Instead, KPP poured $1 million into an upgrade of Honsador’s Ariel Truss operations in 2005, doubling capacity to 400,000 board feet in Kapolei and 300,000 board feet in Hilo. “They didn’t nickel-and-dime on the improvements, that’s for sure,” says Ariel Truss general manager Steve Guynes, who managed truss shops for BMC West before re-succumbing to the Aloha spirit he felt while working construction in the islands throughout the ’90s. “There was a complete reconditioning with new gantries, new cutting equipment, Mitek shop software, and Cyber and TCT saws. We don’t even have a wish list for equipment any more. Even the rolling stock was upgraded.”
Material logistics also are simplified at Ariel’s Kapolei plant, which sits adjacent to Honolulu Wood Treating and shares yard space with the sister company, although stocks are not co-mingled. Still, Guynes can simultaneously monitor plant production while his studs enter one of HWT’s six treatment tubes, all 7 feet in diameter, the longest of which stretches 185 feet. Running 12- to 14-hour days, HWT president Hap Person and his crew crank out 60 million board feet of treated lumber annually, supplying not only Honsador and Ariel but also other lumber players in the state, including The Home Depot. “If we’re on time and everything is clicking, it’s just a continuous opening and closing of doors,” Person says.
In addition to keeping the islands awash in treated lumber, HWT also serves as a wholesale distribution facility for several high-brand construction materials, including DuPont Tyvek housewrap, Simpson Strong-Tie fasteners, and ClosetMaid shelving and storage products. The vastly different cost centers give Person an appreciation for the logistical balancing act that Honsador Holdings faces as a whole as it continues to grow.
Safety in Numbers
However, there’s really no secret to how Honsador manages the logistics complexities, Person and others maintain. The three answers most commonly proffered by the pro dealer’s staff are good old-fashioned experience, 100 days of on-the-ground inventory (compare that to a mainland dealer turning stocks on an average 30-day basis), and the capital wherewithal to meet 10-day payment terms for commodity wood products that likely won’t hit a jobsite for 60 days. “Our product has not gone very far before the money is already in the vendor’s hands,” explains Person. “Maybe it’s in Portland, maybe it hits the barge schedule, or maybe it has to wait a week. You’ve got a couple of weeks at sea, so maybe that’s five weeks. After that it goes to treatment. From the moment you call the vendor to the time it hits the jobsite you have upwards of two months, and hitting the jobsite only triggers the invoice on our side and the accounts receivable, so there’s additional time on that, and that’s when you get your check for the investment you made months ago.”
Safety stock offers some alleviation, but space on the islands is limited. The only place they are making new land is on the Big Island of Hawaii, and it will be years before the lava hitting the ocean now cools and is overgrown with grasses and soil, and by then it will be prime residential property, not commercial lots. “There is a vast difference doing business out here, and No. 1 is the real estate,” says Honsador Lumber vice president of sales and marketing Wayne Lincoln. “There are no industrial areas with 15 acres of property and a base cost of $300,000. Over here, maybe an acre is $300,000, so all of a sudden your cost basis is way up on that issue alone.”
Honsador Lumber’s Oahu yard in Kapolei—the company’s largest—is 7 acres, and every square inch is managed to maximize inventory that can at times stack up to $1 million per acre. “You just cannot afford to put up a 22-acre yard in Hawaii,” says Liliequist. The importance of having safety stock exacerbates the inventory situation. “There are so called one-stop dealers on the mainland who will have a manufacturer’s catalog worth of products warehoused in the back,” says Lincoln. “You need your stock here to be deeper rather than wide. Obviously the deeper you go, the shallower the selection becomes. A product with 18 options on the mainland will typically have six here, and the other 12 are much less likely to be ordered.”
Hanging Ten Still, Honsador hasn’t been shy on venturing into new product categories. The June 2001 acquisition of Cameli drywall in Kona on the Big Island brought the company into the gypsum and concrete business, and attention is focused on improving core competencies in doors and windows, profit centers that the company was founded on in 1935 when it was known as Honolulu Sash and Door but discounted over time as the commodity lumber business surged. “You could say that we began as a millwork company, became a lumber wholesaler, and in the past decade have really emerged as a pro dealer and full-line building materials distributor,” Liliequist says.
As Honsador grows, reliance on technology will become more critical to both daily operations and logistical management of the pipeline. The company has high hopes for a transition to Activant’s Falcon system, which began with a beta test at HWT in August and was rolled out company-wide in mid-October. “It should give us much better capabilities with our newer products, especially cabinets, but also with our commodity product lines,” says Lincoln. “Our access to up-to-date and complete information on orders, inventory, and payments should drastically improve, and our logistics, so dependent on information, will immediately benefit.”
Technology aside, Honsador clearly will continue to rely on what 35-year company veteran and assistant vice president and sales manager Larry Arraki says is the Honsador Spirit: “There is Ho’ohana, a passion for good and satisfying work that was here when Jim Pappas led this organization and it is still here today. We manage the long pipeline to the mainland; we take care of ourselves, take care of our good loyal customers. This is a small island and we are all involved in it together.” Let KPP or anyone take that attitude up to the North Shore elsewhere in Hawaii and there’s a good chance that Honsador will continue to rise to the surface regardless of the size of the waves.
