Insuring longevity Benefits of key person life insurance

By Paul C. MacDonald

QEVERAL years ago, I worked for \)a manufacturing firm where several key executives were returning f a trip when the small plane theY flying in crashed into the mou and all were killed.

The family-owned company left with one brother to run the com: pany and several widows as shareholders. The sudden, simultaneous deaths of several key managers put a tremendous amount of financial and emotional pressure on the one surviving brother, and soon thereafter, he had a heart attack and died. The company was eventually sold to an outsider for pennies on the dollar. This is not an uncommon story.

In a short span of time, the manufacturer was reduced from a highlY profitable company to one that nearly went out of business. Whv did this happen?

Most companies

realize that their key people have a tremendous impact on the profitability of their business.

tory of good execution, and stability among the managers who PreviouslY achieved success.

Another reason may have been that the new leadership wasn't able to lead the employees as well as the recently departed managers did. People can be in shock for a long time, and much of their creativity and energy can be lost while they grieve. There is also a tendency to canonize a good Person who died too soon, making it more difficult for successors to be judged fairly.

I don't know why the comPanY struggled, but I do know that a keY person life insurance policy would have helped. Most companies recognize that their key people have a tremendous impact on the profitability of their business. A president, a top salesperson, or a financial officer can be difficult to replace. Their sudden loss can be devastating.

absolutely cannot afford to lose. Given enough time, almost anybodY can be replaced, but if death were sudden and unexpected, what imPact would that have? Think about what the loss of a key financial officer or person could mean to your busihess. If you couldn't replace your key executives tomorrow, then You probably need to insure them.

As for the amount of coverage a company needs, there is no right or wrong answer. I generally recommend purchasing the maximum coverage that can be obtained. An insurance company will typically offer 10 to 20 times an executive's salary as coverage.

As for what type of insurance should be purchased, the answer varies. If the company is younger and cash is tight. term insurance is very inexpensive initially. If the company has good cash flow and is more mature, then a permanent insurance plan with a high early cash value can be utilized. This can serve to provide a "golden handcuff' to keep the key executive from leaving to a competitor and then coming back and raiding key management. It also has minimal impact on the company's balance sheet.

One reason was undoubtedly a lack of top management talent. A good manager is hard to find, and small businesses have trouble keeping more than one or two because the comPanY isn't large enough to offer enough room for more to grow.

A second reason may have been a tightening of credit. Banks don't like risk. They like to see a strong balance sheet, a strong income statement, a well thought out business plan, a his-

However, if the company had Purchased a key person life insurance policy, it would have received cash at a time when it needed it most. Companies can have lines of credit frozen, or even called at the death of a key executive, so a sudden influx of tax-free money certainly helps.

Who should a company insure and how much insurance should they purchase? What type of insurance should be bought? Insure any executive You

For those who own or manage a business, make sure to protect it. Remember, the rank and file emPloYees are counting on you for a job, and your families are counting on the income you derive from the business.

- Paul C. MacDonald is a chartered life underwriter and financial consultant specializing in working with businesses in the areas of insurance, benefits, estate and retirement planning. A qualifying member of the Million Dollar Round Table, putting him in the top 6Vo of insurance professionals wordwide, he may be reached at (949) 252-26s2.

R:ulrrns

T.H. Rogers Lumber Co., Edmond, Ok., has acquired True Value Home Center, Pittsburg, Ks., from Norman Miller; only one of T.H. Rogers' 30 retail locations had been in Kansas

Hawkeye Lumber Co. will close its vard in Muscatine,Ia., bv Jan. 1 and sell the 2-acre site to tire city; Hawkeye continues operation in Iowa City, Hutchinson and Oskaloosa, Ia. ...

Everglades Lumber & Building Supply is selling its Miami, Fl., property to a condominium developer and relocating after 62 Years to Homestead, Fl.; the deal allows Everglades to keep a 15,000-sq. ft. showroom at the Miami site once the development goes up ...

Shone Lumber opened its 3rd Delaware location Sept. 26 in Georgetown; situated on the former Thriftway site, the operation consists of 10,000 sq. ft. of warehouse and 8,000 sq. ft. of showroom and offices (Jim Hackney, general mgr.)

Denny's Lumber and Arnold's Hardware, Steele, N.D., are closing; Dennis Arnold, who founded the businesses in 1992, died two years ago ...

Swift Supply is adding locations in Pensacola, Fl. (Bill Carter, exWickes, mgr.), and Daphne, Al., which will serve as a satellite yard of Bay Minette. Al.

BMC Construction, a subsidiary of Building Materials Holding Corp., has entered the MidAtlantic region by acquiring a majority interest in ANM Carpenffy, Strafford, Va., serving production builders in Va., Md. and De.; the joint venture has been named WBC-a BMC Construction Co....

Lee Lumber & Building Material Corp., Chicago, Il., has opened its fifth store, Lee Lumber's Spaces and Views, in Oakbrook Terrace, Il.

Stuckey Lumber & Supply, Hutchinson, Ks., closed Sept. 30; the business, including inventory and selected equipment, but not the facilitv. was sold to a local competito;, multi-unit Star Lumber & Supply Co., Wichita, Ks.

Adams Building Supply, North Augusta, S.C., has been acquired by Builders FirstSource and folded into its Southeast Group ...

Sol's Hardware, South Bend, In., has been acquired by Tim Rankert and reopened as Westside Hardware ..,

Bender Lumber Co., Madison, In., received a conditional use permit to operate a retail lumberyard on a portion of its property currently zoned "heavy industry"

Mueller Roofing Distributors, Lockland, Oh., purchased the assets of Andres Lumber & Supply, Mount Carmel, Oh., for an undisclosed amount

84 Lumber opened a 40,000-sq. ft. store in Lubbock, Tx. (Pete Cantu, store mgr.; Rick Bettis, comgr.), and a 57,500-sq. ft. unit in Gulfport, Ms. (Ken Tuggle Jr., store mgr.; Wayne Eason, co-mgr.) Oct.7 ...

84 Lumber paid $750,000 for 35 acres in LaVergne, Tn., to build either a truss company, retail service center, or lumberyard

The OId Lumber Company

Hardware & General Store, Cotter, Ar., has been opened by William and Tina Cooke

Home Depot this month opens new home centers in Sandy Plain (Marietta), Ga.; Homer Glen and Machesney Park, Il.; Owensboro, Ky; Rome, N.Y., and Johnston, R.I....

Home Depot will oPen two urban-focused stores next summer in Manhattan, N.Y.-an 83,000-sq. ft. unit on the lower level of a tower under construction on 3rd Ave. between 58th and 59th streets and a midtown outpost on 23rd St. near 5th Ave.

Lowe's Cos. opened a replacement store in late October in Wise, Va. (David Altizer, store mgr.), and recently unveiled new locations in Jacksonville. Ar.: S. Clearwater and W Jacksonville, Fl.; Madison, In.; N.W. Staten Island, N.Y.; Ardmore, Ok.; Springfield, Tn., and W. Dallas and Nacogdoches, Tx.

Lowe's has broken ground in Opelousas, La. ... the chain Plans to add 140 new stores next year, and 150 in 2005

Wnorrslrr ns/lhlrutlcruttRs

Industrial Lumber Sales, Tuscaloosa, Al., has been renamed North River Wood Products ...

International Paper is closing its Georgetown Region Forest Resources, its regional woodlands office in Georgetown, S.C.

N orandex Reynolds Distribu' tion,Macedonia, Oh., has acquired Razorback Siding Supply, Fort Smith and Lowell, Ar. (Dana McFain, district mgr.)

Eastex Forest Products, Houston, Tx., will convert two of three cylinders to ACQ by Thanksgiving; the third will continue with CCA for non-residential applications until mid-February ...

Curt Beqn Lumber converted its Buckner, Mo., plant to CBA (Natural Select) mid-Nov., and will convert its Glenwood, Ar., plant to CBA in Dec., when its Amity, Ar., plant will convert back to CCA

Wood Protection Co., Houston, Tx., converts its second cylinder to ACQ Nov. 11; the third cylinder will continue with CCA..,

C olumbus Lumb er, Brookhaven, Ms., converts to NatureWood ACQ Nov. 15...

CCI Tria.d, Austin, Tx., has been renamed Activant Solutions to better reflect its wide range of customers and services

Housing starts in Sept. (latest figures) rose 3.4Vo to an adjusted annual rate of 1.888 million single-family starts increased 3.IVo to 1.520 million and multi-family starts (5+ units) were at a rate of 321,000 ... building perrnits fell 2.2Vo to a 1.860 million pace (Please turn to page 38)

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Listings are often submitted months in advance. Always veriJj' dates aid locations with sponsor before making plans to attend.

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Construction Suppliers Association - Nov.9'll' dealer roundtable, Sandersville, Ga.; (770) 751-63-73

Southern Forest Products Association - Nov. 9-12' annual meeting, Hyatt Regency, San Antonio, Tx.; (504) 443-4464.

Western New York Lumber Dealers Association - Nov. 10, board meeting, Best Western, Batavia, N.Y.; (800) 292-6752.

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Northeastern Retail Lumber Association - Nov. 10-12, dealer roundtable, Rensselaer, N.Y. ; (800) 292-6'7 52.

Columbia Forest Products - Nov. 11'13, hardwood plywood training class, Trumann, Ar.; (800) 547 -4261.

South Carolina Forestry Association - Nov. 1L'13, annual meeting, Grove Park Inn, Asheville, N.C.; (803) 798-4170'

Northeastern Young Lumber Execs - Nov. 13, board meeting, Amherst. Ma.l (800) 292-6752.

Oklahoma Lumbermen's Association - Nov. 13, health benefits committee meeting, Oklahoma City, Ok.; (405) 840-l'771.

Virginia Tech - Nov. 13, strategic marketing planning for the wood products industry, Blacksburg, Va.; (540) 231-8'152.

Distribution America/Pro Group - Nov. 13-L5' 2004 executive planning conference, Naples, Fl.; (847) 296-'7000.

Noith American Wholesale Lumber Association - Nov. 13'15. Traders Market, Wyndham Anatole Hotel' Dallas, Tx'l (800) 52'7-8258.

Mid-America Lumbermens Association - Nov. l3'14. Fall Fling, Kansas City, Mo.; Nov. 17, area meetings, Chanute, Ks.l Nov. 18, Wichita and Garden City' Ks'; Nov. 19' Hays and Manhattan, Ks.; Nov. 20, Lawrence, Ks.; (800) 747 -6529'

National Forest Products Week - Nov. 16'22.

Building Shanghai - Nov. 1E-2L, Shanghai. P.R. China; (408) 737-2820.

Lumber Dealers Association of Connecticut - Nov. 19, annual meeting, Marriott, Rocky Hill, Ct.; (800) 292-6752.

North American Building Material Distribution AssociationNov. 19, sales workshop, Dallas, Tx.; (312) 321-6845.

Central New York Retail Lumber Dealers Association - Nov. 22, anmal meeting, Verona, N.Y.; (800) 292-6752.

Drcrmrrn

Mid-America Lumbermens Association - Dec. L, area meetings, Springfield, Mo.; Dec. 2, Sikeston and St. Louis, Mo.; Dec.3, Moberly and Cameron, Mo.; (800)74'7-6529.

Ohio Lumbermen's Association - Dec. 1'4' Bill Darling seminars, OLA Hq., Columbus, Oh.; (614) 267-'/817.

Eastern New York Lumber Dealers Association - Dec. 2, trade show, Holiday Inn, Saratoga Springs, N.Y.; (800) 292-6752.

Kentucky Lumber & Building Material Dealers AssociationDec, 2, yard foreman training; Dec. 3, selling your price seminar, KLBMDA office, Louisville, Ky.: (502) 245-'7283.

Virginia Tech - Dec.2-4, oak drying workshop, Hotel Roanoke & Conference Center, Roanoke, Va.; (540) 231-8752.

Eastern Building Material Dealers Association - Dec. 4-5, winter board meeting, Bethlehem, Pa.; (800) 296-3278.

Wallace Hardware Co. - Dec. 4-5, winter show, Gatlinburg Convention Center, Gatlinburg. Tn.: (423) 586-5650.

Northern New York Lumber Dealers Association - Dec. 10, board meeting, Lobster House, Norrvood, N.Y.; (800) 2926752.

SouthWestern Association - Dec. 10, counter sales program, Columbia, Mo.; Dec. 11, managing iron salespeople workshop, Kansas City, Mo.l Dec. 12, iron salespeople workshop. Oklahoma City, Ok.; Dec. 12, understanding the warranty game, Hays, Ks.; (816) 561-5323.

Distributors View Latest Software

Fascination with new electronic commerce. warehouse management, and rvireless Windows technology make these favorite topics the hot-buttons for efficiency in 2003 among distributors of lumber, millwork, laminate, roofing, siding and building materials. Distributors attending the recent DMSi Partner Conference in Omaha, Ne., inquired about these avenues more than any other throughout the two-day meeting as they experienced and discussed the newesl soliware innovations.

DMSi c.e.o. Jim Hassenstab opened the conference with remarks to an enthusiastic and generally optimistic group of building product distributors coming off a season of higher than averase business revenues.

Several distributors then shared their experiences and strategies with technology. Millsource, Montevallo, Al., is running real-time Warehouse Management Systems (WMS) in three locations, with plans to implement the same system over the next year in its six other locations.

According to Millsource's Rick Pearson, "Order accuracy is one of the key benefits of running a real-time WMS. We have a system-generated tally sheet showing us exactly what was pulled for each order. The items the customer ordered now match the items they receive, in the right quantity. I know that sounds simple, but in the millwork business that wasn't always the case."

Pearson added that since WMS has been running at Millsource, 99.9Vo of the time the right material is on the right truck. "Reaching higher than 99Vo accuracy makes for very happy customers," he noted.

Other wholesalers are adopting e-commerce solutions, such as EDI, online catalogs, and online ordering capabilities. Chris Cramer, Boise Building Solutions, Boise, Id., said, "We believe in StockNet, DMSi's online catalog. It's a platform we can use to provide business-to-business system integrations for our customers and our suppliers."

Grand Rapids Sash & Door, Grand Rapids, Mi., has had success with the EntryNet online ordering solution. "Our customers find value in EntryNet when they see how easy it is to order products online," said Dawn Hemond. "They immediately realize online ordering can save them time and increase productivity. It's a win-win situation for building product distributors, our vendors and our customers."

The conference, titled "One Source, Endless Solutions," also featured educational classes, exhibits, demonstrations and discussion forums for each industry sector.

Eastern Building Material Dealers Association will hold its winter board meeting Dec. 4-5 in Bethlehem, Pa.

Mid-America Lumbermens Association is picking up the tab for members at its annual Fall Fling Nov. l3-14 at the Marriott Country Club Plaza Hotel, Kansas City, Mo.

Activities include an open board meeting, "meet-and-greet" reception, address by National Lumber & Building Material Dealers Association president Shawn Conrad, and tour of a HarleyDavidson assembly plant.

Area meetings continue through the fall in Kansas (Nov. 17 at the Holiday Park Motel, Chanute; Nov. 18, Ramada Inn East, Wichita, and The Plaza Inn, Garden City; Nov. 19, Holiday Inn, Hays, and Ramada Inn, Manhattan; Nov. 20, Holiday Inn, Lawrence) and

Missouri (Dec. I, Holiday Inn-North, Springfield; Dec. 2, Best Western Coach House, Sikeston, and Holiday InnWentzville, St. Louis; Dec. 3, Best Western, Moberly, and Country Side Hall-South City Limits, Cameron).

Michigan Lumber & Building Materials Association will hold a yard foreman training session Dec.2.

Mike Butts of the LD.E.A. Group, a subsidiary of the MLBMA, will take members through a day-long course designed to provide a clearer understanding of what it takes to manage one of your most important assets-your lumberyard. Topics to be covered include customer service. personnel management, managing the operation and understanding the process.

Butts will conduct an advanced skills course, "Selling Your Price," Dec. 3.

The workshop teaches salespeople specific strategies and skills to sell their price and negotiate more effectively with the customer. It provides solutions for price competition, teaching specific selling strategies that help salespeople handle price objection and negotiation. Also included are improved questioning, presenting and closing skills.

Kentucky Lumber & Building

Material Dealers Association's membership committee has designed a contest to bring in new members and reward those who help recruit them.

Through Dec. 31, KLBMDA is offering prospective members their choice of either the remainder of the year at prorated dues, or they may pay first year's dues now and the dues will be considered paid through 2004.

For each new member recruited. sponsors earn a chance to win a threenight Caribbean cruise plus $500 spending money. Other prizes include 507o off next year's dues, and IOOVo of dues back in KLBMDA credit, which can be applied to registration fees, seminars, dues or business forms.

National Sash & Door Jobbers Association unveiled its name. Association of Milllvork Distributors. at its recent convention in Orlando, Fl.

Newly elected officers (see p.40-4 I for photos)are president Brian Mcllwee, J.J. Mcllwee Co., Itasca, Il.; v.p. Terry Bumgarner, King Sash & Door, Clemmons, N.C.; 2nd v.p. Carl Detering, Detering Co., Houston, Tx.; immediate past president George Lorenz, Western Building Products, Milwaukee, Wi.; treasurer Mike Walsh, Radford Co., Oshkosh. Wi.. and executive director Rosali Leone. AMD.

Board members include Bill Anders. Pacific Millwork, Inc., Marysville, Ca.; Robert Kasten, K-K Distributing, Wausau, Wi.; Daniel Barber, Barnett Millworks, Theodore, Al.; Joe Bayer, Bayer-Built Woodworks, Belgrade, Mn.; Kenneth Bussmann, Cleary Millwork Co., Rocky Hill, Ct.; Joe Cornett, Texas Wholesale Building Materials, Farmers Branch, Tx.; John DeSimone, New England Millwork, Dorchester, Ma.; Andy Durosky, Black Millwork Co., East Islip, N.Y.; Doug Hart, OrePac Building Products, Wilsonville, Or.; John Kerr, Reeb Millwork, Kent, Wa.; Jack LaRock, BMC West, Englewood, Co.; Johnathan Lambert, Pacific Mutual Door Co., Kansas City, Mo.; Timothy Lyons, Brockway-Smith Co., Andover, Ma.; William Sarbaugh, River City Millwork, Rockford, Il.; Hanell Spivey, Guardian Building Products, Greenville, S.C., and Daniel Warren, Warren Window & Supply, Rapid City, S.D.

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Arson Fires Put Missouri Lumberyards On Alert

Northwest Missouri lumberyards are beefing up security after suspicious fires destroyed three area lumberyards in one week.

Arson was confirmed as the cause of fires that leveled two Porter Brothers Lumber Co. and Building Center yards and is suspected in the blaze that decimated 123-year-old Schutte Lumber Co. five days later.

The first fire, late night Oct. 6 at Porter's Building Center in Kearney, began in a warehouse that contained drywall, plywood, forklifts, paint and other building materials. Fire officials said 75-foot-high flames ripped through the warehouse and detonated propane tanks on the back offorklifts.

Two hours later, a second blaze struck a lumber warehouse at Porter's yard in Mosby. In all, damage is estimated at $2 million, with no injuries.

The hardware stores reopened the following day, with building material orders filled from other company locations in the metropolitan area.

The Porters will rebuild and hooe to be back in business by early Apiil -with improved security. "We've talked about better fencing, more lighting, some type of security system that was maybe better than what we had," said co-owner Craig Porter.

Then, early Oct. 12, fire struck Schutte Lumber, about 25 miles away in midtown Kansas City. The fouralarm blaze consumed about half of the l3-acre yard and caused $4 to $5 million in damage.

The fire appeared to have started in at least two spots, according to fire department spokesperson Germane Friends. Although the blaze was also ruled arson, no connection was found to the Porter fires.

The company reopened Oct. 20, working out of a tent and a leased 15,000-sq. fr. building across the street. To clear space at the yard, Schutte sold 30 truckloads of damaged materials to a salvage firm.

After the Porter fires. Schutte employees had been asked to watch for anything suspicious. Other Kansas City dealers, including 84 Lumber Co. and United Building Center, are also urging workers to be extra watchful.

Beverly Lumber consulted with police for advice on how to better secure its yard. Albert Tamm Lumber Co. added overnight security and, as a precaution. relocated some equipment and materials to off-site locations.