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By Bill l,ee Lee Resources. Greenville. S.C.

TRECENTLY received a most interlesting phone call.

When I answered the phone, I immediately recognized the name of the company as one of the most visible organizations in their region of the country. The owner described how this seemingly invincible, 75-year-old firm had very little to show for all those years except their good name. In fact, over the past five years, their sales had deteriorated by over one third.

The owner cited two major factors that he believed to be the cause: one, a strong national player had opened in his market and, two, a near depression was looming over the community due to the closure of a large military base.

I asked the owner to allow me to interview and test each of his keY emolovees and to interview several local contractors. The orvner also agreed to send me the company's financial statements from the past five years.

The results should be a rvarning to every business owner: management apathy rvill kill a business.

From the psychological tests rve administered. rve learned that the organization was not balanced. Inertia had set in. There was no spark, no innovation. No one rvas initiating change.

The employees were good folks rvith excellent product knorvledge and years of experience. The problem rvas that they rvere merely going through the same motions year after year. expecting different results.

The financial statements revealed that over the past five years operating expenses had steadily increased rvhile gross margin had slorvly declined. producing a lot of red ink. Employee interviervs revealed that not one of them had a clue that the company rvas in trouble. Management kept Profitability a secret among the stockholders. Everyone rvas rvorking hard. but no one rvas doing any long-term thinking or planning or keeping score.

The core problem rvas that for years management had given raises averaging 4% to 5Vc regardless ofperformance. Gross margin didn't keep pace. so the bonom line slowly eroded. The salespeople had noticed that they'd lost a few accounts here and there. but they'd spent no time on a game plan to replace them. The operations managers realized that overtime rvas a problem. but limits were never set.

The buyer rvas achieving 5.6 inventory turns and thought this was a pretty good job for a business doing nearly $20 million in sales. Contractor interviews revealed that our client did have a great reputation for quality and service, but most of the builders who weren't regular customers hadn't seen one of this company's contractor sales reps in years. To make a long story short, the sales force was in a rut, calling on the same customers year after year.

Could a similar scenario occur in your company? By putting basic management principles in place now, any company can avoid this kind of catastrophe. Just don't wait until you are in serious trouble to begin.

The most profitable companies I work with have strong leadership at the helm. All companies have managers in place, but only the most progressive have placed an emphasis on leadership. While leaders are also managers, they do more than merely tell their people what to do-what I call directing traffic. True leaders have developed the critical thinking skills necessary to determine why their organization is not performing to high standards.

For example, if your sales force has not produced sufficient sales for your company to keep up with the growth in your market (that is, your company is losing market share to the competition), critical thinking skills are necessary to determine why this is the case.

It is often the case that owners and managers are so close to the business that they can't observe it objectively. They are so much a part of the "day to day" that they can't step back and see the business analytically. If this is the case with you as an owner or manager, it would be wise to either retain an industry consultant or invite a fellow owner or manager whom you respect to take a critical look at your business and make proactive recommendations.

Executive success is measured by a leader's ability to achieve an optimal level of profitability in good times and in times of slower business activity. Don't allow management apathy to rob you and your business of the success it deserves.

- Bill Lee is a consultant and trainer speciali:ing in the construction supply industry and cuthor ofthe new booft Gross Margin: 26 Factors Affecting Your Bottom Line, available .from (800) 808-0534 or www. bi I I le e onl ine.c ont.

Warm Springs

Forest Products Industries

P.O. Box 810, Warm SPrings, Or. 97761 Fax 541.553. 1063 Phone 541.553.f 148

Janet Corbett Irri Courtney

Paperloop Adopts RlSl Name

Paperloop. a leading information provider for the global forest products industry. is changing its name to "RISI" early this year. The rebranding is pan of a corporate strategy to better position the company to enter nerv market segments and streamline the current brand structure.

Bedford. Ma.-based Paperloop rvas formed in 2000 by merging Miller Freeman's pulp and paper publications with Resource Information Systems. Inc. (RISI). a longestablished source of independent economic analysis and the inspiration for the new company name. The mill cost benchmarking group from Jacobs Consultancy rvas added in 2A02 and the assets of lumber and panel pricing guide C.C. Crorv Publications in 20O5.

"As rve have expanded into industries like timber. rvood products. tissue and nonwovens. the name 'Paperloop' has become a limiting picture of rvho lve are." said Liza Turner. senior v.p. of sales & marketing. "By renaming the company 'RISI' rve are leveraging the heritage of one of Paperloop's strongest brands. as we meet our customers' needs to expand into nerv sectors and regions."

The new identity begins rolling out this month. culminating in a redesigned Web site later in the first quarter.

A Celebration of Decks

Evergrain Composite Decking has signed on as a sponsor of the first annuat National Outdoor Living Week. June 5-l 1.2006.

The week-long event celebrates the fun and beauty of outdoor living. Building a deck also makes financial sense, since experts estimate that homeowners who add a deck can exp€ct to recover more than 907c ofthe cost.

One highlight of the rveek rvill be announcement of the winner of an EveCrain deck worth up to $10.000 retail. Homeorvners rvill compete for the prize by explaining their compelling need for an outdoor makeover.

On June 10. a party rvill commemorate an EverGrain deck to be built at a public site. Homeorvners will be able to join in the celebration through party plans. e-vites. and outdoor entertaining/cooking tips found on www.nationaloutdoorlivingrveek.com

Sniff Out Wood's Past

Imagine a future where wood products could be ensured to have come from certified forests simply by smelling them.

"One of the challenges the forest industry faces is being able to track products through the supply chain," said Glen Murphy, a forest engineer- ing professor at Oregon State University. "Ideally, we want to track from standing tree to a piece of wood on a desk."

Some day, he hopes, his aroma-tagging system will be able to track millions of logs, with a unique scent for each one. He said that the ideal system would be inexpensive and able to withstand harsh climates, difficult transportation conditions, and treatments such as sawing, varnishing and staining. Right now, the lumber industry uses metal staples or plastic tags that can harm plant machinery. Radio frequency tags are also used, but they are expensive.

Along with researchers from the New Zealand Forest Research Institute, Murphy has been exploring the subject since 2000. So far, his $8,000 device can track one individual scent, but doesn't work with combinations. In five years' time he hopes to be able to track 25 different aromas in various combinations.

To finance more studies, Murphy is seeking grant money from private timber companies, the U.S. Forest Service, and the Oregon Department of Forestry.

Wolseley Has New U.S. Home

Wolseley, a British company that owns Stock Building Supply and Ferguson Enterprises Inc., will invest $30 million in a 220,000-sq. ft. U.S. headquarters in Newport News, Va. The North America division, which also includes Wolseley Canada, was created in 2005 to better manage the three rapidly growing companies. Over the next 10 to 15 years, the company may add three more office buildings to the new headquarters.

"It depends on how fast we grow," said Chip Hornsby, former head of Ferguson and Wolseley's next c.e.o. after Charlie Banks retires Aug. 1.

Frank Roach, formerly senior v.p. of the North America management team, will be responsible for the new division.

"I don't think it will bother us any. If you're going to do something and you can't do it any better than the next guy, you hadn't ought to be doing it."

- Dan Barmon, Barmon Lumber, Sultan, Wa., on prospects for a Home Depot or Lowe's movinp into town

DEALERS, DISTRIBUTORS and manulacturers ioined tens ol thousands ol builders at the National Association ol Home Builders' annual show Jan. 1 1-14 in Orlando, Fl. (1) John Schutte, Bob Zavorskas, Larry Hawkins, Patrice Dyckes, Eric Pelerson. (2) Pe!9r Lang, Ed Burke, Paul Mackie. (3) Connie'Kim, Miguel Gonzales. (4) Kent Gilbert, Clark Allen, John Greirn, Terry Hathaway. (5) Matt Mettry, JohnJay]01, Jo[ Sooker. (6) Randyhaatz, Steve Barth, Larry Fairbanks, Tor Driflot. (7) Brian Briti, Breni Gwatney, Steve Anderson, John Long. (8) Gene 80 Tsn Mnrculxr MaclzrxB FEenunnY 2006

Cormier, Rob Mitchell, Peter Con, Sleve Guertin. (9) Dave Coleman, Rindy Learn. (10) Harry Hoffman, Carol Lyn Groce, Tim Taylor. (!!) Davri & Wenriy Rubischko, Terry Tarvestad, Diane Lambrecht, Uli Walther, Duan6 Lambrecht. (12) Seamus O'Reilly, Craig Sichling. (13) Jefi Proznik, Nicole Polston. (14) Tim Dyer, Peter Alemian, Kelcey Wriqhtsmith, Rachelle Shendow, Jason Olding, Cindy Martin. (15) Keitt Sim-pson, Bill Roberts. (16) Huck DeVenzio, Ken Trainor. $ee nert page for more Photos)

AT THE fNTERNATIONAL Builders Show (continued from previous page): (1) Jamie Marlin, Jim Abbott. Bill Lancaster, Sheldon Watson, Mike Carver (2) !erry Hingle, Melissa Johnson. (3) Billy Turner. Clif Jones. (4) Kelly Stephens. Barry Taylor. Jack Rombough. (5) John Murray, Heather Crunchie, Terry Stone, Allen Ainsworth, Robert Fouquet. (6) Bo Snell, Melissa Morinelli, Jamie Urino, Joel Adamson. (7) Paul Quinn, Kim Pohl. (8) Josh Daniel, Bob Edwards, Larry Lang.

Feenunnv 2006 Tnn MpncruNr M,rcazrNn