The Pro Dealer of the Year: A primer
During a ceremony at the ProDealer Industry Conference in Savannah, Ga., Boise, Idaho-based BMC received the HCN Pro Dealer of the Year award. Here are the facts behind the award and the 2012 ceremony.
The award criteria
The HCN Pro Dealer of the Year Award is presented annually to a lumber and building material dealer based on three main criteria: high performance, innovation and corporate behavior that reflects the values of the LBM industry.
The Pro Dealer of the Year selection process begins with analysis of the HCN Top 200 Pro Dealer Scoreboard, which shows sales performance of the nation’s leading lumberyard dealers.
BMC’s selection as 2012 Pro Dealer of the Year coincides with the pro dealer’s 25th anniversary. It was spun out of Boise Cascade in 1987.
The 2012 ceremony marked the first time the award was given to a company that descended directly from a previous honoree. Building Material Holding Co. (BMHC), the former parent of BMC West and Select Build, received the Pro Dealer of the Year award in 2005.
BMC was recognized during the 2012 ProDealer Industry Summit held in Savannah, Ga. The summit is co-sponsored by HCN and the National Lumber and Building Material Dealers Association. The 2013 event is scheduled to take place in Nashville, Tenn.
The honoree’s charitable cause
BMC is a major supporter of Light the Night for the Leukemia & Lymphoma Society. The pro dealer’s employees raised about $175,000 in 2012, largely through volunteering for Light the Night Walks in virtually every market. BMC is one of the top five corporate sponsors of Light the Night.
Weyerhaeuser’s Larry Burrows, senior VP residential wood products, introduced BMC CEO Peter Alexander. “I don’t need to tell the people in this room how difficult it is to change and transform your business; to think, to act and to execute differently,” Burrows said. “We’ve all been doing that and living that over the years. The work that Peter and that the BMC team here have been doing and continue to do is a wonderful example of that transformation.“
The acceptance speech
“As part of our 25th anniversary, in every single branch, we recommitted to our values, we celebrated our success and survival, and we celebrated the people who got us here,” Alexander said. “It’s ultimately a people business. It’s not about me, it’s not about our group here, it’s about the people who work their tails off out in the yards, the drivers, the front line to our customer — who deliver happily through rain, sleet, snow and heat. It’s our pickers, it’s our truss and wall production lines that never settle for less than 100% accuracy as we say in the halls — ‘every damn day.’ And it’s our sales force and our credit teams and our operations teams that execute every day.”
The comeback kids
It’s a relatively simple script: A large, publicly traded company finds itself over-leveraged. It enters and exits bankruptcy protection, reorganizes and emerges as a leaner, more focused company.
It’s a story that has played out many times in corporate America. But don’t be fooled by the simplicity of the plot. It’s never easy.
Case in point: BMC, which emerged from reorganization in January 2010. There was nothing simple, nor easy, about the transformation, according to the people who lived and worked through it. Plus, like any reorganization, there was never a guarantee that it would work, despite the confidence of the principle actors.
Some of the executives and managers who worked through the challenge shared their thoughts with HCN on some key themes of the transition.
On moving the headquarters to Boise, from San Francisco
Stephanie Erickson, VP human resources: “It was like getting back to our roots and getting back to basics, shedding all the excess and focusing on business. San Francisco was kind of considered to be the ivory tower — the second-most expensive real estate market in America, and we had a building materials company there. When we moved it to Boise, we said, ‘OK, we’re going to get back to our roots that made us successful.’ “
On belief in the transformation
Danny McQuary, CFO: “There wasn’t a question that financially we were going to make it. But what was gratifying was to see our new board come in — a group of outsiders — and do a complete 180-degree turn. They tended to think their job was to sell the company, but after a relatively short period of time, they realized there was way too much value here. Even though we believed it, here came a group of outsiders who also believed it, and that was important.”
Michael Badgley, executive VP company-wide operations: “I never once felt that I was going to have to look for a job. And I don’t think that from an operating level any of us ever doubted that we would make it through. It was just a matter of going to work and getting down to the basics and taking the business where it needs to go. We knew we had a very strong operating company inside of that nonsense that was going on.”
Wayne Mangan, market sales manager, Tacoma, Wash.: “We got stuck in the mentality that bigger was better, and that mentality cost us. When we thought bigger was better, we thought, ‘Let’s get concrete.’ We got into areas where we shouldn’t have. The difference with this new company BMC is we’re not going to get into anything that is not in our wheelhouse. The idea is: ‘If you’re in it, you better be good.’ “
On restructuring the sales team
Mangan: “[CEO] Peter [Alexander] said, ‘I got news for you. I hired a VP sales for you.’ It was Keith Costello. ‘And I want to know how you guys are going to accept this.’ My answer was: ‘Thank you!’ We needed one so badly. That was the start. We are customer-driven and not operational-driven. I think everyone was hesitant at first, but now we love him.”
On the annual sales meeting in Las Vegas
Mangan: “Visualize this: You’re in a room full of hundreds of people. I grabbed the microphone and asked [former president Stan Wilson] to come on up front. I turned to face him and in front of everybody said: ‘On behalf of the company, we would like to say thank you. You took us through these tough times. You could have retired, but you kept us afloat.’ There was a standing ovation.
“Then I called Peter up to the stage. ‘I don’t know what we can say to you. We were in the middle of the ocean treading water. You pulled us in. Thank you.’ Another standing ovation. That was a defining moment.”
Keith Costello: “At first, the feeling was, ‘I don’t want to be gone for a week at a time.’ Taking time out is difficult. But now they’re looking forward to coming back and meeting with the team. It’s a great chance to learn not only from their fellow employees, but also from the vendors.”
On cuts and the comeback
Erickson: “When I joined the company in 2006, we had 23,000 employees. Now we have 4,600.”
McQuary: “At the operational level, we had cut and cut and cut, closed locations, and done a lot of things. But I think there was a perception in operations the cuts had not been as deep at the corporate level. There was a psychological benefit to cutting off the high-cost San Francisco holding company, but it went beyond that. In January 2010, when we emerged from bankruptcy, we had 160 corporate employees. Now we have less than 110. Yet we’ve grown 35%. So the feeling now is we’re more in line than we’ve been in 15 years.”
On receiving the 2012 Pro Dealer of the year award
CEO Peter Alexander: “It hasn’t been easy. At our peak, we were nearly $3.7 billion in size with nearly 23,000 employees. We were public. We were over-leveraged and ultimately went through a financial reengineering to right our ship for the future.
“We were humbled as a company beyond reproach. We emerged as a new company in January 2010. We used that opportunity to define a plan, determine the best people to drive the plan forward and define the pace by which we execute.”
BMC: Keeping ‘em happy
Anyone in the LBM trade knows it’s all about keeping the customer happy, whether he be a remodeler with a pick-up full of plywood sheets or a purchasing agent with a spreadsheet. A customer will let you know he’s happy by bringing back more business or making a referral. Sometimes, he will even tell you. All you have to do is ask.
Chris Warr, a purchasing agent for David Weekley Homes in the Austin, Texas, market, inherited BMC from his predecessor. The company (then called BMHC) had been supplying the production builder for 10 years, and Warr saw no reason to change. Five years later, he feels the same way.
“[BMC] has a solid knowledge of the local market and a good understanding of what our goals are,” Warr said. “They’re the closest thing to what we would call a true partner.”
David Weekley, a production builder with operations in more than 16 cities, purchases panels, millwork, hardware and turnkey framing from BMC, and Warr estimated their business is “knocking on $10-plus million on an average year, depending on the market.” The Boise, Idaho-based pro dealer also installs some of these products.
Construction services can be tricky, both in terms of pricing and execution. “It’s been an evolution over the past five years,” Warr said. When he contracted with BMC to frame houses, it caused some friction in the local market, but BMC smoothed this out by hiring some of the key framing crews in town — something Warr said he appreciated.
Keith Costello, VP sales and marketing for BMC, said the company is “not just in this to sell a 2 by 4. We want to bring them solutions.” While this often means bundling installation with products, Costello is also talking about proposing changes to a building’s design to save on costs. A BMC rep might even show a different style of cabinet to homeowners, one that better fits their tastes and their budget.
“[Custom builders] don’t have the resources that the nationals have, so they’re looking to us for different ways to get the job done more quickly and efficiently,” Costello said.
Candlelight Homes is one of those customers, although Joe Salisbury’s company dwarfs that of a typical custom home builder. Salisbury is a partner in the Utah firm currently building homes in the Wasatch Front, the area surrounding Salt Lake City.
Candlelight Homes uses BMC to do about half of its framing. “They prebuild a lot of it and bring it over,” Salisbury said. “But they can make changes quickly. They’re not just a framing crew.”
Indeed not. BMC operates both a wall panel plant and a truss manufacturing facility in West Jordan, Utah, not far from the headquarters of Candlelight Homes.
Salisbury also purchases interior trim, base molding, shelving, door hardware and the doors themselves, both interior and exterior. BMC installs all these products, too. The Utah home builder said he likes the fact that BMC can “work across multiple contracts.”
John Osborne, one of two sales reps who works with Candlelight, estimates that BMC is supplying materials and services to 20 different Candlelight homes right now. “We sell all the different categories, so they can buy a lot from one shop,” he said.
Salisbury is also happy with the pricing — ‘They’re priced right,” he said — and most important of all, the service. “They’re responsive,” he added.