Attacking the labor problem at its source
Strategies for the tight labor market include software solutions to improve planning, products that speed up production cycles and materials that can be installed and used in a wider range of temperatures. And then there’s the longer-term solution – recruiting the next generation to enter the building trades.
Rick Lierz, president of Boise, Idaho-based Franklin Building Supply and chairman of the National Association of Lumber and Building Material Dealers, says business is strong and growing at his 14-unit lumber industry. But there’s no doubt the lack of job site labor is a headwind at Franklin and other dealers around the country.
The NLBMDA and other regional dealer associations have been beating the drum for trade education and support for years. Meanwhile, Mooresville, N.C.-based Lowe’s jumped into the movement in a significant way last week with plan to encourage and support its employees to gain training and skills in the building trades.
“We don’t see the labor problem getting better for awhile,” Lierz told HBSDealer. “And it’s certainly hurting our customers and all the trades.”
That’s a common viewpoint. A recent HBSDealer poll question finds dramatic solidarity behind the idea that the tight labor market is either directly or indirectly affecting business. HBSDealer specifically asked: “How is your business affected by the tight labor market?” More than 100 respondents generated the following breakdown:
- 61% — Directly
- 9% — Indirectly
- 20% — Directly and indirectly
- 11% — What tight labor market?
At Franklin Building Supply, the company is concentrating on lean business practices to boost productivity and efficiency of its own work force. It’s also implemented a new software system to “help us do more with less.” The company is also growing its business with trusses, cabinets and doors – products that help the builder customer speed up production. All these efforts are bearing fruit, he said.
But there’s also the long-term approach, and that’s where the NLBMDA and the regional associations come into play.
“As an industry, we need to entice more kids who aren’t on a college track to explore careers in the trades,” he said. “ There’s a whole generation missing from our industry.”
He said lumberyards – with a boost from their state, regional and national associations — are taking steps to attract young talent. They’re meeting local school districts and business leaders and promoting the idea that the lumber distribution business is “sexy.”
Those in the business understand the rewards of the career in LBM. The challenge is promoting that message to as large an audience as possible.
Lowe’s stepped up its support for the trades with an announcement last week of a labor development initiative that provides financial support to Lowe’s workers to pursue a skilled trade. The program is called “Track to the Trades.”
“The trade profession is a high-demand, high-opportunity field for the next generation workforce, and today, there is a massive unmet need,” said Jennifer Weber, Lowe’s chief human resources officer.
Her comments echo those of the Boise pro dealer.
“We need do more to get out and talk about it how that it’s a great career, and you can make a really decent living,” Lierz said.
Orgill draws a crowd in Orlando
Measuring in at about 1 million square feet of exhibit space, the Feb. 22-24 Orgill Spring Dealer Market attracted independent home improvement retailers from around the world. The Orlando event features vendors from across the industry, special buys and Market-only specials, networking opportunities, according to the Memphis-based hardware distributor.
“Our merchants and vendors have teamed up to add the items our customers want,” says Jeff Curler, senior VP of purchasing. “Many products are being offered at deeply discounted prices, and a number of our vendors are offering creative merchandising ideas to help retailers stand out from the competition.”
Around the perimeter of the Market floor are a number of promotional areas, including Door Busters, Pallet Buys, New Items and more. In these areas, attendees can shop for products at low, Market-only prices.
Outside the convention center itself, retailers can find the Outdoor Grilling Area, which made its debut at the Market last summer in Boston. This area highlights products from the outdoor living, grilling and tailgate categories.
Two particularly popular areas of the show floor are the concept stores, where two full-size model stores are set up, showcasing real-life displays, product assortments and merchandising techniques.
Central Tool & Building Supply is a pro-focused, 8,000-square-foot store that’s also 100-percent Canadian-compliant. Its primary niche is hand and power tools, but it also offers a deep selection of paint and sundries, plumbing, and electrical products.
The second concept store is Green River Hardware & Garden, which encompasses 15,000-square-foot and showcases space-saving techniques by stocking a 25,000 SKU count. Niches include outdoor power equipment, outdoor living and lawn and garden.
“Our customers are looking for ideas of how to use their space effectively, especially by best utilizing the footprint they currently have, rather than expanding,” says Phillip Walker, senior vice president of merchandising services. “In this model store, we’re showing them a number of solutions.”
[Read about Orgill’s “Spring is Here” Lawn and Garden program here.]
Also popular are the Product Showcases. In Orlando, the focusis on construction fasteners, rental, impulse and worldwide sourcing. The seasonal flex showcase displays how retailers can adapt their assortments with the seasons to gain year-round sales.
Some of the educational opportunities include “Retail Pricing,” “Social Media in the Real World,” “Should You Sell on Amazon?” and “Why Loyalty Marketing Works.” Other clinics and workshops cover topics such as marketing tactics, strong in-store promotional efforts and cybersecurity.
Next up for Orgill: the Fall Dealer Market will be Aug. 23-25 at the Sands Expo Convention Center in Las Vegas.
“We always look forward to our Dealer Markets because they give us the opportunity to interact with our customers and provide them with a wide range of products, programs and services to drive their businesses,” says Ron Beal, Orgill’s chairman, president and CEO. “We’re excited to share all that Orgill has to offer.”
Record quarter for Universal Forest Products
Building products manufacturer Universal Forest Products, Inc. (UFPI) reported record fourth quarter sales of $966.1 million, a 12% increase compared to fourth quarter 2016 net sales of $859.6 million.
The Grand Rapids, Mich.-based company also reported record fourth quarter net earnings of $33.1 million, nearly a 48% increase from net earnings of $22.4 million for the same period a year ago. Fourth quarter 2017 earnings include $6.4 million as a result of changes to the corporate tax structure following the Tax Cuts and Jobs Act.
For the full year, 2017 net sales rose 22% to $3.94 billion from 2016 net sales of $3.24 billion. The company reported full year net earnings of $124 million, rising nearly 14% from 2016 net earnings of $105.5 million.
UFPI reported fourth quarter gross retail sales increased 20% to $330.6 million in gross sales. Full year retail gross sales were up 15% to $1.49 billion.
Construction gross sales during the quarter were up 10% to $305.8 million, mostly due to price increases as a result of the lumber market, the company said. Unit sales to manufactured housing customers grew 4% during the period, while sales to residential and commercial construction customers fell 2% and 3%. Residential construction sales were likely affected by project delays associated with higher lumber prices, UFPI reported.
Full year construction segment gross sales increased 16% to $1.18 billion, driven by a 7% percent increase in unit sales and a 9% increase in prices. Residential construction unit sales grew 7%, and unit sales to manufactured housing customers rose 9% over 2016.
“The employees of Universal did a great job managing our business through a challenging lumber market that pressured margins for our products at different periods throughout the year,” said CEO Matthew J. Missad. In 2017, average prices for framing lumber and southern yellow pine rose 20 percent and 7 percent, respectively, over 2016, but fell during the Company’s peak selling times, reducing margins on certain products.”
“We experienced terrific growth with new products in 2017, making significant inroads in the retail market with new products such as our UFP-Edge profile lines and several product introductions in our Deckorators line,” Missad added.
Missad noted that despite challenges that remain in the lumber market, the company is optimistic and plans to invest a portion of its income, saved through the tax reform bill, for capital expenditures.