The future will look a lot like today, with labor shortages and consolidation as key areas of unease, according to a panel of industry experts speaking Sept. 24 at the Florida Building Material Association. Don Magruder of Ro-Mac Lumber moderated the “New Age of Our Industry” panel that included CEOs and industry experts from around Florida.
When asked about the current state of the industry, Russ Hallenback, CEO of Tibbetts Lumber and Cox Lumber, replied that “This is the new normal.”
The other panelists agreed, echoing a sentiment of general optimism and talking about the potential for modest growth tempered by new limitations and legislation, all while big national dealers are consolidating.
“Consolidation is a big concern,” said Mitch Lewis, president and CEO of BlueLinx Holdings. “The concern is the vibrancy of the overall industry. A potential acquisition spawns new entrepreneurs. You better have a good strategy and execute in light of that consolidation.”
“There’s going to be some cultural adjustments, that’s going to happen,” said Hallenbeck. “Being through one myself, 95% of what they say is a lie. The big are getting really, really big. And I think the bigger they get, there’s opportunity for us to get really close to our customers.”
The panelists also dismissed the idea that bigger is better. The bigger national chains have razor-thin margins that are unsustainable, the panelists believe.
“Every morning we’re writing credits for stuff we shouldn’t be writing credits for,” said Spike Cissel, chairman of the board of Manning Building Supplies. “When you get a big company, the bean counters start to get control: ‘You will buy from this guy, you will buy from this guy,’ and it starts to break down.”
With all of the consolidations taking place, there’s a lot of overlap in locations (take a look at our maps) and that means that good people who know the industry will inevitably be out of a job. Hiring those people can be tough because of salary differences, however.
“In the roll up, when companies were acquiring to build these four or five national entities, salaries were pushed up,” said Jim Schaffer, chairman and CEO of Schaffer Associates, an executive search firm. “When they are downsized, they either have to face a reduction in salary or you’re going to have to pay more for their services, or in theory both. So there’s some wage adjustment pain. This is a source of talent for us in the future.”
But Schaeffer also warns that those employees with transferrable talent sets like managers or salesmen will leave the industry.
It might seem like a challenge to compete with these ever growing businesses, but Johnny Hughes, CEO and founder of Designzillas, sees salvation online, as long as you don’t lose sight of what’s important.
“You have to be flexible you have to be unpredictable,” Hughes said about combating the big chains. “The online space allows for some variety. There is an opportunity to define a niche and become the authority online in that subject area and have a real personality. You can’t compete in everything.”
Even with the potential of online, dealers still focus on the importance of the face-to-face communications.
“It’s about relationships,” said Jack Monroe, president of JM Building Supply. “Tech or not, we’re still a very traditional industry. They need you to deliver on time when you promised.”