Robert Lopez and his team at Digital Control Systems (Miami) were responsible for the KMC system installation, which manages AHUs, FCUs, VAV boxes, and cooling towers at this historical building.

More than 100 years ago, John M. Neustadt started his own business on the west side of Chicago.  Markets were evolving rapidly and what started as selling hay, coal, and grain, turned to, exclusively, coal sales throughout the 1920s and 30s.  World events such as the Great Depression and World War II forced other market evolutions and the Neustadt Company evolved with them, becoming a heating system installer and fuel oil deliverer.  At its prime, Neustadt Fuel and Supply had a fleet of 10 oil delivery trucks servicing the west side of Chicago. By the 1960's natural gas was taking over more and more of the oil business as a cheaper, cleaner, and easier-to-get alternative.

That's when John's son, Howard, and his brothers had the foresight and courage to take a monumental, evolutionary step-forming Neuco Inc., a distributor of automatic controls.  The gamble has paid off many times over as Neuco has emerged as a world-class master distributor of control products.  
Howard has since passed away, but his descendents and extended family members continue to provide not only ownership but strategic direction for Neuco.  But here is also another key to understanding the passion for evolution that typifies the culture of Neuco.  One of Howard's sons, Paul Neustadt, serves as company President today.  "As we have grown," Paul says, "we knew we needed specialization of skills and improved processes.  And it became clear that, for such expertise, we needed to reach outside of the Neustadt family."  

Scott Kohler, Neuco Purchasing Manager, exemplifies this practice.  "Previously," he says, "the company had a few buyers.  Now we have a dedicated Purchasing Department and all of the professional practices that ensure we can offer the right products at the right prices to our customers."  Scott earned an accounting degree from the University of Illinois at Chicago and has a self-described "passion for numbers."

Paul, who earned his bachelor's degree at Northern Illinois University, has a self-described "passion for selling."  "I absolutely love the customer interactions," Paul explains.  In fact, Paul seeks regular opportunities to meet with his customers and with a company sales territory of the U.S. and Canada that can be challenging.  He routinely joins his sales team on customer visits and works the industry event circuit, manning the event booth with his cousin, Bill (CEO), in order to maintain the relationships that have become so important to Neuco business. 


"We know who we are and what we do.  But more importantly, we know who we are not and what we don't do," Paul explains.  "We won't sell what we don't understand, for example.  And, of course, we want to grow the company but we have to be smart about it.  For instance, we're a family company and have a family atmosphere," he continues.  "We want our customers to feel like part of our family as well.  Maintaining that kind of culture through growth is challenging and we make a very deliberate and conscious effort to maintain the values that have served us for 100 years.  We work hard at this."  

"There are some things we do," Paul continues, "that simply don't make financial sense in the short term.  And there are some things we do simply because they are the right things to do.  We are concerned with the bottom line, but in the long term."

That same kind of strategic approach and commitment to values helps Neuco evolve in other ways as well.  For instance, through the recent, Great Recession there were no reductions in workforce at Neuco or even any reductions in hours for any employees.  "However," Paul says, "we have had to re-purpose the workload for some employees, refocusing their efforts where it made sense to adapt.  But because we had meetings and explained these moves ahead of time, there has been a full level of acceptance.  I think it is a good illustration of the trust that exists within our company family."

Neuco is, in fact, a wholesaler to wholesalers, performing no direct-to-contractor sales.  In the world of HVACR distribution there are often references to the so-called A & B items or the high-volume, fast moving components.  All wholesalers serve their markets with these parts.  But what about the C & D items?  With today's inventory pressures, more and more wholesalers have cut their stock levels so low that they can't respond in timely fashion to contractor requests for the lower volume items such as control products.  That's where Neuco comes in.

"We plug holes," Paul Neustadt says.  "Our goal is to make our wholesale customers shine in the eyes of their contracting customers.  We do that through same day and next day delivery, even if it's for that odd, $500 component that is used once every two years in a specialty industrial application." 


Along these same lines, Neuco serves wholesalers who, due to low sales volumes for certain items, are not able to maintain direct relationships with manufacturing suppliers.  "We've seen a fair amount of this activity in the last couple of years," says Scott Kohler.  "Manufacturers are looking at their customer base and making management decisions about where it does not make sense to deal with a given wholesaler directly.  And that's fine as long as there is a company like Neuco to bridge the gap."

Paul notes that the inventory pressures affecting some wholesalers also have an impact on some manufacturers.  "Lead times have lengthened from many suppliers and, of course, this has dramatic ramifications in slowing down the supply chain.  I note, however," he continues, "that quality and lead times from KMC Controls are always very good.  I suspect that has something to do with your vertical integration and centralized location."

"By the same token, similar factors lead to our own success," Paul says. "We are in the middle both geographically and time zone wise.  We are not afraid of inventory.  (This is, after all, an inventory-driven business.)  And, we offer incredible breadth in our product line."

With just brief exposure to Neuco, it becomes apparent that not only these factors but passionate people with a passion to evolve have accounted for a century of success and will undoubtedly lead to continued distribution excellence in the years to come.