Battle Stations
To compensate for the margin squeeze, dealers in the ProSales 100 continue to invest heavily in value-added services and are embracing installed sales and tech investments. Some also are working on improved manufacturing capabilities and market diversification.
Indeed, many dealers in the 2007 ProSales 100 say that you’ll need installed offerings if you want to keep going once construction activity resumes. “You’ve got to have that installed sales in your arsenal if you are going to sell the larger builders,” says Gary Campbell, president and COO of Vidalia, Ga.-based VNS Corp. (No. 40), who cites installed sales as one of the key growth drivers for his company in 2006. “You just have to slog through it and figure out how you are going to make a buck on it. It is just one of the pieces you have to have.”
The ProSales 100 have shown a consistent interest in adopting install for the past three years, this year seeing about three-quarters of dealers having installed services and another 8% indicating an interest in getting into the installed game (see “Contractor Services Offered by the ProSales 100,” above). Industry attitude on install has changed dramatically during the same period, however, and install has jettisoned a loss-leader image to land securely in profit-center territory. “Ten percent to the bottom line in a heartbeat,” says van Tilburg. “After having a wall panel and component plant it is the second most profitable thing in our business. It has catapulted, and to me, you absolutely must do it.”
At Foxworth-Galbraith Lumber Co. (No. 11) in Dallas, president Walter Foxworth says his company wants installed sales to account for 50% of overall company revenue.
New Shipmates
Installation also may end up leading the ProSales 100 into new customer segments. While contractor focus on commercial and multifamily builders remained relatively steady in 2006 at 6% and 11%, respectively (see “Average Customer Base of the ProSales 100,” page 66), survey respondents are reporting an inclination to broaden their customer horizons to balance instability in the residential market. “A big strategy for us going forward is to examine more of that commercial installation market, the mid-rise institutional projects like hospitals and schools,” says Scott Whiddon, president of Causeway Lumber in Fort Lauderdale, Fla. (No. 61).
Beisser reports that commercial and government sales are steadily becoming a more important part of the business at Beisser Lumber. “Everybody is trying to scramble to find sales right now, and we’re no different than that,” Beisser says. “There are some big commercial projects going on in our markets, and our commercial sales are probably a little bit higher than they were three years ago. We look at what Dunn Lumber is doing up in Seattle, and we are going through the process of becoming an approved government contractor to see if it is worth it to try and get some of that business that we have not been getting.”
On the multifamily end, wholesale distributor Shelter Products (No. 44), Portland, Ore., set corporate records for sales and profits in 2006 by focusing three-quarters of its business on multifamily builders, according to company CFO Kurt Hutton.
Regardless of customer focus, a full 86% of the ProSales 100 are involved in some type of component manufacturing, and eight out of 10 ProSales 100 dealers expect either a gradual or rapid increase in their overall manufacturing activity (see “Expectations of the ProSales 100 on the Evolution of Their Component Manufacturing Services,” above), particularly among favorites like door shops and roof truss and wall panel plants (see “Manufactured Product Lines Produced by the ProSales100”). “We just purchased a panel plant and we are excited,” says Beisser. “We were missing out on business that was going to panelizers, and we wanted to be in there swinging with them.”
