For all the departures and changes that ProBuild CEO Rob Marchbank announced last month, he left out one that some watchers regard as the company's most significant: The abandonment of market share as the LBM giant's No. 1 objective.
Denver-based ProBuild has run its operations for years based on the philosophy that if it could get to be significantly bigger than its competitors in a market, its dominance would enable it to charge higher prices than its rivals while it reaped the benefits of volume purchasing. Apple Computer enjoys that status today with many of its products, and Builders FirstSource CEO Floyd Sherman has promoted much the same idea.
This drive for market hegemony helped spur ProBuild to sell its goods at what competitors regarded as foolishly low prices, and it fit in with the lucrative offers that ProBuild used to lure hundreds of sales reps from competitive firms. But two changes in late March—one widely reported, one far less so—signal those days are over.
Expert observers see in Marchbank's memo of March 20 a lot of signs that the company is cutting expenses in a further attempt to turn around what is generally viewed as a money-losing operation. The executive vice president of operations management layer was eliminated, several senior staffers left, the Corporate Development function was erased, the vice president of marketing job will remain unfilled, and a hiring freeze was put in place in Denver.
Less known but equally significant, ProBuild is shifting its sales reps to a more consistent, more profit-oriented commission structure. No more offers of multiple years of guaranteed income, it appears. As yet, it's too early to tell whether the company also will quote fewer bargain-basement prices to win bids.
The changes create the third organizational structure that ProBuild has used since last summer, and Marchbank is the fourth person to occupy the CEO's office since August 2010. "I realize there have been a number of changes in leadership and direction over the past 24 months," Marchbank wrote. "We need to focus on developing the tools and capabilities that will differentiate our company in the future."