On Air: The Art of Industrial Real Estate — Episode 22
Host: All right, all right — welcome, listeners. We have with us folks from CFM Distributors here down in the West Bottoms today, episode 22 of On Air: The Art of Industrial Real Estate. Thanks for coming on with us — we have Lauren and Ryan.
Lauren / Ryan: Thanks for having us — excited to be here.
Host: Very cool building here in the West Bottoms, and we’re in your world-class training center. Excited to dive into things and hear more about CFM and your roles. Lauren, if you want to get us started.
Lauren: I’m Lauren Roberts, President, CEO, and Chairwoman of the Board here at CFM. I’ve worked here about 20 years, started as an accounting assistant, then moved to marketing, and worked my way up through leadership since 2012. We’re a 100% employee-owned company, which makes it even more fun to work here.
Ryan: Ryan Martin, CFO here at CFM Distributors. Coming up on four years now. My background is eclectic — art school, played music in bands, traveled a bit, then somehow got my CPA and spent about a decade in public practice. Been here almost four years, and it’s been a pleasure.
Host: It’s nice joining a company and getting to ride the coattails of the reputation a little.
Ryan: Absolutely — I walk into a room and I’m “the guy from CFM Distributors.”
Host: Lauren, you’re the fourth-generation leader of the company?
Lauren: Fourth leader — there was one outside our family who was one of the founders.
Host: Touching on CFM’s history — is this where you got started?
Lauren: CFM was founded in 1969 in Maryville, Kansas. When they were asked to become a stocking wholesale distributor rather than a manufacturer’s rep, they moved to the West Bottoms in 1974, to this building — our first and only location. In the late ’90s, leadership started adding branch locations throughout Kansas, Missouri, Nebraska, and Iowa.
Host: So in ’74 the founders bought this building — what was the West Bottoms like then?
Lauren: Still recovering from the 1951 flood — a much different landscape, lots of vacant buildings, though some businesses were around, like a little dive bar down the street that’s gone now. I’m not sure exactly when Kemper Arena was added, but it was a big fixture for years, with huge events, which kept the area going strong.
Host: Do you recall when the CFM label went up on the building?
Lauren: I wasn’t around for that — but it looks like it’s been there a long time.
Host: Being a KC lifer, I’ve driven by this building thousands of times. Do you remember coming out here as a kid?
Lauren: Yeah, a lot. My grandfather was a co-founder, and until about six years ago my dad worked here full-time — he was my predecessor as CEO. When he was a salesperson, I’d come to work with him on snow days or summer days. It was much different down here then — we’d even come during Halloween season for the haunted house in the neighborhood, and it wasn’t really a place you wanted to be after dark. The Historic West Bottoms Association has done a lot to bring in security and cleanup over the years. I enjoyed running around the building and causing a little trouble, trying to help wherever I could.
Host: Did you get overlap working with your dad before he retired?
Lauren: I even got to work with my grandfather, who was here part-time for the first few years. That’s special.
Host: Ryan, you’ve been here about four years — right around when the pandemic hit. Curious about the difference between fresh eyes versus growing up around the company, and the challenges and opportunities that came up.
Ryan: Coming in late 2020 was really the height of the pandemic. Right after I accepted the job, I heard a bunch of people had COVID, so I wasn’t sure if I’d be starting that day. It was such an interesting time to see the company handle a crisis — there’s no better way to figure out who people are, and who companies are, than during a crisis. Especially being employee-owned, seeing everybody come together was amazing.
Lauren: As Ryan touched on, it started in March 2020, and he was lucky not to be on our team yet — it was a lot for whatever team you were on across the world. We’d just seen a fairly lackluster Q1, then the pandemic hit, and nobody knew what was going to happen even in the next ten minutes. So we decided to tap into something CFM had done during hard times in the early ’80s oil crisis — we asked everybody if they wanted a 10% pay cut across the board, or a 10% layoff. In the early ’80s, when they did it, everybody agreed, even though the company wasn’t employee-owned yet, and by year’s end they’d recovered, reinstated pay, paid back lost wages, and even gave bonuses.
I tapped into that in 2020, went around talking to everybody at headquarters about the options, and everybody chose the 10% base pay cut. Within six weeks we got the PPP and EIDL loans and were able to reinstate pay and pay back what was lost — plus we gave a ton of bonuses to frontline people who kept operations running at all our locations while others worked remotely.
Host: That’s a special culture to be able to do that.
Lauren: It was instilled from the company’s inception — that’s a big part of why we’ve been able to stay a successful employee-owned company, because it’s not for everybody. Another fun thing during the pandemic — Ryan was part of this — for years we’d looked at changing operating systems, and finally got everybody on board. We paused when the pandemic hit, originally planning a December 2020 go-live, but held off given the uncertainty. Once things started looking like they’d go gangbusters, we proceeded with a go-live date of March 26, 2021. People from different departments worked on refining the project and picked the vendor together. A year after the pandemic started, we went live with a new operating system, warehouse management system, e-commerce site, online payment solution, and tax software — all five integrated in one day.
Host: Welcome to your first year, huh?
Ryan: I’d been here three or four months — it was a lot, but fun. Implementations, like COVID, are a great way to see who everybody is. There were definitely moments, but getting to where everybody could say “look what we’ve done” was amazing.
Host: I’d guess the new systems helped with the demand that followed.
Ryan: Definitely — especially the tight warehouse management system, knowing where everything is, what serial numbers are where, especially now with five satellite stores and an out-east distribution center. For me coming in fresh in 2020, full disclosure, I walked in thinking, “You distribute HVAC out of a 115-year-old, seven-story building with a basement?” But I’ve fallen in love with the building and all its nooks and crannies. Once you see the history, the people, and the customers — a buddy of mine who grew up in the industry talks about coming here as a kid, getting a hot dog, walking the shop — it’s been a fun journey from “are we insane” to “I get why this is such a special place.”
Host: That leads to my crack-it-open question — over your 20 years, I’m sure people have pitched CFM more efficient options than this building. What are the main reasons you’ve stayed and leaned into this historic property?
Lauren: We’re the only downtown wholesaler in our industry, so we’re well located for contractor customers. This building has also played a huge part in West Bottoms history, and with all the attention from the riverfront redevelopment project, it comes up more and more. This building’s been a shining star of the West Bottoms — well maintained and cleaned regularly, and having a thriving business here helps, since some neighboring buildings have had vacancies. We also did a SWOT analysis as a leadership team a couple years ago, and the building showed up in every quadrant — attractive to some, while others would prefer something more modern. Overall, more favorable opinions than unfavorable.
Host: And you’re using every floor?
Lauren: Yep, two freight elevators, and we’re strategic about inventory placement — faster-moving items on the first floor, like most wholesalers. The second floor, where we are now, is more training center and classroom space. Three and up has inventory on at least half the floor, especially before we moved to the off-site distribution center model. For years we used all seven floors with just two freight elevators because of that strategic positioning.
Host: I’m sure it hasn’t come without pain points when a 120-year-old elevator goes down.
Lauren: We’ve got a great elevator repair company right down the street, and they prioritize us.
Ryan: Even those elevators are just really cool — are they original freight elevators?
Lauren: Yeah, well maintained. I always point people to the inspection certificates.
Host: People get in and are like—
Lauren: And I say, no, we’re good, we’re good.
Host: Let’s touch on the training center we’re in — what makes it special to us as a value-added distributor?
Lauren: It’s not common for a distributor to offer this level of facility. Our industry, like other trades, faces massive shortages of trained technicians, and not many people think about trade school. That leaves it to contractors to build their own labs, which can cost hundreds of thousands of dollars. We figured this was another value-add — they save that expense, and we have very experienced, well-renowned trainers on staff. Unlike some competitors, our tech-service and training team doesn’t compete with our customers, so they trust us to truly train them hands-on.
Host: Good time for that, with college costs and trades getting more attention. Have you done recruiting in high schools?
Lauren: Multiple team members, including myself and Ryan, have done one-off career days and speeches at high schools and even elementary level, in underserved community areas — we could probably do more. We’re also involved with some local trade schools.
Ryan: There’s so much opportunity — the trades just aren’t as popular to get into right now, so it’s about building interest generally, but also encouraging more diversity, including people of color and folks from marginalized communities. It’ll be fun to see the future.
Host: No doubt. Switching to employee ownership — when did the company decide to go that route, and how does it separate you from the competition?
Lauren: We became partially employee-owned in 2002, when one of the founders wanted an exit strategy. Given the mentality from the early-’80s rally and years of involving everybody in key decisions — even though my grandfather and co-founder Bruce Huffman owned it — it made sense to keep sharing the wealth and decision-making. My dad became majority owner, with the ESOP at about 30%, and over time he sold more shares to the ESOP as more people joined and became owners. In 2012 we became 100% employee-owned — another natural progression after years of teaching people about the benefits of employee ownership.
Some companies say they’re employee-owned but the leader actually holds the majority — that’s not the case here. I own about 2% as leader, and plenty of people at all levels own more than I do. That empowers people to act like owners. We also have policies like our “Thousand Rule” — any employee, from day one, can make a decision on the spot. Say a product ships wrong and a customer’s stuck on a hot job site — our person can get a replacement on a flatbed, get it out, cover the cost, no supervisor approval needed, turning a bad day into a good one instantly. Our competitors are often private-equity owned or large corporations without that frontline empowerment — it might take three weeks to resolve something, and by then the customer’s mad. That rule is one of the biggest ways we empower our people to do right by the customer.
Host: I’d imagine you have a lot of tenured employees.
Lauren: We do. I’m a millennial, so I can say this — millennials were supposed to be job-hoppers. We have a significant number of employees who’ve worked here 10+ years. Another unique thing: we only have one competitor in our territory who’s 100% employee-owned.
Host: That really sets you apart. We’re short on time, but speaking of the pandemic and how things have changed — 2024’s been a slower year for a lot of folks. What’s your vision for the short and long term?
Lauren: Our industry’s facing a huge product transition with refrigerants — a massive, EPA-driven undertaking most of us haven’t been through at this scale in our whole careers. Everyone’s transitioning at different times, and we’re doing a ton of training with contractors to prepare them — some refrigerants are mildly flammable, so brazing and installation methods have to change. That’s a big focus this year. Another is technology — we’re launching a companywide CRM for the first time, a little behind the times but excited about it. We’ve launched analytical tools for easier reporting, and we’ve got AI coming in different ways, plus automation in accounting and inventory management already. Long term, we’re looking forward to staying in the West Bottoms and seeing how the new development pans out.
Host: Any plans to stretch into other Midwest markets?
Lauren: We’re open to opportunities, though nothing’s on the doorstep right now.
Ryan: That’s the great thing about a well-run, debt-free ESOP company — nothing on the horizon, but we can stay nimble. If the world goes nuts like in 2020, we can put $10 million into inventory and get an extra 50,000-square-foot location to store it, and if M&A opportunities come up, we can go into them on our own terms. I stress at every company meeting how fun it is to be part of a company that plays the long game and cares about financial health. With interest rates up this year and more replace-vs-repair decisions happening, it’s about setting ourselves up so that when the playing field opens back up, we’re ready.
Host: Sounds like CFM’s in good hands to weather any storms, like it has for decades.
Lauren: We have some amazing people.
Host: Anything else before we wrap up — any way for listeners to reach out?
Lauren: If you want to be a future employee, we’d love inquiries about opportunities. And if you need a trusted heating and cooling contractor, go to midwestairpros.com — our list of quality dealers in the territory. We don’t sell to just any dealer, and we’re proud of that.
Host: MidwestAirPros.com — awesome. Really appreciate you both coming on today, enjoyed being in this historic building. Until next time — I don’t think CFM’s logo is going anywhere. Maybe we’ll do another episode once the West Bottoms development is all built out.
Lauren / Ryan: That’d be great.
Host: Thanks again for coming on — listeners, give us a follow on Spotify, Apple, and YouTube. Appreciate it.
Lauren / Ryan: Thank you both so much.
