Glen Burnie, Md.-based JJ Haines recently announced it has acquired fellow distributor CMH Space, based out of Wadesboro, N.C. Both companies serve the Mid-Atlantic and Southeast areas of the United States. With the move, the combined companies now boast sales of over $500 million, with 400 trucks/trailers, 28 branches, 10 warehouses and more than 750 employees. We spoke with Bruce Zwicker, Haines president and CEO, about plans for the integration of the two companies and what it means for their customers.
Q: First, how did this acquisition come about?
A: I have known the four primary owners of CMH for seven years. We’ve had ongoing relationships and talked about possibilities for a long time. In the last year everything came together. This was not a sudden decision – it’s a very amicable coming together of the two companies.
Hoy Lanning will become the president of CMH Space during integration. After that, he will stay on as an executive of Haines. The other owners will stay on through the integration period, which we’re planning to take nine months to complete.
Q: What were the reasons behind aligning the two companies?
A: The owners were looking to link up with a strategic player who was well-financed; someone who had a similar culture to theirs to take care of their customers and employees. It’s a really good match for those guys and for us. Between us we have 9,500 customers. The true number of customers might be higher, around 12,500 or so, but if you take the away the overlap we have 9,500 discrete customers.
The primary reason behind this is we looked at the customers, and we saw what we were going to be able to do by combining and improving our services. Dealers today want a lot of variety in products, and we’re going to be able to deliver that. After integration we’ll be able to deliver all of the products from both companies in one truck. It will be one phone call for one order, one receipt of goods, one invoice, one payment. It becomes far more efficient.
Also, from a financial standpoint, we wanted to be sure we’re securing the future for Haines shareholders. We’re buying a profitable company with a lot of market share. We’re increasing our scale, and scale becomes very important in this business. Floor covering is essentially a low-growth business. There are fewer independent dealers out there. We’re serving a market that’s not growing.
Q: Since there is so much overlap between the two companies, are there any plans to consolidate or streamline?
A: Their employees and our employees are more secure in their future since they are part of an enterprise with the scale to survive in the long-term. This is not the kind of acquisition where the only way to justify it is to slash and burn. We’re not in that position where we’re looking to lay people off. As for our warehouses, they’re already running at 80 to 90 percent capacity. We are looking for ways to expand, not consolidate.At the end of the integration, we’re going to be a multi-division company. We’re going to have an Armstrong division, which will be a dedicated sales force that sells nothing but Armstrong products. That’s unique – the first in the country.
Q: Can you tell us a little more about how this Armstrong division will work? Will it be made up of both Haines and CMH employees?
A: We’re saving a lot of these questions until after the integration. What I can say is Armstrong and Haines have had a relationship that is more than 100 years old. Haines is one of the first and last of the remaining 12 original distributors. We’re now of a scale where we can create this division. We have talked about this with Armstrong in the past, and the timing is right.
Q: Finally, are you planning on keeping the CMH Space name?
A: That’s another question we don’t have the answer to yet. To integrate, we need to get onto the same computer database. We can’t changes sales reps’ territories and can’t combine deliveries until that’s done. We want to take our time, do this at the right pace and thoroughly.
We’ll have to figure out the question of branding as we go along. Should the CMH name be retained as a brand, or have Haines the company with multiple brands underneath it? I can say the Allied Products name will stay. Installers are going to the same place and we want to keep them going to the same place. But as for CMH, that brand may stay or it may not. Right now, we are going to operate alongside each other as two separate companies, until integration is complete.