There is no shortage of log-cabin-style homes and pancake houses in the tourist towns that surround Tennessee's portion of Great Smoky Mountains National Park, America's most visited national park.
The growth of log-cabin properties in Pigeon Forge, Gatlinburg, and Sevierville spawned an economy within the local economy–one that Knoxville, Tenn.-based Tindell's Lumber and Building Materials has latched onto while providing materials for new construction.
Six years ago, Nelson Calfee, a salesman at Tindell's Sevierville retail facility that serves the county between Knoxville and the park, persuaded president and CEO Johan van Tilburg to carry $150,000 in log-related inventory with a buyback guarantee from the vendor. Van Tilburg gave the lark the go-ahead. The inventory was gone in two weeks.
Today, nearly 75% of all sales the Sevierville branch serves are log related, including log-home rental communities, vacation cabins, and new pancake houses. The Sevierville branch provides both the interior guts of the cabins–traditional framing materials–and custom white pine and white cedar log products used for siding, railing, beams, and porch kits. Staircases and false corners are also on the menu.
Carl Tindell, chairman and patriarch of Tindell's, is quick to point out Calfee's role in the company's good fortune. "Every business is a winner, and every business is a loser," says Carl. "It depends on the people you've got working for you."
Today, those people–particularly the unlikely duo of Tindell, the East Tennessee native who grew up in lumber, and van Tilburg, the much-traveled Dutchman who didn't get involved in LBM until 2001–are a big reason why Tindell's has prospered for the past 20 years. Along the way, the $67 million, eight-unit dealer has won fame for its logistical innovations, creative thinking, and service to its business and local communities. The combination has won Tindell's the 2007 ProSales Dealer of the Year award.
Tindell's hasn't always had the right management team on board, Carl notes. In the 1970s, a truss plant the dealer opened in Birmingham, Ala., ended up being a bust and was eventually sold off. "I didn't have the right people working for me there," Carl says. "That business was a winner, though."
Building the Team
Under Carl's leadership, Tindell's was doing well, reaching a record $31 million in sales in 1999. But Carl, then nearing his 60s, questioned his own future at the company. He could have sold the business outright, but "if I sold it, I would have been out the door," he says. "I wasn't ready for that yet."
In 2001, Carl persuaded his son-in-law, van Tilburg, to join the company as Carl's successor. Van Tilburg, who had grown up in several countries, had come to the Knoxville area in the 1980s to study logistics and finance at the University of Tennessee. Over the succeeding years, he had built a career as a logistics executive in the electronics and technology industries.
"I came from high tech during a high-flying time to an industry that is low tech," he says. Reviewing Tindell's situation, he wondered why "blocking and tackling 101," the rudiments of logistical solutions, had not been transferred to the lumberyard industry.
Tindell's created a data warehouse that combined all the data it had in its enterprise system in a way that gave company executives the ability to analyze information "the way we wanted to look at it," says van Tilburg. Through the data warehouse, the company can examine product profitability as well as how profitable a customer is to Tindell's. "It allows us to do some comparisons, focusing on gross margin return," van Tilburg says. The company can dismiss products that are not selling or not making money.
The same can be said for customers. In fact, Tindell's ended up "firing" a few customers who were not worth dealing with anymore, according to van Tilburg. "We looked if we were selling them the right mix, and if we weren't, how do we get there. But we also looked at the pain factor of some customers," he says. That pain factor included how often an emergency arose with particular customers, whether bills got paid on time, and how often the customer returned products.
By 2003, just two years after van Tilburg joined the company, Tindell's sales soared to $45 million. Last year, Tindell's ranked 88th on the ProSales 100, with 2006 sales of $67 million. The dealer has grown to a seven-yard powerhouse complete with truss manufacturing, a millwork facility, door shop, and a rising installed sales program.
A slight drop is expected for 2007 sales–no surprise given slumping market conditions–but the drive to improve efficiencies continues. Since the implementation of the data warehouse, inventory turns rose from eight times per year in 2001 to 16 times today. The company is shooting for 20 turns in 2008 and 24 by 2009.
Tindell's also projects double-digit growth in its installed sales business, looking to sales of $5.2 million for 2007.
Approximately 97% of Tindell's overall sales are to new-home builders. The dealer won't turn away mom-and-pop businesses, "but we scare them away," van Tilburg says. "At the same time, we don't do a lot with remodelers, either."
Nor does Tindell's deal with traditional tract builders. Its largest customers are on the cusp of building 200 homes per year. There also are several multifamily builders that might turn out 150 units per year.
Competition in this region is fierce, given that several strong independents operate here along with national dealers such as Pro-Build, 84 Lumber, and Builders FirstSource. In fact, 84 Lumber opened a new truss plant right down the road from Tindell's own nine-acre truss facility.
While the Knoxville region might not be thought of as a metropolis–its metropolitan area ranked 76th nationally in 2000, with nearly 620,000 people–it includes the University of Tennessee and is the headquarters for several major companies, including Regal Entertainment Group, Scripps Network, Sea Ray, and the Tennessee Valley Authority. There's Dollywood amusement park, too, the destination for Tindell's annual employee summer picnic. All this, combined with second-home and tourist communities, and the greater Knoxville area remains a strong market.