Keeping it Cool in the Arizona Sun

In the HVACR wholesale distribution business, Arizona is a hot market — and not only because the average July daily temperature in Phoenix is 105 degrees. As the state's population swelled from 2.7 million people in 1980 to 6.1 million in 2006, the HVACR market grew accordingly with just about every national and regional wholesale distributor flocking to the region and competing for the business of residential and commercial contractors and engineers.

While other distributors have come to Arizona seeking to stake a claim in the market, Phoenix Wholesale has been a steady presence in the state for nearly 30 years. The Phoenix-based HVACR distributor has nine locations Arizona. Together with its sister company, Canyon Pipe & Supply Inc., a plumbing distributor, the business is a well-regarded resource featuring an experienced and savvy staff that is known for taking care of customers.

Carl Formento started Phoenix Wholesale in 1981, while his son, Nick Formento Sr., established Canyon Pipe & Supply Inc. The two companies operated separately but were under the same roof — a 10,000-square-foot facility in Phoenix with no loading dock, recalls Nick Formento II, current president of Phoenix Wholesale and Canyon Pipe & Supply Inc. In 1983, the Formentos established NCI, which serves as the parent company for both the HVACR and plumbing divisions.

With roots firmly planted in Arizona, customers know they can count on Phoenix Wholesale as their HVACR wholesale supplier. "We have longevity here in this market," says Nick Formento II, who took over as president from his father in 2007. Customers appreciate knowing that they'll work with employees who both understand and appreciate them. The average tenure of a Phoenix Wholesale employee is 10 years. "In Arizona, that's a big deal," Nick Formento II says. "We've always been a company dedicated to service." Formento II recalls his father lugging copper tubing from their supply house to a contractor's job across the street because they didn't yet have a forklift. Dedication to customers began at the top.

Today, Phoenix Wholesale has grown from that small facility, occupying a 29,000-square- foot facility — with a loading dock — on three acres in Tempe, AZ. It operates nine locations with a mix of HVACR and plumbing that are spread throughout the state — from Flagstaff in the north to Tucson in the south. Because of the distance between branches, branch managers manage their inventories for their individual locations, relying on a transfer system for some of the other supplies that they may need for customers. A transfer truck makes deliveries weekly to branches to fill any shortages, Nick Formento II says. While the transfer system may not be perfect, it has proven over the years to be the most cost-effective method to serve customers, he adds.

The branches have the authority to order what they need, when they need it, which speaks to the independence they have and the trust that Phoenix Wholesale senior management places on their branch managers and staff. Nick Formento II joined the company in 1992 and has worked in every job throughout the company, including a stint as branch manager. He remembers what he liked about being a branch manager and what he didn't like. "I wasn’t micromanaged," and that, he says, allowed him the freedom to run the branch largely as he saw fit for that particular market. That empowerment made him a better leader.

"There's no forward thinking when you're micromanaged," he says.

"We are not a company that micromanages." Branch managers largely operate as entrepreneurs, responsible for inventory, turns, personnel and core customers in their markets. Nick Formento II says the branch managers are seasoned and understand the guiding philosophy that drives the business forward, and most worked for Carl Formento, who retired in 1992.

Left to right: Joe Marinez, Commercial HVAC Sales Manager; Nick Formento II, President; Vince Kovic, Residential Sales Manager; Mike Lengyel, General Manager; Ed Kondrat, Controller (kneeling)

At the Phoenix Wholesale headquarters, a senior management team helps guide the branches. The management team is a "very valuable part of our business," Nick Formento II says. Six members make up the management team — a representative group that comprises plumbing and HVACR, as well as the controller and general manager and president. "It's very representative with experience in all aspects of what we do," he says. "Their perspectives help to give our company a better idea of the needs of branches and customers and what we can do to improve our operations. It’s a very effective way to run and manage a wholesale company."

Nick Formento Sr. retired as president in 2007, but he remains as the company CEO and is actively involved in business reviews and quarterly meetings. Nick Formento II says his father's greatest role is serving as a mentor to himself and other members of the management team.