2011 Rep of the Year: Inter American Builders Agencies Co.
When Lester Toro Jr., CEO of Inter American Builders Agencies Co., asked me to visit his company in Carolina, Puerto Rico, on the outskirts of San Juan, to conduct this Rep of the Year interview, he had a specific reason. “We do things differently here,” he told me; he couldn’t explain it sufficiently over the phone.
So I made the journey to Puerto Rico to find out how this family-owned plumbing manufacturers representative agency was different than those here on the mainland.
Inter American’s story begins in 1949, when Lester Toro Jr.’s father Lester A. Toro-Lucchetti started his business selling furniture paint and related items from his home. He was successful for about 10 years as a one-man operation.
In the early 1960s, Toro Jr. joined his father and mother, Sylvia Carreras Toro, in the business. In order to grow the company, the Toro family decided to add plumbing material to its inventory. But they ran into difficulty from the start.
“The established wholesalers wouldn’t pay attention to us,” Toro Jr. explains. He notes many of those companies do not exist today because they had no succession plans.
At that time, most plumbing material in Puerto Rico was sold through nearly 1,000 small hardware stores on the island, largely because of Cuban wholesalers pushing product to these stores. So Inter American began a relationship with some of the hardware stores. “They needed plumbing material and we needed sales,” Toro Jr. says.
The company’s first consigned plumbing inventory was from Elkhart Products Corp. Adding more lines to Inter American’s inventory was difficult because of the island’s location as well as the language barrier. During the 1960s, manufacturers went through export agencies in New York to send product. It could take five to six days to reach Puerto Rico.
In order to increase its sales, Inter American needed more lines in its inventory. Toro-Lucchetti used the Thomas Register, which lists U.S. manufacturers, to research U.S. plumbing companies. He sent out nearly 1,000 letters to these companies requesting to represent their top lines in Puerto Rico.
Another avenue the Toros used to gain lines was networking at industry conventions in the United States. They made many industry friends who eventually gave Inter American their business - “handshake agreements,” Toro Jr. notes. In turn, these friends referred them to other manufacturers. And the company began to grow.
“If we didn’t have these friendships, we wouldn’t have some of the best lines in the industry,” Toro Jr. notes. “Our major asset is the lines we represent.”
Inter American has carried some lines for 30 to 40 years, such as Bradford White Corp., Elkhart, E.L. Mustee & Sons and Oatey Mfg. The company strives to represent the No. 1 or No. 2 lines in the plumbing market.
Today, Inter American Builders Agencies Co. is a full-service manufacturers rep agency with two locations (the other is located in Ponce, Puerto Rico) offering warehousing, delivery, sales and spec work to hardware stores as well as plumbing and industrial wholesaler distributors. It works as a hybrid agency on the island, selling retail and wholesale for many of its lines. And Inter American pays its sales force of about 12 to 14 people with a straight salary - no commission.
“What if something happens and they can’t work for awhile?” Toro Jr. asks. “With a salary, they can still get paid until they are able to return to work.” The company does provide incentives for those salespeople who exceed certain goals - between $500 and $1,200 per month.
The company’s territory includes Puerto Rico, the Dominican Republic and the Caribbean Islands. Office and warehouse space at the main office in Carolina stands at 60,000 square feet. Large orders are shipped from Miami in container loads, but as freight is a big factor, smaller orders are fulfilled through Inter American’s warehouse. Toro Jr. continually thinks of expansion, so he purchased more space to house the additional lines he intends to obtain.
During my visit, he told me he was searching on the Internet and happened across a shower door manufacturer located in Arizona he was unfamiliar with. He intended to email the company and inquire about repping the line in Puerto Rico.
The wholesale componentInter American President Ricardo Jimenez is married to Toro Jr.’s daughter, Maria M. Toro, who serves as the company’s controller. (His other daughter, Brenda, works in the medical field.) Vice President Enrique Del Cueto is Toro Jr.’s cousin. Lester A. Toro III, Toro Jr.’s son, is president of Ventor Corp., the commercial plumbing and industrial supply wholesale division of Inter American Builders Agencies.
Both Maria Toro and Lester Toro III started working for the company when they were in high school and learned the business from the ground up. They credit their father for being a good teacher and fully preparing them to take over the business when he retires (but he’s not ready yet, Toro Jr. says).
In 1983, Inter American started its own wholesale distribution arm - Ventor - to obtain the construction business it needed to continue growing.
“Some manufacturers who want to do business in Puerto Rico try to go through wholesale distributors,” Toro Jr. notes. “They should go through their manufacturer representatives to open up the market for them. Wholesalers can limit their sales volume.”
Commercial and goverment construction on the island consists of hotels, school renovations and hospitals. Ventor is currently working on three hospital projects.
“We have products for every stage of construction,” Toro III says.
The residential new construction market took a big hit in Puerto Rico, as it did on the mainland. However, the remodeling market on the island is growing quite well, prompting Ventor to improve its 2,500-square-foot showroom.
“The showroom was more commercial and industrial, but we changed it to capture the remodeling market,” Toro III explains. Plumbing manufacturers Moen and Mansfield Plumbing Products are featured in the front of the showroom, while “green” products by Zurn take center stage.
He says there is much more competition for jobs now than a few years ago. Before the recession, there may have been 10 contractors bidding for a job. Now, 80 contractors could be bidding on one job, including many large contracting firms looking for any type of work to survive.
Those contractors who worked only on residential new construction projects are not doing well. “Prices have gone down because of the increased competition,” Toro III says. He expects some contractors will go out of business before the recovery takes hold. One of his customers has moved into plumbing service, but most have not diversified.
Solar thermal for water heating is popular on the island, Jimenez says, and Inter American provides Bradford White tanks to OEM solar manufacturers. This could be a good opportunity for Puerto Rican plumbers to diversify their businesses into renewable energy, he notes.
Ventor fosters good relationships with its contractor customers. “We call on them, see what they need,” Toro III says. “We treat them like family - if you know them, it is easier to sell them on the products you represent.”
Price is an issue, especially during difficult times. But establishing relationships with contractors may get the company the job for a three- or four-point difference in price or even a second chance on a bid.
“Through Ventor, we can reach contractors, engineers and building owners,” Jimenez says. “We push product through and make it easier for contractors to get orders.”
Inter American and Ventor are involved in groups such as the Mechanical Contractors Association of America, Associated Builders and Contractors and the American Society of Plumbing Engineers to enhance their relationships with contractors and engineers.
Weathering the stormInter American and Ventor have weathered the recent recession well and have kept all 65 of their employees. Several cost-cutting measures were taken, Jimenez says, including adding skylights to the building for natural lighting (saving $3,000 in energy costs) and replacing all the lightbulbs with energy-efficient ones.
Other measures include cutting eight hours per month for each employee, working with less paper by scanning documents, reducing traveling expenses, and changing health care, building and general insurance. These changes have saved the company about $40,000 a year, Maria Toro says.
“We have a history of rejection and hard work,” Toro Jr. says. “Going through hard times teaches you not to spend so much money in the good times.”
Investing in technology also can help save money, as Jimenez has done in recent years. He came to Inter American from Citibank, where he dealt with advanced technology in the IT department. He brought that knowledge to Inter American and has been modernizing the company’s systems to streamline its procedures.
“When the sales team is on the road, they can take orders via their PDAs for all the lines we represent,” he says. “The order is sent electronically to the customer service representative. Once the order is approved, it is picked at the warehouse and shipped.”
Streamlining the order-taking process results in fewer errors so customers get what they ordered and delivered when they need it.
Service is job No. 1Providing exceptional service is a primary goal of Inter American and Ventor. The rep agency has two salespeople dedicated to calling on engineers. And the company’s two customer service reps - Brenda Rosa and Vivian Perez - work with contractors, hardware stores and direct customers to make sure their needs are met.
“The types of product we offer, the service we provide and how we treat our customers - this is what makes Inter American successful,” Perez says. And the teamwork she and Rosa find at the company helps them be successful in their jobs.
Carmen Juarbe handles logistics for the company, specifically dealing with product coming in from the mainland. Shipping plumbing equipment or large quantities of heavy product to Puerto Rico can incur large fees. Her job is to get manufacturers a good rate for shipping their products to Puerto Rico - container shiploads for Inter American and less-than-container-load shipments for Ventor Corp.
To further emphasize service to its customers, Ventor may provide product and technical training for contractors in the field or do the takeoffs for their jobs, Toro III explains.
“Being so far away from the mainland, we get less help from the factories,” Jimenez notes. “And because we are so small geographically [the maximum length of the main island is 100 miles and the maximum width is 35 miles], everything is close by. We’ve gotten used to doing everything. If you don’t work like that, you will lose a lot of jobs.”
And while Inter American Builders Agencies and Ventor Corp. look to the resurgence of new construction on the island next year, Toro Jr. is grateful for the past.
“I am grateful to the manufacturers in the States for allowing Inter American to sell their products in Puerto Rico,” he says. “Our friendships with people in the plumbing industry have contributed to our success.”