It's a looming presence in many towns, surrounded by razor wire and studded with guard towers. You might drive by your local prison daily. But have you ever thought of selling there? Some lumberyards do, and in these recessionary times, they are more than grateful for the revenue such sales provide.
Sales to prisons require a little extra work in terms of delivery, but because prisoners tend to be pretty hard on materials–"they're liable to throw a cue ball through a window or a chair through a door, and they are really hard on plumbing," says Gary Copp, owner of Carson City (Mich.) Lumber–there is always a need for replacement materials.
In Cameron, Mo., before a Porters Building Center driver can make a delivery to one of two local prisons the yard supplies, manager Shane Hendrix has to ensure that everything is taken out of the truck that might be misused in the wrong hands, such as utility knives and straps. "When we get there, the driver has his ID checked and a guard inspects the truck," he says. "If we have to go in [to the prison yard], someone rides with us."
If the delivery is small, the materials will usually be offloaded onto one of the prison's vehicles at the gate, so the lumberyard's truck doesn't have to enter the prison yard, Hendrix says, which cuts down on his delivery time.
"The guys at the maximum security facility are really easy to deal with, unless they've got something going on, like a delivery of new prisoners," says Hendrix. Then my guys are going, 'Please don't get in my truck.'"
Porters tends to sell more to the town's medium-security facility, which has a woodworking shop. Typically, the yard sells the prison tools, small pieces of wood, fasteners, and dowel rods.
The only unusual materials request Hendrix got from a prison came from the local medium-security facility, and that was for paint thinner and a lot of small plastic bags, "like sandwich bags," he says. Hendrix still doesn't know what they wanted the stuff for, "but all we know is, don't make a joke about huffing, because they didn't think that was funny."
Along with the unusual materials supplied, penal institutions also differ from home builders in another important way: how fast they pay.
Bill Swanson, general manager of Hoffrichter's West Side Lumber in Pontiac, Ill., whose yard has sold building materials to prisons around the state for years, says that dealers in Illinois typically have to wait 120 days to get paid from the state compared with the usual 40- to 45-day payback for a sale to a private individual.
But slow pay is better than no pay in many parts of the country, so dealers are pursuing all sorts of institutional business besides prisons, including sales to hospitals and universities.
Sales to institutions, including those to the regional hospital in Cameron, account for 10% of Porters' annual business, Hendrix says, and "we'll bend over backwards to keep it. We are beating the bushes for any kind of sales."
In Des Moines, Iowa, Leachman Lumber sells to all the local hospitals and colleges, says Leachman's president, Jim Kaplan. While these commercial sales only account for 3% of his yard's annual business, Kaplan says, "it's definitely business we want to keep." One reason why, he said, is that with these businesses, "You don't worry so much about whether the economy is down."
At Carson City Lumber, sales to institutions account for just 1% of the yard's annual revenue, but "1% is 1%," Copp says. "It's decent, and it's worth entertaining." Plus, he adds, "you make contact with those people, and they may come back to you with a personal project."
Tim Haley, director of sales, northern division, for Curtis Lumber in Plattsburgh, N.Y., supplies materials to Clinton Correctional Facility, a maximum security prison in nearby Dannemora, as well as Plattsburgh's Champlain Valley Physicians Hospital and the local State University of New York campus. He says sales to these institutions account for about 2% to 3% of the yard's annual revenue. "I definitely think that this is a market to be pursued, especially in today's market," he says.
Eric Spencer, owner of Spencer Home Center in Lexington, Va., agrees. Sales to local prisons, hospitals, and universities account for 5% to 8% of his yard's annual sales revenue. He uses the Commonwealth of Virginia's online service to look up government contracts sent out for bid. Spencer supplies materials to local institutions on both an as-needed and contract basis.
"Each institution in our state has its own discretionary money it can use and not go through the bid system," he explains, "and we do have salesmen call on them." While he acknowledges that as-needed sales "aren't going to be huge home runs for us, if we sell a replacement door and some hardware, that could lead into a larger project."
Many dealers prefer to avoid the paperwork and lowered margins that are attendant on contracts put out for bid, irrespective of the higher dollar values they carry. As Copp notes: "People who request a bid expect a guaranteed bid, but you can end up against the wall due to overuse [of materials] by the contractor or changes that show up in the final blueprints. There can be so many problems that you can lose money."
Buzz Miller, manager of Allen & Allen Co., prefers to get his business from his home base in San Antonio, Texas, but that doesn't stop him from bidding on state contracts. "Nowadays you don't leave any stone unturned," he says. Allen & Allen attributes 10% to 15% of its revenue from institutional sales, and sells to prisons, hospitals, and colleges and universities within 100 miles of San Antonio. Says Miller: "I think some people drive by these institutions without realizing that money can be made."