Leaders of Lumber. Five executives share thoughts on growth, success and serving the customer

LEADERS OF By Andy Carlo LUMBER 2020

For the second year in a row, HBSDealer discussed strategy, culture, and opportunities with the leaders of some of the largest lumber and building material retail organizations in the nation. Here are five views on growth, success, and meeting customers’ needs in the lumber industry from the top of US LBM, American Construction Source, Hancock Lumber, LMC, and The Home Depot.

L.T. Gibson, CEO

President and Founder

US LBM

Last year marked the 10 th anniversary for US LBM.

Founded in 2009 with 16 locations in three states, there have been a few changes at the company since its debut. That includes expanding to more than 250 locations with sales hitting $3.5 billion in 2019.

But US LBM President and

CEO L.T. Gibson has been a constant since he founded the company, overseeing super growth at one of the lumber and building material industry’s largest dealers.

“Building a great company is full of ups and downs and you have to realize that the process you create and the journey you take is your ultimate destination,”

Gibson told HBSDealer. “At the end of the day, this is about people, reliability and excellence.”

Gibson says the lessons he learned during his journey with

US LBM “could fill volumes.”

“It ranges from setting the right strategies early, to building processes and systems to meet your needs today and in the future, to being flexible so you can quickly pivot as markets and economies shift,” he says.

“Most importantly, you need to lay out a clear vision of the future and keep your team focused on that vision.”

Part of that vision is US

LBM’s leadership team who remain focused on continuing best practices for the business on a daily basis. “Keeping our attention on our core mission and strategic road map gives us the most options and opportunities for the future,” Gibson says.

Regarding growth, the Buffalo Grove, Ill.-based pro dealer looks to expand in existing markets and partner with the best companies in new markets. Essential to acquisitions are partnerships that are beneficial to both companies.

“Even if we partner with a market leader, we want to be able to provide a potential new partner the tools and resources to grow, which could be via our wider access of suppliers, product lines, or technology,” Gibson explains. “They receive the benefits of US LBM’s scale and industry leverage along with a deep bench of support, product and subject matter experts, technology, training opportunities, and a playbook of operational best practices from across our family of divisions.”

Likewise, US LBM looks at companies that can bring a new dynamic to the dealer and its network, including markets or product categories that dealers might not be in.

A strength of US LBM is the company’s ability to adapt while proactively finding new opportunities to advance and improve in the industry.

“We’re progressive in how we approach things and have always regarded ourselves as the ‘new’ kid on the block and as an alternative to the traditional lumber yard model,” Gibson says. “Doing things because ‘that’s how they’ve always been done’ has never been our approach. Technology has been central to our value proposition from day one and we’ve

been quicker to implement technology than others.”

Giving back is another aspect of US LBM. The company’s non-profit US LBM Foundation is an aspect of the company that Gibson says he is most proud of.

“We’ve recently entered into some very exciting partnerships through our foundation to either donate dollars or building materials to assist veterans, help those who need housing or are victims of natural disasters and diseases,” Gibson says.

The company has a disaster relief fund to help its own associates in times of need. US LBM also sets aside a fund of more than $100,000 that its divisions have access to for use in supporting communities and augmenting local volunteer work and donations.

In response to COVID-19, the dealer donated $100,000 to Meals on Wheels to help the hard-hit Northeast and allocated $50,000 across its divisions to support local community food banks.

“It’s great to be able to give back and it’s one of the most important things we’re able to do. Since the foundation was established in 2013, we have donated more than $1 million in total and that is something we are all very proud of,” Gibson says.

“Even if we partner with a market leader, we want to be able to provide a potential new partner the tools and resources to grow, which could be via our wider access of suppliers, product lines, or technology.”

James Drexinger

CEO American Construction Source

American Construction Source (ACS) burst onto the pro dealer scene in the second half of 2018 when its formation included the acquisition of more than 50 Meek’s Lumber Company locations in Arkansas, California, Missouri and Nevada

From there, it was all business as the company made a series of acquisitions fueled by the financial backing of investment firms Angeles Equity Partners and Clearlake Capital Group.

For 2019, sales increased more than 13% to over $640.7 million from sales of $566.3 million in the prior year.

And in 2020, ACS made big news again when it acquired Homewood Holdings - another rising star among the dealer ranks. The acquisition expanded ACS to more than 70 locations in 9 states, including Arizona, California, Colorado, and Washington. This past summer, ACS expanded again, acquiring Weaver Lumber of North Carolina.

According to ACS CEO James Drexinger, a driver behind ACS’s rapid growth and big deals is the company’s approach to preserving the family-owned business legacy of the dealers it acquires.

“ACS knows this is a people business built on relationships and trust,” Drexinger told HBSDealer. “We work hard every day to earn the right to our business with builders, contractors, tradespeople, and sophisticated DIY consumers.”

A key component to ACS’s

ability to strengthen relations is the Springfield, Mo.-based company’s management team, composed of experienced leaders who have previously executed successful strategies on both a national and local scale. According to ACS, the pro dealer has the ability to improve the local customer experience while leveraging national scale efficiencies.

During his tenure as CEO of ACS, Drexinger said he has learned that the culture of acquisition targets, along with their employees,must be a match with ACS’s culture in order for the deal to be a success. ACS is looking for LBM yards with strong leadership and a bench of talent willing to tackle tough problems as the company continues to grow its business through investment and expansion, he said.

“We have customers where grandma/grandpa, mom/ dad, and sons and daughters have all been supported over the decades by our local yards,” Drexinger notes. “You approach the business differently, knowing you are not only honoring a multigeneration relationship – but you are also earning the right to the next generation of opportunities.”

“We work hard every day to earn the right to our business with builders, contractors, tradespeople, and sophisticated DIY consumers.”

While it’s a major LBM player, ACS is loyal to its roots. Each location is given a specific budget for supporting community activities, including family-friendly appreciation days, pro-focused manufacturer expos, training events, sponsoring local charities and athletics, and ways to say thank you to first responders.

Most recently, with the COVID-19 crisis, and previously with wildfires and other natural disasters, local ACS associates have stood strong to help keep builders building and contractors remodeling.

“Customers repeatedly tell us, ‘I can stay open because you are staying open’.” Drexinger said.

Evidence of ACS’s national leadership has been apparent during the COVID-19 crisis. The dealer continuously communicated the latest updates to employees and customers while backing the construction safety shut down, encouraged by the National Association of Home Builders, to help reinforce safety standards and training during the pandemic.

“We proactively overcommunicate with associates and customers,” Drexinger says. “ACS would rather be leading the navigation through the crisis, rather than following, or just being in the way.”

Kevin Hancock

Chairman and CEO Hancock Lumber

Company culture is an essential component of Hancock Lumber.

A little more than a year ago, Hancock Lumber was named a “Best Place to Work in Maine” for the sixth year in a row.

The Casco, Maine pro dealer’s Chairman and CEO Kevin Hancock said the importance of company culture moved to the forefront after he acquired a voice disorder — spasmodic dysphonia — in 2010. “From that voice

condition I came to know what it was like to not feel fully heard,” Hancock told HBSDealer.

Roughly two years later, Hancock began spending time on the Pine Ridge Indian Reservation in South Dakota where he met an entire community that felt like a piece of their authentic voice had been taken or marginalized.

“Putting the two events together, I realized that there are lots of ways for people to lose their voice in this world and that leaders had often done more to restrict the voices of others than to liberate them,” Hancock explains. “This is how I decided I wanted to help create a work culture where power was dispersed and every voice felt authentically heard.”

Hancock has written two books about the subject and his journey: Not For Sale: Finding Center in the Land of Crazy Horse and The Seventh Power, released in January.

Since initiating a shift in company culture, Hancock says he has learned that everyone wins when a company makes the employee experience a top priority.

“We all know the old saying, ‘the customer comes first.’ Well, I don’t actually believe that’s true anymore,” Hancock notes. “I believe the people who are going to take care of the customer should

I believe the people who are going to take care of the customer should come first. If the employees are having a great experience they will take best in class care of the customer and their company in return.

come first. If the employees are having a great experience they will take best in class care of the customer and their company in return.”

Using a piece of Maine slang, Hancock says customer service is pivotal - but “The customer comes a wicked close second.”

“We love our customers and they are exceptionally important to our success and mission—but, they don’t come first. The people who are going to serve them come first and our customers support this.”

A vital component of company culture is the ability to measure the employee experience at a company. Hancock Lumber does this two ways. Each year the company participates in the “Best Places to Work in Maine” survey with every employee spending several confidential minutes online answering questions about their experience at Hancock Lumber.

“When everyone takes the survey, this becomes the collective voice of the employees and the survey produces a score in a variety of important categories. We then track our progress against those scores across time and locations.”

The CEO describes the data received from the survey as “exceptionally rich.” He also calls the actual data as “the answers to the test.”

“Our employees are telling us exactly where the opportunities to celebrate and the opportunities to improve lie. It really simplifies the running of a company.”

Hancock says the company doesn’t participate in the Best Places survey to capture another award. Rather, the dealer is participating so it can capture metrics about employee satisfaction.

“We want to know what employees are feeling and thinking; the survey is one valuable way to access that information,” Hancock says. Once the data is analyzed, managers respond to what employees are saying.

The company also spends a great deal of time listening to individual employees and small focus groups. For the activity to be true, employees are safe to freely speak and provide honest opinions.

“Listening for understanding, not judgment is the key skill,” Hancock explains. “In this approach it becomes important to realize that there are no wrong answers, just honest perspectives that we want to hear and understand.”

“When a company is safe, people will relax and focus on helping the organization improve,” he adds. “The politics, the fear, and the distrust simply dissolve. Ego dissolves as well. People are allowed to just be themselves at Hancock.”

Sean Tighe

Senior VP of Purchasing

LMC “Y es, we have taken a hit, and our resolve is being tested, but the LMC network is defined by hope, pride and determination,”

Sean Tighe, senior vice president of purchasing at

LMC, said as the COVID-19 crisis was at its height.

Now in its 85 th year, LMC is made up of more than 390 independent forest products and building material dealers with over 1,400 locations in 50 states and the Bahamas.

The largest forest products and building materials co-op in the nation, the company had more than $4.5 billion in purchases last year.

Tighe took over the role of SVP purchasing after the retirement of 39-year veteran

Andy Toombs this past April.

A 21-year veteran of LMC,

Tighe previously held the position of vice president of the Lumber Division. He began his career at LMC in 1994 as a lumber buyer, and has subsequently traded every lumber species in the

North American wood basket.

Prior to the COVID-19 crisis,

LMC and its dealer members were off and running.

“First quarter numbers were record-setting,” Tighe told

HBSDealer. “We had a great start to the year. The first quarter was ahead of previous year by 13%, with March finishing 16% ahead of the same month last year.”

“Housing starts were far outpacing 2019,” he adds. “By all indications, 2020 was to be a very strong year for all of us.”

But despite the arrival of the crisis, LMC and its membership marches on.

“As an organization, we have taken all necessary steps to continue to provide our dealers with the exceptional service they are accustomed to even while working remotely,” Tighe explains. “They can count on us to provide support, guidance, and solutions to all the challenges they are facing during this pandemic. We are all survivors. We have a solid history of adapting. Regardless of how long this will last, the challenges we are facing today, will make us much stronger tomorrow.”

Tighe says that the Independent retail lumberyard is “resilient.”

“And as they often do, they have lead the way in their communities to assist the local hospitals and medical professionals to fight this enemy. They led the way, immediately implementing safety standards in their organizations, for the safety of their employees and their customers.”

“Similar to the Great Recession, our dealers will continue to pick up share as they have for the last 10 years.”

From a supplier perspective, LMC has taken a proactive approach communicating with suppliers to gather any supply chain disruptions and then shared the updates in daily emails to members. These daily emails also broke down the everchanging federal government opportunities available for members to keep their businesses moving.

For the supplier community, LMC began monitoring dealer location hours that could affect deliveries, so critical shipments would arrive at the right time.

LMC employees quickly rose to the challenge of working remotely and embraced tech to get the job done. “This technology will provide us some new opportunities to be even more connected with our dealers and each other, even when we return to the office,” Tighe says.

Looking ahead, LMC wants its members to continue keeping their employees safe and to remain leaders in their communities.

“Whether the recovery will be, a V, U, L or W is the question,” Tighe says. “Similar to the Great Recession, our dealers will continue to pick up share as they have for the last 10 years.”

J.T. Rieves

Vice President, Pro Business The Home Depot

The Home Depot continues to make professional customers a major focus.

Its pro B2B site now has more than 1 million pro customers onboarded and is intent on making the new online experience very “pro specific,” according to J.T. Rieves, The Home Depot vice president, Pro Business.

Rieves is in his 31 st year working at The Home Depot, having started as an hourly associate, and rising up the ranks to store manager, district manager and regional vice president. For the past 8 years he’s been overseeing the home improvement giant’s in-store pro segment.

“Professionals are one of our most important customers,” Rieves told HBSDealer. “Our leadership and field teams remain laserfocused on how to make the business better for our pro customers. A significant part of our strategic business initiatives are focused on our commitment to the pro. This includes expanded fulfillment options and improvements to pricing programs, and our Pro

“Our leadership and field teams remain laserfocused on how to make the business better for our pro customers.”

Xtra loyalty program.”

The new pro online experience allows pros to build lists of frequently purchased items, download their purchase history in QuickBooks, and to build, save and share quotes — locking in pricing.”

Within the retailer’s stores, The Home Depot is enhancing its focus on in-stock products, with new tools targeting best sellers and key pro items. The retailer is also looking to expedite pros’ visit to the store so they are in and out faster. This includes enhancements to the pro desk system, allowing store associates to assist top pros through recommended products and services. While product assortments have been expanded and inventory strengthened, The Home Depot’s pricing continues to focus on low prices for pros.

“Our Volume Pricing Program allows pros to take advantage of pricing by our merchandising team when buying in larger quantities,” Rieves says. “In addition, we continue to expand our Pro Direct programs, allowing pros to buy in bulk for larger savings and have the product delivered directly to the pro.” During the COVID-19 crisis, The Home Depot’s ‘Buy Online Pickup in Store’ program became extremely successful with pros. “This enables our pros to order from their home or the job site and lets us do the work of pulling the order — allowing the pro to spend more time working and less time shopping.”

Whether it’s leadership, reps in the field, products or technology, Rieves said that the company is laser-focused on how to make business better for its pro customers.

“We always strive to provide unique and comprehensive product offerings, continued innovation, and exceptional convenience and value,” he said.

Lumber prices hit the homeowners wallet

Surging softwood lumber prices are having a big impact on the price of new homes.

The big price increases in lumber have caused the sticker on the average new single-family home to increase by more than $16,000 since April 17, according to National Association of Home Builders (NAHB) standard estimates of lumber used to the build the average home.

Simultaneously, the average new multifamily home has increased by more than $6,000 during the same period.

Random Lengths, the lumber pricing guide, reported that the price of framing lumber climbed beyond $800 per thousand board feet as of Aug. 21. This is a 130% increase since mid-April.

The NAHB said it calculated average home-price increases based on the softwood lumber that goes into the average new home, as captured in the Builder Practices Survey conducted by Home Innovation Research Labs.

This includes any softwood used in structural framing (including beams, joists, headers, rafters and trusses), sheathing, flooring and underlayment, interior wall and ceiling finishing, cabinets, doors, windows, roofing, siding, soffit and fascia, and exterior features such as garages, porches, decks, railing, fences and landscape walls.

The softwood products considered include lumber of various dimensions (including any that may be appearance grade or pressure treated for outdoor use), plywood, OSB, particleboard, fiberboard, shakes and shingles — essentially, any of the products sold by U.S. sawmills and tracked on a weekly basis by Random Lengths.

At the prices reported by Random Lengths on April 17, 2020, the total cost to a builder for all the lumber and lumberrelated products described above was $16,927 for the products in an average single-family home, and $5,940 for the products in an average multifamily home.

But the NAHB said that by the time Random Lengths reported prices on Aug. 21, the cost to builders had risen to $30,470 for the softwood lumber products in an average single-family home, and $11,061 for the products in an average multifamily home.

This is a $13,543 (80%) and $5,122 (86%) increase respectively, in only four months.

Hot summer for starts

Housing starts continue to demonstrate dramatic growth, fueled by low mortgage rates and an urban exit to the suburbs and beyond.

Total residential starts for July surged 22.6% to a seasonally adjusted annual rate of 1.496 million from the revised June rate of 1.22 million.

The latest report, released today by the Department of Commerce, is 23.4% above the July 2019 rate of 1.212 million.

Single-family starts in July jumped 8.2% to 940,000 compared to a revised June rate of 869,000.

Housing permits for July are at a seasonally adjusted annual rate of 1.495 million, rising 18.8% from the revised June rate of 1.258 million. The latest report is also 9.4% above the July 2019 rate of 1.366 million.

Single-family authorizations in July were at

Total Housing Starts

Through July, SAAR, in thousands 1,600

1,400

1,200

a rate of 983,000, which is 17% above the revised June figure of 840,000.

Lawrence Yun, chief economist of the National Association of Realtors, said the strength in housing is a major contributor to local economic recovery.

“Such growth is needed to steadily relieve the housing shortage,” Yun said. “The rise of single-family units is welcome, as overall inventory of homes for sale are down by 19% from one year ago and there is intense buyer competition in the market as a result.”

Despite rising lumber prices, the housing landscape is ripe for buyers.

“The market is being buoyed by historically low interest rates, a focus on the importance of housing and a shift to the suburbs as more buyers are seeking homes in suburban communities, exurbs and more affordable low density markets,” said NAHB Chief Economist Robert Dietz.

1,496

2019 2020

1,000

800

600

400

Jan. Feb. Mar.

Source: Commerce Department Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.