Merchant Jan 2014

MERCHANT

LBM TECHNOLOGY TRENDS  TAX WARNING  SPECIAL FOCUS: WESTERN WOODS

The

JANUARY 2014

Magazine

THE VOICE OF THE WEST’S LBM DEALERS & DISTRIBUTORS – SINCE 1922

My customers are looking for quality and innovation that they can count on. For years we have experienced that quality with Simpson Strong-Tie and continue to reap the benefits of products that save time and money and perform above expectations. There is no equal!”

Lonnie Holmes – Manager, Bloedorn Lumber

To learn how our commitment to quality, innovation and support adds value to you and your business, call (800) 999-5099 or visit strongtie.com/genuine.

©2014 Simpson

Strong-Tie Company Inc. DTCP2D13

The

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Special Features

In Every Issue

9 INDUSTRY TRENDS

HOW DEALERS ARE USING TWITTER

10 FEATURE STORY

BEWARE SURPRISE SALES TAX

12 PRODUCT SPOTLIGHT

MANUFACTURED STONE VENEER

14 FIRST PERSON

WIDEN YOUR SOFTWARE SEARCH

16 COMPANY PROFILE: SILVASTAR 20 MANAGEMENT TIPS

WHEN YOUR BEST SALES REP IS A JERK

30 SPECIAL FOCUS: WESTERN WOODS 50 PHOTO RECAP: WEST COAST HOLIDAY

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6 TOTALLY RANDOM 18 COMPETITIVE INTELLIGENCE 22 OLSEN ON SALES 26 THINKING AHEAD 28 MOVERS & SHAKERS 42 FAMILY BUSINESS 46 NEW PRODUCTS 51 ASSOCIATION UPDATE 52 IN MEMORIAM 52 CLASSIFIED MARKETPLACE 53 DATE BOOK 54 IDEA FILE 54 ADVERTISERS INDEX

January 2014

January 2014

Volume 92  Number 7

Magazine

Online BREAKING INDUSTRY NEWS, EVENT PHOTOS, & DIGITAL EDITION BUILDING-PRODUCTS.COM

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The Merchant Magazine (ISSN 7399723) (USPS 796560) is published monthly at 4500 Campus Dr., Ste. 480, Newport Beach, Ca. 92660-1872 by Cutler Publishing, Inc. Periodicals Postage paid at Newport Beach, Ca., and additional post offices. It is an independently-owned publication for the retail, wholesale and distribution levels of the lumber and building products markets in 13 western states. Copyright®2014 by Cutler Publishing, Inc. Cover and entire contents are fully protected and must not be reproduced in any manner without written permission. All Rights Reserved. It reserves the right to accept or reject any editorial or advertising matter, and assumes no liability for materials furnished to it.

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TOTALLY Random

By Alan Oakes

The

MERCHANT

Magazine

www.building-products.com

Let’s get growing

F

IRST, A HAPPY NEW YEAR to all our readers. I hope you had a wonderful holiday with your families and are charged up for the year to come. May 2014 be profitable personally and in business.

This year certainly holds a lot of promise, as forecasts suggest the gains of the last two years will continue in 2014. Indeed, at the top end of the housing starts forecasts, numbers will approach historical averages. Most businesses that have survived are already facing the challenge of how to grow again. In speaking to many owners, I know some are nervous about the thought—and for good reason. When and where to invest is a tough question.

I think that many would admit that in the years 2004-2007 we were all drinking the Kool-Aid and, as the market grew, we may have taken actions that our instincts told us not to. Companies entered the market and, just as quickly, exited it with no solid foundation of business. Others invested heavily, taking on debt to manage what turned out to be phantom business. Many paid a heavy price, and the industry today is a fraction of what it was only six years ago, with an awful lot of pain during the process.

But the good news is that if you are reading this issue, you were one of the great survivors of our “Great Depression.”

We as an industry (and this is your comment to me over the years) never learn. So the question perhaps to ask as the industry grows again is, how are we going to grow the right way? Whether large or small, we will face the challenge of growth this year.

The challenge is, if you are seeking out new business, it has to be worth the time and risk. Too often we chase new opportunities without considering whether these activities can be short- and long-term profitable, a good use of resources, worth the risk of adding new resources, or fit into the culture of our company. Perhaps the latter is what we do not take heed of often enough.

For any growth decision you take (developing or stocking a new product, adding staff, expanding, remodeling, rebuilding, etc.), make sure you have the funds. Monitor your cash flow intently. Nothing chases off your friendly banker like money wildly flowing in and out, as many discovered last time round. Indeed, get the bank to buy into your growth and any short-term negatives that you anticipate. Line up financing before you expand. No surprises!

Keep staffing increases to the minimum to protect cash. Staffing is normally one of our top expenses—consider outsourcing in the beginning.

Work with your suppliers, where appropriate, on scheduling, co-op marketing, training, etc.—all to get your new program off the ground as quickly as possible.

The key to any business success for the long term is to have a strategy that is focused, concentrates on profit opportunities with healthy margins, and allows you to work with customers that are profitable to the company. (Yes, you know the ones you don’t want: the ones who are low-margin to start and get even lower with their constant demands). Don’t waste time or resources on unprofitable business. Let those customers go elsewhere. Don’t let them bleed you.

Identify the driver of your business and concentrate your energies on building that.

Understand where you can gain the most. In previous columns I have suggested ranking your customers by their value to your business (by the way, that value changes every year). Pay attention to the quality of their business. Their value is not only the hard profit on products sold, but also includes the costs of servicing them. When that is done, you probably will get a better understanding of their true value.

It’s the same with new customers. New business is great—in fact, the lifeblood of every company—but if you lack the skill set in your company to manage this new business, and if it does not fit in with your culture (sales or otherwise), stay clear. All business is not created equal.

Again, have a great year. I look forward to meeting you on my travels.

A publication of Cutler Publishing

4500 Campus Dr., Ste. 480, Newport Beach, CA 92660

Publisher Alan Oakes ajoakes@aol.com Publisher Emeritus David Cutler Director of Editorial & Production David Koenig dkoenig@building-products.com Editor Karen Debats kdebats@building-products.com Contributing Editors Dwight Curran James Olsen Carla Waldemar Advertising Sales Manager Chuck Casey ccasey@building-products.com Administration Director/Secretary Marie Oakes mfpoakes@aol.com Circulation Manager Heather Kelly hkelly@building-products.com

How to Advertise

Chuck Casey Phone (949) 852-1990 Fax 949-852-0231 ccasey@building-products.com Alan Oakes www.building-products.com Phone (949) 852-1990 Fax 949-852-0231 ajoakes@aol.com CLASSIFIED David Koenig Phone (949) 852-1990 Fax 949-852-0231 dkoenig@building-products.com

How to Subscribe

SUBSCRIPTIONS Heather Kelly Phone (949) 852-1990 Fax 949-852-0231 hkelly@building-products.com or send a check to 4500 Campus Dr., Ste. 480, Newport Beach, CA 92660 U.S.A.: One year (12 issues), $22 Two years, $36 Three years, $50 FOREIGN (Per year, paid in advance in US funds): Surface-Canada or Mexico, $48 Other countries, $60 Air rates also available.

SINGLE COPIES $4 + shipping BACK ISSUES $5 + shipping

Alan Oakes, Publisher ajoakes@aol.com

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January 2014

Building-Products.com

WHY SILVASTAR? 30 acre facility in Bellingham, WA 200 million board ft annual capacity 6 car rail spur In business since 1987 All manufacturing is done at the same location Raw materials brought in by rail Rail, Container, Truck, and Van delivery SilvaStar Forest Products Premium Fascia, Trim, Siding, Decking, Patterns, Furring Strips All produced from selected J-Grade & Square Edge KD SPF

SilvaStar Custom Milling & Staining Custom Drying, Milling, Staining and Priming Custom Barcoding, Packaging, and Branding 2 Nyle low temperature dry kilns

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WE BRING VALUE TO OUR CUSTOMERS, BOTTOM LINE. See our product catalogue online at www.silvastar.com | Lori DeWitt +1 (360) 647-2434

INDUSTRY Trends Dealers on Twitter

How dealers are using Twitter

D

ESPITE WAILING FROM experts on the necessity of companies being active on Twitter to instantly communicate with customers and prospects, few LBM dealers tweet.

Of the nation’s estimated 10,000 LBM retailers, the vast majority appear to have never set up a Twitter account and, among those who have, only about 30 independents send out more than two tweets a week. Next to feeling the service is not worth their time, the next primary reason for not using Twitter more is that dealers feel they don’t have anything worthwhile to say. So just what are those 30 active users finding to talk about?

The Merchant surveyed the communications of 30 indpendent lumber dealers most active on Twitter. What we discovered is that few are dreaming up long, complex posts to amaze the masses (after all, the service limits messages to 140 characters or fewer). Most are building an identity, such as: The Linker. Linking to home improvement articles (like “How to Install Crown Moulding”) may kickstart a project—and a purchase. Linking to industry news (the latest NAHB housing statistics) can also get pros thinking

What the Top 30 Are Tweeting Survey of 30 actively tweeting independent LBM dealers, based on 967 total tweets from Nov. 1-Dec. 2, 2013

Building-Products.com

about you as an expert.

Links can also be time-savers. It can be doubly timeconsuming to maintain presences on multiple social media platforms, so some dealers use their Twitter account primarily to link to updates on their blogs or Facebook page (which allows posts in excess of Twitter’s 140-character limit).

In addition to links to its Facebook page, Parr Lumber, Hillsboro, Or., sends out several links a day to photos it’s collected on its Pinterest site, highlighting glamorous projects and interesting new products.

The Conversation Starter. Ideally, tweeters want their name spread not only to their followers, but in turn to their followers’ followers, so it’s key to engage them and turn the monologue into a dialogue. Dealers ask what their followers’ latest project is, what their dream purchase is, or what their plans are for the holidays. Peter Lumber Co., Pleasantville, N.J., and City Lumber Co., Dyer, Tn., solicit participation with a weekly trivia contest.

The Commenter. No one joining your conversation?

Chime in on theirs! Dunn Lumber, Seattle, Wa., has collected more than 8,500 followers by themselves following an equal number of users and regularly commenting on their tweets and photos—and thanking anyone who mentions Dunn Lumber. The idea is to get the Dunn Lumber name out wide and often, and to be seen as a friend to the community.

The Promoter. Got something on sale? Tweet it.

Ashby Lumber, Berkeley and Concord, Ca., publicizes specials on a near-daily basis. Meek’s Lumber, Springfield, Mo., even tweets out downloadable coupons.

How about an upcoming contractor night or other event? Ro-Mac Lumber, Leesburg, Fl., uses Twitter to direct followers to its weekly “Around the House” radio show.

The Recruiter. About half of the 50-plus Tweets a month by Lyman Lumber advertise the various job openings at its Wisconsin and Minnesota facilities. (With more than 250 locations, 84 Lumber has so many positions available that it maintains a separate Twitter feed, 84LumberCareers.)

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9

FEATURE Story

By Jessica Arant, DMSi

Are you at risk of surprise sales tax?

M

OST BUSINESS LEADERS are comfortable discussing things like risk, ROI, and market share. They are less comfortable discussing sales tax, but it’s a conversation that needs to happen.

States are getting increasingly creative about finding new revenue sources through sales tax. Businesses can easily incur “surprise” tax liabilities without realizing it. Assuming sales tax rules are the same across all your territories can be a costly mistake.

What is Nexus?

Sales tax starts with something called “nexus.” Nexus is the relationship a business must have with an authority (like a state or local government) in order for that authority to collect taxes. Let’s simplify that. Imagine you have a store in Nebraska: you own your building, pay employees, and complete business transactions in the state. All these things give you nexus in Nebraska, and the state will collect sales tax from your business.

Say you have a customer, Jim, who works in Iowa, but comes to Nebraska

to purchase his materials. You probably don’t have nexus in Iowa just because your customer works there.

But let’s change the situation. Jim calls in his orders from Iowa and your employees deliver materials to his jobsites in that state. Now Iowa might argue you have nexus in their state and you owe them sales tax.

The problem businesses face lies in the words “probably” and “might.”

Each state has different nexus triggers.

If your Nebraska store sells an item to people in two different states, you may have nexus in one but not the other.

Things like buildings and equipment are almost universal triggers, but many states are starting to define nexus based on activity rather than physical presence. Sending an employee to a trade show, industry conference, or training seminar can all give you nexus in a state. You can establish nexus in Arizona if an employee spends two days of the year there. If your Nebraska store has a lot of Iowa customers like Jim, Iowa might argue you have an “economic nexus” in their state, even if all your

sales take place in Nebraska.

Delivery of Goods

Delivering purchased items is a common nexus trigger, but there are a variety of ways states approach the issue. In Georgia, the “taxable event” takes place at the ship-to location, but in Kansas, it occurs at the ship-from location. In some cases, just delivering an item may not trigger nexus, but offering a service can. (It’s the difference between delivering a door, and delivering and installing a door.) The method of transportation may be a trigger as well. Are you using your own fleet, a common carrier like FedEx, or a third-party vendor? The bedding store Mattress World is an excellent cautionary tale about ignoring delivery-related sales taxes.

Mattress World is located on the Oregon-Washington border. Many Washington residents would cross the border to purchase and pick up mattresses. Mattress World started offering delivery and set-up service to their Washington customers through a third-party vendor. But hiring and sending that vendor across state lines created nexus under Washington’s tax code. The company didn’t plan for this and ended up with a $1.7 million (plus tax) debt to the state.

Jurisdictional Boundaries

KEEPING TRACK of differing sales tax rates within your selling area is imperative. Consider that in one area of Colorado, there are six different tax rates contained within a single zip code!

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We’ve been discussing nexus triggers as a state-by-state issue. The truth is you can create additional nexus within the same state by crossing into new tax jurisdictions. States might define their tax jurisdictions by cities or countries, but the boundaries aren’t always so clear. To further complicate the matter, some states allow jurisdictions to set their own sales tax rules.

Getting business from a new area in town means you could owe a comBuilding-Products.com

pletely new sales tax to a completely new authority. Colorado is notorious for this: they have six different rates in a single zip code!

What’s in a Name

Definitions are one of the stickiest points in sales tax, in part because they can seem so arbitrary and absent of common sense. KitKats, Twizzlers and Whoppers are not “candy” under the Streamlined Sales Tax definition because they all contain flour. Indiana categorizes marshmallows as “candy” (taxable) and marshmallow crème as “food” (exempt). Pennsylvania does not tax clothing, but does tax “fur articles,” which include “articles made of woven animal hair or wool that resembles fur in appearance.” (Presumably a wool sweater would be exempt, but a coat with sheepskin trim would not.)

California’s 2013 tax on “certain lumber and engineered wood products” is a great example of definitionrelated chaos. Under this rule, “fencing, railing and decking” are subject to the tax, but bamboo fencing, pre-constructed railing sections, and “deck packages” are exempt. Retailers spent countless hours determining which items in their catalogs were taxable. It was a huge investment of time and

Building-Products.com

money for the businesses, but it needed to be done. Shortly before enacting this new rule, California announced a plan to hire 300 auditors. Businesses are held responsible for complying with tax rules, even if those rules are almost impossible to understand.

The Take-Away

• Check the nexus triggers for every territory your company interacts with.

Don’t assume you need a building or permanent employee in a state to owe sales tax there.

• Check the tax rules regarding deliveries for every area you deliver to. You may need to collect additional sales tax from customers in some areas but not others.

• Check the jurisdictional boundaries for every state you do business in. Make sure you’re collecting the correct amount of sales tax for each jurisdiction and remitting payment to the correct authority.

• Pay attention to definitions attached to sales taxes. The distinctions between taxable and exempt items may seem arbitrary and silly, but the state is going to be very serious about collecting fines and penalties.

Sales tax is incredibly complicated.

You need a good tax consultant to

make sure you follow the rules in all jurisdictions where you have nexus.

But once you know what you’re supposed to do, the next step is doing it consistently.

Automating tax calculation is a great strategy because it virtually eliminates the risk of human error.

Services like Avalara work with your ERP system and calculate the appropriate rate for each transaction. Your software platforms should be robust, yet flexible enough to handle the inevitable changes in sales tax rules.

California’s lumber tax impacted products so inconsistently that most POS programs couldn’t apply it correctly. Many businesses resorted to calculating sales tax by spreadsheet.

Agility software was one exception. It adapted to the change easily, and users like Peterman Lumber, Fontana, Ca., and S&J Lumber, Madera, Ca., were able to incorporate the tax without a problem.

You may not want to think about this topic, but it’s far better to discuss sales taxes now with your colleagues, rather than later with an auditor.

– Jessica Arant is communication coordinator for DMSi Software, Omaha, Ne. Reach her at jarant@dmsi.com.

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PRODUCT Spotlight

By Ed Perez, Boral

The many uses of manufactured stone veneer

M

ANUFACTURED STONE veneer promises to be more popular than ever in the residential building materials market this year, as its ease of installation and extreme versatility make it a perfect solution for customers looking to keep pace with today’s design trends.

Whether it’s a production builder seeking innovative ways to add curb appeal to a community or homeowners wishing to update their residence through a creative remodel, consumers continue to favor manufactured stone veneer because of its varied uses. And the number of applications are still growing: the product’s high adaptability means it is often a natural fit for even the most innovative developments in design.

Pioneered more than 50 years ago, manufactured stone veneer is cast

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from natural stone molds and then meticulously hand colored with mineral oxide pigments to give it the depth, pattern, complexity of color, and unique pattern of stone. Due to its lighter weight, it actually has many more design uses than natural stone.

Manufactured stone veneer can be adhered to most wall surfaces, since it is one-third the weight of full-thickness stone. To comply with building codes, stone veneers cannot exceed 15 pounds per square foot, which allows for greater design flexibility.

Durability is another prime characteristic of stone veneer, which is of crucial importance to developers, builders and architects who need predictable strength, consistency and quality in their stone veneer products, ensuring materials are safe to handle and remain secure over the long term.

January 2014

Concrete mix used to make stone veneer must withstand at least 1,800 psi without damage, which ensures its durability for years of service. In fact, stone veneer products usually come with a 50-year limited warranty.

Made with Portland cement and lightweight aggregates, manufactured stone veneer is low maintenance and can tolerate a wide range of climates.

Boral’s Versetta Stone, for example, is rated for wind resistance of over 100 mph. This panelized stone veneer is easily installed in any climate, because its mechanical fastening system does not require heating the wall to a certain temperature during cold weather.

Residential projects of all types can benefit from the installation advantages of panelized stone veneer, as evidenced by the recent completion of a $27.9-million affordable assisted living community in Lansing, Il. The community, known as St. Anthony of Lansing, houses 125 apartment units in a three-story building on a four-acre parcel. General contractor LedCor selected panelized stone veneer for its ease of installation in cold weather.

The portion of the building that involved 27,000 ft. of product applied via traditional stone masonry methods Building-Products.com

took three months to complete and required a full wall tent and heat. In comparison, installer Residential Exteriors applied 27,000 ft. of panelized stone veneer (along with an additional 54,000 ft. of fiber cement shake siding and trim) to the building in just three weeks, without the need for a wall tent and heat. Even with the cold weather, there were no delays.

More cost effective than natural stone and available in more than 100 colors and textures, stone veneer is increasingly popular for both exterior and interior applications. Stone veneer can be utilized in almost any manner, even as cornices, copings, wall brackets, and door surrounds. No matter where it’s used, stone veneer makes good construction and design sense— and even a small amount makes a large statement. Following are some of the varied applications that dealers can now target to sell stone veneer: Fireplaces: With the wide variety of stone veneer styles available, it is easy to achieve virtually any look for fireplaces. Stone veneer fireplaces can feature anything from a traditional, rubble texture to a modern, sleek feel.

They can be ornate, reminiscent of Victorian styles, given a Tuscan or Building-Products.com

Mediterranean appearance, or simply a stone wall and floor on which a wood burner sits.

Kitchens/Bathrooms: Stone veneer islands and backsplashes can add texture and variation to kitchens, while decorative stone veneer accents can lend a rustic or natural vibe to bathrooms. A little wall cladding in stone veneer goes a long way.

Arches/Doors/Windows: An ordinary arch, door or window can be transformed into a stunning architectural feature just by adding some stone veneer accents. Using stone veneer to offset brick window accents is a growing trend, as is combining different stone veneers to give a very customized look. Keystone windows and arches are also trendy as are window and door surrounds made from carved or inset stone.

Exterior Facades: Whether used as an accent or a full wrap, stone veneer can add curb appeal to any home. Using different materials and colors can provide a three-dimensional quality, creating more interest and depth to a building. Layering also helps articulate human scale while complementing the architecture and surroundings. More earth-toned colors are being favored by architects, who are incorporating stone veneer into exterior facades as a way to complement the natural scenery around many homes. In some cases, styles that emulate the natural stone found in nearby surroundings are used, giving the illu-

sion that a piece of the landscape has been incorporated right into the home.

Outdoors: A major trend today is the use of stone veneer for outdoor fireplaces, kitchens, barbecue islands, and cabanas. Stone veneer walls can be used to add character and form to gardens and outdoor yards. Their beautiful aesthetics and extreme durability also make them a perfect option for lining driveways and property borders. A Tuscan vernacular is also popular, in which elements are completely cladded—as if the materials were “pulled off the land” and the outbuildings (such as a pool house or shed) have the same look.

Columns: With columns a preferred solution for housing heat structures in backyards, stone veneer makes for an ideal wrap because of its light weight. Stone veneer columns in a square shape are a favorite at the moment for backyards, while traditional, Tuscan-style columns are a classic choice for adding old-world charm to entranceways.

No matter what your customers’ design needs and interests, stone veneer is likely to be an ideal fit, given its beautiful aesthetics, adaptability, durability and relatively low cost.

– Ed Perez is the area sales manager for Boral Stone Northern California and Northern Nevada. Based in Roswell, Ga., Boral USA subsidiaries include Boral Bricks, Boral Roofing, Boral Stone, and Boral Material Technologies. Reach him at ed.perez@boral.com.

MANUFACTURED stone veneer use is growing both indoors and out.

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(Photos by Boral USA)

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13

FIRST Person

By Gordon Birgbauer, AIIS/MFP

Industry-specific software isn’t the only solution

O

VER THE YEARS ,

I have shared your pain, struggles and sleepless nights with—dare I say it?—IS (Information System) or, as it is sometimes called, IT (Information Technology). I’ve never liked either of those descriptions. Let’s move to a much broader description: ERP, or Enterprise Resource Planning.

Why is it that we spend countless labor hours on budget meetings, integration methodologies, maintenance, inappropriate functionality, and the inflexibility to adapt to changing business needs? What frustrates me even more is that we allow this IT to rule our business lives with substandard performance, only to be assured, “Don’t worry, your software provider will have it fixed in the next enhancement release.”

I contend that LBM industry-specific solutions don’t have to be your only options. A SKU is a SKU is a SKU. You’re telling me that the barcode on that Victoria’s Secret shelf is different from the barcode on a gallon of paint at your store? I guarantee you that walking down Fifth Avenue and visiting the Ralph Lauren store or Gucci store, that they don’t have the ERP struggles that our industry does.

You don’t need to have exponential budgets, either. There are solutions outside our industry that offer these ancillary benefits for us to run our day-to-day operations. They are just as efficient and also effective for our internal and external customer.

Let’s look at the facts. Compare the growth of our industry in terms of dealers, market share, revenue and profitability to that of Home Depot,

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Lowe’s and Menards. They, like most Fortune 500 up to 5000 companies, use outside ERP systems.

The experts at your local “geek shop” have probably never even heard of your system. If you search Monster or any of the other employment networks for IT or ERP jobs that relate to our industry’s specific software package, you won’t find a huge pool of qualified prospects.

Why is it that some co-ops use systems like SAP, but offer their dealers different ERP solutions? I guess they never read Harvard professor Michael Porter’s work on value chain and the importance of transparency to the customer in order to bring value to all stakeholders. The basis of his thesis is that Enterprise Resource Planning facilitates improvement to a company’s value chain, thus generating significant competitive advantage.

ERP is the integration of a busiJanuary 2014

ness software solution into a company’s activities and strategy. The theoretical motivation behind implementing an ERP project is to increase efficiency, thereby reducing costs and increasing profitability and customer satisfaction. In addition, there should be increased efficiencies around the supply chain, consolidation of information, and an overall business improvement, which gives those who use ERP an advantage over their competitors.

According to Porter, a company’s ERP project can be assessed by the level of improvement in terms of productivity and customer satisfaction.

The analysis of the data presented by ROI figures will clearly show that ERP systems provide a significant benefit to the value chain, increasing competitive advantage within an industry.

Companies like SAP and Oracle have been leaders in creating value efficiently and effectively by adapting quickly to business changes for their clients.

To better compete in the 21st Century, dealers may want to consider more than just industry-specific ERP packages. Like most owners who grew up in this business, I have sawdust in my veins. I love the independent lumber industry and want to see all of us succeed.

– The former president of LumberJack Building Centers, Algonac, Mi., where he spent 22 years, Gordon Birgbauer is now a lumber distribution consultant, as president of AIIS/MFP, Algonac. He can be reached at gbirgbauer3@gmail.com.

Building-Products.com

COMPANY Profile SilvaStar Forest Products

Producer branches out

Targets custom orders, shipping

O

being acquired by the owners of Welco Lumber, Vancouver, B.C., SilvaStar Forest Products, Bellingham, Wa., is expanding its business by introducing new products and services.

“Many companies offer one or more of the same services we do, but none offer the same unique, complete solution,” says Mike Thelen, SilvaStar’s chief operating officer. “Our motto is: ‘Together, your product line combined with ours builds a world of possibilities.’”

Here’s how it works: The company produces its own fascia, trim, siding, decking, patterns and furring strips in its 100,000-sq. ft. manufacturing plant. However, with annual production capacity of 200 million bd. ft., there’s also room to dry, mill and stain to customers’ specifications. An additional 40,000-sq. ft. of additional covered storage keeps everything in great shape.

“Customers bring their raw material to our plant,” he explains. “If it’s wet, we re-dry it in our kilns. We then process their lumber to match their individual specifications.”

NE YEAR AFTER

A SIX-CAR RAIL SPUR on the property enables mixed loads for substantial savings.

(All photos courtesy of SilvaStar)

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SILVASTAR’S plant produces a range of company-branded products, plus custom milling and staining to customers’ specifications.

A six-railcar spur on the 30-acre property—which is paved and fenced—simplifies delivery. “We offer a unique advantage for our rail customers, allowing them to order highly mixed cars combining material from our inventory with their custom milling and staining orders,” he says.

Adding product from nearby producers isn’t a problem either. “Framing lumber from nearby sawmills can be used to complete their orders,” he adds. “This allows purchasing flexibility and substantial savings.”

More than two-third’s of SilvaStar’s business is with two-step distributors, such as Boise Cascade, Boise, Id. “We currently supply 14 Boise locations from Woodinville, Wa., to Pompano Beach, Fl.,” says Thelen.

“We also supply custom-branded products to the big boxes.”

Mike Bland, general manager of Boise Cascade Building Materials Distribution in Riverside, Ca., says that Boise decided to partner with SilvaStar because “they understand that customer loyalty is all about building longterm relationships. I would rate them right at the top.”

Building-Products.com

COMPETITIVE Intelligence

By Carla Waldemar

Same footprint, but a Cinderella transformation

G

C LINE ’ S GOT HIS dream job—just ask him. He signed on a year ago as retail merchandising manager for Bloedorn Lumber, headquartered in Torrington, Wy., with 21 stores and a truss plant in four western states.

Joe Maya’s crazy about his job, too. He’s worked 17 years in the Worland, Wy., lumberyard he manages, which Bloedorn bought in 2000.

“I love merchandising,” swears Greg, who recently masterminded the complete rehab of the Worland store Joe runs. And you couldn’t pry Joe himself out of it with a forklift. “This is my hometown, where I grew up. I love working here,” Joe jubilates.

And after the remodel, he loves it even more: Sales are skyrocketing, and new-customer count is on the REG

uptick, too.

Bloedorn, launched back in 1919 selling lumber and coal, is on track to remodel the majority of its locations, two stores at a time—some, like Worland, drastically; others with a more subtle touch. The Torrington and Buffalo locations, already completed, each shifted focus in slightly different directions—one toward the retail market, the other to the pro. No cookie cutter in the grand design: “Each store is a little different,” says Greg. So we’ll look at Worland, which celebrated its grand reopening in late September.

What’s the town like? Let’s ask Joe, who’s one of the 5,000 folks who live here. First of all, “it’s not a bedroom community,” he laughs. “In Wyoming, every little town is out on

its own. We’re the only lumberyard in town.”

But they don’t write off the challenges. “Very strong competition” thrives here, according to Greg, who’s spotted an Ace, True Value, Big Horn, and big boxes looming down the highway. “So, we saw a need to diversify, to update things.”

If you, too, are feeling that urge but hesitate to undertake a huge expansion, take note: “remodel” doesn’t have to mean “expand.”

Worland’s 10,000-sq. ft. footprint stayed the very same. And, challenging as it was, the store never closed during the top-to-bottom rehab.

Customers not only took the upheaval in stride, they acted as cheerleaders, creating a buzz around town (a.k.a. free advertising) about the progress.

TOP-TO-BOTTOM remodel of Wyoming yard began on the outside, with new landscaping, signage and stylish color scheme.

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Planning was done with input of store management. “We spent a lot of time working together,” Joe reports, “back and forth, exchanging ideas.

Sometimes I couldn’t believe the new items Greg would suggest—‘Not a chance!’—but we went ahead with many of them, and they’re doing very, very well.”

Not by accident. Greg had done his homework, patrolling the aisles of the competition, counting the linear footage in their stores. “I did a market and site analysis, which spurred us to add whole new categories, like RV accessories (lots of tourists along the highway), Dickies work wear, and outdoor camping and cooking gear. We positioned these new features all together in an area of their own, and they’ve been very well-received. We plan to advertise them with circulars and with Ladies KICKED OFF with a recent grand reopening celebration, the makeover has turned Bloedorn Lumber Night events.”

Those ladies are thrilled with the into a destination store. store’s brand-new cabinet displays, Greg reports. “Talk about a wow factor!

“I started on the outside—I always do, where it’s most Plus chandeliers and ceiling fans and new positioning of visible,” Greg explains. “We put in new lawn and planting, windows and doors.”

Speaking of wow, the floor now new paint (from an orangey-red color scheme to one of showcases working fireplaces and pellet stove and a brandmuted green—more stylish), added new signage. It was new outdoor kitchen in the home décor area, complete with right on a busy highway, so people took notice. grill and fridge. The lawn and garden department has “Before, business was 80/20, focused on pros. tripled, including a garden tower and 17-ft.-by-35-ft.

Contractors had their own counter, back near the office, greenhouse nurturing live plants. Joe’s staff of 11 will which (unfortunately) they couldn’t see from the front expand in spring to include a nursery-products expert. A door. Now they can spot it, plus there’s more to appeal to new cabinet specialist is already on board. the walk-ins. With the recession, we knew we couldn’t rely Bottom line: Bloedorn has become a destination store. only on the building trade, so we decided this was the time “You don’t have to run to the boxes. Now it’s more in line for an update and a repositioning of the departments to with what the d-i-yer expects from a retailer,” Greg allows. attract the retail trade—especially those with a female “We’ve incorporated items customers have been asking appeal. Today, ladies tell us, ‘I like the way the store is for, and it’s greatly expanded our customer base—espeorganized. Now I can come in with my husband.’” The cially females. We’ll be holding events like Powder Puff paint department, Greg gives an example, used to be right Mechanics—mowers, weed cutters—and classes in canup front. Now, it’s halfway back, on the power aisle, so ning and food preservation.” folks can see it easily.

Fine, but how about those pros? “Well, you know,” Same for contractors goods. “‘I never knew you had Greg laughs, “when change happens, it’s, ‘I can’t find it!’ faucets,’ they tell me,” says Greg, “yet there’d been a 28But then I hear, ‘I didn’t know you carried X.’ They were ft. aisle of them, where the pros first came in the store. so locked into their patterns that they never walked the They were right in front of them.” Wrong! Explains Greg, other aisles.” the master merchandiser, “You need a transition zone.

The night before the grand reopening, the store hosted a When customers first come in, they need to get their bearcontractors’ night (wives—thrilled—were invited, too) ings, decide where to head. They need space. So we creatwith a catered barbecue dinner, demos ed a foyer with tiled floor and an automatic door (used to and prizes.

Then followed the public be swinging). And”—big deal—“we’ve added shopping reopening. “That day—wouldn’t you carts. They’re used to grabbing carts in other stores, and know it?—was the first big snowfall it’s working here. They’re buying more, filling them up.” of the year. We were worried, but Everyone—especially the ladies—likes the new look, the store was full. Lots of new faces, too. Formerly the interior was lit by fluorescent tubes and faces we hadn’t seen for a long hanging on chains from a vaulted ceiling. (“We were heattime, coming back to us. Sales ing a lot of empty space.”) Now, there’s a new drop ceiling are definitely up, and (unlike with new insulation, drywall, paint and lights. Restrooms, the pro accounts) they’re payoffices and break rooms got upgrades, too. ing in cash!”

During the months-long transition, gondolas had to be shifted from one side of the store to the other, and products dropped in the power aisle to be sorted through—which to save and which to sell off in the $1 bin. Several brand-new departments were added.

Building-Products.com

Carla Waldemar cwaldemar@comcast.net January 2014

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MANAGEMENT Tips

By Steve Ondich, Commercial Forest Products

So your best sales rep is a jerk...

W

I WAS 15, I joined a baseball team, playing what would be my last year of organized ball.

Because I signed up late, all the teams in my age division were full, so I agreed to play in the 16-18 league.

I’ve since forgotten the name of my team, but not the chaos that ensued that season. Imagine a Farrelly Brothers remake of The Bad News Bears. Most of my teammates were talented with behavioral issues. They smoked during batting practice, arrived hung over on game day, and cursed at the coach.

They were talented, though. They may have been incapable of showing up for practice or passing a drug test, but on Saturday they hit home runs and won games. I say they because I did not see a lot of playing time that season. If there was an award for effort, attendance and attitude, it would have been mine. Despite being disrespected in countless ways, my coach did the pragmatic thing and played the best players. Although I practiced tenaciously, the lion’s share of playing time went to kids who were physically or mentally absent during the week. To my teenage psyche, that seemed wrong. What I realize now is that my teammates excelled in the one area that mattered most: performing on game day.

In the upper echelons of sales departments across the country, many well compensated sales professionals are resented by co-workers for the same reasons that I resented my delinquent teammates. Do any of these water cooler rants sound familiar?

Lucky Laurie has her nerve.

Someone gave her the Vanderdoody account five years ago and all she does is sit around collecting commission checks while we’re working 24/7 to make her look good.

Arrogant Aaron never follows up on the leads that he’s supposed to. He HEN

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never fills out his call reports and always comes in late to meetings.

Lazy Louise always has her phone off. She’s supposed to be working in the field, but we can never reach her before 10 a.m. She makes all her money from one account and never opens new ones.

Incompetent Ian is barely functional. Customers are calling us in the office because they can’t reach him. If we weren’t constantly cleaning up his messes, he’d have no accounts.

Anyone who relates to those sentiments should understand this: Laurie, Aaron, Louise and Ian all have at least one skill set that trumps their character flaws. Their flaws are obvious. Their strengths are in areas that may not be immediately apparent. Punctuality is easy to measure. You either arrive at 7 a.m. or you’re late. Earning the business of a large account is more involved. It can take a combination of timing, luck, strategy, psychology and presentation. Arriving on a prospect’s doorstep three times a week at 7 a.m. shows tenacity, but it may also reveal desperation or stupidity.

Could these negative traits actually be contributing to the reps’ success?

Let’s take a contrarian perspective.

Luck – Successful people tend to make their own luck—endearing

January 2014

themselves to a new boss, becoming a widget expert just in time for the current widget expert’s retirement party, staying close by while another rep is badly botching a good account. Were things like this happening before this person’s lucky break?

Even if someone is blessed with serendipity, it rarely sustains if the person is incapable of handling it. As a sales manager, I have assigned prime accounts to reps who could not handle them. An account can be transferred, but if the client does not bond with the rep—for whatever reason—the relationship will not last. Being in the right place at the right time can help establish an account, but it takes work to sustain it. I’ve never encountered a situation where a client tolerates an incompetent rep for an extended period of time out of convenience. A bluechip account that churns out large commissions through no effort of the rep is the business equivalent of a Chupacabra. Urban legends abound, but I’ve never seen one.

Arrogance – Successful reps can come across as arrogant. It takes a certain type of person to embrace big accounts and engage in the kind of weighty deals that can significantly impact a company’s bottom line. Reps open to these challenges tend to see Building-Products.com

themselves as elite. Paperwork, meetings, non-sales-related issues, and even small accounts are beneath them. They have more important things to accomplish. Their words, actions and body language convey their mindset to everyone around them.

Certain clients are drawn to egotistical reps because it feeds into their own ego. Years ago, I was in a situation where a key account requested a new rep. The customer felt his operation was high volume but low maintenance. His rep was slow to respond, bad with paperwork, and often went MIA when problems occurred. We stood to double our business by putting someone responsive on the account.

Taking the customer at his word, we reassigned the account to a junior rep who was disciplined and agreed to devote significant time to the account. The switch resulted in no new sales and the account ultimately went back to the original rep. This customer saw himself as an A-list account.

What he really wanted was the time and attention of his senior level rep. Psychologically, I believe he wanted to punish the rep whose attention he sought and came to look at the new rep as a demotion in his status/value, even though it’s exactly what he asked for.

Laziness – The 80/20 rule states that 80% of revenue comes from 20% of your accounts. Is it bad to focus exclusively on the 20%? One could make the case that it’s irresponsible to do anything else. Providing a C-list account with the customer service experience of a lifetime may warm your heart, but should you do it? Reps who appear inattentive to accounts outside of their 20% circle are protecting their limited time and focusing their efforts where the results will be maximized.

Incompetence – Reps who can’t seem to figure out how to complete administrative tasks are often de facto delegating. The way they approach it may not be ideal, but the intended result is achieved. With their inside support staff clamoring to send samples, generate paperwork, and provide information, the rep can focus solely on sales.

Companies rarely fire high-performing sales reps just to teach the rest of the group a lesson in etiquette. Ideally, all reps would be gracious, diplomatic, empathetic, disciplined, effective team players. If forced to select only one of those attributes, I’d pick the one that starts with “e” and doesn’t end with “pathetic.” The downside of harboring reps who produce well but behave shoddily is that they generate a lot of unnecessary drama and negative energy.

Angry co-workers quietly rooting for someone’s comeuppance don’t contribute much toward optimal productivity.

If you have a star rep with behavioral issues, consider these steps: • Don’t preach about why their behavior is detrimental to office morale. Appeal to their own self-interest. People who aren’t angry with you are less likely to internally sabotage your sales efforts. It would be nice if reps behaved properly because it’s the right thing to do, but...

• Forget the MBA courses and executive sales programs, send the offending parties to a Dale Carnegie class (How to Win Friends and Influence People). There is a reason why these courses have been around since the early 1900s and are still wildly popular today.

• Remind them that small gestures of appreciation can go a long way. Voicing a simple “Thank you” or showing up with a $7 box of doughnuts can quickly undo feelings of animosity. I’ve seen it happen.

• Talk frankly with your employees who are upset. If a star rep is being cut more slack than other people in the Building-Products.com

organization, it’s better to acknowledge it than deny it.

Coach Jimmy Johnson led the Dallas Cowboys renaissance of the 1990s. When he assumed the coaching position, the Cowboys were a pitiful organization. From 1986-1989, their win/loss record was 18-45. Johnson quickly cleaned house. He was unapologetically biased in his treatment of players. Former lineman Kevin Gogan explained to the Los Angeles Times, “I remember once when Michael Irvin came in late to a meeting… Jimmy looked back at him and said, ‘That’s okay, Michael, because you’re up here (holding his hand high).’ With Jimmy, you’ve got guys up there, and guys way down.” Johnson unceremoniously cut future Hall of Famers Randy White and Ed Jones. Both were about a decade removed from being “up there.” Cultivating high performers should be a priority for coaches, business owners, and sales managers.

• Monitor their progress on substantial new business (the reason you’re putting up with their BS, right?). It’s easy for reps to get in the habit of nursing one or two established accounts when those accounts are driving a lot of sales.

There is a fine line between protecting your valuable time and coasting. It’s important to identify when that line has been crossed. Let’s say two accounts are generating $20,000/month in commissions for Arrogant Aaron.

You: “Aaron, you haven’t opened any new accounts lately, what’s up?”

Aaron (indignantly): “I’m making $20,000/month on these two accounts and you want me to waste my time prospecting for another $200-$300? Not worth it.”

You: “Agreed. You’re one of a select few reps capable of finding and opening sizable accounts. I’d prefer you don’t engage with the small accounts. Now that you mention it, the last account you did open was a small one. What were you thinking? You’re our Reggie Jackson. Knock it out of the park or miss wildly, but don’t lay down a bunt.

What kind of significant new business have you been working on?”

When accounts get busy, reps should be intelligently accelerating their efforts, not coasting. In the same way poker becomes easier when you take the chip lead, adding good accounts becomes easier when you’re flush with business. Counterproductive emotions like fear and desperation fade; confidence and optimism grow. It’s the ideal time to cultivate better sales.

• Make them aware that by taking a self-centered approach, they’re really working without a net. It’s easy to tolerate boorish behavior from someone with the Midas sales touch. It almost adds to their renegade sales cowboy mystique. Eliminate their impressive sales numbers and the behavior becomes decidedly less endearing. If they hit a sales slump, their toxic behavior will certainly come back to haunt them.

Insufferable high-earning reps succeed in spite of their boorishness, not because of it. Successful reps do not need to create havoc. The best sales professionals delegate, prioritize, manage their time, and seize opportunities without alienating and offending the people around them.

– Stephen Ondich is the owner of hardwood manufacturer/distributor Commercial Forest Products, Fontana, Ca. Reach him at (909) 256-4583 or sondich@commercialforestproducts.com.

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OLSEN On Sales

By James Olsen

The size of the motor

A

have we gone over this?) They just may not have the motor to deliver on your expectations.

FRIEND ONCE TOLD me, “If you’re crazy and poor, you’re called crazy. If you’re crazy and rich, you’re called eccentric.” Let’s just say, if they had been born rich, my parents would have been eccentric.

My mother read John Steinbeck’s Grapes of Wrath about the Dust Bowl migration of millions during the Depression from Oklahoma to California looking for work. A powerful novel, the book won the National Book Award, a Pulitzer, the Nobel Prize, and drove my mother to think that it would be a good for our family to pick fruit in the summer, like migrant workers!

To my father, an easy-going dreamer and English teacher, in that order, it must have seemed like a great idea, because we spent every summer from age 5 to 14 picking fruit. School would get out on the 6th of June and on the 10th we were gone with the wind (really just an old Ford Fairlane wagon) like a band of fruit-picking gypsies for two-and-a-half months.

No baseball, golf or summer tomfoolery for the Olsen boys, no—just Grapes of Wrath.

Many managers I work with have salespeople working for them who are “just good enough not to fire.”

They have been haranguing (managing?) these same salespeople for years. Who’s lazy? The sales team or the sales manager?

A dirty little secret of sales management is that it is a pain in the neck (read: difficult) to hire and train new salespeople. So it’s easier to try to get growth from the team in front of you.

Most managers have some very good salespeople who will never be great. Are they profitable? Yes, more profitable than most, but all their manager can see is what they could be doing (if only), not the great work (especially visà-vis their motor) they are doing.

Expecting A+ results from a B+ salesperson is the same as a salesperson wanting A+ results from a B+ account base! SALES GROWTH IS YOUR JOB. Banging your fist on the table and saying, “Sell more!” will not get it done.

Motor Size

Maximize & Grow

I have a twin brother, David. We picked fruit together for nine summers. Cherries, apples, peaches, strawberries, plums and pears. In nine summers, I never out-picked him.

David has the focus, drive and tenacity to finish big and small jobs. He is the senior v.p. of a Fortune 500 company.

He is a machine with no off switch. His motor for work is bigger than mine. We have the same DNA, but the power is dispersed differently. (I sing and dance better, but no one is paying for that.)

You may have some David Olsens working for you.

Congratulations, you’ve won the salesman’s lottery. Treat them great; they are rare.

Realistically, you probably have more James Olsen types (not Superman, just his pal, cub reporter Jimmy Olsen) working for you.

Asking a player to make a play he cannot make and then getting angry with him for not making it is bad coaching, but it happens all the time.

It happens on sales teams, too. Any time you hear yourself saying, “If only he would _____ more, he would sell more” or “All she has to do is _____ and she would sell more,” stop. You are not smarter than your sales team.

They know what you are telling them. (How many times

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Banging the Table

Set a profitability goal for all salespeople. Make it aggressive. Don’t give in to mediocrity, but be realistic.

Once your individual salespeople hit that number, work with them (give them RST Leadership sales training, for example) to get better, but when you get to maximization with your current team, hire more salespeople.

This strategy will work with the experienced yet underperforming salesperson who is holding your growth hostage. Like the development in a city that must grow around a hard-nosed non-seller, build around him.

When your team knows that you are committed to growth, that you will hire new salespeople, they will work harder for you.

New blood will do what nagging never will—grow sales.

James Olsen Reality Sales Training (503) 544-3572 james@realitysalestraining.com Building-Products.com

Echo Park Do it Center Closes

DEALER Briefs Red Bluff True Value Hardware, Red Bluff, Ca., closed Dec. 21 after 56 years, with the retirement of owners Larry and Wayne Brown.

True Value Hardware, Mercer Island, Wa., held a grand re-opening Nov. 23 to show off its newly relocated store.

Lowe’s submitted revised plans for the proposed store on its 11.5-acre site in Poway, Ca. The chain now wants to build an 111,500-sq. ft. building with attached 27,700-sq. ft. garden center instead of a 121,000-sq. ft. home center with 31,500-sq. ft. garden center, as approved two years earlier. Lowe’s hopes to begin construction within months, in time for a grand opening at end of the year.

Home Depot plans to open eight new stores this year and repurchase approximately $5 billion of its stock.

Chainwide sales were up 5.6% in 2013.

Anniversaries: Gold 55th …

Beach Lumber, Gold Beach, Or.,

Stardust Non-Profit Building Supplies, Phoenix,

Az., won a 2013 environmental award from the EPA for its creative re-use of building materials.

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Reliable Do it Center, Echo Park (Los Angeles), Ca., closed at the end of the year, nearly six decades after its founding by owner Steve Wintner’s father.

Winter, 65, had worked at the store since he was 10 and took over 25 years ago when his father passed away. He attributed the closure to big box competition and onerous city regulations. He has sold the 2.5-acre property to a Canadian-based developer, who plans to build a multi-story mix of apartments and businesses.

Plum Creek Purchases Last U.S. Forests of MeadWestvaco

Plum Creek Timber Co., Seattle, Wa., has completed the purchase of all of the U.S. timberlands of MeadWestvaco Corp., Richmond, Va. The $1.1-billion deal includes 501,000 acres of Southeastern timberland, associated mineral and wind assets, and interests in 109,000 acres of rural and development lands in the Charleston, S.C., region.

MeadWestvaco continues to own and manage 135,000 acres of forestland in Brazil.

Kodiak Buys Denver Distributor

Kodiak Building Partners, Denver, Co., has acquired the state’s largest independent drywall distributor, JonesHeartz Drywall Supply, Denver.

Prior Jones-Heartz president Greg Lyon will lead the

Building-Products.com

merged drywall operations of JonesHeartz and Great West Drywall, which Kodiak bought two years ago.

RY Nets Montana Timber Sale

RY Timber, Townsend, Mt., successfully bid $1.7 million for the 789acre Palisades Timber Sale near Red Lodge, Mt. The purchase includes 32 harvest units to net an estimated 6 million bd. ft. of timber to fuel RY’s sawmills in Townsend and Livingston, Mt.

Montana Dealer Pays Tribute to Predecessors

When Triple S Building Center acquired additional land in Butte, Mt., it discovered that the property previously had been home to at least six other lumberyards since 1900.

An engineering firm hired by Triple S to conduct research on the property made the discovery looking over old fire maps of the 100-200 block of East Front Street.

While refacing the warehouse, owners David and Doug Stordahl decided to pay their respects. They installed six wooden doors with vintage lighting fixtures above to better illuminate the sidewalk below. Above each door they placed a dated plaque commemmorating a prior resident— Big Blackfoot Milling, Stephenson Lumber, Monarch Lumber, Pioneer Lumber, Best Way Building Center, and United Building Center.

SUPPLIER Briefs Boise Cascade’s engineered wood products plant in White City, Or., installed a bander from Samuel Strapping Systems.

Canfor Corp. will invest over $30 million upgrading its Houston, B.C., sawmill.

Rhino Linings Corp. ., San Diego, Ca., has acquired the assets of Expo Stucco manufacturer Expo Industries, San Diego.

Olympic Paint & Stain was honored as Lowe’s 2013 Innovation Partner of the Year.

Huttig Building Products, St. Louis, Mo., has begun trading its shares on the NASDAQ exchange under the ticker symbol “HBP.” Building-Products.com

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THINKING Ahead

By Gary Vitale, President & C.e.o., North American Wholesale Lumber Association

Sizing up the supply side

Outlooks and observations for 2014

R

in the lumber supply chain—logger, mill, remanufacturer, wholesaler, retailer—the immediate future of our businesses will be determined by many forces beyond our control and several very much in our grasp.

The questions of growth and profitability will be impacted by the very small (the mountain pine beetle) and the very large (the urbanization policies of the Chinese government), and much in between (the ability of a young family to buy a new home, or the changing EGARDLESS OF OUR PLACE

credit policies of business lenders). With so many factors in play, what lies ahead for the lumber companies that have persevered and survived the devastating impacts of the great recession and the housing collapse?

Real recovery has been evident in recent months and there are many positive trends, and we are guardedly optimistic as we look at 2014 and beyond. What is clear is that despite generally rosy outlooks for lumber, not everyone in the industry will emerge from the recession and recovery as a winner.

There are many challenges ahead: dealing with credit issues, identifying trustworthy partners, introducing innovative products and practices, and understanding international impacts. Chief among the realities we face is the likelihood that the lumber supply cannot keep pace with growing demand.

Constraints on the supply side While there are varied predictions on how much the lumber supply will tighten, there is a strong consensus among industry experts that supply will not be able to keep pace with demand increases in the U.S. and China— beginning this year and continuing over perhaps the next five years.

To dig deeper into this issue, I talked recently with Henry Spelter, a partner and forecaster with Forest Economic Advisors. He predicts that by 2015 or 2016 demand will double to 1.5 billion board feet—twice the current demand—a level that will come up against major supply constraints.

The biggest constraint is the pine beetle epidemic. It is reaching its climax in British Columbia (B.C.), but the

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Building-Products.com

A Special Series from North American Wholesale Lumber Association

wood that has been infested is less useful and a good chunk of supply will be taken out in coming harvests. In 2013, demand was up 5% to 10%, but B.C.’s harvest was the same as the previous year and its ability to respond to increasing demand is very low. This is likely to reduce B.C.’s role in the supply mix.

Mill closures due to recession are a factor, but not an enormous one, because much of their output has been replaced by more production at other mills. Still, there has been a loss of about 7 billion board feet in production capacity—about 10%.

A third supply constraint is government policies, which are especially limiting in the U.S. Pacific Northwest. These include limitation of timber harvests from public lands, lumber trade restrictions, and log

to grow as China moves to urbanize its population. One result is likely to be higher prices for wood. If demand bumps against constraints, log prices will go up. Now about $400 per 1,000 bd. ft., the price could get to $500 or even $600 or $700. If so, alternative building products such as steel, plastic and composites will become more attractive building products.

What to do Keep your suppliers close. Regardless of the exact levels or causes of the supply shortage, it is increasingly important for lumber wholesalers to solidify relationships with your suppliers and reach out to new possible sources before we are desperate. The competition will intensify in coming months, and those who are well positioned with suppliers will have an advantage.

Listen to the sound of the future. I invite you to join me for what will be a very important 2014 NAWLA Leadership Summit, March 30-April 1, at Callaway Gardens, near Atlanta. It will be a timely gathering for all of us, as we face these challenges. Seven industry leaders have agreed to speak to us about the future— about outlooks in various regions, U.S. and international developments, and navigating changes in the supply chain.

The speakers are Don Kayne, president/c.e.o. of Canfor; Marc Brinkmeyer, chairman of Idaho Forest Group; Jack Koraleski, president/c.e.o. of Union Pacific; Kimmo Jarvinen, secretary general of the European Organization of the Sawmill Industry; Jon Biotti, managing director of Charlesbank Partners; Peter Alexander, c.e.o. of BMC, and Curt Stevens, c.e.o. of Louisiana Pacific. I urge you to consider attending this Summit as we begin a new phase of lumber industry recovery. For more information, go to www.nawla.org.

export duties and restrictions.

Spelter says the high point of production, in 20042005, was 65 to 70 billion board feet a year. Today, there is 50-55 billion board feet of capacity being used of the nominal capacity of 63 billion board feet (effective or real usable capacity is less because some mills are mothballed).

Supply limitations come at a time when U.S. housing starts are trending upward and Chinese demand continues

Building-Products.com

Position yourself to compete. In this new environment, securing good deals with suppliers will become very competitive. Also, anticipate competition from engineered woods, plastics, vinyl decking and composites, which are likely to become a large part of the market. As one insider said, “We’re going to have to stay alert and act decisively to get our share.”

Caution: sharp elbows may prevail.

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MOVERS & Shakers Mike Thelen has been named chief operating officer for Welco Lumber, Burnaby, B.C. He also continues as v.p. of sales & marketing for SilvaStar, Bellingham, Wa. Jeff Wolgemuth is now sales mgr. for SilvaStar.

Josh Clark has joined Central Valley Builders Supply, St. Helena, Ca., as director of sales & business development, managing its agriculture and contractor sales teams.

Rhonda Hunter has been promoted to senior v.p.-timberlands for Weyerhaeuser Co., Federal Way, Wa., succeeding Tom Gideon, who retires next month.

Nate Freeman is new to inside sales at Advantage Trim & Lumber, Santa Fe Springs, Ca. Rick Re has been promoted to c.e.o. and board chairman of the Seneca Family of Companies, Eugene, Or. Todd Payne is now general mgr.

Kate Hyatt, ex-Staples, has been named v.p.-talent for ProBuild Holdings, Denver, Co. Steve Russell is new to commercial sales in Eagle, Id.

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Amy Monson was promoted to marketing specialist at J.M. Thomas Forest Products, Ogden, Ut. Susan Timpe, ex-Concannon Lumber, is a new transaction specialist at Stimson Lumber, Portland, Or. Frank Parrott, Matheus Lumber, San Marcos, Tx., has retired after 30+ years in the industry.

Frank Carroll, ex-Knaack, has been named general merchandise mgr. for Ace Hardware Corp., Oak Brook, Il. Bruce Bunn has joined BW Creative Railings, Maple Ridge, B.C., as director of sales. Frank Girard is now senior financial mgr., and Phil Jones, controller. Kalvin Eden has been promoted to sales mgr. for BW Vista Railing Systems.

Rob Schmiedel has been appointed national sales mgr. for Do it Best Corp., Fort Wayne, In. Scott Orman is national logistics mgr.

Charles W. Roady, F.H. Stoltze Land & Lumber, Columbia Falls, Mt., has been newly appointed to the Softwood Lumber Board by U.S. Agriculture Secretary Tom

January 2014

Vilsack, along with Don Kayne, Canfor, Vancouver, B.C., and Danny White, T.R. Miller Mill Co., Brewton, Al. Reappointed to three more years were Francisco Figueroa, Arauco USA, Atlanta, Ga.; Aubra Anthony Jr., Anthony Forest Products, El Dorado, Ar., and Alden J. Robbins, Robbins Lumber, Searsmont, Me. Art Burne is manning the employee cafeteria at Mungus-Fungus Forest Products, Climax, Nv., report owners Hugh Mungus and Freddy Fungus.

Plycem Buying CertainTeed Fiber Cement Business

Intent on focusing on vinyl and polymer siding, Saint-Gobain has agreed to sell its U.S.-based CertainTeed fiber cement siding business to Plycem USA. The deal, set to close in first quarter 2014, includes plants in White City, Or.; Roaring River, N.C., and Terre Haute, In., and employs nearly 250.

Plycem and sister company Maxitile are subsidiaries of Elementia of Mexico.

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THE BEST BUILDERS AGREE ON COLLINS.

We work with some of the best homebuilders around, be it sub-division or sub-terrain. So when you specify Collins, you’ll work with a timber company with a healthy respect for both. For more than 150 years, we’ve worked to preserve natural habitat, minimize our impact and maintain our forests for the good of those who live in it, and for those who don’t. Building and rebuilding. It’s something that we believe should go hand in hand. Or paw in paw.

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Feel good about it

SPECIAL Focus Western Woods

By Brooks Mendell, Forisk Consulting

U.S. timber supplies and rising demand for softwood lumber

T

UNITED STATES has more softwood trees than you can shake a stick at. Analysis of U.S. Forest Service data indicates the South has nearly 3.5 billion tons of standing pine grade and pulpwood inventory on private, operable timberlands.

That’s about 140 million truckloads.

Coastal Oregon and Washington, a region with 103 open softwood mills, has over 68 billion bd. ft. (over 400 million tons) of standing softwood grade inventory on privately-owned timberlands. And these numbers represent but a fraction of total U.S. forest stocks.

Forisk conducts research on the impact of local supply events (such as natural disasters) and trends (such as increased forest growth rates or plantation acreages) on timber markets to forecast timber and delivered log shipments. For the near-term, states with the most severe pine grade oversupplies show how stumpage prices become less sensitive to increases in demand in those states for which a HE

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quantitative basis exists for significant excess inventories.

Alternately, analysis of coastal markets in the Pacific Northwest indicates less quantitative evidence for dampened log prices in a region buffeted by robust export demand.

Forest Supplies & Demand

What do we think about the potential impact of forest supplies on timber prices across the United States in the short and long-term as housing markets recover and forest harvesting increases?

In evaluating the potential for softwood grade oversupplies or constraints, Forisk uses the “removal year” metric—accessible inventory divided by removals—to identify a local market with a potential supply imbalance. The removal year estimates how many years it would take to deplete standing inventories, given a set level of removals per year. For example, if we assume one extra year’s worth of standing inventory, it

January 2014

would take four years of removals at 25% above the long-term average to deplete the backlog.

In the Pacific Northwest, estimated changes in operable inventories on private lands have been modest, with Coastal Oregon and Washington averaging 16 years of softwood grade removals on the stump on private lands alone.

The results in the Northwest change slowly for two reasons. First, the U.S. Forest Service analyzes onetenth of Oregon and Washington’s forests each year. Therefore, we are continually looking at an average 10year forest. Second, Northwest markets have supplemented domestic downtime with increased export volumes, reducing the impact on net harvests. We note that the total removal years in the Northwest are higher when operating public forests are included, but we focus on private lands to better reflect harvest respons(Please turn to page 32)

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U.S. Timber Supplies (Continued from page 30)

es to changes in market prices.

Log exports are important to forecasting models for the Pacific Northwest because exports, while volatile and inconsistent, influence domestic sawlog prices. Export pricing ripples inward from the Coast to the Eastern Washington and Inland markets. In addition, log exports are subject to substitution across products, species and size classes. This is especially critical in Washington, where the ratio of domestic-to-export demand is 5:1. For Coastal Oregon, this ratio is closer to 50:1.

On the other hand, analysis of timber markets across the South indicates that, in the short term, excess sawtimber volumes can delay the strengthening of pine grade prices. For the U.S. South, not including outliers associated with lower-volume Tennessee and Virginia, states historically average 18 years of pine grade removals on the stump on private lands. Recent data indicates inventories for these same states approaching 31 years of pine grade removals on the stump.

The largest gains have occurred in Georgia, Mississippi and Arkansas.

While the Northwest benefits from log exports, forecasts for the South enjoy an increasing share of U.S. softwood lumber production. Current and forward-looking views on U.S. lumber production by region must account for two shifts. One is the increased U.S. market share of domestic lumber at the expense of

Canadian imports. The U.S. share has risen from 61% in 2004 to 72% for 2013 based on year-to-date WWPA data.

Two is the U.S. South’s increased market share of domestic softwood lumber production relative to the Pacific Northwest. The South grew its share of domestic production from 34% in 1983 through 1993 to 46% in 1993 through 2003. The 2008 to 2012 five-year average was 50%.

Long term, we assume that the South will grow its share of U.S. lumber production as the demand for housing returns to trend. This assumption is supported by the location of capital investments made and

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announced by forest industry firms in the United States.

Forward-looking projections highlight differing potential impacts of the recent economic recession on future forest supplies in the South and Pacific Northwest. Reduced harvesting activities over the past five years resulted in fewer acres of replanted trees.

For the near-term, states with the most severe pine grade oversupplies continue to show material decreases in their price-to-demand relationships over the past five years. In other words, stumpage prices became less sensitive to increases in demand in those states for which a quantitative basis exists for significant excess inventories. This includes states, for example, such as Georgia, Mississippi and Arkansas. Alternately, coastal Oregon and Washington have less evidence of supply-driven price effects.

While these estimates do not specify the situation in any given wood basket or for any given timberland property, they do support the evidence that supplies have affected stumpage markets selectively.

– Brooks Mendell, Ph.D., is president and v.p.-research of Forisk Consulting, Athens, Ga., providing research and educational services to executives and analysts making decisions related to timber REITs, timberlands, and wood-using energy and manufacturing facilities. He can be reached at (770) 725-8447 or bmendell@forisk.com.

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SPECIAL Focus Western Woods

SPF testing confirms published design values

P

RELIMINARY TEST DATA analysis of Spruce-Pine-Fir (South) lumber samples from the western mills indicates no change to SPF’s lumber design values is needed.

A report on SPF by the cooperating agencies is being finalized for submission to the American Lumber

Standard Committee board of review at this writing. It is anticipated the board of review will consider the submission at their meeting later this month.

SPF is a U.S. commercial species combination similar to the Canadian SPF combination. The growth range

of the species included in the group covers the western lumber producing region through the Great Lakes states and extends into New England.

Lumber samples for the testing program in the West were taken from mills producing 2x4 lumber in Engelmann spruce, lodgepole pine,

PACIFIC LUMBER Inspection Bureau’s Jeff Fantozzi (right) checks the percentage of summer wood in a No. 2 2x4 SPF sample, as American Lumber Standard Committee’s John McDaniel observes the testing procedures.

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the original in-grade testing program indicates no change is required to the currently published design values.

The monitoring program affirms current uses and building code recognition. The recognized span data for the species group will also remain the same. Had the data indicated a shift in properties, the test findings would have reviewed by the cooperating agencies’ memberships and appropriate actions taken.

The coordinating western lumber agencies, including Pacific Lumber Inspection Bureau, Redwood

Inspection Service, Timber Products Inspection, West Coast Lumber Inspection Bureau, and Western Wood Products Association, have been working together since early 2011 on the testing program to monitor western lumber design values.

Hem-fir will be sampled and tested in 2014. The testing of western species lumber is conducted periodically to monitor for changes and to allow for timely actions to be taken, if needed, to support western lumber products.

WWPA’s Russ Tuvey measures the mechanical properties of a No. 2 SPF 2x4 at the association’s testing facility in Vancouver, Wa.

and Sitka spruce.

The testing for the western lumber sample was conducted by Western Wood Products Association in cooperation with other western lumber agencies.

Northeast Lumber Manufacturers Association had previously conducted testing for the Northeast SPF production region and the Northern Softwood Lumber Bureau completed testing for the Great Lakes area earlier this year.

The published lumber design values are based on the in-grade lumber testing program. The testing plan was approved by the ALSC board of review. The plan required destructive testing of lumber samples in bending of SPF No. 2 2x4.

The preliminary data comparison to the SPF properties established in Building-Products.com

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SPECIAL Focus Western Woods

By Craig Larsen, Softwood Lumber Export Council

Steady increases for western softwood exports

T

marketplace for U.S.-produced softwood lumber continues to be a small but steady destination for western softwood species, especially in the Pacific Rim countries. The market fell back a bit in 2012, but recovered with the return of China as a major buyer of U.S. softwoods in 2013. Exports for 2013 should finish 20% ahead of 2012 at more than $1.15 billion and 1.4 billion bd. ft.—a possible new near-term record.

China reentered the market in a big way, pushing it to the number one HE INTERNATIONAL

spot with an estimated $223 million in value. Japan continued to improve with an estimated $166 million in value and 173 million bd. ft. received in 2011. Two other $100-million markets were Mexico and Canada, which includes re-exports overseas.

The international markets cooled in 2012 and were slow to start up again in 2013. Exports picked up during the second half of 2013 and are up from 2012 and near the record levels of 2011. Last year, China regained the number one position for softwood exports after dropping back to fourth

Specialized Lumber Remanufacturer & Sawmill with emphasis on Western Cedars Multiple Automated Prefinish Lines.

place in 2012, behind Canada, Mexico and Japan—markets that are steady or slowly growing.

Regional markets estimates in 2013 for U.S. softwoods include the Caribbean at $150 million, Southeast Asia at $50 million, and the European Union falling to $18 million. Upwardmoving markets—such as South Asia, including India and Pakistan, and the South Pacific, including Australia and the French Pacific Islands—combine for another $60 million in exports and Central and South America combine for over $12 million in shipments, up from 9 million in 2012.

Western species continue to have the major share of the international markets. Fir has climbed from $58 million in 2005 to $295 million (33% of all softwood export) in 2013.

Hemlock has climbed from $11 million in 2005 to $161 million in 2011, but dropped in 2013 to $105 million, mostly from China. Ponderosa pine has maintained a steady market at about $32 million in 2011, but up to $40 million in 2013.

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In the worldwide lumber market, U.S. softwood producers are still small suppliers in international softwood markets. Europe, Canada, Chile, New Zealand, and Russia are the major exporting regions or countries for softwood lumber products.

International markets requirements and product uses vary widely by species, sizes, grade requirements, and end use of the materials.

Traditional structural species, such as fir and hemlock, are found in many non-structural products. Lower grades of all species, of limited value in structural applications, find a home in crating, pallets, and packaging.

They are used in many remanufacturBuilding-Products.com

ing and gluing facilities, in parts of the world with much lower labor rates, for furniture and millwork components.

Wood frame residential construction is mostly limited to North America, Japan and parts of Oceana.

Even in those markets, the use of North American framing systems that incorporate 38mm x 89mm (2x4) structural members is limited to the U.S., Canada and a small segment in Japan.

Japan is the second largest wood frame building in the world, but of the nearly 540,000 wood frame units in Japan this year, only 108,000 were 2x4 based. The vast majority were traditional Japanese metric post and beam timber construction using metric sizes. Structural framing sizes in Australia and New Zealand use 35mm and 45mm by 90mm and 100mm sizes. U.S. softwood producers successful in these markets are providing metric sized lumber to compete with other imported products, mainly from Europe and Canada.

International Wood Uses

Most of the U.S. softwood exported is for non-structural uses. Interior

INTERNATIONAL BUYERS gave U.S. species a hard look at the American Softwoods booth at the 2013 Birmingham Timber Expo in Birmingham, U.K.

applications, such as doors, windows, frames, mouldings, flooring, paneling and other millwork, is a prime destination for both pine and fir species.

Furniture parts and glued panels are also a destination for softwood lumber. Western species, such as Douglas fir and hemlock, in the clear and other

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Jim Jim Vandegrift Vandegrift Sales Sales Manager Manager

January 2014

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upper grades are prized in Europe for wooden window and door parts and frames. Ponderosa and other western pines are used in rustic pine furniture, and for upholstery frames in Mexico, China and Vietnam. U.S. producers are selling both metric and imperial sizes into these markets, because much of the stock is ripped and resawn to provide “finished” metric sizes for the local markets.

A large portion of exported lower grades in softwoods are used in concrete forming for form walls, wailers and support posts. Much of the worldwide structural construction is based on the use of concrete so there are a

large demand for formwork materials at all levels. Some world markets require structurally graded materials, some cultures use the material repeatedly. But some see wood as a single use material and aim for a cost competitive disposable supply, and use the remains for fuel or local d-i-y projects.

Western Species Markets

The Pacific Rim is the leading market for western species, with China the leading destination in 2013, after dropping back in 2012 behind Japan. China has grown by a factor of 10. In 2005, the exports to China were

$23 million (33,072,000 bd. ft.), which rose to $245 million in 2011. In 2013, however, China rose back to an estimated $236 million, a increase of 53%. Hemlock was the leading U.S. species imported in 2011 at $105 million; it took the big hit in 2012 and recovered in 2013 to $79 million.

Douglas fir was $37 million in 2011, and increased to $53 million in 2013.

Japan is the major export market for U.S.-produced Douglas fir, importing $137 million, which was 50% of all Douglas fir exported in 2013, increasing to an estimated $160 million this year and up to 53%. The vast majority of the product is in metric sizes and lengths for post and beam construction. Western hemlock and hem-fir was a distant second at $6 million. Other notable species include redwood, western red cedar, yellow cedar, and ponderosa pine. Overall exports are on track to increase by more than 21% over 2013.

Mexico is the fourth largest market for western species in 2013. A market value of $126 million was exported to Mexico in 2011, and 2013 should top out at $149 million. Mexico is a lowgrade pine market, with ponderosa pine the leading known species imported, behind “other softwoods.”

Uses include furniture components, concrete forming, pallets, crating and millwork. Douglas fir is also imported for some structural applications along the border. The major competition is radiata pine from Chile.

The Softwood Export Council (softwood.org) is the U.S. western softwood link to international markets and marketing activities. The SEC and its member organizations, grading agencies, trade associations, and state agencies provide marketing programs, including trade shows, trade missions, market sourcing, design and usage information in native languages. A special SEC program helps put U.S. companies in direct contact with foreign buyers by helping with travel expenses to trade shows and on trade missions. Whether you are a producer, wholesaler or retailer, you probably have a link to the SEC and its activities through one of the SEC members.

– Craig Larsen has served as president of the Softwood Export Council since its founding in 1998. Previously, he spent nearly two decades with the Western Wood Products Association. Reach him at clarsen@softwood.org.

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SPECIAL Focus Western Woods

Modest expansion ahead for U.S. lumber markets Log exports to all countries are expected to top 11.9 million cubic meters for the year, up 24%. In 2014,

log and lumber exports should ease as domestic lumber prices rise and competition for logs increases.

U

.S. LUMBER DEMAND strengthened significantly in late 2012/early 2013 as home construction showed double-digit growth.

While home building slowed late in the year, residential repair and remodeling—the largest lumber market by volume—picked up the slack.

R&R construction spending finished the year up an estimated 9% compared to 2012. Higher interest rates coupled with continued slow economic growth is expected to result in modest but sustainable gains in 2014.

Responding to increased demand, 2013 U.S. lumber production increased an estimated 6% to 39.32 billion bd. ft., compared to 36.54 billion bd. ft. in 2012, according to WWPA. Lumber production in the West is expected to climb to 13.34 billion bd. ft. for 2013 and is projected to be 13.97 billion bd. ft. in 2014.

Lumber and log exports both saw gains. Lumber exports to the Pacific Rim should top 2.2 million cubic meters in 2013, with overall lumber exports finishing about 9% higher.

Log exports to China, predominantly Douglas fir and hemlock from the West Coast, are expected to top 6 million cubic meters in 2013—a 45% increase year-over-year. Exports to Japan are also up by double digits.

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SPECIAL Focus Western Woods

WWPA annual meeting to mark 50 years

W

WOOD Products Association will celebrate 50 years of lumber industry service at the 2014 annual meeting March 2-4 at the Embassy Suites Hotel Downtown in Portland, Or. More than 200 industry professionESTERN

als are expected to attend the threeday gathering, which will feature committee meetings, awards, receptions, lumber and housing forecasts, and events to commemorate WWPA’s 50th anniversary.

The North American Wholesale

Lumber Association again has planned its annual western regional meeting for March 4, to coincide with the WWPA occasion. NAWLA regional meeting details can be found on the the association’s website, at www.nawla.org/events/portland-

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www.yakama-forest.com 40

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regional-meeting.

The annual meeting will kick off with the industry welcome reception on Sunday evening March 2. WWPA president Kevin Binam will provide the association’s lumber outlook through 2016 at Monday’s forecast breakfast.

WWPA standing committee meetings will tackle a variety of industry issues, from lumber design values and grade requirements to phytosanitary regulations for lumber exports, followed by the industry luncheon. Monday afternoon features an industry forum covering a range of industry issues that impact western lumber producers and their customers.

Among this year’s guest presenters will be Brooks C. Mendell, Ph.D., president and founder of Forisk Consulting. Dr. Mendell has over 20 years of consulting, operating and research experience in forestry, finance, and the timber and bio-energy industries. He will provide an assessment of U.S. timber supply constraints on producers and their influence on western lumber markets.

The nation’s housing market and consumer demand for repair and remodeling will be covered by Jonathan Smoke, chief economist for Hanley Wood. Smoke is a national expert on tracking and analyzing housing market conditions across the country. The day will close with the chairman’s reception, which offers many opportunities to network with other industry professionals.

The annual meeting is open to all interested industry professionals, including retailers, wholesalers and manufacturers. Registration fees are $300 for WWPA members, $350 for associate members, and $450 for all others. Fees for registrations received after Feb. 15 increase by $50. For those who would like to just network with industry folks,

WWPA is again offering a special registration for the welcome and chairman’s receptions on Sunday and Monday nights, for $125 each.

Registration and hotel reservations for the meeting can now be completed online, using the WWPA registration link www.regonline.com/2014wwpa-annualmeeting. The annual meeting room block at the Embassy Suites fills quickly and it is anticipated the WWPA’s 50th anniversary conference will draw more registrants than previous meetings. The reservation deadline, to secure the WWPA group rate, is Feb. 2. Those needing overnight accommodations are urged to make hotel reservations early.

We’re growing Colville, WA – Usk, WA – Midway, BC – Eagar, AZ

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FAMILY Business

By Wayne Rivers

TLC needed for family members in the business H

AVE YOU EVER had a dog? Dogs love unconditionally and, in return, you show them love. The relationship is very special.

Unfortunately, some people treat their pets better than they do the members of their own families. Why not treat your family members as well as you treat your dog? Families in business can learn some valuable lessons from the way we treat our pets.

1. Pet them frequently. Your dog isn’t the only one who needs attention. Some of us express our needs clearly, while others don’t. But everyone needs love, affirmation, and time.

Your family members are no different. Spend time with them… not just in the business, but interacting as family.

You say sweet things to your dog.

When was the last time you said something sweet to a family member?

Tell your family members you love them, appreciate them, and respect them as people. A little TLC earns great dividends in love and loyalty from your dog. You will receive the same effect from your family.

2 . Stay in the yard. You don’t want your dog to stray from home because you don’t want them to get harmed or get into trouble. That’s good advice for family members also.

Don’t make family members “leave the yard” to find the acceptance, fulfillment, or support they want and need.

3. Feed them regularly. Are you giving family members just the scraps from your table or do you really feed them? All of us need to be fed, but nourishment and growth don’t just come from groceries or paychecks.

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Family Business Institute, Raleigh, N.C. Reach him at wayne.rivers@familybusinessinstitute.com or (877) 326-2493.

Reprinted with permission of the Family Business Institute. No portion of this article may be reproduced without its permission.

Send us your news!

Promote your recent expansion, new hires, product introductions, or other company changes on the news pages of the next issue of The Merchant Magazine.

Email to kdebats@building-products.com.

 ROUGH TIMBERS  UTILITY POLES  PRESSURE TREATED LUMBER RETARDANT TREATED  FIRE LUMBER AND PLYWOOD Provide opportunities for family members to learn and grow professionally and personally. The more you feed them, the more all of you grow.

4 . Throw them a bone. From time to time, treat family members to an unexpected bonus. It might be a something as simple as a night on the town, a day off work, or even a getaway trip. Let them know you appreciate them and the roles they play in your family and your business.

5. Listen to their barking. When a dog barks it is because he is afraid or something is not right. When family members “bark,” you should pay attention and be responsive. If something is wrong, don’t allow it to drag on and on.

You get the point. Your dog deserves time and care. So do members of your family, especially if you work with them. Just as your dog gives you unconditional love in return for your attention, you might be pleasantly surprised by similar results from family members. You can get everything in life you want if you just help enough other people get what they want. And what most of us crave is recognition, care and love.

If this approach works for dogs and for family members, why shouldn’t it apply to co-workers, customers, vendors and everyone you know? The analogy may seem simplistic and silly, but the lesson is real. Treat everyone around you like a dog. Not only will they be happier, more productive, and more dedicated, but their responses to you will help you in attaining everything in life you want.

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– Wayne Rivers is president of the Building-Products.com

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PARR

LUMBER COMPANY 14023 Ramona • PO Box 898 Chino, CA 91708

www.parrlumberchino.com (909) 627-0953 • Fax 909-591-9132

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• • • • •

Vince Galloway – x19 Chris Hexberg – x22 Matt Wright – x33 Joe McCarron – x21 Bert McKee – x16

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TOP 10 green product CrossLam CLT comes in panels up to 40 ft. long, 10 ft. wide, and 12 inches thick, and uses formaldehyde-free Purebond polyurethane adhesive.

CLT Stars Among Top 10 Green Products of 2014

CrossLam cross laminated timber from Structurlam Products was honored as one of the Top 10 green products of the year, according to the annual ranking by BuildingGreen.

The CLT is made by gluing layers of softwood boards one on top of the next at right angles to each other, creating panels that are light and dimensionally stable in all directions for use in floors, walls and roofing. CLT is made from less desirable wood, including wood taken from forests killed by mountain pine beetles.

The product, like almost all the others on the list, qualifies for LEED credits. According to BuildingGreen, the rating system continues to be a big driver of innovative green products and the recent launch of LEED v4 marked an even stronger focus on safe materials and product transparency.

Other products on the Top 10 are: • ComfortBoard mineral wool board insulation from Roxul; • Assa Abloy Group’s PoE electronic access control locks, which can stay operable during power outages using very little back-up energy; • SMA America’s Sunny Boy inverters, which take solar energy off the grid; • Coldspring’s Earth Measure exterior stone cladding, dimension stone that utilizes quarry waste; • Kinetex textile composite flooring from J+J Flooring Group • Mayekawa USA’s CO2-refrigerant heat pumps; • Soraa’s Vivid MR16 LED replacement lamps; • Schüco’s ERC 50 modernization facade, and • Green Mountain Technologies’ Earth Flow composting system.

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A HARDWOOD CHRISTMAS Heidi & Steve Ondich, Candice & Paul Pendergast. [10] Randy & Marty Porter, Tracy & Jim Gaither. [11] Charley Fiala, Alana Northrup, Allison & Deonn Deford. [12] Randy & Sherri Wilson, Tobi Wilson, Rob Wilson. [13] Charley Bohnhoff, Dian & Walter Maas.

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Photos by Walter Ralston

Keith Swaner. [3] George & Katie Swaner. [4] Joyce Ralston, Gary & Lauralee Swaner. [5] Alan & Dayna Arbiso. [6] Bill & Kathy Fitzgerald, Katherine Rohm, Dan Bohannon.

[7] John Banks, Christian Aldama, Sheree & Richard Phillips. [8] Garrison & Nicole Cox. [9]

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ACQ ACQPreserve • Borates D-Blaze® Interior Fire Retardant Heat Treating ISPM 15 Compliant • Custom Drying Rail Served BNSF • TPI Third Party Inspected FSC Certified SCS-COC-002513

909-350-1214

15500 Valencia Ave. (Box 1070), Fontana, CA 92335 Fax 909-350-9623 • email – sales@fontanawholesalelumber.com

www.fontanawholesalelumber.com

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Building-Products.com

PVC Deck with Charm

Paramount PVC decking from Fiberon combines lasting durability with a realistic wood look.

The line includes two solid color and three multi-colored looks, in

square-edge and grooved profiles.

Phantom hidden fasteners provide a smooth surface.

 FIBERONDECKING.COM (800) 573-8841

Micro Pinners

Senco’s two new 23-guage pneumatic micro pinners are designed for woodworking and carpentry professionals.

FinishPRO 10 and 11 weigh under 3 lbs. and can fire headless pins ranging from 1/2” to 2” long. Other improvements include quick and easy loading, a more powerful motor, and an ergonomically angled pistol grip.

 SENCO.COM

(513) 388-2000

Advanced Sealer

Zinsser BIN Advanced from Rust-Oleum is a primer and sealer made with synthetic shellac.

The white finish covers stains and odors, sealing and hiding everything from pet smells to soot and lingering smoke damage from fire.

It reportedly offers excellent adhesion and can stick to slick surfaces, such as Formica, tile, glossy paints, and varnishes.

 RUSTOLEUM.COM (888) 855-1774

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The Look of Slate Up Top

Sustainable Insulation

CertainTeed’s R20 Sustainable Insulation meets new 2012 IECC requirements for wood-frame walls.

Designed for use in standard wood stud and steelframe wall assemblies, the fiberglass product is available unfaced or kraft-faced.

It is manufactured with recycled and renewable content, including a plant-based binder, and contains no formaldehydes, dyes, acrylics, or unnecessary fireretardant chemicals.

Aledora roof tiles from InSpire Roofing Products are designed to look like genuine slate tile at a more economical price, with lighter weight and virtually no maintenance.

The 12” tiles have authentic texture, sharp and jagged tiles edges, and natural shadow variance. They also offer a 110-mph wind-uplift rating and Class 4 impact rating.

Available colors include charcoal black, mist gray, olive, steel gray, sage green, red rock, and brandywine.

 INSPIREROOFING.COM (800) 971-4148

 CERTAINTEED.COM (800) 233-8990

Up With Safety

Werner’s new Podium ladder offers a larger standing surface and waist-high guard rail, to increase safety on the job.

A Locktop design securely and conveniently organizes tools and accessories at the top of the ladder, where they are needed. The Edgetop bracing system increases the size of the ladder foot pad, braces the first step, and provides protection at every angle.

 WERNERCO.COM (888) 523-3371

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Building-Products.com

Bamboo Dimension

Simplified Software

The new 4.0 release of Epicor BisTrac a platform update to Microsoft .NET Framework, a simplified and streamlined user interface, and added functionality.

LBM dealers can now insert value-added price and time into a sales order, schedule work orders and sales orders together, and share

Building-Products.com

these times with work crews via an Outlook calendar.

For distributors and dealers with multiple locations, the software has new tools to coordinate and optimize the movement of inventory between branches.

 EPICOR.COM

Plyboo dimensional lumber from Smith & Fong is designed to be both substantial and decorative.

Made of bamboo, the interiorgrade product is available in amber and natural, edge and flat grain, in 2”x2”, 2’x4”, 2’x6”, 2’x8”, 2”x10”, 2”x12, and 4”x4”, in standard lengths of 72”, 96”, and 120”. Other lengths and dimensions are available upon request.

 PLYBOO.COM

(888) 463-4700

(866) 835-9859

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WEST COAST HOLIDAYS Photos by The Merchant

HOLIDAY MEETING of the West Coast Lumber & Building Material Association’s 2nd Growth group was held Dec. 5 at Embassy Suites, Brea, Ca. [1] Larry Bollinger, Stephanie Rasmussen, Keith & Sherie Lyng, Terry Rasmussen. [2] Scott Whitman, Mark Huff, Craig Larson. [3] Rick Deen, Kathy Retledge.

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[4] John Neel, Dan Croker. [5] Shellie Porter, David Abbott, Sherie Lyng. [6] Tyrone Smith, Nancy Shaw. [7] Ryan Mitchell, Chuck Casey.

[8] Jay & Holly McArthur. [9] Jarrell Deschenes, Carlos Lopez, Chris Johnson. [10] Mike Bland, Troy Huff. [11] Tom Rider, Victoria Foucault. [12] Jackie Vega, Natalie Allen. [13]

January 2014

Betsy Bendix, Jean Henning, Charlene Valine.

[14] Shawn Knight, Joe Lozano, Will Lone. [15] Ed Aguilar, Margarita & Jorge Vargas. [16] Bill Young, Joe Allotta. [17] Al Reed, Melinda Ganahl. [18] Rick Porter, Pete Ganahl. [19] Denise Bough, John Assman. [20] Jose Jimenez, Les Haugen, Mike Garrity.

Building-Products.com

ASSOCIATION Update Western Building Material Association has scheduled its annual convention Feb. 12-14 at Tulalip Resort, Marysville, Wa. Rick Davis will present his Sales Boot Camp, covering such topics as the four key attributes of top sales leaders and how to beat the price objection. Duane Knapp will discuss the benefits of building a genuine brand: enhancing your brand’s relevance and preference in your markets, improving your competitive advantage, and defining your perceived value proposition.

Mountain States Lumber & Building Material Dealers Association is moving to a new location and a single-day format for its upcoming 2014 LBM expo.

Themed “Things Are Taking Off: Problems Become Opportunities When the Right People Come Together,” the event is set for March 14 in the Convention Center at the Crowne Plaza Denver International Airport, Denver, Co.

China & beyond, and Brooks Mendell, Forisk, investor strategies in the timberlands, processing & energy sectors.

Western Wood Products Association will meet March 2-4 at Embassy Suites Downtown, Portland, Or. , for its annual meeting. A western regional meeting of North American Wholesale Lumber Association will be held on the last day.

National Lumber & Building Material Dealers Association is holding its spring meeting and legislative conference March 31-April 2 at

the Hyatt Regency, Arlington, Va. Political commentator Tucker Carlson is guest speaker for the LuDPAC fundraising luncheon.

In addition to association committee and board meetings, Capitol Hill appointments will be set up by local federated associations between NLBMDA members and legislators and key federal agency officials to discuss NLBMDA’s policy priorities in Washington, culminating with a reception for members of Congress and their staff on Capitol Hill.

Once again, the conference will take place jointly with the Window & Door Manufacturers Association, increasing the number of business networking opportunities.

West Coast Lumber & Building Material Association will hold a 2nd Growth meeting March 4 in Buena Park, Ca. Western Wood Preservers Institute will host its winter meeting Feb. 20-21 at Embassy Suites Downtown, Portland, Or. Western Forestry & Conservation Association is partering with Wood Resources International to present “Mapping the Course: Timberlands, Forest Products Processing, and Energy Issues for 2014” Jan. 23 at Heathman Lodge, Portland, Or. Speakers include Hakan Ekstrom, Wood Resources International, on global drivers affecting the Douglasfir region; Bruce Glass, Campbell Group, strategic issues for Doug-fir timberland; Rocky Goodnow, Forest Economic Analysts, Doug-fir region timber supply; Dave West, Kapstone Paper, and Scott Atkinson, Idaho Forest Group, issues for Doug-fir region processors; Tad Mason, TSS Consultants, issues for Doug-fir region biomass energy; David Elstone, Equity Research Associates, evolving lumber economics & quality; consultant Grant Watkins, issues in the pellet sector; Bob Flynn, RISI, exports to Building-Products.com

Thanks to our customers and vendors as we begin our 28th year • Tyvek • Garden Products • Building Materials • Panels • Roseburg DuraTemp Plywood Siding • Industrial Lumber • Salvage & Surplus

Riverside, CA

877-369-2327 “Caring about customers is our business” January 2014

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IN Memoriam Neil Nakamura, 54, buyer for Pine Cone Lumber, Sunnyvale, Ca., died Nov. 30.

After graduating from the University of Hawaii, he entered the lumber industry in the late 1980s, handling purchasing for Lee Haskin Co., Kailua, Hi. In 1992, he joined Forest Grove Lumber, McMinnville, Or., initially in Hawaii sales, before taking over as sales manager in 1994.

He joined the sales team at Elk Creek Forest Products, McMinnville, in 2002, moving to purchasing and sales at Conrad Forest Products, McMinnville, in 2004. He joined Pine Cone in 2007.

Don R. Johnson, 83, founder of D.R. Johnson Lumber, Riddle, Or., died Nov. 25 in Riddle after battling illness for several years. He suffered the first of several strokes in 2006, but continued to work.

Mr. Johnson started in the lumber

industry at a young age, working in his father’s mill in Veneta, Or. He started his own logging company after serving in the Merchant Marines from 1945 to 1950.

In 1951, he began building a sawmill that was the start of D.R. Johnson Lumber. He later added Riddle Laminators, Umpqua Lumber, Prairie Wood Products, and Grant West Lumber. He also owned and operated two wood-fired co-generation plants in Riddle and Prairie City.

In 1994, the Douglas Timber Operators honored Johnson with its Tough Tree Award.

account manager in Portland, Or. In 1974, he moved to Tucson, Az., as lumber sales manager, then to Reno, Nv., until the facility closed. In 1988, he formed his own wholesale company, Stilwell Lumber Sales, Klamath Falls.

Michael James Stilwell, 70, longtime Georgia Pacific sales manager, died Oct. 5 in Klamath Falls, Or. After serving in the U.S. Navy, he joined Modoc Lumber Co., Klamath Falls, Or., as a mill hand in 1964, working his way up to assistant sales manager. In 1973, he joined GP as an

Bruce Valentine, 64, communications director for AWFS (Association of Woodworking & Furnishings Suppliers), Anaheim, Ca., died Dec. 3rd in Anaheim.

He joined the trade association, producer of the biennial AWFS Fair, in 1996 as marketing manager.

Bill Davis, 92, retired mill superintendent at Flodin Lumber, Plains, Mt., died Dec. 13 in Milton-Freewater, Or. During World War II, Mr. Davis worked on war planes at Boeing and served in the U.S. Army.

He spent more than 35 years with Flodin.

CLASSIFIED Marketplace Rates: $1.20 per word (25 word minimum). Phone number counts as 1 word, address as 6. Centered copy or headline, $9 per line. Border, $9. Private box, $15. Column inch rate: $55 if art furnished “cameraready” (advertiser sets the type), $65 if we set type.

Send ad to Fax 949-852-0231 or dkoenig@building-products.com.

For more info, call (949) 852-1990. Make checks payable to Cutler

HELP WANTED RELIABLE WHOLESALE LUMBER, Huntington Beach, Ca., is seeking an experienced moulder operator. This is a union position with full benefits. Schedule is M-F 6:30 – 3:00, some weekends. Contact Randall Richards, randall.richards@rwli.net or (714) 849-2211.

Publishing, 4500 Campus Dr., Ste. 480, Newport Beach, Ca. 92660.

Deadline: 18th of previous month.

To reply to ads with private box numbers, send correspondence to box number shown, c/o The Merchant. Names of advertisers using a box number cannot be released.

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• More news • User-friendlier layout • Frequent updates throughout each day • Smartphone & tablet accessible • Improved search features • Event photos • Videos • Building products stock ticker January 2014

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DATE Book Listings are often submitted months in advance. Always verify dates and locations with sponsor before making plans to attend.

Colorado Springs Home Building & Remodeling Show – Jan. 1012, Norris-Penrose Event Center, Colorado Springs, Co.; (800) 374-6463; www.homeshowcenter.com.

San Diego Home Show – Jan. 10-12, Convention Center, San Diego, Ca.; (888) 433-3976; www.acshomeshow.com.

National Retail Federation – Jan. 12-15, convention & expo, New York, N.Y.; (800) 673-4692; www.nrf.com.

Black Bart Hoo-Hoo Club – Jan. 15, industry night, Broiler Steakhouse, Ukiah, Ca.; (707) 621-0485; blackbarthoohoo181.org.

Truck Loggers Association – Jan. 15-17, convention & show, Westin Bayshore, Vancouver, B.C.; (604) 684-4291; www.tla.ca.

Humboldt Hoo-Hoo Club – Jan. 16, crab feed, Elks Lodge, Eureka, Ca.; (707) 601-9128.

Western Pallet Association – Jan. 17-21, annual meeting, Rancho Las Palmas Resort, Rancho Mirage, Ca.; (360) 335-0208; www.westernpallet.org.

Do it Best Corp. – Jan. 20-22, winter conference, Walt Disney World Swan Resort, Orlando, Fl.; (260) 748-5300; doitbestcorp.

Western Forestry & Conservation Association – Jan. 23, forest industry conference, Heathman Lodge, Vancouver, Wa.; www. westernforestry.org.

Portland Renovation & Landscaping Show – Jan. 24-26, Portland Veterans Memorial Coliseum, Portland, Or.; (800) 374-6463; www.homeshowcenter.com.

Surfaces – Jan. 27-30, Mandalay Bay Convention Center, Las Vegas, Nv.; (972) 536-6358; www.surfaces.com.

National Association of Wholesaler-Distributors – Jan. 28-30, executive summit, Fairmont, Washington, D.C.; (202) 872-0885; www.naw.org.

California Forestry Association – Jan. 29-30, annual meeting, Marriott, Napa, Ca.; (916) 444-6592; www.foresthealth.org.

International Builders Show – Feb. 4-6, sponsored by National Association of Home Builders, Las Vegas Convention Center, Las Vegas, Nv.; (800) 368-5242; www.buildersshow.com.

National Kitchen & Bath Assn. – Feb. 4-6, expo, Las Vegas Convention Center, Las Vegas, Nv.; (800) 843-6522; nkba.org.

Sierra-Cascade Logging Conference – Feb. 6-8, Anderson, Ca.; www.sierracascadeexpo.com.

Willamette Valley Hoo-Hoo Club – Feb. 7, crab feed, Shadow Hills Country Club, Junction City, Or.; (541) 688-6675.

Northern Utah Home Show – Feb. 7-9, Davis Convention Center, Layton, Ut.; (888) 433-3976; www.acshomeshow.com.

Los Angeles Home Show – Feb. 7-9, L.A. Convention Center, Los Angeles, Ca.; (888) 433-3976; www.acshome-show.com.

San Mateo Home Show – Feb. 7-9, San Mateo Event Center, San Mateo, Ca.; (888) 433-3976; www.acshomeshow.com.

Western Building Material Association – Feb. 12-14, annual convention, Tulalip Resort, Marysville, Wa.; (888) 551-9262; www.wbma.org.

Southern California Hoo-Hoo Club – Feb. 19, meeting, San Dimas Golf Course, San Dimas, Ca.; (760) 324-0842; hoohoo117.org.

Western Wood Preservers Institute – Feb. 20-21, winter meeting, Embassy Suites Downtown, Portland, Or.; (360) 693-9958; www.wwpinstitute.org.

Oregon Logging Conference – Feb. 20-22, Lane County Fairgrounds, Eugene, Or.; www.oregonloggingconference.com.

True Value Co. – Feb. 22-24, spring market, Georgia World Congress Center, Atlanta, Ga.; (773) 695-5171; www.truevaluecompany.com.

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IDEA File

ADVERTISERS Index

Doing Good

For more information on advertisers, call them directly or visit their websites [in brackets].

Bear Forest Products [www.bearfp.com].....................................51 Bennett Lumber [www.blpi.com] ..................................................37 Blue Book Services [www.bluebookservices.com] ....................40 Bodyguard Wood Products [www.bodyguardwood.com]............8 Cabot [www.cabotfactoryfinish.com] .............................................5 Capital [www.capital-lumber.com]................................................44 Collins [www.collinswood.com]....................................................29 Columbia Vista Corp. [www.columbiavistacorp.com] ................39 C.T. Darnell Construction [www.ct-darnell.com].........................42 DeckWise [www.deckwise.com] ...................................................53

Business basics and civic responsibility have

helped an East Coast dealer to thrive, even in tough economic times.

“It’s service and price,” says Scott Pesavento, owner of Hemlock Hardware, Fairfield, Ct. “This past year was our biggest and best year in 21 years.”

To stimulate business, he dropped prices on 35% of his inventory and plans to reduce prices on almost all the merchandise he sells. “Our industry has contracted,” he says. “The weak don’t survive.”

Pesavento also believes that his business succeeds by working hard to serve the community, by hiring only local residents to work in the store, and supporting local charities—especially in times of disaster.

He says that he cherishes the close connection he feels with regular customers. “I’ve had people sobbing in my arms,” he says. “You can’t put a value on that.”

After Hurricane Sandy, his store donated several hundred lanterns to those in need. When a winter blizzard shut down power, he stepped up with free flashlights. Last summer, he donated fans to elderly residents.

“Hemlock Hardware has always been there to help us in a variety of ways,” says police chief Gary McNamara. “It’s such a good partnership.”

When a local family has a particular need, such as insulation in cold weather, the police department calls Pesavento. When a weather-related crisis develops, Pesavento contacts police to offer help.

Hemlock Hardware’s commitment to community helped it win a national award from its co-op, Do it Best, which has 3,800 member-stores worldwide.

Hemlock was the only one in Connecticut to be named a 2013 Hardware Store All Star for outstanding customer service, community involvement, and business acumen.

Pesavento believes that running a small business has its advantages. He doesn’t have to answer to shareholders, and his customers enjoy the old-fashioned aspect of direct service and mutual respect.

“My grandfather was a handshake kind of guy,” he says, “and so am I.”

El & El Wood Products [www.elandelwoodproducts.com] ..........8 Fontana Wholesale Lumber [fontanawholesalelumber.com].....46 Huff Lumber Co. .............................................................................47 Jaaco Corp. [www.jaaco.com].......................................................48 Jones Wholesale Lumber [www.joneswholesale.com] ..............49 Keller Lumber Co............................................................................51 Malheur Lumber Co........................................................................32 Norman Distribution Inc. [www.normandist.com].......................45 Nusku Partners [www.nuskufireblocker.com]...............................3 Parr Lumber [www.parrlumberchino.com] ..................................44 Plycem USA [www.plycemtrim.com] ............................................15 Potlatch [www.potlatchcorp.com] ................................................35 PPG Machine Applied Coatings. [www.ppgpro.com]..................23 Redwood Empire [www.redwoodemp.com].................................17 Roseburg Forest Products [www.roseburg.com].............Cover IV Screw Products [www.screw-products.com] ..............................11 SilvaStar Forest Products [www.silvastar.com]............................7 Simpson Strong-Tie [www.strongtie.com]...........................Cover I Simpson Timber [www.simpson.com] .........................................38 Siskiyou Forest Products [siskiyouforestproducts.com]...........25 Skyreach L&S Extrusions [www.skyreachls.com] ......................28 Snider Industries [www.sniderindustries.com] .............................4 Stimson Lumber Co. [www.stimsonlumber.com] .......................31 Swanson Group Sales Co. [www.swansongroupinc.com].........33 Taiga Building Products [www.taigabuilding.com].....................43 Unity Forest Products [www.unityforest.com] ............................36 Universal Forest Products [www.ufpedge.com] ...............Cover III Utah Wood Preserving Co. ............................................................43 Vaagen Bros. Lumber [www.vaagenbros.com] ...........................41 Viance [www.treatedwood.com] ..........................................Cover II Woodtone [www.woodtone.com]..................................................24 Yakama Forest Products [www.yakama-forest.com]..................40

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