Pacific Plumbing Supply Co. LLC - Background
Pacific Plumbing Supply Co. was founded in Seattle in 1949 by Maurice Sherman. Prior to this, Maurice had been an owner and manager for 30 years at Sherman Supply, another distribution business. Maurice had 2 sons, Ernest and Edward. Ernest, the eldest son, was 20 years old and a senior at the University of Washington when he dropped out of school in 1949 to quickly learn the business from his father. Suffering from a terminal illness, Maurice passed away after the new business had only been in operation for six months, and Ernest assumed control. The younger son, Edward, graduated from the University of Washington and in 1958 joined the firm in a management capacity at the age of 22. The company prospered over the years, and grew through the addition of several warehouse locations in western Washington.
In 1972, when the Boeing slowdown hurt the local economy, a decision was made to spread the company’s investment outside Washington, by expanding to first to Alaska and later to Hawaii (1978). The company’s growth continued, and the business now includes 3 separate divisions with 15 locations. The primary activity remains wholesale plumbing distribution, through 11 locations in Washington, 2 in Alaska, and 2 in Hawaii. The 2 Hawaii locations are operated through Hawaii Pacific Plumbing Supply Co. LLC, a separate company affiliated with Pacific through common ownership. The other two divisions consist of a master distribution division, “Master Source,” located in Kent, Washington, and a luxury retail store and showroom, “A Better Bath and Kitchen”, located in Bellevue, Washington.
The markets served by these 3 divisions are as follows. The Pacific warehouses provide materials (approximately 5,000 SKU’s at a typical branch) for single family, multi-family and commercial new construction applications, primarily through a plumbing sub-contractor customer base, as well as providing materials for the service and remodel market, through sales to service and remodel plumbing contractors. The company also sells materials to retailers, for resale at the consumer level.
The Master Source division caters to a slightly different market within the plumbing industry. As a master distributor, it offers selective and exclusive product lines, which are sold to other plumbing wholesalers, and to kitchen and bath retail dealers. Master Source currently serves customers in Washington, Oregon, Idaho, Alaska and Hawaii.
A Better Bath and Kitchen is a luxury retail-plumbing store, which sells to the general contractor, plumbing contractor, and to the end consumer. Located in Bellevue, it primarily serves the greater Seattle area.
While Pacific’s biggest competition is larger in total sales volume, largely due to national consolidation, the company dominates the western Washington markets in terms of the number of branches located in high growth areas, and competes effectively in Alaska and Hawaii as well. The company also belongs to a well-known plumbing industry buying group, “Embassy Group Ltd.” This group consists of approximately 60 of the top independent wholesale distributors across the U.S, whose purchasing volume is combined for rebate incentives. In addition, the company has been a partner with industry-leading American Standard for decades and is the primary distributor in this region with exclusive rights to sell their products.
An affiliated company, Penguin Plumbing & Electric Supply Co., Inc. operates a small chain of retail stores which sell to consumer do-it-your-selfer’s as well as contractors. The company, which is under common ownership with Pacific, began operations in 1964 and currently operates through 4 locations in eastern Washington and 1 location in central Nevada. Stores have generally been located in smaller communities that were poorly served, until recent years, by traditional retailers. Penguin inventories approximately 20,000 SKU’s, including plumbing, electrical, lighting and irrigation materials. About 80% of Penguin’s business is cash, with the balance on credit. Primary competition is from the Home Depot and Lowe’s warehouse chains, as well as Ace and True Value Hardware stores.
Another company affiliated with Pacific through common ownership is S&S Partners LLC. This company owns the land and buildings for several warehouse locations leased to and operated by Pacific and Penguin. The company also conducts other real estate and investment activities on behalf of the owners.
The Pacific, Hawaii, and S&S businesses were converted from partnerships to LLC’s in December 2002. Since its inception, Penguin has operated as a Washington corporation.