ProBuild CEO Rob Marchbank raised more than a few eyebrows at the ProSales 100 Conference in New Orleans when he confided, “We’re crap in safety,” during a wide-ranging panel discussion March 27.
Marchbank joined fellow panelists US LBM’s L.T. Gibson, Builders FirstSource Floyd Sherman, Carter president and COO Jeff Donley, and Golden State’s Jessica Scerri, who represent five of the top 17 dealers in the ProSales 100, in sharing war stories, confessing blunders, and discussing strategies during the hour-long discussion.
The Probuild CEO also surprised his audience by saying the company turned a profit last year, but did not elaborate on how that profit was calculated. Earlier this year at the International Builders Show, Marchbank declined to tell ProSales whether the company had turned a profit in 2013.
Referring back to ProBuild’s safety record, Marchbank told dealers, “Don’t lose sight of the fundamentals, the Xs and Os. Quite honestly, we lost a little of the fundamentals.”
A botched installation of ProBuild’s ProEdge IT system was another blunder Marchbank pointed out. “In hindsight, if that could have been done in a different way, ProBuild would be in a materially different place. We just kept compounding [the problem] for all sorts of internal reasons,” he said.
The recession caused many dealers to rethink how they operated. “When I came on five years ago, it was all gloom and doom, said Scerri. “One of the first things we did was to look at metrics for all the departments, and put in incentives with different targets. If they met target, they got a bonus."
At Carter Lumber, we took the downturn as a way to invest heavily and change who we are,” said Donley, adding, “We were running into the burning house. We reconsolidated locations and our management teams.”
Carter learned they could do more with fewer people as long as they were the right people. “We looked at things long term, and closed 26 yards that we knew weren’t going to give us the capital we needed for growth today,” Donley said. The Kent, Ohio-based company started to invest in growth markets outside its midwestern range.
Carter Lumber recently added two new yards near Atlanta. When Gibson was asked whether Green Bay, Wis.-based US LBM would ever venture outside its traditional stomping grounds, he told the audience, “As early as next Monday, you might hear we aren’t set on any particular geography.”
On April 1, US LBM announced it had added Jones Lumber Company of Boca Raton, Fla., to its family of companies.
US LBM, created in October 2009, experienced the downturn a bit differently than other companies, according to Gibson.
“Because we entered the business at the bottom of the downturn, we didn’t have a lot of the negativeness [others did] because we bought businesses that had already gone through the downturn and had restructured,” he said.
“We know what we are about and what our goals are. We break it down to product category level and customer. We want to be the best with each segment. We put goals, tactics, and strategies behind that plan, and assign that to people in the marketplace,” said Gibson. “Nothing happens by accident.
“When we started up, our goals and aspirations certainly exceeded our resources. There may be more risk now than there was in 2009.”
Sherman, who saw a 70% decline in revenue at Dallas-based Builders FirstSource during the recession, confessed that, “A lot of it had to do with me.
“We didn’t want to believe things were going to get as bad as they did. When it finally dawned on us, it put a lot of additional pressure on us. It was painful, and took a creative financial engineering [to recover].” In 2013, BFS posted $1.07 billion in sales up from its 2011 low of $664 million.
Sherman believes installed business is the wave of the future, and started developing that during the downturn.
“We foresaw a labor shortage and felt if we could supply that labor service, we could be a better supplier to our customers.” BFS is still working to increase its installed business, he says, but notes that “it’s challenging to get qualified labor. We do a tremendous amount of training.” —Kate Tyndall
Takeouts from the discussion:
“We have 400 dots on the map, but they are all very, very different. One of the things we realized was that making everybody look the same was hindering some, like Dixieland and Spenard, our business in Alaska. So we decided to let them blossom and stopped trying to make them look like the rest.” —Rob Marchbank, ProBuild
“I thought the banks were our friend, and when it all went to shit, I found out different.” —Floyd Sherman, Builders FirstSource
“What we don’t want to do is let an increase in sales lure us into mediocrity and get fat and happy again.” Jeff Donley, Carter Lumber
“Tomorrow's normal is not like any normal we've ever seen.” —Floyd Sherman, BFS
“[If] we have done all the things necessary to make ourselves as efficient as possible, and to best serve our customers, then we have a right to our profit.” —Floyd Sherman, BFS