Game Changer: The Builders FirstSource-BMC integration

Executives in Dallas point to a number of reasons for the integration’s success to date. Chief among them: management teams that have been there before, specifically in 2015 when BMC and Stock, and BFS and ProBuild went through mega mergers.

The repercussions of the merger are playing out in several ways, both internally and externally throughout the (still) fragmented building supply sector.

Here are some of the big transformative themes of the merger.

SYNERGIES

“We have the geographic coverage, but also the product depth that’s really unmatched in the industry,” said Flitman, speaking for the company’s combined company’s 550-plus locations in 84 of the nation’s top 100 metro areas. “But the real power in this over the long haul, in my view, is the transformative nature of bringing together more than 26,000 team members.”

The combination of two like-minded cultures focused on innovation is a foundation for solving customer problems deep into the future. “That’s what I get excited about,” Flitman added. “And that’s really going to be the ultimate game-changer of this merger when we look back in 10 years.”

On the operations said, Mike Farmer, president of commercial operations, said teams on the ground have been able to quickly respond to synergized manufacturing. Take truss plants for instance.

“At the heart of our culture is our people,” Flitman told HBSDealer. “And at the heart of our people is how they think about the customer.”

The human resources team at BFS is immersed in helping to build a successful culture, but according to Amy Plasha, senior vice president of human resources, the task falls on everyone. “I’m a firm believer that we all own the culture,” she said.

The companies have been lucky, executives say, that the BMC and BFS cultures were a good match from the beginning. But Plasha has also been busy applying best practices — even through a pandemic. “We need to make sure that our people feel engaged, that they stay with us and that they feel like they have a voice,” she said. “And that effort carries through into the effort to build an open and diverse work force. That’s an important initiative for us, and it’s not just a corporate-driven, top-down program. It’s important everywhere.

“One goal is getting folks to understand that this isn’t about statistics It is about inclusion, and ensuring that all different groups have a voice and are part of the conversation. I’m passionate about it, and we have a lot of team members who are passionate about it, too.”

PRODUCT OFFERING

When asked about the term “lumberyard” and how it applies to Builders FirstSource, CEO Dave Flitman had a quick response: “We’re not a lumberyard,” he said. “We are the largest building materials, supplier and manufacturer in the country. That’s the way I think about it. With those capabilities, what we do is we solve problems. And we do that in a number of ways.”

CFO Peter Jackson added that BFS has locations that do a great job selling sticks, and the company does so much more. “We’ve got tools and approaches to building homes that can really make it easier, faster and better.”

Jackson adds: “I think that our broad product portfolio is the most compelling factor, when you talk to a builder customer and ask, ‘How can we help today?’”

One of the more highly visible products along those lines is Ready-Frame, the precision, pre-cut framing package delivered to the job site ready to assemble. The process has shown results that significantly reduce framing time and improve the cycle time for the builder. Before the merger, Builders FirstSource had a similar solution called Better Framing Systems that was available in a few markets.

The two products have merged into what President of Commercial Operations Mike Farmer calls “a new and improved Builders FirstSource Ready-Frame.” “We’re making adjustments to our go-to-market strategy, and how we’re pricing it, how we’re selling it and some of the internal processes around how we bundle and ship out the product,” he added.

Being the largest player also comes with advantages.

Farmer explained that during the pandemic’s early stages, both BFS and BMC stocked up on materials even as prices were surging. “Not everybody did that,” he said. He pointed to OSB as a particular success story earlier this year, as BFS maintained its flow of product while it was under allocation in many places.

Maintaining relationships with vendors is also a high priority, he said.

INNOVATION

Many have tried and some have failed to solve the construction industry’s challenges related to labor and efficiency. One well-publicized failure was that of Katerra, the Silicon Valley off-site construction start up that filed for bankruptcy this summer.

Builders FirstSource recognizes that the industry will evolve, but it will evolve around the needs of the customer.

“We have the credibility that comes from being innovative and solving their problems,” Flitman said. “Whatever the building industry evolves into over the course of time, we’re going to be in the center. We’re going to be right in the middle of helping to figure out what that needs to look like.”

He added: “We’re not trying to fundamentally change the way homes are built,” he said. “What we’re trying to do is provide a platform to allow our customers to get more efficient with their building process—to produce what’s possible off-site to save labor hours, to do it safer at the job site, to eliminate waste and to be more productive overall.”

Technology and digitization have a large and growing role to play, according to Farmer.

“The last 12 to 18 months has taught us to think a little bit differently,” Farmer said. “And I think one of the clear areas is that communication of the home building process life cycle is at an absolute premium. There is a real opportunity to bring more technology and to be able to connect that technology to improve everybody’s experience and reduce build cycle times.”