On the opposite end, Gill considers keeping up with current concerns among his big builder customers a cornerstone in serving that segment. “Being proactive sets us apart in the market,” he says. “I have to know their business well enough to approach them, even if it’s just to educate them about what options are out there.”
Monroe coaches dealers to be innovative and unafraid to approach production builders with something new. “Worry now about being irrelevant and avoid it by listening and anticipating a builder’s needs,” he says.
Myth No.5: Wine and dine the PA and the business is yours While production builders say that their purchasing agents (PAs) or staff make the buying decisions, project managers aren’t far behind in their influence. “PAs are often far removed from the [construction] process,” says Monroe. “You have to get out in the field and listen to the superintendents and subcontractors.”
At Wieland Homes, all LBM sales calls are referred to a purchasing agent at the company’s Forest Materials Supply (FMS) division, an example of the vertical integration some of the nation’s largest builders employ to control as much of the home buying and building process as possible.
Another trend among tract builders is to turn most of the actual purchasing over to subcontractors or so-called trade partners. “Our approach is to manage jobs, not purchase materials,” says Pardee’s Hughes, who contracts all of the company’s LBM buys to its trades and refers all calls regarding such products to the company’s structural engineers and framing subs. Finish products, meanwhile, are sent to the marketing department for review. His simple advice to LBM dealers: “Get friendly with our subs and rough carpentry trades.”
National trends point to big builders that increasingly require subs to furnish labor and materials, which Chambers and others read as an opportunity for dealers to get into the installation business. “The biggest problem big builders have is finding good subs to meet their [production] demands,” says Chambers. “If a dealer can offer services a big builder needs, it takes the burden off them to go out and find it elsewhere.”
Still, as the primary buyer for Chase Lumber, Gill respects the role of a big builder’s PA in the dealer’s overall success in serving that market. “If all I’m doing is submitting numbers and shipping lumber, there’s no relationship,” he says. “If you have a relationship, then everything’s negotiable.”
Myth No. 6: Big builders won’t enter my market Even if dealers are fueled by resentment of large land options that squeeze their small-builder customers, a local building culture that has so far kept them at bay, or simple denial that big builders have any interest in their backyards, suppliers in every significant metro market should stop denying the fast-track growth of production operations nationwide.
Regardless of their willingness to try new products, large-volume builders continue to expand their geographic reach and boost market share. For the last several years, the biggest of the big builders have grown by starts and share, and the vast majority expect to continue that trend by entering new markets and pursuing different types of buyers and projects (see “Think Big, Act Local,” page 40). Erwin sees a dealer’s ability to adjust to changing market demographics as the key to success in serving production builders. “If you can supply a builder moving into higher-density housing or building an age-restricted community, you’ll be ahead of the game,” he says, which will likely require adjustments in inventory and product offerings, as well as changes in logistics and sales processes. “The day is coming when independent dealers can no longer just do what they want to be successful.”—Rich Binsacca is a contributing editor to PROSALES.
Tip Sheet: Big Builders Consider the following tips for successfully serving production builders:
