If there is a component capital of the world, it's pretty far from Kansas City. Whether you're on the Missouri side or Kansas side of the Missouri River, the action is dominated primarily by custom and semi-custom home builders with volumes between 15 and 50 houses a year. “It really is not a tract market,” says Roger Sandquist, purchasing manager for Overland Park, Kan.–based McCray Lumber, a six-unit pro dealer with 2003 sales of $106 million.
“Pulte is here, but they might build 200 homes a year,” Sandquist says of the production builder activity that is often the harbinger of pro dealer component sales. “We're all stick-framed for the most part, very little trusses, very little wall panels. Engineered wood and floor systems are the first things we've been trying to introduce.”
Given this market, when Jim Rinehart, a field technical manager (FTM) for the Engineered Wood Products (EWP) division of Boise, Idaho–based Boise Building Solutions, told Sandquist that he could double the 25 percent of his builders that had switched to I-joists for their flooring, Sandquist was a bit skeptical. “Our builders often get in a comfort zone,” Sandquist says. “If they are busy and making money, they really question spending an extra $700 to $900 dollars on something better, so it can be hard to sell the sizzle at our end of the product.” Add to that McCray's own bustling level of business activity and the corresponding customer demands it creates, and market expansion and new product sales can quickly take a backseat. But Rinehart was up to the challenge. Using Boise's Business Planning Process, he came armed with an analysis of McCray's EWP market based on data collected at Boise corporate from a variety of industry sources, and a willingness to personally help sell McCray's builders on EWP. “One of the key things that attracted us to the Boise program is that they will come into town and call on our customers with our salespeople and hold builder/contractor meetings,” Sandquist says. “We are very busy, and it helps when a manufacturer can take that part of the business and run with it.”
Creating a Market Introduced in January 2003, the Business Planning Process offers strategic business planning for Boise EWP distributors and dealers. Specifically, the program joins Boise FTMs with pro dealers in a collective effort to determine the current size of any given EWP market and a dealer's potential share of that market, then develops business objectives to meet projected growth goals in both market and share of market. The program also includes assistance on balancing inventories, selling effectively against competitors, and developing employee training programs.
“We're trying to get out of this old commodity mentality where we've got product and you've got money, so let's trade and that's the end of the relationship,” says Denny Huston, sales and marketing manager for Boise EWP. “We want to look at things we can bring to the relationship besides manufacturing and selling product.”
For example, says Huston, Boise has the local and regional market data and the analysis acumen to develop coordinated sales action plans. The company also engages in large-scale strategic planning and has access to detailed information from various studies that Boise sponsors or subscribes to annually. “We can drill that data down to permits by county,” Huston adds. “We can get right into a dealer's market area to determine housing permit history and what their local EWP market share is.”
However, all the data in the world isn't going to incite change in a market without implementing a plan, and Huston points out that the ultimate success of any manufacturer/supplier partnership lies not so much in information and agreements generated at the corporate level as it does on the commitment made by the manufacturer's field representatives executing plans based on shared business objectives. Rinehart, for example, spends several days with McCray each month visiting jobsites and hosting dinners with builders to explain the value proposition of I-joists over solid-sawn lumber flooring systems. “The goal isn't so much to analyze the market and identify the [EWP] customers you aren't hitting,” Rinehart says. “It's to create a larger [EWP] market overall to give you more business to go and get.”
Selling the Market To that end, Rinehart leverages his experience as a college professor on construction techniques and some ex-builder credentials to relay the features of EWP to McCray's contractor base during dinner meetings and jobsite visits set up by McCray salespeople. “Builders are pretty open-minded today,” Rinehart explains. “They don't want problems, and the main thing we are trying to communicate is problem solving.”
According to Rinehart, who focuses his market outreach efforts for McCray exclusively on EWP, I-joist product performance and quality, from load bearing to reducing floor squeaks, can be a compelling argument to solid-sawn floor supporters. “It is a lot easier to fix a problem from a set of plans by offering engineered alternatives than to come back and correct problems [post-construction], which ultimately is very expensive for the builder,” he says.
While McCray's EWP sales haven't jumped as easily or as quickly as expected, Sandquist is still optimistic about increasing account buy-in to 50 percent, particularly in markets closer to the city. Overall EWP sales by volume increased approximately 11 percent in 2003, and the number of McCray accounts opting for I-joists over solid-sawn alternatives rose from 25 percent to approximately 35 percent. “It's great to have someone that can come down the chain and still communicate with builders,” says Sandquist. “It's hard to quantify on the sales side, but you have to recognize their effort. It has to have had an impact.”