CSUC’s corporate parts store could squeeze local vendors
A change to how Chico State University buys its supplies could cut into local retailers’ share of half-a-million dollars a year.
This week, the university began seeking bids from corporate industrial supply stores to sell parts and other goods to the school from a shop located in the campus maintenance and operations yard.
The likely applicants, given a deadline of April 1, are national, big-name vendors such as Grainger, Universal Supply and McMaster-Carr, one of whom is expected to contract with the university to lease the store and staff it with nonunion workers. The three university-employed stock clerks with the Central Supply Department would probably shift to warehouse work.
“It’s a big change for our department,” acknowledged Glennda Morse, the university’s director of facilities, management and services. For years, the university has had accounts with dozens of vendors for everything from toilet paper to tools. Now, Morse said, the university’s goal is to continue to include local vendors in the mix, but have an outside contractor handle the bulk of the most commonly needed maintenance, repair and operational (MRO) supplies and equipment.
Local merchants have begun to hear about the changes through customers and each other, and some of them aren’t happy.
Christine, a co-owner of Valley-Wide Fasteners in Chico who didn’t want to give her last name, said her 20-year-old company does $15,000 worth of business with Chico State annually, selling nuts, bolts and screws custom-packaged for the university’s needs.
She said that while a corporation may be able to charge less for parts, thanks to lower wages and benefits, the service wouldn’t be the same. “If you can’t do a part number or a specific name for what you want, you’re not going to get it [from a corporate store],” she said. “The guys coming to the counter rely on my knowledge. … I just don’t see [a corporation] working with them like a small business would.”
She also mentioned that Valley-Wide donates materials for several student projects at Chico State. “We do it because CSUC buys from us,” she said, adding that if her company is squeezed out, “All of that would stop. Let Grainger donate that.”
Marc Lucena, one of the owners of family-run Collier Hardware in downtown Chico, hadn’t heard of any changes to the university’s way of purchasing supplies. “They’re a good customer,” he offered, deferring comment until he learned more.
Two other business owners contacted by the News & Review had heard about the changes but chose not to comment.
Morse said the new approach will not cut out local mom-and-pop retailers altogether.
“If we still want to buy from a certain vendor downtown, we could still buy from them, they will just do it through the store,” she explained. The corporate vendor could purchase the items from the local retailer, presumably at a discount, and mark them back up to sell to Chico State.
“Our preference is to pay the same as we were before,” Morse said, acknowledging that that means the local vendors will be drawing less of a profit.
Morse said that while the corporate vendor could petition to sell the university comparable items to substitute for what it’s buying locally, “we’re basing the store right now on those things we’d normally buy from a Grainger or a McMaster anyway.” That’s about $90,000 worth of supplies a year, said Morse, who anticipates the corporate vendor’s take topping out at $100,000 a year–leaving $400,000 to be made by other vendors and through contracts negotiated at the state level.
She added that she was a little surprised to find several vendors, including Home Depot, express an interest in pursuing a contract that involves only around $90,000. The vendor would also pay to lease the building.
Morse said the changes will save money, but she’s not yet sure how much.
The Central Supply Department store as currently operated by the university keeps “a huge stock of materials” on hand, and of the $800,000 worth of materials stored there at any given time, $233,000 worth are not being used. “They’re getting old, they’re getting dusty and in some cases they’re going out of style,” Morse said. She said that rather than harbor the overstock, “We could pay for them as we used them.”
She said the university would also save money by reducing the number of times employees, including tradespeople working on a task, go off campus to pick up parts. Accounting, too, would be simpler.
In March, Morse and Central Supply manager Gary Vercruse plan to visit San Diego State University, where Grainger has operated a store since June 2005. Morse said mom-and-pop retailers in the much larger city of San Diego have not been adversely affected, even though, according to an SDSU Web site, Grainger supplies 75 percent of the maintenance items used on campus.
“It always has to be part of a state entity’s goal to save dollars,” Morse said. “But we’re also part of a community. It’ll be a balance.” Small, local retailers, she said, “have been wonderful” to the university.
The store on the Chico State campus would not offer items for sale to the general public, nor to faculty, staff or outside contractors working on jobs on campus, Morse said. Besides the university, the Associated Students businesses, campus housing and the University Farm could shop there. (At San Diego State, faculty and staff can shop for personal items at the Grainger store.)
“A lot of it is just the fear of the unknown,” Morse said of concerns about the university’s plans. “The people who don’t feel comfortable with it are the people who don’t have all the information.”