we lay out our expectations for them, and get out of the way. Our role is one of support to help them excel.

“Our people have created a family atmosphere here, thanks to many veteran employees who have been with us a long time. We encourage interaction between our employees so they can learn from each other. And we provide open communication from the top down. On the second Friday of the month, I do a live Internet broadcast at 9 a.m. to go through financials, year-to-date numbers, and share information from each of my reports on significant events or success stories that have occurred during the past four weeks. It gives everyone a real look inside the company and what is going on. The Internet broadcast is done live. Sometimes groups of employees will gather in a break room at a branch and watch together, others watch at their desks, and it is archived so if they’re not available at the time, they can watch it later at the office or at home.”

Each of Mingledorff’s stores operates rather autonomously and has its own personality. Typically the rule of thumb for store staffing is around one store employee per $1 million in annual sales. Most branches have two to three people working the counter, a manager, a truck driver and one or two warehouse staff. They are set up with high-volume parts & supplies, tools and popular items technicians need up front, with equipment and all other products stored in the warehouse.

“Our branches take great pride in the independence we give them,” noted General Manager of the Southeast Region Rob Massey. “I check in with them and am there to support them, but we give them the power to run their own businesses. It’s the same with our territory managers. They’re all very independent. It’s a more productive way for them to work; and they appreciate not having bosses looking over their shoulder.”

Rick echoed those thoughts: “They trust us, give us the power to make decisions and then back us up. They value our evaluation of what is needed in a situation. This philosophy ultimately enables us to better service our customers — and that empowerment goes all the way to lower levels of the company. It gives employees ownership and makes them feel that they have a valuable role within the company.”

There is also a great opportunity for growth within the company. Almost all of the company’s store managers are former counter salespeople, and some even started in the warehouse. They make a significant effort to promote from within.

75 and Counting

Celebrating its 75th anniversary this year, Mingledorff’s has experienced dramatic growth from its earliest days as a contractor in Savannah, to a $315-million regional wholesaler with headquarters in Norcross, Ga., and 33 branches over five divisions with locations in five states.

Bud believes that one of the key factors in the company’s consistent performance has been its ability to successfully pass its values on through a series of presidents over the years, from his father Walter Lee Mingledorff, to Ed Eckles, Bob Kesterton, Bud, and now David Kesterton. “We’ve never wavered,” Bud said. “We’ve all embraced our core values and kept those constant. Some things are worth preserving, and over the years, we’ve done a good job figuring out what to preserve and what to change.”

David Kesterton admits that even though he grew up admiring his father’s career at Mingledorff’s, working under his dad wasn’t exactly on his agenda. When he first started working there part-time at the age of 16, there were plenty of layers between the two of them. Gradually, working in various departments as a part-timer while he was going to college, he discovered he really liked the business. David joined Mingledorff’s full-time in 1984 after finishing college, starting in the commercial support group then outside sales for 8 years before becoming a Residential Sales Manager and then General Manager of the North Georgia Division. He has been president since 2008.

Since its founding, Mingledorff’s has been aligned with Carrier. It’s an extremely important relationship, as Mingledorff’s has an exclusive relationship with them in their trading area. But they also place a high regard on all of their 100+ manufacturers. “We are the ones who carry the mantle for them in our territory,” David explained. “So it’s important that we understand their concerns and business objectives, and vice versa. We have people knocking on our doors all the time, and we’re very selective of the products we sell. Once we do partner with a manufacturer, we feel responsible to deliver because they’ve put their trust in us. We are closely aligned with the management teams of all of our manufacturers. That is critical. Of course, we don’t always see eye to eye but ultimately we find a win-win solution that works for both of us. Stocking and selling complimentary products gives us the ability to offer one stop shopping in all of our distribution centers.

Operational Excellence

Over the years, Mingledorff’s has developed a reputation for top-notch service, and they’ve capitalized on that recently with a new tagline/brand promise of “Service. Solutions. Success.” As they describe it:

• Service is about their strong desire to serve customers, employees and the manufacturers they represent.

• Solutions represents the fact that Mingledorff’s prides themselves on being more than just a “box seller” — they have complete linecard of HVAC products to meet nearly every customer need. That breadth of product is supported by training and technical knowledge so Mingledorff’s is truly a partner in helping customers solve problems. As David described, “We don’t limit our solutions to technical HVAC problems. We are just as interested in offering business solutions, from marketing to sales to financials to operations. We have full-time retail sales trainer on staff, and we are the only distributor in the country with a wholly owned accounting firm that specializes in helping contractors maximize their profits.”

• All of that leads to the final point — Success. Mingledorff’s focus is on the success of its customers. The same mindset applies to their employees and vendors as well. “We want to create an environment where these key stakeholders can achieve their professional and personal goals,” Rick shared.

David emphasized, “It’s not just a tagline to us. It’s what our company is built around and the way we’ve been operating for as long as we remember. It’s part of our DNA to offer full service with solutions to meet all the needs of our customers. So our new tagline really communicates what we’re trying to do for our customers — and helps galvanize the message inside our company among both our veteran staff and new employees. If we can help them be successful, we’re going to be successful. It’s a domino effect.”

And Mingledorff’s goes to great lengths to ensure that customers keep coming back. In fact, many of their customers are multi-generational contractors that they’ve done business with 60+ years. In addition to tried-and-true service and product quality, Mingledorff’s has had a history over the years of coming up with a number of innovative programs that help customers be successful. As Rob described, “We are very genuine in our desire for our customers to be successful. So we’re always looking for new and innovative programs like this to help them operate more efficiently and profitably.”

These include:

• An industry leading e-commerce system that allows customers to browse, check inventory, get pricing, order, pay, retrieve proof of delivery, research invoices and much more. These tasks can all be performed on mobile device just as easily as a computer, making it easy for contractors on the go. This system is completely “homegrown” and always evolving based customers’ needs.

• Mingledorff’s partnered with a fledgling capital company to equip its residential contractor customers with no-credit-check financing. This valuable sales tool opened-up an entirely new segment of business and enabled Mingledorff’s customers to sell over 1,000 additional systems since its inception in 2013.

• Propose & Close is a web-based proposal generation tool provided by Enterprise Selling Solutions (ESS) of Jacksonville, FL. It allows contractors to professionally present homeowners with four profitable options in a matter of minutes. Tools like this have been around for a while, and other distributors have partnered with ESS for proposals. However, Mingledorff’s took theirs a step further by investing tens of thousands of dollars to integrate it in real-time with contractors’ pricing in their ERP system. Participating contractors never have to upload or update their equipment costs. “I know contractors who literally spend days uploading new costs and updating retail price books or proposal generation tools after a manufacturer’s price increase,” described Rick. “With Propose & Close, that problem is eliminated. A contractor can generate a fast, accurate proposal at any time and be confident that their margins are being preserved, independent of changes in products’ costs.”

• On the commercial side, Mingledorff’s has two wholly-owned subsidiaries which offer specialty products and services with complement their equipment offerings. Commercial Controls Group (CCG) is a full service HVAC controls contractor and reseller which they launched and built from the group up. In 1999, Mingledorff’s acquired Holden & Associates, a fan and air distribution rep agency. Having these companies allows Mingledorff’s commercial customers to have a single source for most, if not all, of the scope of an HVAC project, reducing the amount of coordination required by the contractor.

• Mingledorff’s also has a separate accounting division called Contractor Financial Services. It is led by CFO Danny Smith, who is also a CPA. Bud launched the program in 1997 by putting Danny on the road to help contractors take a hard look at their numbers and improve their profitability. Bud realized that most small companies can’t afford their own CFO, and that by providing this service, Mingledorff’s could help ensure greater profitability for customers — improving the opportunity for growth for both the contractors and for Mingledorff’s. And because Danny was previously a territory manager for the company for 20 years, he really understands a contractor’s business needs and the HVAC market.

Outside the Box

The Division General Managers all have dual roles – managing their geographic business unit, as well another area of expertise across the entire footprint of the company. Rick Center (Gulf Coast) is Director of Marketing. Jim Spenello (North Georgia) leads the company’s commercial efforts. Mike Harrison (Southwest Georgia) is Bryant Brand Manager. Bill Hallenberg (North Alabama) serves as ICP Brand Manager and drives the liquidation of obsolete equipment. Rob Massey (Southeast Georgia) handles pricing and provides guidance for inventory management. This accelerates teamwork and best practice sharing across the various business units.

As with many of his counterparts, Rob didn’t plan on ending up at Mingledorff’s. He graduated from Georgia Tech in 1986 with a degree in civil engineering and already had a job lined up with a firm in Savannah. But his father knew the manager of Mingledorff’s location in Savannah and arranged for me to meet with him. “I really did it on a whim,” Rob recalled. “We ended up sitting in a Hardee’s restaurant talking for three hours, and then I went to Atlanta to meet with Bud. I took the job that day, and it was one of the best things that’s ever happened to me. Honestly, I really didn’t know that much about the company when I took the job — and definitely wasn’t planning on going into sales — but I liked the way they talked about their customers and their people. It all sounded very rewarding. Needless to say, the civil engineering firm was shocked when I told them I had decided to go in another direction.”

So he came on board as an application engineer in the commercial department, before going for advanced training that led to a territory manager position, then general manager of the Southeast Division and now VP of the Company. He also has pricing responsibility company-wide.

“I do a lot of analysis, looking at suppliers and making sure we’re market competitive. Our Aftermarket Manager, Jeff Mingledorff, works with me, and he spends a lot of time negotiating with vendors on costs. I’m more involved in setting up customer pricing.

“Pricing is vitally important to the company’s profitability. It’s tricky in the wholesale business to stay competitive. Even small percentages of margins can make a big difference. So I spend a lot of time looking for opportunities where we may be able to tweak things even just a little bit. I think we’ve added a good point and a half over the past few years by being more strategic on our parts pricing and gross margins — and a little more aggressive in our purchasing thanks to our volume. That large footprint gives us more negotiation power.”

After a career that spanned the military, Procter & Gamble, General Electric and another HVAC distributor, Rick joined Mingledorff’s at the start of 2010 in conjunction with their acquisition of Equipment Sales Corporation. Rick shared, “It was really special how we found each other at just the right time. I was working for a different Carrier distributor in another part of the country, and I was traveling almost every week of the month. I was looking for a job that would afford me more nights at home with my family. At that same time, Mingledorff’s, a family company, was seeking someone to lead their new acquisition.” Rick was aware of Mingledorff’s from their strong reputation throughout the network of Carrier distributors. “I had always heard Mingledorff’s was a great company, but you really cannot appreciate how special the company is until you are part of it,” Rick said emphatically.

As part of his marketing responsibilities, Rick oversaw the 75th Anniversary Gala which Mingledorff’s hosted in Savannah last February. It was a very special event two years in the making. They chose to go back to their roots in Savannah, however as the number of guests kept rising, they almost outgrew their destination. In fact, three hotels were needed to house the 850 people who attended. (See The Wholesaler’s March issue, pages 228-230, for photo coverage of the event.)

The two-and-a-half-day event included a look back at the history of the company, a series of videos, thought-provoking keynote speakers, a “tailgate”-themed tradeshow with over 75 vendor booths and break-out sessions on new products, programs and sales tools. The culmination of the meeting was a celebration party which consisted of a cocktail reception, dinner, a performance by comedian James Gregory – The Funniest Man in America, a drawing for a brand new Ford F-150 XLT SuperCab truck, closing remarks by David and Bud, and it ended with music and dancing led by the band Sweetwater Junction. “We wanted to celebrate this milestone with the people who made it possible — our customers, vendors and employees. Also, we wanted to make sure there was a lot of value for them to attend, beyond just being a good time of celebration,” Rick explained. “Based on the surveys we conducted afterwards, we definitely delivered on that objective.”

The celebration was not limited to the 75th Anniversary Dealer Meeting. “One of the challenges in hosting a gala like we did with a company as big and spread out as we are is that inevitably many of our employees had to man the offices and they weren’t able to participate,” David explained. Mingledorff’s HR Director, Katie Perry spearheaded the plan for employee engagement in the 75th Anniversary milestone. “In the March employee broadcast following the meeting, I shared one of the videos produced for the meeting and announced that each store would receive a 75th Anniversary cake that day so they could have their own local celebration.” David also announced that each employee would receive a special ‘thank you’ gift from the company the following week. Employees were only expecting a 75th Anniversary golf shirt, and they were very pleasantly surprised to find a gift box which also included all kinds of goodies like an embossed leather portfolio, a portable phone recharger, soft-sided cooler bag, insulated tumblers and much more. This was yet another way Mingledorff’s demonstrated the value and gratitude they place upon employees.

There are more plans to keep the celebration going throughout the year. “To keep customers, vendors and employees engaged, we have been periodically posting the 75th Anniversary videos to our YouTube channel and Facebook page,” shared Rick. “Also, we also have plans to run 75th Anniversary-themed promotions throughout the year that will benefit both our customers and vendors.”

Back to the Future

The leadership at Mingledorff’s is extremely optimistic about the future. They are focused on continued growth, winning strategies and a solid succession plan.

“We’re looking strategically at how we want to grow, and we’ll continue to pursue that whether it’s through acquisitions, organic growth, DCs etc.,” David shared. “We have a lot of opportunities just within our current footprint, and we’ll approach them in a very systematic fashion.

“One of the things at the forefront of my responsibilities is to look at succession in all of our departments. We have bi-annual succession planning meetings where we examine the demographics in every department and see where we might have concerns two, five or even 10 years out. We also look closely to identify our managers of the future, and then nurture them through programs so that they can get more experience and are ready when their time comes.”

After spending virtually his entire career at the company – and leading it as President for 13 years — Bud Mingledorff has comfortably settled into his role as Chairman. He enjoys reflecting on its rich heritage, and the lessons learned from those who came before him (see sidebar).

“I listen to [business executive and former candidate for Republican presidential nomination] Herman Cain’s radio talk show almost every morning, and he always says that behind every successful business is someone who made a courageous decision that somehow defied logic.
“When my father started Mingledorff’s, he was all of 25 years old. Who thinks of starting a business from scratch with a product that wasn’t even known or proven? He installed the very first air conditioning unit in Savannah.

“Around that same time, he got together with his father and they bid on — and won — a contract to build a mine-sweeping ship! They knew nothing about shipbuilding. When I asked him what made them even think of doing such a thing, he just looked at me and said ‘We didn’t have a ship yard.’ After a year and a half, they had 100 employees. Hundreds of people came to the ship launching. The whole thing was a crapshoot that could have gone either way. But as my father told me, they hired people who knew what they didn’t.”

It’s been extremely rewarding to Bud to carry on that legacy begun by his father, and to have built the company into something that will last for future generations — “not just for my family, but for the well being of everyone who works here. Once you’ve got employees, there is a responsibility that comes. It’s not the most glamorous industry, but there is a sense of accomplishment in what we have built and the standard of living it’s provided our employees. Profits are the result of doing things right. But sometimes, you have to forego the profits to do the right things. We’ve also been lucky. We’ve been in the right industry at the right time. We kept our head low when the consolidation craze was going on and just kept doing our thing.”

Bud and his wife have two adult sons who are both beginning their careers at Mingledorff’s. Joe is a territory manager based out of Savannah, who was recently assigned a turnaround territory in Augusta. Jeff is the Aftermarket Manager for the company, also based in Savannah.

“Since the boys were children, we’ve guided them toward a bond that will go far beyond the business,” Bud shared. “Both of them graduated from Georgia Tech. It was a tough school and I’m proud of the route they chose and how hard they’re working — but I’m even more proud of their genuine relationship. When my oldest graduated from college, I put them in a car and gave them a list of distributors around the country to go visit. They spent months on the road together, which gave them a whole new perspective on wholesaling — and built a bond between them that will hopefully last the rest of their lives.

“They’re All-American boys, and one day they’ll do a fabulous job of running the company. When it’s time for David and I to pass the torch, we’ll have done our best to instill the values in the next generation so they will carry it on proudly.”