One of the most recognizable man-made landmarks you can see for miles around Huntsville, Ala., isn’t a church steeple or skyscraper. It’s a test version of the space shuttle, one of the crown jewels of the U.S. Space and Rocket Center’s outdoor museum of famous rockets. The shuttle lifts off at a crawl but ultimately goes wicked fast: Its top speed hits 17,500 mph.
You get the same feeling of velocity when you drive 8 miles northwest and visit Wilson Lumber. The company has been a fixture in Huntsville since 1949, a year before Wernher von Braun arrived to spearhead the nation’s aerospace program and earn Huntsville the nickname Rocket City.
Like the early space program, Wilson Lumber was a big vehicle that couldn’t deliver very much payload. For several years this decade, revenues barely moved.
“Three years ago, we were still in hunker-down mode,” COO John B. Marshall says. “Then we looked up and said, ‘Let’s go get it.’”
Liftoff came in 2016. Wilson Lumber’s revenue jumped to $42.5 million that year from $33.3 million, a 28% increase from 2015 and the seventh-fastest growth rate among all ProSales 100 companies that hadn’t made acquisitions. For 2017, it expects to rise another 11%, to at least $47 million. Meanwhile, net profit margins—which started to rise even before revenues—has reached a level that knowledgeable observers say puts Wilson Lumber comfortably near 10% and way ahead of its peers. In an industry where many dealers dream of selling at 28% gross margins, Wilson Lumber’s hefty income from higher-value products means its executives get angry when overall margins drop to that level.
Indications point to the third stage being even more spectacular. All at once, Wilson Lumber is:
- Revamping its millwork and truss operations under the leadership of an in-house director of continuous improvement
- Refreshing its branding and website.
- Revamping its warehouses, storefront, and fleet.
- Expanding commercial sales hundreds of miles beyond Huntsville.
- Dramatically upgrading its IT system.
It’s also reorganizing its leadership structure so Robb Wilson, the company’s president, can focus on the future. Most important to him is the development of the company culture. “I don’t think we do anything that’s particularly unique,” Wilson says with typical understatement. “But we have 150 people who are fanatical about doing the right thing.”
That achievement to date, and prospects for a fiery performance in coming years, has earned Wilson Lumber the title of ProSales’ 2018 Dealer of the Year.
Sweet Home Alabama
To understand Wilson Lumber, start with Huntsville. “It’s a pretty simple place,” Wilson says. “There’s not a beach, but there are a lot of lakes. There aren’t mountains, but there are nice hills. It’s not too big, not too small.”
That description may summarize the topography, but it only partly reveals Huntsville’s character. With a population near 450,000, metro Huntsville is the second- biggest market in Alabama and the wealthiest and best-educated part of the state, with a Whole Foods Market and its own Apple Store.
It’s home not only to a robust aerospace industry but also a booming biotech sector. Huntsville has the highest percentage of engineers per resident in the country and the second-highest percentage of workers in STEM (science, technology, engineering, and mathematics) professions.
The staff at Wilson Lumber believes that having so many engineers around helps the company sell its trusses because they’re an engineered product. On the other hand, it’s common for sales reps to field requests from knowledgeable homeowners for product data sheets and studies that show how well simple fasteners stood up to shear tests.
When asked to describe Huntsville, locals often will reply, “It’s not like the rest of Alabama.” But even when you’re called Rocket City, that claim is only partly true. This is a region where, by the third question, you can expect to be asked whether you’re a fan of the University of Alabama or Auburn University. (Wilson, an Auburn grad, made sure the red in the company’s recently redesigned logo doesn’t come close to the Crimson Tide’s color.)
Huntsville features one of the largest collections of homes that predate the Civil War. It’s also the birthplace of actress Tallulah Bankhead, and its most famous lifelong resident is Lilly Flag, a cow that in 1892 set the world record for producing the most butter fat in a year.
Metrostudy, the data unit of Hanley Wood, says the average new home in the market cost $212,000 as of last June, but there are plenty of models that top $500,000. The unemployment rate beats the national average and median pay for early-career jobs is nearly $60,000 a year.
Wilson Lumber serves this market in three ways: With a one-location lumberyard, a millwork facility in the back that includes a door shop, and a truss plant about 15 miles away. Each provide about one-third of the company’s revenue. That 66% weighting toward higher-value products is a model that many other dealers are trying to attain. Broken down by customers, roughly 45% of sales come through tract builders. Semi-custom, build-it-for-me work accounts for another 25% of sales, and the rest is split among remodeling, retail, and commercial customers.
You can find Wilson Lumber’s most dramatic transformation in the millwork shop. That’s due in large part to Jerry Pilman, an Indiana native recruited as a consultant in November 2016 who proved so valuable that the company—unusual for a business its size—hired Pilman as a full-time staffer in March.
Pilman examined the work areas, how the production lines were laid out, what the flow was through the building, and what ad-hoc procedures had taken root. At his suggestion, Wilson Lumber stopped production for two days to hold a kaizen (the Japanese word for “improvement”) event to revamp both the facility and the attitudes of the people who work there.
The results more than paid for Pilman’s salary: Door production rose 30% in 2017 from 2016, efficiency improved 40%, and it took fewer labor hours to produce more product, without any added shifts or capital investments. Whiteboards are updated hourly to help keep track of whether the team is meeting its goals.
“The guys on the floor need to know if they are winning or losing that hour, day, or month,” Pilman says. When the numbers turn from green to red, that’s a sign the group might have to put in overtime. And in an age in which workers are valuing their time more than ever, Pilman believes that’s a good incentive.
Wilson Lumber’s millwork gains came primarily from embracing an organizational philosophy called 5S, for sort, straighten (or set), shine (or sweep), standardize, and sustain. Pilman’s next goal for the millwork shop is to introduce a just-in-time flow of supplies. He also has begun to work on improvements at the truss plant, where new equipment already has increased efficiency by one-third. That company currently delivers truss packages as far away as the Kentucky state line and deep into Mississippi, and it’s eager to grow.
Core Convictions, New Ideas
Mill and truss improvements have yielded tangible results. But at Wilson Lumber, the intangible gains are even bigger, and likely to be longer-lasting. Lots of small dealers have bedrock principles but fail to innovate. Lots of big dealers can afford to innovate but lack unity across their vast enterprises. Wilson Lumber has figured out how to combine three generations of core beliefs with an unceasing appetite for new ways to improve. Credit that in part to a foundation built on faith and family (see Why Robb Wilson Closes His Emails with “Peace and Grace" ) that from the start has emphasized doing the right thing, treating people right, and challenging yourself.
But having a new generation in charge figures into this, too. It may be no coincidence Robb Wilson’s current leadership team is the third generation of the family and one of the youngest top-performing managerial teams that we’ve chronicled lately. Robb is 46 years old, while sales manager and cousin Russ Wilson is 43. One of the few leaders older than that is John B. Marshall, the chief operating officer. He’s 59.
Responsibilities are clearly divided. “Robb’s job is to figure out where we’re going,” Marshall says. “My job is to think about where we are.” That gives Robb “wide fences to run in,” as he puts it, while Marshall works with Lee Smith, the operations director, and Russ Wilson to focus on the day-to-day priorities.
Despite their varying roles, Wilson Lumber’s leaders exhibit a remarkable level of unity on what matters. You can see that in how they decorate their offices. Rarely will you see an LBM operation with more signs in more places extolling the company’s mission statement and core values. In addition, in several managers’ offices you’ll see buffalo squeeze toys. They serve as reminders of the saying in management that it’s better to act like a buffalo and face an oncoming storm than try to run away from it.
“When somebody tries to avoid something, we chuck a buffalo at them,” explains Russ Wilson.
While Robb Wilson grew up in a house behind the lumberyard, and 42-year-old Russ did chores at the yard starting when he was 7, Wilson Lumber’s leaders are voracious consumers of advice from outside their town. Company staffers participate in industry roundtables, and then there’s book learning. Robb embraced the popular business book Good to Great years ago, and in a recent message to employees he returned to that book’s call to face the brutal facts, understand what you can be best at, find your passion, and decide what drives your economic engine.
From talking with other groups and reading industry publications, Wilson Lumber’s leaders are demanding better ways to measure their company. Current key performance indicators stress year-over-year growth of net profit and revenue, as well as getting a bigger share of the customer’s wallet. Now they’re digging into areas like credits as a percentage of sales and dollars spent per delivery.
Lately, the company has been studying Traction, a book by Gino Wickman that pushes business owners to focus on optimizing six areas if they want a smooth-running, high-performing company: Vision, people, data, issues, process and, ultimately, getting traction. Robb Wilson considers himself responsible for those first two areas.
“In our accountability chart, my top two duties are company culture and strategic planning,” he says. “As the leader, I and I alone am responsible for culture. If it’s good, hopefully I contributed somehow and if it’s bad, it’s because I am either causing or allowing it. Luckily, I have some really good people as well as other owners who are all positive contributors.
“Strategic planning involves setting goals for where we want to be but also includes staying on course,” he continues. “If I am not doing that, then who is? I’m a big proponent of figuring out what we do best and do the heck out of it. I’ll stand by that but, again, it’s the people here that do it. I’m a spectator.”
Seeking the Right Fit
Despite an area unemployment rate of just 2.9% (one-third better than the state average), Wilson Lumber picks carefully when it hires. All prospects go through three levels of interviews that focus primarily on competence and cultural fit. Candidates are asked questions like, “Tell me about a time when you messed up?” to learn whether they are likely to be a match with the company’s core principles.
Each month, Wilson and Marshall meet with any new employees who have joined the team, which gives the leaders an additional opportunity to stress the company’s cultural imperatives. You can see that focus show up in its pay package as well. Millwork staff get a performance pay package that’s 70% based on quality of work, attendance, and keeping the culture, and 30% based on how the team did as a whole.
Currently, the company is trying to attract both current and new truck drivers. For people who already have a commercial driver’s license, Wilson Lumber offers perks such as a winter coat, a nice pair of Red Wing boots, and a clothing allowance for pants and rain gear. For potential drivers, it pays for candidates to attend a truck driver training class that runs eight consecutive weekends at a local community college. Drivers who stay for six months get a $250 bonus then, and $500 more if they stay for a year.
Refusing to settle for less than good is a common Wilson Lumber attitude. Don’t assume that the company’s Southern politeness and its willingness to help customers with temporary emergencies means it’ll let bills go unpaid; DSOs run well under 30 days. As for technology: Robb Wilson is a member of Epicor’s BisTrack software user group and is pushing to get better e-commerce capabilities.
“How do we make it easy for people to buy here?” he asks. “It is literally easier for me to order a 24-pack of K-cups than it is for me to order 10 studs to finish a framing package. So if I have a customer who is used to and likes ordering from Amazon, I am failing that customer. Do I look at Amazon as a competitor? You bet I do.” Switching the company to Google Fiber and its 100-megabyte speeds likely will help Wilson fight back.
Wilson and his team drive by that space shuttle and the NASA rocket park just about every time they do their own shuttle between Wilson Lumber and the truss plant. Given what the company has accomplished lately and what it is set to do in the years to come, Rocket City seems to have another high-performing, sophisticated vehicle in its midst.
* Read why Robb Wilson ends his emails with "Peace and Grace."
* Check out our profiles of past Dealers of the Year.
* See the full list of past Dealers of the Year.