Getting Tough
Tindell’s viewed accounts receivables as a problem on the horizon in 2007 when foreclosures began to rise. In flush times a few years ago, Tindell’s didn’t fret when a customer was a month late paying the dealer. But that changed in 2008. Builders who had not paid Tindell’s by the 25th of the month, 10 days past the actual due date, had their accounts locked out. Late in 2008, Tindell’s changed that to the day after accounts were due.
In another effort to circle the wagons, Tindell’s became an active participant at National Association of Credit Managers (NACM) meetings. The dealer has been a member of the NACM but in prior meetings, it chose to be a listener. “Now we are more vocal,” van Tilburg says.
In some cases, Tindell’s would run into competitors at meetings. The outlet became a good venue to ask questions about mutual customers on a case-by-case basis.
“We began hearing rumors from subs in the field or supervisors on the job about companies in trouble,” van Tilburg says. “We were putting those businesses on the top of our list and having our concerns addressed.”
Tindell’s began to see patterns develop with some customers, especially if the builder was not paying his tab on the front end of the job, such as the pouring of the concrete foundation. This led Tindell’s to pull customers aside to make sure they had the funds in place when the dealer started shipping, even if the customer was not past due with payments to Tindell’s itself.
Margin Call
In some situations Tindell’s was able to speak directly to banks and ask why customers who had already borrowed money had yet to pay their bill.
“This has paid huge dividends,” van Tilburg states. “I urge people in these current conditions to go to those meetings.”
Van Tilburg continues, “We all know cash is king. ? We could not dig a deeper hole than we wanted to get into, and it has paid off.”
Tindell’s didn’t close any of its branches because all eight locations were still operating at break-even or better levels, van Tilburg says. But the Tennessee dealer did take a hard look at every line of expense: association memberships, donations, office supplies, service maintenance on office machines, telephone service, even the lease agreements on copy machines.
“And we were amazed how fat and happy we had gotten during the good times,” van Tilburg says. The response to the discovery was “ruthlessly cutting” the fat.
“The problem is, that was 2008 and we are into 2009,” says van Tilburg. “We’ve cut as far as we can without closing stores.”
Every Little Thing
Ridout says his company took a similar strategy when it came to sizing up where dollars were being spent. “We looked at every little thing you can do, all the way down to our sanitation service,” he says.
Ridout Lumber took several vehicles off the road and turned in lease equipment, including forklifts. But there wasn’t any massive tag sale; Ridout says that while you might save a few dollars getting rid of insurance payments on some vehicles, it is not worth selling them when you might need them back on the road once things pick up.
Tindell’s did some vehicle swapping as well, putting nearly a dozen of its least fuel efficient trucks to rest and distributing its most efficient on a per-yard basis. And at Western Building Materials, Shanks says the change in attitude has been profound.
“We saw seven to eight to nine years of incredible growth,” Shanks says. Previously, he continues, “When you came to a decision you usually just said ‘yes.’ You need another forklift? ‘Yeah, just get it.'”
Some of the subtle changes made at Erie Materials included reducing employee hours, not holding as many marketing events, and cutting back on the level of mailings to customers. “These are things you might not recognize,” Neumann says.
At the same time, Erie does not plan to hire as many people in 2009 as it had in the past, and it isn’t filling positions that came open through attrition.
Others were forced to take a different route. Ridout Lumber is operating with fewer than 300 employees from about 450 in 2007, while Tindell’s saw its personnel drop from a high of 280 to 160. Tindell’s has not been replacing workers and lost 70 to 80 employees through attrition, but in the end, two rounds of cuts were inevitable.
This year, Western Building Materials began eliminating “non-front line and support” positions as well as limiting overtime, Shanks says. “We’ve got things reined in pretty tight …and we’re bound and determined it will not show up on sales and service.
“Sales and service can’t falter,” Shank stresses. “We live and die by sales and service.”
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