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At nearly 100 years old, Puget Sound Pipe & Supply is a fixture in the Pacific Northwest, one of the highly respected names in industrial PVF distribution and continues to be owned and led by members of the founding Stratiner family.
They have the benefit of the experience, long-time leadership and knowledge of President & CEO Gary Stratiner and CFO Steven Lewis, paired with the fresh perspectives and young-gun enthusiasm of their fourth-generation sons, Koltin, Matt and Kyle Stratiner, and Andy and Scott Lewis. All are committed to continuing the legacy of this venerable wholesaler, and exploring new potential avenues for growth.
The Wholesaler is delighted to honor Puget Sound Pipe & Supply as its PVF Hall of Fame inductee for 2015. I recently interviewed these gentlemen, and on the following pages share the story of the past, the present and what they look forward to as the future of Puget Sound.
MJM: You are going to be one an elite group of PVF wholesalers to reach 100 years old in 2017. Give our readers a little glimpse of the early days of Puget Sound Pipe & Supply — and your family’s involvement over the years.
Gary Stratiner: My grandfather, Ire Stratiner, was originally on his way to Alaska, but found a home here in Seattle and started his business buying and selling used pipe, valves and fittings.
My father, Phil Stratiner, had one older brother who unfortunately passed away at age 17. Phil attended the University of Washington and graduated in mechanical engineering just in time for World War II. He enlisted in Navy Officer Training and spent the last part of the war in the Pacific with the Seabees. When he returned home, Ire literally threw him the keys to the front door and told him the business was his. My grandfather passed away a few years later, and Phil continued to build the business up as a legitimate supplier of new PVF doing business mostly in the Puget Sound area. His main lines were US Steel, Jones & Laughlin Steel, Stockham, Ladish and Jenkins Valve and Milwaukee Marine Valves.
I only had one sibling, my older sister Jan. A few years after I came to work full time after graduating from the University of Washington Business School in 1973, we brought in Jan’s husband, Steve Lewis, to take over our accounting and finance responsibilities. He replaced a gentleman named Art Furtwangler who had been with my grandfather and — if I remember correctly — worked for us for close to 60 years.
Steve has been my partner from nearly the beginning. I might hold the title of President/CEO, but we are equal shareholders and have a policy that if either of us feels strongly about something, we find a way to get it done. Steve oversees the financial and computer aspects, and I oversee sales, purchasing and operations.
When I took on the role of President in 1973, we had one location in Seattle with 15 employees and annual sales of $4 to $5 million. Today, our 150 employees at 10 operations generate sales close to $100 million.
My father Phil is now 92 years old, and is Chairman of the Board.
MJM: Tell us a little about your dad and his way of doing business?
Gary: Phil was content to build his business regionally, concentrating on the very lucrative Pacific Northwest Marine Industry and doing most of the sales work himself. For years he only had one other outside salesman and one inside salesman besides himself. When I came to work full time in 1973, there were two outside and four inside sales people and two-thirds of all our sales were with Todd Shipyards, Lockheed Shipbuilding and Tacoma Boat. They were all building big Navy ships at the time and just that business alone kept them busy. He also had close relationships with the local mechanical contractors.
MJM: What are some of your favorite memories growing up in the business?
Gary: I could fill a book with memories from the business — after all, it has been my life for so many years. I learned the business as a young man from industry legends such as Hershel Seder of Milwaukee Valve, John Leone of Bonney Forge, Ceace Jones from J & L Steel and Don Ryan of Stockham Valve and Fitting. They all had close personal relationships with my father and whenever they would visit, they would make sure to give me a “lesson or two.” There were a dozen more at least who taught me a lot over the years.
And now, it is a pleasure to come to work every day and see the progress the boys are making. I probably shouldn’t say it, but they are capable today of running my end of the business by themselves — although I still remind them they need me around!
Koltin:I have grown up hearing so many great stories — things like the goats my Great-grandpa used to have out in the pipe yard to keep the grass “cut,” and the auctions for the surplus material after the wars when they started to dismantle the liberty ships.
I remember going to visit my dad for lunch at the old building in the SODO district of Seattle. My grandfather and father used to share a large office with a desk at either end of it. The employees who were there at the time — many of whom are still with us, or were with us when I started full time but have since retired — used to take us out in the warehouse and show us around.
MJM: Please share some of the key factors that helped you learn the business?
Matt: First, it was working in the warehouse a couple of weeks each summer growing up, learning the product. The second — and probably the most important — is to take advantage of the years and years of experience available to me in all of our employees. My first few years full time, I tried to soak in as much as possible, listening to my father, our managers and other employees who have probably forgotten more in their time than I have even learned. Third, it’s to sometimes just go for it. You can’t sit around and fret about what you are going to do all the time. Everyone makes mistakes, but we have always been taught that the important thing is to learn from those mistakes so as to not make them again in the future. I have had to be a little more political at times, rather than the very blunt person I am. Learning what my flaws are and trying to correct them have led to some great lessons for me, to say the least.
MJM: Talk about some of the lessons your dad has taught you both personally and professionally?
Koltin: My father has always expected as much of us — if not more — than he has expected from everyone else. He actually cut up my credit card in front of half the office once right after I had graduated from college — still a funny story to this day that he denies ever happened! He always expected my cousins, brothers and me to take responsibility for our actions. He told us that we are going to make mistakes, but that we needed to acknowledge them, learn from them, and make sure we did not make them a second time. It is impossible to learn, and to grow, without making mistakes, so it was always nice to know that it is OK to take a course of action even if it might be the wrong one.
That does not mean that he was not always there — as he still is — looking over our shoulder trying to keep us from making the mistakes he has made. We always hear from him, my uncle and my grandfather that there will be slow years, that we will have to work harder than anyone else in the company and stay ahead of issues or we will get caught up in it.
The other important lesson that my father — and for that matter Jerry Hendricks and Pat Manning — taught all of us, is the importance of relationships. We were taught that it is important that everyone always feel like they are working together, with everyone wining. As soon as someone isn’t able to make money off of the business relationship, if one side pushes too far, the whole structure will come down.
Matt: I totally agree. People will always buy from who they want to in the end. We work with some great people and companies across the U.S. and some other parts of the world. Without those relationships, we wouldn’t be able to do most of the things we have done and grow the business the way we have. I talk to vendors every day.
Not just about orders I have, or problems, or a question regarding a certain product, but also about what the market is doing and what they see for the coming months, and years. As we begin to go into new products, I rely on my vendors to speed along my education and help me better understand the ins and outs of what I am buying. We also rely on our relationships with our vendors in order to ensure that we have what we need when we need it. Problems are going to happen no matter what you try to do to avoid them, and its our relationships with our vendors that always allow us to get together to find solutions to those problems.
MJM: Give us an overhead view of Puget Sound today?
Gary: We have eight warehouses and two sales offices:
• Kent, Wash. — Located just south of Seattle, this serves as our Corporate Headquarters and main Distribution Center for all facilities. Manager is Dave Mahlum.
• Seattle — This facility is located within the McKinstry Co business complex and primarily serves their needs. McKinstry is one of the largest mechanical contractors on the West Coast and pioneered Design/Build/Maintain, and we have a just in time inventory on hand for their operations 24/7. Manager is Sean Nadeau.
• Kelso, Wash. — Services the Pulp and Paper industry and some very large contractors and fabricators in Southwest Washington. Manager is Rich Roberts.
• Vancouver, Wash. — Located just across the Columbia River from Portland, services southwestern Washington and all of our business in the State of Oregon. They also help manage most of our import pipe that comes into the Port of Vancouver. Manager is Eric Heilbrun.
• Burlington, Wash. — This is our newest branch, and is in the northern Puget Sound Region. They service all our business in that area including all of the Puget Sound refineries. Manager is Tim Chapman.
• Kennewick, Wash. — Services central and eastern Washington for us and is a combination of all our commercial/industrial business, ag business and government NQA-1 business out of the Hanford Nuclear Reservation. Manager is Mark Chindivat.
• Anchorage, Alaska — Traditionally, this location was 100% petrochemical, but in the last five years has slowly built up their commercial/industrial business as well. Manager overseeing all Alaska operations is Scott English.
• Kenai, Alaska — Services the Cook Inlet petrochemical business for us.
• Los Angeles sales office — Headed up by long-time employee Pat Manning .
• Houston sales office — Opened in 2014, it is led by long time industry salesman Minto Mann.
All of the Pacific Northwest locations and managers report to Executive VP Steve Weber, my right-hand man. The Alaska operations have always reported directly to myself, but in the last few years, my son Koltin has taken on that role.
MJM: Do you feel any pressure as the new generation carrying on the legacy at Puget Sound?
Andy: There is a lot of responsibility to carry on our 98-year legacy. With 150 employees counting on this company remaining successful, we have an obligation to carry on the same values and keep moving forward and growing. Moving forward into the future I am extremely grateful to have a great relationship with my cousins and brother and we share a vision on where we would like to see the company grow and how to get there together. I also feel a responsibility to keep the company for my two kids to become involved in if they choose to in the future
Matt: We all love what we do, and fortunately we all are pretty good at the parts of the business we have ended up in. It also helps that we usually all see pretty eye to eye on things, at least after a few minutes of discussions! We also have been very lucky to get great people around us, to help guide us in the direction we want to go in the future.
MJM: What do you feel have been some of your best accomplishments?
Gary: I try my best to let everyone do their jobs. We give all of our employees as much responsibility as possible. The saying around here is “We give everyone a lot of rope and you can either run with it or hang yourself.” I joke around and tell everyone I just try to stay out of their way, but they know I am around watching and helping out. I delegate well and keep my eye on as much as possible so I can help out by sharing my two cents when needed. Today’s electronic world makes that easy. I check all the sale orders and purchase orders placed the day before so I know what’s going on, but we have a very, very good group of managers and along with the boys, they are all very capable. I have been damn lucky to have been able to bring Steve Weber, Pat Manning and Jerry Hendriks into the company over the years. All three have been key contributors to our growth and I would not have been successful without them. Sometimes it pays to be lucky rather than good!
Matt: As much as knowing the product and being able to analyze what we need and when is essential to my job, managing and dealing with people is even more important. Talking with vendors every day to get the best prices, as well as finding out what is going on in the market place is very important, and often times I am the first point of contact for many of our vendors. In other cases, I am the one who has the relationships with the principles at may of our vendors, so when something needs to get run up the flag pole, that often is my responsibility.
When I started in the Purchasing Department in 2008, we were almost exclusively stocking and selling carbon steel. My first big project was to take the lead on stainless steel, learning that product from the ground up. Today 40% of our inventory is SS, and the fact that it was closer to .5% back when I started just shows how far we have come.
Since then, with the help of great salespeople and managers who have been able to sell the product, we now stock and sell copper tube and fittings, PVC fittings and pipe, stainless steel fittings, flanges pipe, and tube, as well as many other items that my father swore we would never go into. We tell people that the general rule is that we sell anything inside the walls, and even that is sometimes not where it ends.
MJM: I’m sure you’ve had numerous offers to acquire your company. Why did you decide to keep it family owned and led?
Gary: We get calls at least once a week, and some of the offers — if we even let it get that far — have been very generous. But the family has decided to leave that decision up to the next generation and they have emphatically told us they are not interested the few times we put something in front of them. My father let Steve and me have the opportunity to grow the business and as long as the boys want to do the same, we will give them the same opportunity.
MJM: Vendors play a key role in any distributor’s success. Talk about those long relationships you’ve had.
Gary: We wouldn’t be where we are today without the backing, support and protection of our key vendors, and every day we work to push more business their way. They know that we have a quality program that we believe is head and shoulders above everyone else in the distribution business, and we actually go to all of our vendor’s plants and facilities around the globe to help them with their quality process. We do everything in our power to make it a win, win situation with them. We have also helped bring some of those key vendors, such as Milwaukee Valve and Allied Group to our buying group (Affiliated Distributors), and I think they would all tell you it has been very worthwhile and profitable.
Add to that the fact that we have had close personal relationships with people like the Seder Family of Milwaukee Valve — Johnny was in my wedding — and the Leone Family of Bonney Forge, which over the years have made us feel like we are part of their family. Today the boys are adding to those relationships with key vendors such as the Lipps of Merit Brass, the Coulas family of Weldbend, the Brevis of OMB Valve, the Mosacks of Apollo, the Galperti family and many more.
MJM: Loyalty and relationships are also critical when it comes to customers. In such a competitive market, how do you manage those relationships?
Gary: Loyalty is a two-way street and we try to show that to each and every customer. I can’t speak for them, but I think the growth in our sales and ability to win and keep business is a good indication of our ability to get that point across.
Koltin: There are no words to describe how crucial those relationships are. I am constantly surprised to hear stories from some of our customers, especially at the EPC level, about when they first met my father or Pat Manning 25 years ago. It says a lot about our relationships with them that they still look to Puget for their material. At the same time, getting the opportunity to travel to our customer’s offices and meet the newer generation as well has been a lot of fun. I cannot wait to see where we all end up 20 years from now, but I can guarantee you it will be somewhere in the industry. We always joke that once we get into it, it is impossible to get out.
MJM: How have your customers’ expectations changed over the years, and how has Puget Sound adapted to those changing needs/wants?
Koltin: Even in the past six years since I have came on full time, our customers have started demanding more and more on the documentation side; including testing procedures, specification review (and everyone has their own specifications) along with drawings, MTRs, and testing results. As a result, we have had to continue to grow our quality department and put personnel in charge of what we call the “documentation packages” which usually have to be uploaded as well, and tracked with extreme care to make sure hold points are not skipped, or not released when allowed, during production of materials. Even on non-project work, we are starting to see more and more customers require MTRs with each shipment. Of course, everything in PSP’s warehouse that is a traceable item has an MTR in our database; so for us, it is not a large burden.
Matt: We also do shop work on pipe. Cutting, threading, beveling and grooving. Many of our customers rely on us doing this prep work for them so their guys in the field can concentrate on other things.
MJM: Do you engage in electronic commerce with your suppliers and/or customers? If so, how has that improved your processes?
Andy: We utilize EDI for some larger customers to bring contract price items into our system to be ordered. Our online MTR system and retrieval is another technology our customers are using in order to get electronic copies of their reports by sales order or PO #
MJM: What are some of the major projects you’ve been involved with?
Koltin: We have been working on the Bechtel National, Waste Treatment facility in Hanford, Washington since 2003, and still continue to supply them with NQA-1 and commercial material. They were our first major nuclear project, and the reason that we developed the nuclear program in 2003.
We recently received the valve contract as well for the Point Thomson project (Exxon) in Alaska. It was our first time working with OMB out of Italy on a major project, and has helped cement not only a working relationship with Exxon Mobile, but also created a very strong relationship between OMB and PSP. The valves that were created and supplied to this project were unbelievable, some of the most technically complicated large OD API 6A valves ever produced worldwide. The team effort between Exxon, Worley Parsons, Fluor, PSP and OMB employees that was required have made all of us stronger, and taught all of us lessons that we will incorporate into major project work in the future.
MJM: How have you cultivated a sense of passion among them?
Gary: It all starts with our employees. They are the best of the best. We treat them like part of the family and do all in our power to convey that to them. We have very little turnover in our management and sales staffs with many employees that have been with us over 30 years, some 40 years. It is very gratifying.
Koltin: We look at Puget as one large family, and I think the longevity of our employees is a testament to how strong that family is. Especially for my cousins, brothers and I, who have counted on these employees to train us over the years and teach us much of what we know today.
In addition, Scott English who is currently managing our Alaska operations does a great job. We will spend hours on the phone together some days, or other weeks barely talk, but the open lines of communication and my family’s ability to count on him in that market allows us to operate the way we do.
Matt: An amazing stat is that of the four guys pulling orders in the warehouse and the one person in working in our shop when I started here at 13, all of us are still with the company.
So many of our employees have been with us for so many years, that I have known them as long as long as I can remember, and many of them have watched my brothers and me grow up. We try and foster a close relationship with all of our employees, old or new, and we stress that we always have an open door policy. We want them all to know that they should feel comfortable coming to us with anything, whether it be business related or personal.
Ultimately, it is our employees that make us such a strong company. What’s that old idiom, a leader is only as strong as the people around him, and that isn’t more true than at Puget Sound Pipe & Supply. We have been extremely lucky over the years to have great managers who have had an eye for talent and have been able to foster and grow that talent into great individuals all across our company. They care about the company like they’re family; that’s what keeps customers coming back to us and makes employees stick around for years and years.
MJM: Talk about the flexibility a company like yours must have when dealing with fluctuating metals prices on materials?
Gary: It’s not easy. I watch the metal prices daily to gauge what our moves should be in regards to purchasing and pricing. I have CNBC on in my office pretty much all day every day — mostly on mute — so I can stay up on what is going on around the world that will affect our business. We are fortunate in that we can act and make decisions immediately, and not have to work it through a corporate hierarchy. Matt, our Corporate Purchasing Manager, has picked up on doing the same, so these decisions don’t have to rely solely on my observations.
Matt: Carbon steel has generally not had the volatility that other metals have had over the last few years. Although we all saw what happened when the carbon bubble burst back in 2007/2008. Lucky my dad had been telling us it was a bubble for a year and a half, so as the prices continued to skyrocket, we had been very conservative in what we had been buying. Cutting down on indent orders that don’t show up for three to five months and so lowering our exposure on pricing. Everyone lost money on high priced material that suddenly plummeted, but since we had only a small amount of material in stock at the highest prices, and nothing coming into the docks three to five months after the fact at those prices, we fared better than most. Stainless steel and copper have been much more volatile, and I have learned to check the price of copper and the price of nickel every day. We all want to buy at the lowest cost possible and not when it is super high, but it’s very hard to determine where those peaks and valleys are going to be. By looking at historical numbers, its possible to see what are very high prices and what are very low prices, so we try and load when it is low, but none of us have a crystal ball to tell us what pricing is going to do. As long as we are careful, and don’t place too many offshore orders when the pricing is very high, then we shouldn’t get hurt too bad. Copper is the trickiest by far, as it can be extremely volatile. Even harder for us is that our copper sales have grown exponentially over the past four years, so we never seem to have enough in stock. Since it all comes in very quickly we try and place more orders of a smaller quantity to ensure that we have the most accurate price available. Even if we don’t hit the troughs exactly, and as long as we don’t buy too much quantity at the peaks, everything has a tendency to average itself out in the end.
MJM: You’ve been very active with industry organizations. Give us a look at some that you belong to, and the volunteer leader roles you’ve taken on? Why has that been important to you?
Gary: You know I hate talking about myself. I am currently serving my second stint on the ASA IPD Board and help write the Carbon Steel Pipe report we publish quarterly. I also have served on a few different leadership positions with AD, including a Network Chairman, serving on the Product Committee and now on the PVF Board.
MJM: How has your membership in AD benefited your business?
Gary: It has been tremendous! Besides the financial contributions, I have met so many leaders from the best Independent PVF Distributors in the country. I’ve learned so much from leaders like Ernie Coutermarsh, Gary Cartwright, Dennis Niver, Jeffrey Beale, Gary Jackson, Pat Adams, Tim Arenberg. I could go on and on. And of course the fearless leader of AD, Bill Weisberg.
Matt: Firstly it allows us to get on the same playing field as the big boys, who buy way more material than we do. If not for the fact that we essentially buy as a group, there would be no reason for manufacturers and master distributors to give us the same prices, discounts and rebates they do the larger conglomerates. Secondly, it gives us the chance to meet with other independent distributors many of whom go through the same problems, dilemmas, and scenarios that we do. To have a group that we can run things by and learn what they have done or are doing in similar situations is priceless.
Kyle: As a youth and individual coming up in the business, AD has been extremely influential. These buying groups contain the best of the industry and if you take the time and listen you can learn an exponential amount from any single person you come across. I think groups like AD or ASA are essential in the education of the next generation because there really in no better way to learn the tools you’ll need to succeed in this industry.
MJM: Give us a look at the economy recently in the Pacific Northwest?
Gary: We have been very fortunate with corporate headquarters like Microsoft, Costco and Amazon along with large employers like Boeing calling this area home. They never went through a slowdown in 2008-2009 and are hiring and spending like crazy. I think we have something like 50 construction cranes dotting our skyline these days with more to come. It bodes well for business through 2016, and we will just have to see after that.
MJM: What are some of the things that you believe makes Puget Sound stand out in the marketplace?
Matt: The fact that we have been able to keep a very large quantity of material on the ground has been very important. I drive my Uncle Steve Lewis, our CFO, nuts sometimes when I place orders with quantities that look to be a year’s supply or more, but we have been lucky enough to have sales people who can push that product to the customers and bankers who haven’t cut us off! When all of the big names have to show ROI and cut inventory, we can show our customers that we aren’t going to do the same. So they rely on us to have the product on the ground when they need it.
Koltin: The quality of the product that we provide, and the level of service, are things that we take great pride in as a family. The options that people have about Puget Sound Pipe, also reflect their opinions of our family, which is something that the larger publically traded companies do not have to worry about. We spend a lot of our working capitol on our quality department. Close to 8% of our work force falls under the quality umbrella, and we physically travel around the world to not only conduct quality audits of our manufacturers, but follow up on production of large orders. Due to the pride we have in the quality of the products we provide, we only align ourselves with manufacturers who take the same pride in the quality of the products they produce. This understanding lends a lot of strength to the relationships between our customers and our vendors, due to the fact that our customers know that if we are recommending a new manufacturer that they are not familiar with, they know we have done our due diligence.
We also do everything in our power to make sure the correct material shows up where it is needed, with all of the documentation in order and the material being fit for immediate use. One of the reasons that our customers will count on Puget Sound Pipe, even if we are not the lowest bidder, is they have learned that they will save money on the backside by not having delays during fabrication and construction. Of course, no company is perfect, but it is how you handle those problems when they arise that counts the most.
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