Galled back to the fold

IfPV Butr-orrc Suppr-y has been lloperating in Hawaii since 192 l. when it started as Hawaii Planing Mill, focused on re-sawing lumber from the mainland amid the palms and sun of Paradise. At least, that's how tourists, in their leis and aloha shirts, view this ocean-bound outpost of the U.S.A. If you're thinking of running a business here, however, take off those rose-colored sunglasses for a squint behind the sand and surf.

"It's a heavy financial burden to run a large-product-based business 2900 miles from their source," testifies Jason Fujimoto, senior v.p. and c.o.o. of the company founded by his forbears five generations back. "There are logistical complexities to being located in the middle of the Pacific Ocean. Shipping adds 307o to 407o to the cost of materials" for the company's full-service yards.

And no such thing as just in timethink six to eight weeks out for delivery of those 2x4s you can never, ever be without. Oh, and there's that rainforest climate to deal with: mold and mildew, to say nothing of the two devastating tsunamis that leveled the company in the past (and the takeover by the U.S. military during World War II.) Plus. no built-in labor force. "It's very hard to find good employees with the limited population base," Jason acknowledges.

Then he asks me: "Ever hear of bonding?" He doesn't mean kumbaya around the campfire. He's referring to the challenging, only-in-Hawaii phenomenon which dictates, he explains, that all houses must offer bond-a guarantee to the bank-that they'll be completed to spec, as insurance for a loan. "It's a little wrinkle here in Hawaii that can be a huge risk component. So, we work with banks to qualify our contractors: estimate. quote. schedule, change orders. We act as their administrative support. And

HPM's process, compared with that of other players, is the most streamlined and customer-friendly"-a huge plus in doing business.

"Also"-as if he needed yet another challenge-"each of the islands is its own entity," meaning added transportation costs between HPM's locations, and no quick subbing for each other if anything's out of stock. Since a store must maintain at least a month's supply of product on hand, factor in a fee for inventory storage"much higher than on the mainland."

So then, what the heck is Jason doing in Hawaii, anyway?-a young man with a degree in corporate finance and strategic management from the famed Wharton School of Business at the U of Pennsylvania, who worked as an investment banker for J.P. Morgan in Manhattan.

It isn't guilt. Nor is it family pressure. "I grew up immersed in everything HPM, exposed to many different family stories. But there was never an expectation as to performance. no pressure. It was just that, at some point, I wanted something different from the Wall Street world-something entrepreneurial, more fulfilling. So in 2004, I decided to come back for one year. I wrote a contract with my father to help HPM improve its business-process mapping. I started with the purchasing group, the supply chain, and helped build a whole new model that would provide visibility so we could plan prices ahead. At 2,000 miles from the source, you deal with lead time. So I helped build a software program to streamline the process." understand what goes on day to day. I explain the direction the company is taking, why we do things, and how it contributes to the bottom line. Because the company is an ESOP, it drives the message home-that our longtime success hinges on our employees."

Well, 2004 went away 10 years ago, but Jason didn't. Despite his "one year and out" mandate, he got hooked, that's all there's to it. He made himself instrumental in developing new product offerings, such as steel framing components, concrete accessories, and asphalt shingles, to complement HPM's manufacturing operations that include metal roofing, trusses, wall panels, and door-hanging plants. He re-thought the existing door operation to cut shipping costs. "Instead of bringing them in complete, we bring in raw slabs, which stack up easier to fill a [ship] container." And now, concrete? "This way, we can get in the door with foundations, too. We had the opportunity of hiring a very, very strong salesperson who proposed a business plan to build the category. We looked at the numbers and went ahead. And we've had very nice growth from it."

That employee count fluctuated during the Great Recession, which hit Hawaii especially hard. HPM employed a staff of 400 in 2006, but winnowed to a current 26O to ride out the storm. "We reduced the workforce, especially in the manufacturing area. But also, we used the recession as an opportunity to expand geographically. In 2009, we greenfielded it on Oahu, when the price became very affordable, and in 2011 acquired a yard in Kauai."

And sales, which had taken a hit, bounced back nicely. Very nicely. In 2006, HPM boasted $131 million in revenue; the number fell to $60 million in 2010. But for the past three years, it's experienced double-digit growth, and in 2Ol3 was up l'77o over the (very good) year before.

No accident. Jason pushed the pedal to the metal. "I initiated my succession plan. My father [HPM's c.e.o.] supported me in building my own team. My dad's executive management team was maxing out. I had the opportunity"-thank you, recession-"to bring in people from the states: from Parr, from Stock. I looked for hires who were in line with our values-honesty, service."

Plus, with the panels, doors, trusses and roofing, HPM now offers one-stop shopping for building a home.

Actually, HPM has been in the one-stop trade for decades. Twenty-five years ago, it launched its package home program, aimed at the low- to-midscale home buyer. "The benefits it provides a home buyer are, we hand-hold the customer all the way, starting with choosing a floor plan, and maybe modifying it. We provide them with a bid, and bid it out to some of our select contractors [for the client to choose betweenl. We walk them through the permitting, all the different steps, yet there's no architect's fee to pay." HPM's business-80Vo pro and primarily residential construction-covers everything from those packaged starter homes to multi-million mansions on the Gold Coast, as well as "large developments as they come up."

Why do contractors gravitate to HPM rather than the competition? (Big boxes and independents dot the landscape.) It starts with relationships, according to Jason. "We have a strong outside sales force, who make the customer feel like part of the family. We go above and beyond, partnering with them to see that job goes very smoothly. We've helped them leverage technology by introducing them to computer systems like BisTrack, which offers online proof of delivery and lets them see their history with us online, which helps them plan their next job. We ensure that our staff is well-trained and ahead of the curve."

That involves constant staff training, of course, and again Jason has taken the lead. "My management style? It's all about communication. I spend time in all the branches to

Also vital: people with flexibility, open to adapt to Hawaii, with deep bench experience and skills to contribute. "I brought in additional team members in manufacturing and distributing to enhance productivity by adding incentives. We positioned ourselves as a company offering great service, while operating with fewer resources than before. For instance, in the sales organization, they were no longer just order-takers, but sales-driven." To retain those hard-to-find employees on the islands, Jason realizes that a long-term strategy is imperative. So HPM instituted a training program to help build an internal career path, planned to nurture local talent rather than hiring from outside.

Fast-forward to the current store-enhancement project. "Now that we're in a growth mode again, we're focusing on the customer experience and looking at every touch point as to 'What experience are they receiving?"' The first project was a major renovation of the Kona store-"a warehouse-type model when it was first built, and l}OVo profocused. Back then, it was the first tenant in a field of grass and rocks. Now, it's the center of a major retail center. We needed to make some changes so that, for retail shoppers, it would be more inviting, with better presentation in the interior. We redesigned the contractor section, too." Next up: stores in Hilo and Waimea.

So, l0 years after his "one year," Jason is repositioning the family company to continue to lead with the times. And he admits it: he's here for the long run. "I really enjoy the family roots, immersing myself in the company. I like helping the employees. And I really enjoy getting us involved in the community, participating in associations. It's part of our identity, to be a core part of the local scene." His kids are 6 and 3: a sixth generation in training?

Carla Waldemar cwaldemar@ comcast.net

By Bethany West, Business Manager, Capital Lumber, and Director, North American Wholesale Lumber Association