Distributors: A vital link in the propane industry chain

August 1, 2004 By    

There is uneasiness in the voices of many long-time propane industry distributors these days when they discuss their role as the link between equipment manufacturers and propane retailers.

More than ever, companies that have been among the staunchest supporters of the propane industry say they are getting squeezed out by price-cutting competitors who offer lower prices but virtually no customer service.

In an informal LP Gas survey of distributors this summer, vendors consistently expressed frustration over losing business to competitors who sell exclusively on bargain-basement pricing. Most all agree that many of today’s propane marketers don’t recognize or appreciate the time, effort and financial investment that their companies put into the industry beyond product sales.

“We spend so much time providing product safety education and training,
yet that seldom is recognized or taken into account when it comes time to purchase.
The big difference between us and someone who sells all kinds of merchandise
out of a catalog house is that when you go into a courtroom, you have someone
behind you because of the education and training that we have provided. You
have a well-known and respected distributor and manufacturer backing you up.
I think that partnership is more than dealers recognize,” says one distributor
who asked not to be identified.

“We also are the ones that invest money as sponsors for industry events,
pay full association membership dues at the national and state levels, and volunteer
our time serving on their boards. These price-cutters usually don’t do any of
those things. They’ve already learned its not worth it to spend the money. Some
of us feel we owe to the industry, but others see it as a good way to save money.
That’s how they can afford to chop their prices.”

If marketers continue to buy with the same “Wal-Mart” mentality that
they loathe from their own retail customers, distributors say it’s just a matter
of time before their financial support in the industry starts to fade.

The new chairman of the National Propane Gas Association’s Distributors Section,
Russ Ridings of Gas Equipment Co., acknowledges that part of the problem lies
with the distributors themselves for failing to utilize resources available
to them to voice their concerns and strategize solutions. The section meeting
held in June was the first one held in three years, and drew just a handful
of attendees.

Ridings says he plans to reach out to the estimated 40 distributor companies
to encourage their input and participation in mapping solutions to common problems.

“My goal as chairman is to get involvement from all of those distributors
who have not been involved,” he says.

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