Green growing pains
Selling green building materials used to be a much simpler business. Sourcing was limited, pricing was fixed and nobody expected to make a lot of money. But as green building goes mainstream, the industry is evolving in ways both traditional and unexpected. A green supply chain has developed, complete with two-step distributors, and the rush to green has manufacturers popping up with eco-offerings in every building category.
Behind the scenes, there’s plenty of confusion, not to mention finger pointing, over green products’ certification and authenticity. Retailers and manufacturers express impatience over supply and demand, depending on their place in the supply chain.
But one thing is not in doubt: sales of green building products are steadily growing, thanks to local land-use incentives and mandates. State legislatures are also getting in on the act. From California to New Jersey, politicians are introducing bills that will weave environmental sustainability and energy efficiency into building codes—and sell even more green products. Home builders are also testing the concept as a way of differentiating themselves in a down market.
SBI Research, a market research firm, estimates an annual growth rate of 17 percent for the green building materials industry. By 2011, wholesale sales will reach $4.7 billion, more than double the sales in 2006, according to SBI’s report.
Although “certified” lumber seems to get the most attention, its overall share of the wood products market was only 1.2 percent in 2006, according to the study. That will soon change, given the new accreditations coming on line for residential projects. These rating systems, offered by both the National Association of Home Builders (NAHB) and the U.S. Green Building Council, will also push sales of millwork, which had a “green penetration rate” of less than one percent in 2006. Yet millwork’s growth rate, 36 percent over the past five years, outstripped every other category, SBI reported.
For companies like Masisa, a maker of FSC-certified fingerjointed moldings and doors since 2001, going to market has involved a long climb up a steep green hill. Masisa was started by a Swedish industrialist who set high environmental standards long before it was fashionable. Masisa even has the seal of approval from ForestEthics, the environmental group that stages protests against logging companies accused of clear cutting.
These days, Masisa finds itself in a growing crowd of green competitors. Director of sales Dean Charles has two message s to promote. He must first tell the story of sustainable forestry practices. Then he has to explain the different shades of green.
“The millwork industry tends to stay with the status quo,” said Charles. “Distributors are focused on moving the product. [Demand] is driven from the bottom up, from the end user.”
While commercial projects tend to dominate the industry at this juncture, green product innovations have always been driven by consumers looking for a less toxic or more environmentally friendly alternative to what was already available. In the early 1990s, eco-aware architects and homeowners of ten traveled to Environmental Building Supplies in Portland, Ore., or Environmental Home Center in Seattle to obtain cotton insulation or recycled glass countertops. These two retail outlets have since merged into a single company, Ecohaus. The new company distributes its own line of interior plaster, stone countertops, cork and lyptus flooring, and plant-based floor finishing products.
Tim Taylor, president and CEO of Ecohaus, said the business encounters the same challenge it faced 15 years ago: demand outpaces supply.
“It used to be that raw materials were the problem,” Taylor said. “Now it’s capacity. [Suppliers] don’t develop infrastructure.” Not surprisingly, this is particularly true with green startups. “The smaller companies have made good, but not industry-defining, moves in expanding their production,” Taylor noted.
At the sametime, large manufacturers have seen the opportunity in green building materials and are responding accordingly. Johns Manville removed formaldehyde from its fiber glass insulation in 2006. Potlatch, Tem bec and Roseburg Forest Products all mill FSC-certified wood products. Ainsworth Lumber began selling FSC-certified oriented strand board last year in the second quarter of 2007 and is now shipping the product to six states.
“The marketplace is still trying to figure out how to buy and sell [FSC-certified] OSB,” said Ainsworth marketing manager Terry Stone.
Wholesalers are slow to take on new products, Stone observed, and many still consider green building products as aniche category. He added: “Most of the people in distribution have been keeping their thumb on it but not moving forward.”
Unless they’re forward thinking wholesalers. California Hardware, a supplier of hardware and building materials to independent retailers, put together a 1,500-sku green program last year. More than just an assortment, Plan-it Hardware (the logo is a green, blue and brown planet) is a separate division that offers retailers point-of-purchase materials, sales force training and help with promotional events.
Jay Tompt, vp-green business development for Plan-it Hardware, said that most retailers need assistance with identifying green products as well as sourcing them. “If you’re getting into it for the first time, it’s a little mind boggling,” Tompt said. As a rule, Plan-it Hardware tries to bring in the greenest choice in each category, according to Tompt. He also looks for products that earn LEED (Leadership in Energy and Environmental Design) points from the U.S. Green Building Council.
Plan-it Hardware now has 55 retailers in the program, many of them hardware stores and home centers. But Tompt said he’s getting phone calls every week from lumberyards looking for guidance, as well as caulks and adhesives with low-VOC content.
The challenge for retailers, particularly those who sell building materials, is whether to tie up money in green inventory that might not turn quickly enough. Distributors like Plan-it Hardware and Natural Forest Distribution (see profile on page 14) are stepping forward to fill the gap, and they may ultimately serve as the all-important link in the green supply chain.
FBMA elects new officers
The Florida Building Material Association (FBMA) has elected Brad Wanzenberg of Deerfield Builders Supply as its new chairman. Wanzenberg, whose term started on Jan. 1, is executive vp of the Tampa Bay chain, which operates locations in Deerfield Beach, Clearwater, Fort Meyers and Sarasota.
Other FBMA board of directors elected for 2009 include: Dennis Vlassis, Gulf Stream Builders Supply, as treasurer and the chairman-elect; Wade Jefferson, Beaver Door & Trim, as first vice chairman; Bridget Pulsifer, Mills & Nebraska, as secretary; and Don Magruder, Ro-Mac Lumber & Supply Company, as national dealer director and immediate past chairman.
Founded in 1920, FBMA represents building material dealers and suppliers throughout the state of Florida.
Do it Best launches credit card program
Do it Best Corp. has partnered with Shoppers Charge Accounts Co. (SCA) to develop and administer a new private label credit card program for its dealer-members throughout the United States, SCA announced.
The new Do it Best credit card will provide such special features as 90-day and six-month “same-as-cash” extended payment terms.
“Through our partnership with Shopper’s Charge Accounts Co. we’ve had many members show interest in this program as a way to help them get away from house accounts, plus offer their customers new purchasing options such as 90 days, 6 months or 12 months same as cash,” said Chris Hill, interim retail programs coordinator for Do it Best.
Headquartered in Mahwah, N.J., Shoppers Charge Accounts Co. ranks among the nation’s largest private label credit card companies. A division of TD Banknorth, N.A., the company launches and administers new credit card portfolios for brick-and-mortar, Internet and catalog merchants, and acquires retailers’ existing credit card portfolios.