Delta backs off homebuilder direct program

BY ROBERT P. MADER

Of CONTRACTOR’s staff

INDIANAPOLIS — Delta Faucet Co. has terminated its involvement in a pilot program to sell direct to a division of KB Home through Penske Logistics. Selling outside of the traditional twostep distribution channel, even as an experiment, did not sit well with members of the plumbing industry.

In an Aug. 1 letter to distribution partners, Delta Faucet announced that as an exclusive supplier to KB Home, the company has agreed to participate in a pilot program with the Inland Valley Division of KB Home in Southern California using Penske Logistics.

The letter explained, “Recently, KB entered into their own agreement with Penske Logistics to warehouse and supply a multitude of finished products that KB currently specifies. It is the goal of KB to purchase and move multiple manufacturers’ product lines through the Penske distribution network and they have requested that we supply Delta Faucets through the Penske warehouse.” The program was to begin on or about Sept. 1, 2007. Delta officially withdrew from the pilot program Aug. 13.

Selling direct was KB Home’s idea, not Delta’s, emphasized Paula Warner, corporate communications and public relations manager for Delta Faucet Co.

“It’s important to start by saying that Delta did not initiate the pilot program with KB Homes,” Warner said. “KB Homes has been a customer of Delta’s since 1995 and recently requested our participation in a small test pilot, a customer- driven pilot program where KB would be using Penske Logistics in a limited area in California.”

In advance, Delta notified its distribution partners via an official letter from Delta dated Aug. 1 and signed by Jon Dartt, vice president, sales. In the letter, Delta asked its distribution partners to share questions or feedback. Plumbing-Heating-Cooling Contractors – National Association reported that members reacted strongly on the online PHCCList e-mail discussion board.

Ron Capilla, president of Pleasanton, Calif.-based wholesaler Can-Am Plumbing wrote to Dartt in a letter dated Aug. 3, “It appears from reading your letter that Delta has lost focus on what your part in the distribution chain should be.”

Capilla pointed out that by selling direct through Penske Logistics, Delta had become a competitor to wholesalers and plumbing contractors.

“The Delta sales team spent time in the field listening to feedback from customers and contractors from across the country,” Warner said.

After considering the feedback and talking with KB Home, Delta notified its distribution partners on Aug. 13 that had it decided to with withdraw from the test. The response to Delta’s withdrawal was much more pleasant.

“As a plumbing contractor, I applaud Delta’s decision to not pursue the pilot program with Penske Logistics,” said Jo Rae Wagner, president of CTO Inc., Harlingen, Texas, and president of Plumbing-Heating-Cooling Contractors – National Association. “My company has been using Delta products for many years, and will continue to do so in the future. Sometimes, in the light of day, ideas that seemed reasonable are found to be not in the best interest of all concerned. They have always been an asset to our industry as well as a great partner.”