19 minute read
ACROSS THE BOARD
THE CURSE
------------ BY PATRICK ADAMS
I LOOKED AT MYSELF in the mirror this morning and wondered what happened. I’m not talking about this face and body that continue to age, but more about who is inside. I’ve spent the past few weeks pondering, worrying, stressing about making the right decision about an acquisition opportunity that was presented to us, about the changing business landscape, about a new magazine that I dreamed about for over a decade that isn’t working out.
It’s not that these are new things to consider. The acquisition, for example, should not be an impulse decision, but after years in business and a track record of having made several other successful acquisitions, does it warrant the level of stress that I’m putting on myself? For perspective, this “stress-inducing opportunity” is about 20 times smaller and about 100 times less risky than my first acquisition.
In past lives, I was called “fearless.” Inside I wasn’t, but I will say I was “quick to calculate.” Evaluate the landscape, the task, the risk, formulate a plan, and then move. Adapt and improvise while I moved and, needless to say, they all must have worked out because here I am today writing this article. That success time and time again fed the next success and over time, you develop a confidence that is based in your abilities to adapt and overcome obstacles.
But for me, time has continued on and my life is different. The risks are different now, and having a family, kids and a team who rely on your decisions makes it feel different. It also feels like as time goes on, you have less time to recover if you make a wrong call.
There are a lot of sayings about “success” that are relevant at this point, but this one feels appropriate: “The true enemy of success is success.” Whether it is being afraid (another enemy of success), or getting comfortable, or getting big enough that you shift your focus from offense to defense, it is a curse. And this curse not only affects your business, but your entire life. There is a great quote from a show I have grown to love: “There’s sharks and minnows in this world, and if you don’t know which one you are, then you aren’t a shark.”
During a recent meeting with one of the contributors for one of our publications, this leadership and development expert gave me one sentence of advice that has lingered with me ever since. He said, “Patrick, your problem is that you don’t have any mentors, nobody to look up to, to compete with, or to bounce ideas off of. How can you be your best self when you surround yourself only with people whom you serve that role for?”
Many of you reading this will shake your head knowingly only because I have had the privilege of talking to you about your own business, your decision-making process, and your fearlessness. I am inspired by you and the industries we serve. You have shared your stories with me that I feel are among the greatest American Dream-Hero stories that I’ve ever heard.
And so, as we get the opportunity to set new goals, reinvent ourselves, and start anew simply because a calendar switches over a 24-hour period, I am going to look into the mirror looking for who I should be, or perhaps always have been. We have several new products, services and ventures launching this year to better serve you and your business needs. There are a few acquisitions on our doorstep that I aspire to look at through the same objective, fearless lens that has extended my life this long. But most of all, I aspire to do something new this year. I will begin reaching out to some of you—my fearless heroes—to simply have a talk. To bounce things off of and to gain from your wisdom and perspective.
I don’t know what led us to this state where we have shrunk into ourselves with our only exposure to the “outside” is through the lens of social media. But, I aspire this year to harken back to the days of barber shops and BBQ’s where we would “talk,” and gain wisdom from each other as we all fight to be our best selves and achieve our American dream.
I’m eternally grateful to serve this industry and each of you and look forward to another year of excitement, adventure, perseverance and achieving our goals. Happy New Year.
DEALERS RETAIN VALUABLE CHANGES FROM COVID
------------ BY DAVID KOENIG
FOR THE MAJORITY of communities, the sudden changes made necessary to function on a daily basis amid a pandemic are becoming a thing of the past. Most of the hassles and true hardships—wildly fluctuating prices, product shortages, the constant gloom of exposure to illness, mandatory masking, and countless other emergency procedures—have mostly worked themselves out of the system.
Yet suddenly having to confront COVID taught many dealers how to run their business better. New procedures, initially thought temporarily, have become permanent.
Inventory & Purchasing
“The primary sticking point during COVID which remains the same today is the acute attention to inventory,” William Crosby, manager of County Building Center, Madill, Ok. “Whether being proactive on particular items and their sensitivity to supply chain disruptions or the extreme price volatility. Everyone in our industry became well aware in knowing where the markets were and where they could go in the future. You have no desire to find yourself with too much product on a high market, being there is little chance to ‘average down’ and remain competitive. However, it is also costly to be without product. Finding the balance is a subject everyone has on the forefront of the thought process.”
Lummus Supply, Atlanta, Ga., similarly shook up how it bought product. “We are doing a better job with our purchasing by not becoming so dependent on one source for certain products,” said president/CEO Will Lummus. “We have learned to start using multiple sources to help us with supply chain and allocation issues in the future.”
As a result of supply bottlenecks and elongated re-supply times, Lumbery, Cape Elizabeth, Me., has been forced to order in bulk six to eight months in advance. That’s necessitated renting a separate warehouse to store the bulk orders, purchasing an additional forklift, and preparing to upgrade its small yard to accommodate a larger inventory.
“Our capital and operational costs have increased while our liquidity has decreased, forcing us to decrease staffing and increase prices,” lamented Mike Friedland. “The one benefit is that contractors are finding it difficult to find the specialty items that we stock in bulk due to the pronounced lag times, most notably white cedar, therefore we, at times, are the only option.”
Communication
Retailers were forced to communicate more directly and more frequently with staff and the public—and saw lasting benefits. “COVID taught us to communicate better not only with our customers, but also within our orga-
nization,” Lummus said. “We have implemented many new policies that are based on communication which has made us a better company today. It has also become one of our five core values.”
Likewise, noted Jonathan Ramsey, general manager for Beatty Lumber & Millwork, Upper Darby, Pa.: “With customer interaction limited during COVID, we called all those customers that had a delivery of material the very next day to check up and make sure everything went smoothly. We have continued that practice. It allows us to identify any issues that need to be addressed. Ninetynine percent of the feedback from these calls is positive, so I find myself giving those team members involved in the delivery a “pat on the back,” which goes a long way in building a positive environment.”
Companies hesitant to adopt new tools, like Zoom, received a crash course that continues to pay benefits. Katherine Cornelius, marketing director for TAL Holdings, Vancouver, Wa., noted, “The only thing that has had a lasting impact is our adoption of, and now standard-practice use of, Microsoft Teams as a collaboration and information sharing platform. Prior to the pandemic, we had done virtually no video conferencing and had a poor information sharing network beyond email. Through the pandemic, we were forced to adopt the software platform to continue to communicate and function. The forced adoption spurred our embrace of Teams so that it is now woven through the fabric of almost everything we do these days.”
Staff from Big Creek Lumber’s main office in Davenport, Ca., physically travels less to its branches throughout Northern California. A growing percentage of interactions with staff, customers and vendors is no longer in-person. There are more remote/virtual meetings, more webinars, and more virtual conferences, reducing travel expenses and increasing frequency. Virtual meeting check-ins are now held regularly, companywide.
Health & Safety
Stine Lumber, Sulphur, La., decided to keep up the Plexiglass partitions that protect clerks at all of its checkout stations. The dealer has also stepped up cleaning with antibacterial products beyond what it had preCOVID, according to Tim Stine.
Meanwhile, at Beatty Lumber, said Ramsey, “we have installed automatic soap dispensers and automatic antibacterial stations in the restrooms and strategically located throughout the office/retail store area. We have also displayed framed documents that tell the person reading how and why washing your hands, and using antibacterial lotion is important.”
At Big Creek’s administration office and wholesale/ sawmill, according to Michelle Webb, “Aside from the various health/social distancing protocols that are still in place, one outcome is that in attempting to socially distance as many office personnel as possible, we had to come up with systems and the technology that allowed employees to work effectively from home. We also started using and continue to use scanned and/or text messaged photos of various types of paperwork/information between our shipping yard and admin or home offices.”
LUMBER and hardware retailers instituted numerous changes to operate during the pandemic, some of which have outlasted the pandemic.
Not every dealer, however, was faced with rolling back a ton of temporary changes. Joel Jumper, owner of Coshocton Lumber Co., Coshocton, Oh., tried to keep changes minor and few. “When the pandemic started, I wanted to try and not make changes in the business,” he said. “We worked to keep things ‘normal’ like the pre-pandemic days. We worked hard to provide the same service and products to our customers. So as the situation eased, we just fell back into our normal world. I honestly thought I would be changing procedures, product, etc. We had enough going on during those times. We didn’t need me reinventing the wheel.” MM
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EXPECT MORE FIBER CEMENT, ENERGY EFFICIENCY IN SIDING
------------ BY DAVID KOENIG
GOOD NEWS for lumber dealers, as fiber cement—the type of siding most commonly distributed by traditional lumberyards—is forecast to exhibit the fastest growth among all types of siding, according to a new Lucintel report, “Siding Market: Trends, Opportunities and Competitive Analysis.”
The global siding market is expected to reach an estimated $126.1 billion by 2027 with a compounded annual growth rate of 4.9% from 2022 to 2027. The
FIBER CEMENT may hold a fraction of the siding market, but it remains the fastest-growing type. (Photo by James Hardie) major growth drivers for this market are increasing construction activities, growing repair and maintenance of building exteriors, and a rise in the hospitality industry.
The sharpest increase lies with fiber cement. “Fiber cement siding continues to pick up steam for several reasons,” explained Jamal Saghir, director of products at James Hardie. “First, we’ve seen that traditional construction practices using brick and stucco are becoming increasingly more expensive and difficult to achieve, leading consumers to evaluate alternative siding options. Another trend we’ve seen is an increase in modern styles and the growing desire for customization. Fiber cement panels are well aligned to this trend of modern styles as they deliver a clean and simple aesthetic.
“Lastly, the impact of severe weather on home design is something we’ve been watching closely for several years now, as homeowners are looking to protect their homes and their families inside those homes.”
Nonetheless, vinyl will remain the largest material type segment over the forecast period, due to low material and maintenance costs, and availability of a wide variety of colors.
Also becoming increasingly popular are sidings that offer good insulation to reduce energy consumption generated by air conditioners and heaters. The most energy-efficient type of siding—insulated vinyl—is laminated with a solid foam-core backing. Once installed, it looks similar to regular vinyl siding with a stepped profile, but provides significantly higher R-values. However, it does cost more and is more labor intensive to install.
Globally, non-residential will remain the largest end use segment for siding during the forecast period due to growth in retail and office buildings. Yet residential construction is expected to witness the highest growth due to increasing adoption of energy efficient homes.
Asia Pacific is expected to remain the largest market and witness the highest growth over the forecast period, supported by increasing urbanization and building construction activities. MM
RELATIONSHIPS AREN’T JUST TRANSACTIONAL
------------ BY SARA GRAVES
IT WAS THE SPRING of 2019 and the country was on the brink of a global pandemic when the Lumber Traders board approached Danny Steiger to ask him to step in as interim CEO. The existing CEO, who took over the reigns in 2014, announced that he was moving on. Steiger, a store manager who had been with the company just shy of three years, had some big shoes to fill.
And as it turned out, the board was correct to ask him. Steiger not long after became the official CEO/ president of Lumber Traders, Inc., parent company to Angeles Millwork & Lumber Co. and Hartnagel Building Supply, Port Angeles, Wa. “All the stars aligned with my past experiences and what I had learned and what I had been through.”
Ironically, he was able to draw upon his past experiences to be successful. He reflected on his time working at his parent’s pet and feed store, where he learned bookkeeping, customer service and basic business practices, and on his experience at Westside Building Supply, Lynden, Wa., where at 18, he began learning pro and contractor sales, and later cabinetry.
And although he originally had no intention of working in the industry out of college, he says it was the customers that caused him to fall in love with the industry. “It’s a relational industry. We’re seeing the same builders in here every single day. We’re getting to know them—working on their projects—really partnering in
EACH YEAR, Washington sister companies Angeles Millwork and Hartnagel Building Supply distribute new branded hats and hoodies to customers and contractors.
their success. It’s not just a transactional relationship.” He is still in love with the industry 21 years later.
He looked to customers like Scott Schwagler of J&J Construction, returning board member for the North Peninsula Building Association (NPBA), who supports many of the area’s youth programs, and Kevin Russell of Kevin Russell Construction, a builder who builds custom homes on the Olympic Peninsula, who remains very active in local politics and lobbying for the industry and community.
“These are the salt-of-the-earth people who really dig in and give back to their community and want to make it a better place,” Steiger says.
He adds although it was a weird time for the industry through the global pandemic, the company has, nevertheless, flourished. “We’re on target to be up, since 2019, 36% in our revenues.” And as an ESOP (Employee Stock Ownership Plan), the share value has increased 66% during the same time period. Through 2021, the ESOP value was nearly $6 million, and on target to grow as 2022 came to an end.
A big part of that success, he says, is being pragmatic and flexible. “The things that worked for us
CEO Danny Steiger stands in front of one of the two Hartnagel Glassworks trucks purchased last year.
PARTNERING with Do it Best, Hartnagel Building Supply has been extensively remodeled, adding $250,000 in additional in-store inventory and categories.
previously—some of those things worked great, and some things were completely turned on their head. We had to get flexible for where we were sourcing product, the supply chain being in a state of shambles, and trying to be proactive about those things.”
In addition, the company’s ability to retain longtime staff and acquire highly skilled staff from outside of the industry have helped the company grow in the years since the pandemic began.
Yet, finding new employees has been hard, Steiger acknowledges, so the company began looking outside of the industry to find potential employees who had the right talent and skills to learn the industry, but also had the right business fundamentals to expand on their knowledge and experience in other areas as well. “There’s not a lot of people coming into the industry, so we really need to look outside of the industry and find the people to bring in who have the skills who can grow the company.”
Thankfully, being an employee- owned company has aided in their search and has been highly attractive to the new talent the company has been looking to bring into the industry. For instance, one store manager hired by the company for his exceptional skills in managing operations, Steiger says, was previously a manager at a Big 5 Sporting Goods store who had no building industry experience. “He’s actually going to be promoted to our operations manager here very shortly (once a replacement is found for his position).”
“So, absolutely, we plan to keep recruiting from out of the industry and bring people who have these skills,” Steiger exclaims, so the company can capitalize on “great ideas that maybe didn’t come from our industry.”
Interestingly, the company has found employee recruiting success in having its employees hand out little cards to people in their community doing an exceptional job. The cards essentially say, “Hey you’re awesome,” and feature a QR code to the company website that asks the person if they would be interested in applying a job. So far, two employees have joined the company using this recruitment method once they learned more about the ESOP.
“It is kind of the ethos of the company—being employee owned. It has changed how the employees view company profits, Steiger says. For instance, “if we wrecked a few boards in the yard, we start thinking, ‘Ok, these boards that we wrecked— let’s say $15,000 last year in damage—that’s half a penny on the share price.’ It doesn’t sound like much, but when you start multiplying that out by how many shares, that’s a lot of money.”
As the company grows its personnel, it also has been eying its expansion in the Port Angeles community.
CUSTOMER SERVICE is at the heart of Lumber Traders.
A GOOD OMEN ascends over the corner of Hartnagel Building Supply—as the company likes to say, “The sun is always shining in the Pacific Northwest, even if we can’t always see it.”
In fact, Angeles Millwork grew its rental department from $105,000 in revenue three years ago, to $250,000 in 2022. And, after looking at the needs of the local community, it closed on a new 11,000-sq. ft. location (in downtown Port Angeles in the Sears building) on December 13, 2022, that will house its rental center so the company can “get a lot more equipment and some different product lines,” Steiger adds. “We don’t have any other rental centers in Port Angeles. Everybody had to drive 20-30 minutes to Sequim (Washington), for those services.”
In addition, the company identified that the Port Angeles area lacked good sources of glass, namely window installation, mirrors, and shower doors. Stepping into that underserved market has proven highly successful for the company.
In fact, the demand on the Hartnagel Glassworks team has been so high that at the end of 2022, the company was booking out about three months just for a measurement and has hired another apprentice for the department.
As the company looks to expand its presence in Port Angeles and the Olympic Peninsula area in the future, Steiger says it is busy launching a new e-commerce platform so it can run its businesses as efficiently and nimbly as possible, and to “adjust and pivot as we need to in the face of changing market conditions. We can’t be stagnant.”
It’s this constant forward momentum that has enabled this company to grow, adapt and faithfully serve its customers and community for nearly 120 years. “The better the community does, the better the business does. And the better the business does, the more we can give back to the community so it can really keep building on each other,” Steiger concludes. MM
SARA GRAVES
Sara Graves, senior editor, is interested in your story. Contact her at sgraves@526mediagroup.com.
THE POSSIBILITIES KEEP GROWING: REDWOOD
