Sourcing
Q: How are you going to handle sourcing?
A: We are probably a little more centralized on the sourcing side (than ProBuild), because that was a big push we had made since 2002 or 2003. All special orders are sourced locally. We are moving to a model, especially on the market side, to allow the markets to participate in the buying and decision-making process. One of the things that was a little different when we were part of WNA [Wolseley North America] that sometimes people miss, WNA was run as a matrix organization. There were several functions in this building that technically reported someplace else. Sourcing was one of them, as was inventory control. Some priorities sometimes were not, from my perspective, as aligned with the local markets as they needed to be. That has changed in a positive direction on May 6. … Jim Drexinger [the SVP for sourcing] has a great background, from Armstrong Flooring and NIBCO. He brings a wonderful outside view of what you can do to make sourcing world-class. I think you’re going to see us rebalance a bit.
Lessons Learned
Q: This has obviously been a hell of an experience for you–
A: It sure has.
Q: –and I wonder what you’ve learned about running this company that maybe makes you different than the way you might have run this company otherwise.
A: It’s all the timing of events. Had you inherited this company in 2004 or 2005 and you were on a growth vector with Wolseley and the times were good, I don’t think you would have made a lot of changes. I don’t think there would have been a necessity to drive any fundamental change. Inheriting the business in 2007 it was for me all about refocus on cash management. For Wolseley, it was still all about earnings and writeoffs and goodwill and all those other things. But I felt clearly that for the organization to survive, it was going to be about how we were going to generate cash.
I think the thing I’ve learned the most, and it’s something I probably knew anyway when we were smaller, is that business gets done outside of here. If you spend too much time in this office you can lose sight of the fact that the business gets done with your customers in the markets. And it’s been a real good re-learning for me about where the business actually takes place.
The other thing I would tell you is that it just amazes me that people say, “Gosh, I feel bad for you. You took the company over a hard time.” And I say, “This has always been my dream job. You don’t really get to pick your spots if you’re lucky enough to get the job you want. And I tell people, “You know, I don’t lose a lot of sleep over when I got the company, because I know the commitment of the associates. I’ve got a wonderful management team, super smart. It’s a good organization. As hard as all these decisions are–and some ended up on a personal, emotional level (regarding) some of the folks that have had to leave the business; that’s the kind of thing you lose sleep over–I still like getting up in the morning. I still love the industry. The business is going to come back.
Angry Ex-Employees
Q: This is painful, but I need to bring it up at some point. … Frankly, as you know, there are discussion boards of former Stock people and they are angry. You’re an upbeat guy and there’s a lot of upbeat things that the company tries to promote. Do you think your staff is really with you?
A: Yes.
Q: And was any effort made to pick people who are with you and take advantage of the opportunity to get rid of people who weren’t willing to buy into the program?
A: In the way of how people were terminated, the answer is no. I wasn’t intimate with most of the terminations in the functional areas. You had to let the folks that run those areas make the decisions. So do I think it was an exercise to get rid of people who weren’t with the program? I don’t think so. I’m sure that people who left may feel differently.
Q: You may have given marching orders that said, “Let’s face it, we need people who really believe in what’s going on here, so if you’ve got any cynics or naysayers.” …
A: I was careful to not try to do that. It’s not my job to influence who goes or stays. It’s my job to say the reality is that this is where the labor number needs to be, and come back to me and deliver the labor number. And as emotionless as that sounds, that’s my responsibility, to say “This thing isn’t working.” … My hope is that we’ll get to a position where we’re hiring people. Everyone in the industry would like to get back to employing folks.
Sourcing from China
Q: When I saw you at IBS [the International Builders’ Show], you said Stock had people in China sourcing products–
A: Wolseley did. Wolseley had a pretty large group of folks who sourced out of China. Our group has one guy who handles our international sourcing. So we bring some adhesives and tools from China. Most of our sourcing from overseas is boards from South America. That’s been going on for a pretty long time. … We’re not nearly as active in China as we once were.
Long-Term Thinking?
Q: While you talk about Gores looking at a longer term, for some dealers out there, three years is–especially for a company trying to turn itself around–can be very much (a sign of the attitude that says) “Let’s try to put as much lipstick on this pig as we can, because in three years I’m going to be out of here.” There may be some cynics who say you say you’re not really profits- and capital-driven.
A: I hope I didn’t leave the impression that we’re not profit-driven. It’s just a matter of the time frame. I can assure you the time frame is to be EBITDA positive this year. And we’ve got a good chance to get there. It’s all about performance, it’s a performance-driven stricture. The cadence is different. We look at metrics differently than in a publicly driven company.
