What are the obstacles in getting more distributors involved?
HL: The size of distributors is an issue along with language problems. Countries like Switzerland and Belgium have several official languages the association cannot afford to be multilingual. And multilingual means accommodating more than just three different languages.
MDM: What about Eastern European distributors’ involvement is this important to the organization?
HL: Every member is important especially membership in emerging markets. The current membership base needs to have access to the development in these countries. On the other hand I find it very important for distributors based in Eastern Europe to have access to the business knowledge of their western colleagues.
MDM: What are the key issues facing distributors in Europe? How do they vary by country?
HL: Generally, the opportunities and threats of this business include rapidly changing customer demands and multi-channeling everywhere in Europe. Differentiation is becoming more and more difficult. Product availability is leveled out whether your business is big or small. So are prices. Differentiation will be possible with service only. And everybody has to be aware that you cannot have cost and service leadership especially customers need to learn that.
HVACR Distributors Tap Into European Group
MDM recently visited the annual meeting of the European Power Transmission Distributors Association in Vienna. The group is formally affiliated with the U.S. PTDA. Founded in 1998, the EPTDA has 199 members, including 116 distributors, 74 manufacturers and nine associate members representing 25 countries, including Eastern Europe, North America and Asia.
Heinz Landhaeusser, managing director of distributor SourceLine Europa Holding GmbH, Germany, is one of the founding members. MDM found that though the European Union may have a common currency and open trade, distributors and manufacturers who want to cross borders face obstacles in language and culture. In this interview, Landhaeusser discusses the challenges of forming an association across borders when every country approaches business a little differently.
MDM: How did the idea for the EPTDA come about?
HL: As a member of PTDA we could see that an association led by distributors with manufacturers as allied members would help to build necessary trust. We saw PTDA (in the U.S.) as a unique networking platform for all members of the industry and thought that we had missed a similar opportunity in Europe.
MDM: Why did you feel the EPTDA was a necessary organization to start? What were your needs and what were the needs of other distributors in Europe?
HL: In the second half of the 90s the climate between manufacturers and distributors with the background of the coming common currency (the euro) became more and more frosty. At the same time the European structures in distribution started to change. Until then the main European markets had clear regional structures with authorized distributors selling one brand per product line and almost not used to “in-brand competition.”
Painting the issue in black and white, the distributors in the high-volume countries had been more like the extended arm of a manufacturer than a market and customer-driven sales organization. Now multi-branding and cross-border business have eroded margins and created a lot of negative discussions and mistrust between parties.
Price levels in Europe were different and the multinational manufacturer organizations caused a lot of fear amongst the local, regional or, in best case, national distributorships.
In those days there was limited communication between the distributors of different countries in Europe. Distributors felt that their weight against the big manufacturers was close to nothing and their voices unheard. So the needs were communication and forming a counterpart to balance the power between the two or at least to make it feel like that.
MDM: How could the EPTDA address these needs?
HL: EPTDA, copying the U.S. structure of PTDA as much as possible, rapidly became the needed platform for communication. Even though we needed to have a lawyer in the room during the business session of our first convention in Marbella.
MDM: What challenges did founding members face in starting this organization?
HL: Many. There was no back office, there was no common language, there was no common understanding on which country should be the one to register the association, and a lot of manufacturers saw such an association as a threat.
MDM: Are you pleased with the growth the organization has seen? What is the best way to get more distributors involved?
HL: Thanks to the growing number of manufacturer members the overall figures look quite impressive. The best way I see to attract and convince more distributors is to motivate and or give incentives to both manufacturer and distributor members to address colleagues they already have a personal relationship with and talk about the features and benefits of a membership.