Losing the Price Edge
No amount of vendor involvement, however, is likely to dissuade detractors who remain unconvinced that the service is all that it’s cracked up to be. “Our framing customers have the ability to buy lumber from many sources, and I think dealers lose their price edge when they expand into installation,” says Mike Murray, vice president with A.C. Houston Lumber in Las Vegas. Murray also worries about competing with his customers.
Getting out of the price rat race, though, is precisely why Millard Lumber added a turnkey component to its installation program last year. “We’re trying to emphasize that installation is about more than price” and involves quality control and management, says Taake. Millard gets 20% of its revenue from installed sales and wants to boost that to between 25% and 30%, so it’s looking to expand its services to garage doors, fireplaces, mirrors, and, possibly, foundations.
For installed sales to flourish, market demand and the competitive landscape must be taken into account. When Mike McIntyre, a former contractor and builder, joined Grandville, Mich.-based Standale Lumber as its installed sales manager in August 2006, he evaluated the competition and concluded that Standale should move more aggressively into window replacement. Standale also installs roofing, housewrap, siding, and stone for new-home construction, and recently began providing framing services to customers that request it. McIntyre says those services don’t compete with the majority of general contractors that are Standale’s primary customers.
On the other hand, Ridout Lumber of Searcy, Ark., vies for kitchen and countertop installations with local shops that fabricate those products, “so we’d be in competition with them whether we installed these products or not,” says vice president Ross Ridout.
Other dealers seek to integrate contractors into their installation networks when possible. “We don’t burn bridges,” says Ariail, “and if we move into a subdivision, we’ll try to get, say, the siding guy already there to do the job for us.”
Who’s In Control?
Dealers are pretty vague when explaining why using subs or employees as installers is the better way to go. Many dealers–including Wheeler’s, VNS, and Standale–use subcontractors exclusively, while Carter goes that route for the most part. “We’re depending on our subs, and find them for our [builder] customers,” says Bart McDonald, senior project manager for VNS’ division that handles installation for single-family home construction, which has as many as 40 to 50 different jobs going on at once. Other dealers mix subs with their own employees, while some–like Tindell’s, Houston-based Bison Building Materials, and John H. Myers & Son in York, Pa.–use only their own workers. “We do it mainly for the control,” says Moore of Tindell’s, which maintains a crew of about 40 installers. Rob Sponseller, Myers’ office manager of construction services, says his company, which maintains a crew of between 20 and 30 installers, hires workers based on experience and then moves them onto projects for which they show the greatest skill.
Certain jobs seem to lend themselves to having employees handle the installation. Millard Lumber uses mixed crews for virtually every product it installs except insulation, which is done by its own employees. Ridout Lumber uses subs for everything but countertops, for which it has a 10-person crew. Ridout says having its own countertop installers is necessary “because you have to build the templates in-house, fabricate them, and then install them piece by piece.”
Countertops, along with flooring and kitchen cabinets, produce the lion’s share of Ridout Lumber’s installed business, although it also installs replacement windows and attic insulation and is investigating hanging drywall. Ridout says that, in his market, the company offering the best supervision “gets all the [installation] business.”
Still, the biggest mistake dealers continue to make when they install what they sell is “not having the right people in place,” says Roy Burleson, director of business development for Guardian Building Products, who has worked with pro dealers for two decades and thinks most of them need higher standards of professionalism within their installation operations.
Wheeler’s, in fact, appears to be an exception by having a full-blown construction management team. Myers divides its installation department into four sections–insulation and garage doors, framing, remodeling, and “other” work–each with one supervisor. VNS’ multifamily division has an English-speaking supervisor on site at all times, who often communicates with subs through a Spanish-speaking liaison. “The crews prefer it that way,” says Matthew Perry, senior project manager for this division.
Standale’s McIntyre says that when subs are used, quality control starts at the hiring stage. “I don’t have open calls for subs, and quite a few are recommended by our salespeople who know their work.” But now that Standale does framing, McIntyre says that an in-house project manager is a must.
Taake of Millard Lumber notes that as his company grows its installation business, “the bookkeeping becomes more complicated,” which is why his company is migrating to Timberline’s project-management software. And as Carter Companies rolls out its installed sales program, it’s still feeling its way through developing a “consistent methodology” to communicate with contractors and their subs, particularly for training. “We have to make sure that there’s compliance of all difficult tasks across a large number of stores,” Morris says.
That’s a challenge pro dealers large or small will continue to face, as long as providing installation remains essential to selling products.
–John Caulfield is a contributing editor for ProSales.
