Johnstone Supply Muskegon Group

The Johnstone Supply National Story

The Johnstone Supply Story
Over six decades of growth and prosperity have positioned Johnstone Supply as one of the premier HVAC/R wholesale distribution companies in the United States. From its modest beginnings in a single 600 square foot store in 1953, Johnstone Supply has expanded to over 400 stores nationwide supported by 5 cutting-edge, computerized distribution centers.

Johnstone’s Roots
Established in 1953 by two gentlemen with the last names of Johnson and Stone, the original Johnstone Supply Company focused mainly on refrigeration, as Stone was a refrigeration contractor. Stone’s experience and Johnson’s capital investment had the company up and running, but not successfully.

Other business demands on the two partners consumed too much of their time. In addition to Stone’s contracting business, Johnson, a dentist, operated a dental practice.

It was at this time Johnstone Supply’s founder John Shank entered the picture. Shank evaluated the business and determined that a dedicated owner could turn the company into a viable and profitable concern. Shank purchased the business from Johnson and Stone for $19,000, and began his ascension into the upper ranks of the HVAC/R wholesale distribution industry.

Built on a Strong Merchandising Foundation
Shank knew that if he compiled a comprehensive listing of all the quality lines his company represented, customers would identify Johnstone Supply as a reliable source for almost any needed repair part. Shank’s marketing sense drove the rapid inception of the Johnstone Supply catalog. Originally a monthly mailer, the Johnstone Supply catalog evolved over the years into the most comprehensive parts and supplies catalog in the industry.

Today, the printed version, sent yearly to over a million Johnstone customers, contains more than 1,300 printed pages of products and product information. In early 2001, Johnstone introduced a state-of-the-art Internet based catalog, allowing Johnstone customers to view every product online and log electronic orders at their convenience, while still going through their trusted local store.

The Reinvention of a Company
Nearly three decades of growth saw the company transform itself from one lone store into a multi-state operation with a dozen company-owned stores and 20 franchises. At this high point in his long and successful career, John Shank began to contemplate retirement and decided to reevaluate his future personal and business plans.

Increased franchise reporting requirements and their resulting legal costs prompted him to bring a halt to the proliferation of the franchise stores. These costs also encouraged him to come to a unique decision: restructuring his company into a cooperative, where individual members shared ownership of the business. By the close of 1981, all 32 of Johnstone’s stores and franchises were on board and ownership transferred from Shank to the new co-op members. The membership organized a company management structure, basing the new company’s headquarters in Portland, Oregon. Johnstone headquarters’ staff would report to a seven position board of directors elected from co-op members and providing each individual member store with centralized merchandising, warehousing and financial reporting services in return for a membership fee. This centralization of resources continues to benefit members by eliminating wasteful duplication of standard store functions and substantially reducing the members’ operations costs.

The Changing of the Guard
By 1985, Shank was ready to step down from his position as Johnstone’s President, and he began to search for a suitable replacement to take the helm. He found this, and more, in Jerry Schultz, who had joined the company in 1978 from Pacific Supply, a co-op dealing in petroleum products, fertilizer and farm supplies. Shank felt Schultz’s background made him the logical choice to spearhead the growth and development of the newly formed cooperative. And, his faith in Schultz was well founded. Under Schultz’s direction, Johnstone Supply grew from 75 member stores in 1985 to 245 stores nationwide in 2000.

After 22 years at the helm, Jerry Schultz retired in August of 2000, and the Johnstone Board of Directors appointed new president. Today Dwight Wallace leads the co-op.

The Essence of the Co-op – Cooperation
Founded on mutual cooperation, Johnstone Supply saw no reason to exclude their business partners from this successful formula. A three-way partnership between Johnstone’s corporate management, member stores and the co-op’s suppliers provided a strong foundation for developing and distributing high-quality merchandising collateral. Johnstone’s suppliers share in the costs of producing yearly the most comprehensive catalog of repair parts in the HVAC/R industry, and the monthly production and distribution of advertising flyers that feature seasonal products and special sale items. This cost sharing reduces the cooperative’s out-of-pocket expenses, while the suppliers benefit from national advertising exposure through their inclusion in the publications