How long has your town had a housing recession? Curt Koth figures the one in Flint, Mich., has been going on since the 1970s. But despite four decades of hard times, Michigan Lumber remains. Now 58, Koth has worked in LBM for 40 years and with Michigan Lumber for 32. Here's how he manages this roughly $5 million single-store yard in a Rust Belt capital where the unemployment rate is half again the national average and city officials are promoting programs to demolish existing homes.
Revenue mix, then and now. I'd have to guess maybe we're 10% commercial now. Back in the day it was well over 50%. When we did stuff for GM, for instance, if a company made engine heads you'd have to have plywood to stack them. For camshafts, you'd have to have spacers between them. And you'd need wood for the foreman's office, cafeterias, meeting rooms. Maybe we do another 10% new build–we get 10 to 20 housing starts in the county per year–30% remodel and 50% John Q. Homeowner. Our two largest customers are cash and COD. Because we are a yard that'll sell you a pole barn, vinyl siding, hardwoods, people come from far and wide.
Our service area. We call it greater Genesee County–just under 500,000 people. We limit deliveries to 100 miles. If someone requests farther than that, we'll contract out. We're doing a lot south in the northern Detroit suburbs, like Birmingham, Bloomfield, Clarkston.
Why we survived. It's like your retirement fund. You don't put all your money into Chrysler, GM, or Dow. We put our money into more than house packages. We stay alive through the winter because of all of our specialty products–plywood, hardwoods, and the mill. It's always been with the company to a point, but back in the '90s, the owner Chuck Olson and I saw the decline of industrial business–GM. That's when we stopped stocking and making more top-shelf hardwood mouldings and hardwood plywoods, and high-end custom cabinets.
Niche marketing. Of what's left in Genesee County in terms of independents we're about it. We are literally surrounded by box stores. You go in any direction and there's one within 15 or 20 minutes. How do you compete against them? We have to do that every day. And what we've talked about is we really don't so much compete against them because our customers know we're different. We don't have bird seed or plumbing faucets or electrical ceiling fans and miles and piles of stuff that's shiny and bright. We don't have to compete so much. Our builders aren't the type who want to push their little cart around and go through checkout and load it themselves. That's not to say when, with OSB, we have to fend that off. But for the most part, we've found we can operate in a market where they are by being different.
Dealing with unions. I remember there were 78,000 United Auto Workers members in our county. There was a day when I had 22 Teamsters here. We still have union representation but we're pretty much a family here. I told the guys running cabinets that it was in their interest to get a chauffeur's license. There was a day when workers really needed a union, when people made their millions by trodding on the backs of the workers. I can't imagine many places where that still happens. Here, people are happy to work and have a job. If there's a benefit and it doesn't cost the company, fine.
Customer surprises. [Given the weak economy,] you'd think everybody wants a #3 2x4. That's probably so in Flint, Mich. But while Flint had a population of 190,000, it's now 115,000. Those people out in the county are living on GM or GM supplier incomes or are retired.
Straight talk. The guys and I get together now and then; now is one of the times we're going to do it. I tell them we sold a lot of decking. Now we're going to be going into the mill and putting stuff up on the shelves. They'll ask how are we doing, and I'll give them an honest answer: "We're down a bit dollarwise, but margins are up, and I want to thank you for everything you're doing." They're comfortable because their job is here. I'm not putting too much honey on because every time they turn on the TV there's doom and gloom. I pat the guys on the back all the time.
My schedule. I usually get up about 5 a.m. and come to work at 6:30. I shut the store alarm off, make the coffee, boot up the computer, print the first delivery invoices of the day, and take care of any paperwork that didn't get done the day before. I look at the end-of-day reports: Any inventory transactions in both quantities and dollar sales. I'm not too much into the financial end because we have a financial manager. Then I go walk the yard. I'm looking for things out of place, anything missing. I might even hop onto a forklift and play lumberman for a while.
My yardsticks. I look at how many customers are coming in and total invoice count. As long as you're getting lots of people in, there's a better chance of producing dollars. Then, obviously, there's margins. Longer-term, I look at losses [from lack or sales], shrinkage. We might have stocked it because John Q. Homeowner wanted it and it doesn't sell. Should we stock it now? Those things concern me.
Why I never worked for GM. A lot of my contemporaries did, and they're now retired. I never thought I'd be happy in a factory screwing on bolts for eight hours a day. Has the lumber business been good for me?Yes. I'm 58 and I can still ski double-black diamonds in Colorado. It has kept me mentally and physically fit far beyond my peers.