Former Mays exec grows business of his own: Thompson gains notice in local construction industry

September 4, 2006

If it weren't for an article that appeared in The Wall Street Journal more than 20 years ago, John Thompson likely would have never come to Indianapolis and ultimately start his plumbing and electrical supply distributorships.

Thompson, 52, launched Thompson Distribution Co. Inc. in 2001 after purchasing the old Mutual Pipe & Supply company in the 2200 block of North College Avenue. Two years later, he founded First Electric Supply Co. Inc. at the same location.

Mutual brought in $1 million in revenue the year before Thompson bought the company. Today, Thompson's two new businesses account for annual revenue of $25 million and have 34 employees.

Thompson's long-term business plan is to expand First Electric's reach and grow it into a $100 million business by adding several locations. The supplier already sells products in several states. And in August, Thompson and partner Ed Droeger traveled to Florida to scout potential opportunities. They also have explored a few acquisitions.

"My vision is to do what we did at Mays Chemical," Thompson said. "We grew that from less than $10 million to over $200 million, and I think the same thing can be done in this industry."

Thompson spent 18 years at Indianapolis-based Mays Chemical Co. Inc., which he learned about from a 1983 article profiling the fast-growing business founded by black businessman William Mays.

The piece caught the attention of the Baltimore native, who earned a chemical engineering degree from Cornell University and an MBA from Columbia University. Thompson phoned Mays and arrived in February 1984, with some trepidation on Mays' part.

"I said, 'John, you have wonderful credentials, but I can't afford you,'" Mays recalled. "I mean, c'mon, he was in the top 10 percent at Columbia and an engineer out of the East Coast. But we hit it off very well, and I never knew what he was making."

Thompson, who had never been to Indiana, thought he might stay at most five years and then branch out on his own. His title of vice president in charge of marketing, sales, customer service and purchasing at Mays delayed his plans a bit. But in 2001, Mays gave him a six-figure severance package to soften the transition and wished Thompson well.

Foot in the door

He bought the assets of financially strapped Mutual Pipe in 2001 for roughly $300,000 and set out to sell plumbing supplies. Later believing that an electrical distributorship might prove more attractive, Thompson recruited Droeger to assist in the venture.

The two met in 2003 at a golf outing hosted by Ermco Inc., one of the city's largest electrical contractors. Droeger, 49, has extensive knowledge in the industry. The Indianapolis native who attended Ball State University started his career at Commonwealth Electric, the contractor for the failed Marble Hill nuclear power plant project near Madison.

He later worked as a salesman for Connecticut-based GE Supply and eventually landed at locally based Peerless Electric Supply Co., where he spent more than 20 years. Before the family-owned company sold to Illinois-based Crescent Electric Supply in 2004, Droeger sought Thompson to make a bid for the business. But confident they could start their own company with less money, they formed First Electric. Tony Frost, who came from Peerless as well, is a third partner.

Thompson set his sights on convincing large, name-brand lighting manufacturers such as Siemens and Lithonia to conduct business with his startup. The task proved difficult at times, as young ventures are more prone to failure. But First Electric now sells almost every line it went after, Thompson said.

Products from those corporations today are sold to large local electrical contractors such as Ermco and Gaylor Inc., among others.

"Some manufacturers were hesitant to supply through First Electric," said Greg Gossett, Ermco's vice president of corporate operations. "But we were honest and told them that if you're going to do business with us, you're going to do business with John Thompson."

Besides First Electric, Ermco mostly uses two other electrical suppliers, St. Louis-based Graybar and Pittsburgh-based WESCO International Inc. While the construction industry is very competitive, due to low margins, Graybar welcomed First Electric as a supply partner to Ermco, Gossett said.

What impressed Ermco about Thompson was that he understood the supply business and surrounded himself with people experienced in the electrical industry, Gossett said.

The fact First Electric is certified as a minority-owned enterprise, which helps it get contracts with corporations and government entities, helps, too. Thompson is apprehensive to use the designation as a crutch, however. He estimated one-third of the company's work results from the certification, but he's certain First Electric would receive the contracts even if they didn't require minority participation.

Reggie Henderson, executive director of the Indiana Business Diversity Council, which helps minorities get corporate contracts, said Thompson has placed himself in position to grow the company quickly.

"Although John's only had these companies for about five years, he has come very far and very fast as a result of his background," Henderson said. "He really came into the world of entrepreneurship with a lot of horsepower."

Becoming a player

First Electric has 56,000 square feet at its showroom and supply center on College Avenue and another 100,000 square feet of warehouse space near Interstate 70 and Keystone Avenue. The additional capacity allows the distributor access to supplies contractors need quickly.

Contractors don't want a lot of materials sitting on job sites for lengthy periods, Droeger said. So First Electric stores them for delivery when needed. Thompson credits the arrangement for building business.

Johnny Giannuzzi, chief vendor relations officer for Gaylor, said First Electric stocks all the conduit, wire, fixtures and switch gears his company needs.

"We use them because they have fair, competitive pricing, and they do deliver on time," Giannuzzi said. "They're definitely a growing company."

To be sure, folks are taking notice of Thompson's success. Last September, Mayor Bart Peterson appointed Thompson to the Indiana Stadium & Convention Building Authority, which is overseeing construction of Lucas Oil Stadium and the expansion of the Indiana Convention Center.

First Electric has a minor, second-tier contract to furnish $5,000 worth of distribution equipment for the stadium contract, according to building authority participation reports.

Thompson also serves as chairman of the Indianapolis Museum of Art's board of governors and helped direct the $220 million expansion that doubled the facility's size.

He is also a director on the board of the National Bank of Indianapolis, one of the city's largest locally owned banks.

Going forward, Thompson may combine the plumbing and electrical supply divisions into one entity to streamline operations. That's the way most of his competitors function, he said.

Either way, Thompson is upbeat about the prospects.

"In our case, [manufacturers] saw that we put together an organization that could grow their business," he said. "Because of our approach, we get a lot of work here."
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