For Carter Lumber, the building slowdown is merely a dip on a long road that started in Kent, Ohio, and led to 10 different states. The 75-year-old company sees the current housing market decline as an opening to hire talented salespeople, ramp up its installed sales division and move forward on the M&A front.
“This downturn is going to last longer than anyone would like,” suggested Jeff Donley, Carter’s senior vp and chief operating officer. “But we see it as an opportunity.”
The privately held company has repositioned itself several times over the past few decades, making an aggressive move five years ago to serve the residential builder. Carter Lumber rode this wave to $689 million in sales in 2006, placing it as No.13 on HCN’s Top 350 Pro Dealer Scoreboard.
While tract home building has cooled considerably, the bulk of Carter Lumber’s builder customers are small- to medium-sized builders who average between five and 75 houses a year. And many of them are still active in markets like Cleveland, Indianapolis, Detroit and Columbus, according to the company.
Carter Lumber continues to sell to these regional builders, finding plenty of work for its new installed sales division. Launched in 2006, the separate business unit is headed by company veteran Don Morris. Carter now offers installation services in 80 percent to 90 percent of its markets, up from 20 percent to 25 percent last year. The menu includes everything from framing to towel bars and doorknobs.
“Even in a downturn, there’s still a lot of opportunity in installed, both residential and commercial,” said Donley, adding, “Commercial jobs are the bright spots through 2008.”
While kitchen makeovers and decks might not have the same luster as restaurants and banks, the remodeling business is still a big part of the daily transactions at the pro dealer’s 216 locations. “The repair and remodeling contractor has been the bread and butter for Carter Lumber for years,” Donley said. “We never walked away from that.” Nevertheless, the company plans to put more resources into developing its over-the-shoulder trade. Expanded product assortment and more training for inside sales reps are options the company is looking at, while keeping its focus on “relationships—which mean something to these guys,” Donley said.
Carter Lumber’s plan to beef up its outside sales force has benefited from the downturn as competitors have closed or consolidated locations. “There are some good people available today who might not have been six months ago,” Donley said. “We’re investing heavily in bringing [them] on.”
The company was also able to hire a former Stock district manager to run its manufacturing division. Casey Carey joined Carter Lumber in July after 10 years with Stock Lumber and eight years at E-town Truss as general manager.
Carter Lumber is also prepared to continue its acquisition strategy, which bolted on three lumberyard operations since 2004. The latest purchase, Griggs Lumber in 2006, is located in North Carolina’s Outer Banks. Carter Lumber still has its eye on that region, along with the Florida Panhandle and Georgia.
“We’re still committed to the Midwest, but we see a lot of our growth coming from [the Southeast],” Donley explained. Without giving specifics on acquisitions, he said the company currently has “two or three on the burner.”
Neil Sackett, president, CEO, and grandson of Carter Lumber’s founder, sees the moribund housing market as a chance to re-examine everything. “It’s a time when your problems glare out at you,” he said. But 2007 is also “a time when a company can reinvest in itself,” Sackett said.
In keeping with the kind of long-term growth strategy that brought Carter Lumber to where it is today, he added: “We’re repositioning ourselves to come out of this a very strong company.”