Three Generations, One Focus: “Customers First”

Wholesale distributor

has been expanding in many ways. Founded in 1935 to serve the heating oil industry, it expanded into propane appliances and equipment in 2005 and is continuing to grow that part of the business. Based in Glen Burnie, Md., the company has been adding locations across the country and opened distribution centers in California and Arizona within the past year. And, a family-owned and-operated company, it passed leadership to a third-generation president nine months ago.

Through these expansions and other moves, the company has maintained a focus on customer service. Company executives say that is what has allowed it to keep growing for 84 years and to successfully transition to a third generation of leadership.

“As times change, the demands have also changed, but the guiding principles of customers first and having what they need, when they need it, all at a fair price has stayed in place,” says Ray Kazakewich, national LPG manager at R.E. Michel Co.

The 84-year-old company was founded in Baltimore as a supplier to the home heating oil burner industry. Since then, R.E. Michel Co. has grown to be one of the nation’s leading wholesale distributors of heating, ventilation, air conditioning, and refrigeration (HVACR) and propane equipment, parts, and supplies. It now has 290 sales locations in 33 states providing products to professional contractors.

All of these locations offer HVACR products and a growing number of them also offer propane products. Seventy locations currently do, and the company plans to add propane products to all locations. In addition, R.E. Michel Co. has an affiliate, Dealers LP Equipment Co. (DLPE), dedicated solely to the wholesale distribution of gas equipment. DLPE serves 20 states in the South and Midwest. It distributes propane appliances like water heaters, gas grills, and hearth products as well as propane equipment like regulators, pipes, and tanks.

“We acquired Dealers LP Equipment in 2005 because we wanted to get into the propane industry,” Kazakewich says. “Many of our traditional oil customers had started propane divisions of their own companies, so it was a natural progression for us to follow them.”

Kazakewich joined R.E. Michel Co. as national LPG manager last fall. He grew up in the propane industry, in a family-owned business. He then was with RegO for 20 years in a variety of positions, most recently as global product manager.

“With the help of the great customers and employees at Dealers LP Equipment, we find ourselves within striking distance of $1 billion in sales,” he says of R.E. Michel Co.

The company locations have been adding propane products as the local customer base demands it; if customers in that area are purchasing propane products, the branch adds them. To make sure each branch has the knowledge base it needs, it hires experienced propane people, looks for current employees who have worked in the propane industry, and trains everyone up for the new skills required by propane products.

“Expanding rapidly into propane has been a major focus since we acquired Dealers LP Equipment in 2005,” says Gene Winters, vice president of operations. “Propane is the future.”

To keep growing and serving customers, R.E. Michel Co. has increased its depth of inventory. The company also keeps these products close to customers, delivers them, and makes information about them readily accessible via printed catalogs and an app.

The depth and breadth of inventory are evident in its current catalog that offers access to 20,000 catalog line items. To handle these products, R.E. Michel Company has a 1.2 million sq.-ft. distribution center in Maryland.

Dealers LP Equipment has its own full-line catalog and offers more than 11,000 LP catalog items. Its branch inventories are catered to local customers’ needs. DLPE has seven warehouses and call centers. The newest, in Pomona, Calif., opened in 2017. DLPE represents the core of the corporation’s propane business, with next-day shipping to 27 states. It has a key focus on introducing the latest technology to the market through key supplier partnerships.

“On both the propane and the HVACR sides, manufacturer lead times are being stretched,” Winters says. “A distributor needs deep pockets in order to stock the products and have them on hand when the customer needs it. We do and we focus on servicing the customer.”

To stock these products where the customers are, the company has been adding locations. Over the past year, R.E. Michel Co. has opened eight new branches. These include Muscle Shoals, Ala.; Gilbert and Phoenix, Ariz.; Pomona, Calif.; Cape Coral and Jupiter, Fla.; and Lewisburg and New Freedom, Pa.

“We’ve put the product closer to the customer,” Winters says. “We also allow them to buy one piece at a time, rather than a caseload.” “Our westward expansion has presented the biggest challenge, because of the logistics involved with trying to serve such a large area,” Kazakewich adds. “We have had to add distribution centers in Arizona and California to support sales and growth in those areas.”

The company also delivers. Rather than shipping the products via mail order, it has purchased delivery trucks and offers localized delivery. “One thing we are trying in three markets is, we bought trucks with cranes and we will deliver a tank to a customer’s jobsite overnight,” Winters explains.

“It used to be you would order a whole truckload of tanks, which was a cash burden,” Kazakewich adds. “We now offer one tank at a time, delivered to a jobsite. That’s a new way of doing things in propane; it’s already done in the oil business.”

To make information about the products readily accessible, the company offers an R.E. Michel Co. app and it plans to add a Dealers LP Equipment app in about three months. Like the current app, the new one will allow customers to pull up the full catalog, company locations, inventory, price, and technical data. “It’s another way we add value,” says Alex Beecher, corporate director of marketing.

The company also releases print catalogs annually. It offers an R.E. Michel Co. catalog that is HVACR only and a Dealers LP Equipment one that is propane only. It also offers Spanish language versions.

“We try to bring a lot of value to customers,” Winters says. “That includes the printed catalogs, the app, free delivery, technical training… We have identified 50 or 60 things we do to add value to the sale. We call it the Circle of Value. That includes, No. 1, putting the customer first and, No. 2, bringing value.”

One thing that has kept the Circle of Value at the forefront of the company’s activities is the continuity of leadership. Three generations of one family have led R.E. Michel Co. The family-owned and -operated company was founded by Robert E. Michel in 1935. It grew from 100 locations to nearly 300 under the leadership of Doc Michel (Robert’s son). It is now focused on further growth with current president Robert (“Bobby”) Michel (Doc’s son).

Today, former president Doc Michel is chairman. Beau Michel (Doc’s nephew, Bobby’s cousin) is purchasing director. J.B. Bailey (Doc’s nephew, Bobby’s cousin) is purchasing agent.

“Because of the natural progression of the family members through the business, we have been able to not lose touch as our customer base continues to evolve; I think that is something that some companies can struggle with,” Kazakewich says.

Another advantage to being a family business, he adds, is that a privately held company can move quickly. “We can spot an opportunity in the morning, get a plan in place, and begin working on it all in the same day. Speed is king.”

Bobby Michel began his career with the company in 1997, working in the warehouse. As he attended college, he continued working in the organization part-time. He returned full time in 2001, working in purchasing, and has been on board ever since. Before becoming president, he took on more and more responsibility. He met weekly with company executives and he was in all major meetings as decisions were being made.

“Doc has laid the groundwork for growth and Bobby is continuing that,” Winters says. “Founder R.E. Michel studied law, but found distribution more rewarding. He instilled in Doc a passion for servicing customers, and Doc handed that down to Bobby and 2200 employees. The customer has a choice of who to do business with, and we want to make it easy to do business with us.”

“The golden rule here is that an employee will never get in trouble with the ownership if they do something to service the customer—even if it costs the company money,” he adds. “We are in it for the long run.” — Steve Relyea

(©Butane-Propane News, June 2019)