Steve Markley Continues do it Best Run
Do it Best, the Fort Wayne, Ind.-based co-op, recently promoted long-time company executive Steve Markley to vp-merchandising. Markley, who previously served as division merchandise manager for home/hardware, electrical, export and commercial/industrial, replaced Jay Brown, who in July was promoted to the role of vp-retail development.
Markley has a lot of experience to draw on for his new position. In addition to managing four departments, he was responsible for the creation of Do it Best’s global sourcing division and last year oversaw the opening of buying offices in mainland China and Hong Kong. All told, he has 24 years of industry experience, including three tours with Do it Best and positions in the vendor community and as a manufacturer’s representative.
CEO Bob Taylor praised Markley’s diverse background and ability to help members. “His exposure to Do it Best goes back a long way, and it’s nice to have another person on our leadership team with that history,” Taylor said.
Home Channel News spoke to Markley about his new role and his plans for the co-op, which include strengthening the supply chain and enhancing member/owner services. He believes his experiences in all phases of the business will help him keep Do it Best’s 4,100 members competitive in terms of retail pricing and brand versus private label strategizing.
HCN: How would you characterize the co-op’s merchandising philosophy, and will you make any changes in this regard?
Markley: There won’t be any major changes. We’re going to continue to work things aggressively, as we’ve always done, and keep our numbers competitive and profitable. We operate with integrity when talking about our suppliers or member/owners. We do have some internal enhancements that we’re doing. We’re working to strengthen our supply chain, and our vendor Extranet is being enhanced, including some new phases rolling out later this year.
HCN: How did your previous position as division merchandise manager prepare you for your new role?
Markley: I’d go even beyond the most immediate position I held. My experience with the company goes back to a full-time summer job I held many years ago. I’ve had several roles here—as well as outside Do it Best—so I understand what goes into the business from the ground up. My strength is my perspective on how to go about things. I’m familiar with the staff, vendors and members. I’m familiar with dealing with global sourcing and the supply chain—in terms of what we’re doing, where we want to go and how we want to get there.
HCN: As the person responsible for creating Do it Best’s global sourcing department, how important would you say it is for today’s hardlines distributor to have a strong presence in Asia?
Markley: I think it’s important to have the ability to go directly to those sources if we feel that’s the right thing to do in a particular category. Our preferred method is if a vendor will take us with them, we’ll buy overseas from them. However, that is often not the case, so it’s important to be able to be competitive at retail. It’s all about being able to supply members with the right margins on each product. Our members are competing with Wal-Mart and other big retailers every day, and we need to give them the means to compete.
HCN: What is the importance of carrying the big brand names? How does that mesh with your assortment of internationally sourced items?
Markley: We evaluate brands with every line review that we do. We don’t have any kind of strategy to deemphasize the national brand. In fact, we have many categories where the national brand is preferred. But sometimes brand names mean more to people in the industry—to our members—than they do to consumers. We evaluate every category individually.
HCN: You had your first job working summers at Do it Best, returned in the mid-1980s and are now on your third tour with the company. What is it about Do it Best that keeps you coming back?
Markley: This company is not just about a slogan, or a mission statement on paper. Everyone actually believes our members come first, and that thought process is imprinted on everything we do—day in and day out. We’re strong financially and are the fastest growing of the co-ops. And we have a great culture here, a great group of staff members to work with every day. Roll all of that together, and there’s something very compelling about the Do it Best environment.
Mansfield named chairman at Valspar
Minneapolis-based paint and coatings company Valspar has named current president and CEO William Mansfield as chairman of the company’s board of directors, effective immediately.
Mansfield succeeds Thomas McBurney, who has served as chairman for the past two years. McBurney will remain chair of the board’s governance committee and lead director.
Mansfield, 59, joined Valspar in 1984. After working in lead roles at most of Valspar’s businesses, he was named COO in April 2004. He has served as president and CEO since February 2005.
Mansfield holds a B.S. degree in engineering from Drexel University and an M.B.A. from Lehigh University.
Top 350 pro dealers cope in a difficult housing market
When the Chinese Year of the Dog came to an end on Feb. 17, 2007, some pro dealers looked at their 2006 sales figures and saw an apt comparison. Sagging lumber prices and dwindling housing starts had a negative effect on many dealers’ revenues. But overall pro sales for the industry’s top 350 players, according to HCN’s annual survey, grew by 9.0 percent, to $55.98 billion. View the top 350.
Although some dealers posted double-digit declines, others were able to break even or grow their business through the downturn. Of the 350 dealers on the list, 119 reported revenue increases, 77 experienced declines and 154 companies are listed with flat sales.
In terms of rankings, Pro-Build, Stock Building Supply, 84 Lumber, BMHC and ABC Supply still occupy the first five positions among lumber and building material dealers. Several of the Big Five continued making acquisitions through 2006, which helped boost their revenues. Altogether, they accounted for 35 percent of the Top 350 sales.
One of the businesses acquired was Rowley Building Products, a 10-unit chain of lumberyards in New York’s Hudson Valley. Rowley’s owners decided to join Strober, a division of Pro-Build, when they noticed national builders moving into the area. But by the time the deal was finished, in July 2006, single-family permits in the New York, New Jersey region were on track for their weakest year since 1996.
“[Strober] has been around awhile, and they understand the cyclical nature of the business,” co-owner Brian Rivenburgh told HCN at the time.
Most of the pro dealers on the Top 350 list have been through housing downturns before, the last one beginning in 1995 and lasting three years. But this downturn is different, with production builders pulling back on the reins quicker than anyone can remember.
“Literally, in early July, it was just as though somebody turned off the faucet,” said Builders FirstSource CEO Floyd Sherman, speaking to a group of analysts last October.
Builders FirstSource showed a decline of 4.2 percent in sales last year, despite expanded manufacturing capacity in Greenville, S.C.; a new lumberyard in Lake City, Fla.; and an acquisition, Freeport Lumber, in the Florida Panhandle.
Florida dealers listed on HCN’s Top 350 scorecard showed a pattern of similar results, with 14 out of 18 companies reporting sales that were flat or down for the year. But the story behind the numbers is one of robust sales in the first half of 2006 followed by steady declines in the last two quarters.
“By the end of the year, many of our dealers had [experienced] a solid year,” explained Bill Tucker, president of the Florida Building Material Association.
Of course, 2007 is another story. “It continues to fall off the roof,” Tucker said. “I’ve spoken to dealers whose sales are off by 40 to 50 percent.”
One of the bright spots on the building landscape — commercial construction — is doing well in Florida, according to Tucker. Dealers across the country are turning in similar reports. O.C. Cluss, a nine-unit pro dealer based in Uniontown, Pa., acquired an Ohio truss manufacturer last year that makes, among other products, steel trusses used in commercial construction. Other Cluss acquisitions in the past two years include a glazing operation and a wholesale plumbing supply company, both of which serve the light commercial market.
O.C. Cluss reported a 30 percent rise in sales in 2006, from $85 million to $110 million.
Even the big guys, the ones who grew more muscle during the production home cycle boom, are turning toward commercial work now that times are lean. BMHC’s construction services division is “pursuing limited commercial construction work where it makes good business sense to do so,” according to SelectBuild president and CEO Mike Mahre.
Although the first half of 2006 was a busy time for acquisitions, M&A activity tapered off toward the end of the year as the outlook grew dim. Stock Building Supply announced employee layoffs in June and November, and the other major LBM players quietly reduced their work forces. Pro dealers who had relied on tract home builders for revenue began looking at multi-family housing, the remodeling contractor, and in some cases, the consumer.
Chip Mortimer, president of Mortimer Lumber in Port Huron, Mich., served home builders from his four locations in southeastern Michigan during the boom days. But with single-family building permits in the Detroit metropolitan area down by 44 percent this year, Mortimer calls his housing market “the worst place to be right now.”
Yet business is holding steady at this $25 million chain, which has shifted its customer mix by redirecting advertising dollars and beefing up its kitchen cabinet and decking division. “We never abandoned our remodelers and our consumers, so business is still strong,” Mortimer said. “The customer count and the transactions are just different.”
Dealers also turned to multi-family housing as single-family starts dried up. Although the condo market has weakened considerably, there are still pockets of intense multi-family building activity in some urban centers. Condo and apartment projects are going up all over downtown Seattle and Bellevue, Wash., some with commercial mixed in, all fed by the job growth in those cities.
In San Jose, Calif., ORCO Construction Supply store manager Mark Tabaldi said his sales figures are running 12 percent to 15 percent higher than last year’s. He attributes the growth to commercial and multi-family construction in the Bay Area.
“Everybody is going up,” Tabaldi said, referring to high-rise residential projects like those being built next to a Bart station near ORCO’s corporate headquarters in Livermore, Calif. “There’s a lot more hardware in these kind of projects, and the order is always pretty big,” he explained. Threaded rods that go between the floors of an apartment building — commonly known as a “hold down system” — can add up to $50,000 for a large project, according to Tabaldi, who isn’t mourning the slowdown in single-family construction.
For more on the Top 350 pro dealers, read the Aug. 27 issue of Home Channel News.