Dealers discuss market conditions and labor at MSC meeting
KANSAS CITY, Missouri - A panel of dealers provided a snapshot of the current business climate and some of their recent strategies at the 2023 ProDealer Industry Summit held in Kansas City, Missouri.
Showcased during the latest National Lumber and Building Material Dealer Association’s Manufacturers and Service Council meeting, four dealers from across the country fielded questions in a panel discussion lead by Todd Skaggs — regional vice president at BlueLinx.
Skaggs asked the dealers to describe market conditions, provide their take on the labor market, and discuss mergers and acquisitions.
The conversation included:
- Chris Borrego, president of Premier Building Supply (a Kodiak Building Partners company); Kansas City, Missouri
- Virginia Lewis, vice president of Tart Lumber; Sterling, Virginia
- Chris Miller, founder, president, and CEO of Nation’s Best Holdings; Dallas, Texas
- Robert Sanford, president of Sanford & Hawley and past NLBMDA chairman; Unionville, Connecticut
Here’s what the dealers who took part in the conversation had to say:
Borrego: Premier Building Supply is more of a greenfield location, operating in the Kansas City, market, Borrego said. Part of Kodiak Building Partners with well over 100 locations in 25 states, Premier focus in the market is single-family production builders in addition to offering turnkey installation services.
Borrego said that Premier is looking at a fourth quarter similar to the same period in 2022. As interest rates impact single-family builds, volume is up on a unit basis.
With the backing of Kodiak, Premier continues to invest in manufacturing operations while making continuous improvements in efficiency.
On the labor front, Borrego said finding quality Class A drivers can be tough due to competitive wages in the market. Drivers also want to be in closer proximity to home so a better work-life balance can be achieved.
In regard to consolidation and acquisitions, Borrego said Kodiak Building Partners looks for businesses that share similar traits in company culture and are best in class operators.
Lewis: Tart Lumber is a single unit dealer serving northern Virginia. The company’s primary clients are small custom builders and remodelers.
Lewis said sales are down from a year ago, but sales are up in comparison to numbers from 2019. “We sell a lot of composite decking, but deck builders are down because everyone put a deck in during 2021 and 2022.”
Lewis noted that Tart Lumber has planned for a "worst case scenario and best case scenario" in regard to sales in 2023 and beyond. The vice president also pointed at that the dealer has a "balanced inside sales" program that leaves her knowing "I'm not at risk."
Tart looks to stand out from the competition by stocking higher-end products that are not carried by box stores and, while more expensive, provide a higher return in the end.
On the workforce front, Tart Lumber has increased wages in recent years in order to compete with the likes of Amazon and other employers who are paying as much as $18 to $20 an hour to start. But poaching skilled employees from rival independent dealers is not in the cards at Tart.
"We as an industry should be supporting each other," Lewis said.
Sanford: Sanford & Hawley, based in Unionville, Connecticut, will celebrate its 140th anniversary in 2024. The company operates four locations along with a rail reload. The prodealer serves professional builders and remodelers along with commercial and general contractors.
Serving central Connecticut, Sanford & Hawley is nearly 100 miles away from Boston in the north and New York City in the South. Sales in 2021 and 2022 were fantastic for the New England dealer, according to Sanford, but 2023 is off more than the company would like partly due to high interest rates.
“Millwork sales are way up from last year but single-family construction has not been a bright spot,” Sanford said.
The New England dealer has made an effort to push into markets it did not traditionally serve. At the same time, Sanford & Hawley is made a serious effort at gaining more sales from remodelers.
Sanford & Hawley is also working hard to get sales associates more comfortable with the products they aren't selling, Sanford said.
When it comes to vendors, Sanford & Hawley wants to meet with sales reps who have a scheduled appointment and purpose. "A box of donuts and some chit-chat is a big loss of productivity for us."
The Connecticut prodealer has expanded twice through acquisitions in recent years but there are no plans for more mergers. Sanford said the company perfers to concentrate on operations excellence while serving smaller, independent-sized builders.
Miller: Nation’s Best operates 51 locations in 15 states, including a portfolio of more than 20 banners. Additionally, a new greenfield location is underway in East Texas.
While the first two quarters of 2023, sales picked up during the summer and Nation’s Best is hitting big numbers again while the lumber market has returned to “normalcy,” according to Miller.
“Our overall business is very regional and that’s been a bright spot for us in California, Texas and New Mexico,” Miller said. “The rest of the year looks very strong and we have a nice backlog going on.”
Recent initiatives at Nation's Best include creating a new national sales manager role while improving its use of technology to identify which products are selling (such as framing materials), what isn't selling, and what's the next step.
Additionally, the company is implementing a new training platform geared toward employee retention. Miller noted that the company is, "operating one man short all the time" in regard to a tough labor market.
Engagement surveys and exit interviews at Nationa's Best revealed that lack of training was one of the biggest reasons for losing personnel. Miller said the new training program will "create a buy-in" so employees know they are helping every day.
"It's a tough hiring market," Miller said.
Looking ahead, Miller said there is no "magic number"when it comes to location growth at Nation's Best.
"We look at strategic markets with best-in-class operators," he said.
