ProBuild reveals list of closures
ProBuild Holdings, which confirmed last Friday that it was closing 20 of its units across the nation, announced 16 of the locations late Monday. The closures include lumber yards, component facilities, gypsum yards, and millwork facilities in both large and small markets, the Denver-based company said.
“Some of these locations are being consolidated with other locations nearby, while others are being mothballed until the construction industry conditions improve,” the prepared statement said. “Those facilities can be restarted quickly once we see a turnaround.”
The lists of 16 closures include:
Newberg, Ore., lumberyard Auburn, Wash., framing business Sequim, Wash., lumberyard Sacramento, Calif., lumberyard Phoenix, Ariz., truss facility Poway, Calif., retail home center Cottonwood, Ariz., lumberyard Orem, Utah, lumberyard Jackson, Wis., lumberyard Gainesville, Va., millwork and windows facility Dry Ridge, Ky., truss facility Franklin, Tenn., components facility Augusta, Ga., framing/gypsum facility Jacksonville, Fla., lumber/gypsum/millwork North Charlotte, N.C., lumberyard Easton, Md., gypsum.
The company pointed to two line-of-business closures:
National City, Calif., truss plant only Waldorf, Md., truss plant only.
The remaining four closures are “pending,” according to ProBuild’s announcement. No timeline was given for the shutdown, but vendors told Home Channel News they were asked to remove their inventory by the end of the year. In Poway, Calif., a retail-oriented home center was already holding a 30% off clearance sale last weekend.
Building (again) in Cincinnati
The owners of Forge Lumber were on the sidelines during the height of the building boom, having sold their Cincinnati operation to Builders FirstSource in 2000. But after their non-compete agreements expired, the management group jumped back in.
And they wasted little time establishing their two-location operation—one yard on each side of the Ohio River in Kentucky and Ohio—as a force in their market.
In 2009, Forge Lumber rode market share gains to a 27% sales increase and a No. 282 ranking on the Pro Dealer Industry Scoreboard. For its success and commitment to service and growth, the company earned the 2010 Independent Pro Dealer of the Year award. That sales success, in a year when the vast majority of companies on the Scoreboard showed declines, was the result of a focus on the customer and a focus on quality.
“We want to have the most professional lumber operation in the country,” said Eric Steinman, executive VP. It’s an ambitious goal, and one that begins with putting the right people in the right positions.
“When we bought two smaller lumber organizations to form Forge Lumber, those purchases were focused on people,” he said. “Many of them we knew and respected and felt like they would help form a great team.”
Forge’s strong 2009 was aided by the withdrawal of some major players, opening the door for local knowledge to win business. One key to the team is David Luecke (pronounced “lucky”), VP sales and marketing. Luecke brings 35 years of experience in the LBM business, including a role as president and CEO of Riemeier Lumber, which was once the dominant commercial project supplier in Cincinnati.
“We have a significant edge in our markets because of who we have on our team and our depth of experience in the industry,” Luecke said.
Forge Lumber Co.
2010 Independent Pro Dealer of the YearSlogan: “We nail it. Every time.”Headquarters: CincinnatiLocations: 2HCN Pro Dealer Scoreboard Ranking: No. 2822009 sales growth: 27.8%President: John SteinmanColor commentary: “We believe our customers will be looking for us to help them more, and in many ways.”—Eric Steinman
Another key member of the management team is John Steinman IV, son of Forge Lumber president John Steinman. Steinman the younger brings a background in information technology and purchasing, which management believes will prove critical to future success, and has already achieved results through the implementation of a new software system.
“We know we have work to do, and we always have work to do; but right now, we’ve completed some difficult upgrades, and we’re about to put the foot on the gas pedal,” Eric Steinman said.
Building on its $23 million performance in 2009 will require a commitment to customers, he added.
The name of “Forge” came about as the result of “non-scientific pondering,” Eric said. But it seems to fit, as the family business pounds away and forges ahead on customer service.
“We’re very honored to receive this award,” Eric said. “It reflects the strong work ethic of all of our team members. And we’re also very optimistic that we can continue to grow with our customers.”
Wielding the supply chain
Anyone who expected the usual supply chain collaboration discussion at the ProDealer Industry Summit was in for a surprise this year. ProBuild’s Michael Mahre and Standard Pacific’s Scott Hearty went beyond the “we need to communicate better” claptrap and talked about more controversial issues like cost visibility, demand forecasting and the unbundling of labor and materials.
ProBuild, the nation’s largest chain of building material outlets, and Standard Pacific, a production home builder with operations in eight states, work together in several markets. But that doesn’t mean that Mahre, senior VP corporate development at ProBuild, and Hearty, VP national purchasing operations for Standard Pacific, agreed on everything.
Not surprisingly, transparent pricing was one dividing line. Using the analogy of a shopping cart of groceries, Hearty said he wanted to know more than just the total amount at the bottom of the receipt; he was also curious about the price of the bunch of bananas.
Reflecting back several years to before Standard Pacific initiated its “1Standard” program, Hearty said he often had “no idea” what that lump sum he had agreed to was really buying him. “It was like a wall,” Hearty said. “I was at the mercy of my trades.”
Applying the supermarket idea to building materials, Hearty embarked on an effort to break out material and labor during the bid process. He also tried to better understand his suppliers’ unit costs and establish more direct buys with distributors and manufacturers.
As a result, Standard Pacific was able to realize substantial savings in framing, roofing and concrete slab work in three separate markets. Hearty’s purchasing agents stopped continually adjusting their pricing when the commodity markets fluctuated; now, they made adjustments three times a year—as per their contracts with their suppliers.
In his remarks, Mahre focused on the difference between “cost transparency” and “price transparency.” With the latter, builders know their suppliers’ margins and mark-ups.
“With price transparency, the fear is that you’re going to take the profit away from those who legitimately earn it. After all, we’re all in this business to make money,” Mahre said.
The ProBuild executive also pointed out that once profit margins become public knowledge, “you take away the incentive for competition.”
Hearty said he’s been able to save an average of $39,000 per house through direct buys, unit pricing for material and labor and other aspects of the company’s “1Standard” program. But there are still some things in the supermarket cart that remain a mystery to him, he admitted.
“If I could [standardize] the top 10 or 15 spends, I would be very excited about that,” Hearty said.
The audience needed little encouragement to participate in the 45-minute session, which also touched on better demand forecasting by builders. Asked where smaller LBM dealers fit into his supply chain, Hearty said: “The small, local [independent] can bring faster service to the builder. They understand the market. So it’s quality, speed and accuracy.”
Mahre wondered why the building material industry is so far behind on product data synchronization, which is being universally adopted by retailers and manufacturers. “Why is it so hard to standardize the identification of a doorknob in a builder’s plan,” he asked?
The answer, as always, was a lack of funding.