Just-in-time delivery. Near-perfect service execution. A broad inventory and the product knowledge to back it up. Open communication lines. A single, dedicated sales rep who picks up the phone on the first ring. Fair prices. No, it's not another production builder regional vice president waving titanic volume dollars in your face and asking for the sun and moon; it's your local professional remodeler. But if you thought remodeling accounts were small change, think again.
The $236 billion–plus repair/remodel segment of the construction industry is huge and is only getting bigger as remodelers report increasing revenues and growing work backlogs. While the service demands at first may seem disproportionate to the account size, remodelers often promise higher margins, better brand support, and consistent payment to pro dealers willing to take them on as VIP accounts. And now some can even offer the volume to go along with it. Professional remodelers are getting backlogged and busier with each passing year, and they are looking for a few good suppliers to lend a helping hand.
Harth Builders Seeking Service At the beginning of June, Allyn Harth, CR, CKBR, president of Springhouse, Pa.–based Harth Builders, was already booking first meetings with prospective remodeling clients through the end of July and beginning of August. He's got a desk stacked with project estimates and blueprints, and a market reputation for getting things done right that keeps him coming back to current jobs to execute all of the finishing touches and slight change orders as a project nears completion. Selected by REMODELING magazine (a sister publication of PROSALES) in 2004 as a Big50 Remodeler, a distinction bestowed on best-in-class remodelers across the country, Harth is as busy as ever keeping up with remodeling clients in the Philadelphia metro area, and suspects most other professional remodelers are pushed to the max with activity in 2004, as well.
Nationwide, remodeling spending and estimations of future spending continue to add luster to a market that many pro suppliers are finding to be a hidden gem between production and custom home builders. In May, the Quarterly Survey of Remodelers conducted by the NAHB's Economics Group revealed all-time-high index rankings for current market conditions (a weighted average of major additions and alterations, minor additions and alterations, and maintenance and repair) and future expectations (an average of calls for bids, amount of work committed for three months, backlog of jobs, and appointments for proposals).
Harth is not surprised. “I have 15 jobs in estimation, and I just told another prospect that I could not see her for two months, but she booked the appointment anyway,” Harth says. “She already had called around and tried some other firms, but they were busy, too.” Harth Builders has seen revenue increases between 25 and 30 percent since 2002, and is closing in on the $1 million mark for 2004. “We expect to grow 20 percent per year for the next five years,” says Harth, who cajoled his son Greg away from a commercial construction estimating job in Colorado to join the family firm as a much-needed project manager last year. Between father and son, the two-man team is managing approximately 35 jobs a year, and for each project, a Harth is always at the jobsite to accept product delivery from a supplier.
“Remodeling takes more coordination and hand-holding than any other type of construction,” says Allyn Harth, who estimates that building material costs approach roughly half of the company's annual dollar volume. Relying almost entirely on subcontractors for job-site labor and construction, and with homeowners on site scrutinizing every delivery truck coming up the street, Harth requires his suppliers to meet stringent schedules and make immaculate, error-free deliveries. “If there is any question about delivery or procedures, the subcontractor will do one of four things: just sit there; leave the job; do it wrong; or maybe do it right. As a result, we like to be there as soon as a delivery hits, as soon as a subcontractor initiates work—you want a minimum of errors.”
With up to 11 different suppliers on any one project and multiple deliveries, the company has come to depend on reliable, on-time delivery of materials to keep subcontractors busy working and to maintain a more seamless construction schedule for concerned homeowners on the lookout. “Remodeling is 30 to 40 percent more labor intensive and less efficient than new construction,” says Greg Harth, who on any given day is orchestrating the jobsite to account for a carpet supplier, a surfaces supplier, a drywall installer, or the more traditional lumber package or window and door delivery. “Every day you have to set up, and every day you have to break down, and at every step the homeowner is either second-guessing you or grading your performance, or both, so for any of our suppliers, we are going to stress the importance of relationship over price. We are going to stress time savings, and we are going to stress product knowledge.”
But despite the daily logistics and high service order, Harth is reluctant to consolidate suppliers or buy into a one-stop-shopper mentality, especially if it involves supply from the big boxes. In addition to a cost savings that the company recoups in saved time as compared to sourcing material at a box store, both Allyn and Greg Harth look to their pro suppliers for in-depth product knowledge past and present to satisfy project requirements for their inquisitive and option-minded clientele, a criteria they have not found from suppliers offering a consolidated gamut of building materials. “Our clients are people with harried lifestyles that include many demands, and for most of them, this is the second largest purchase they will ever make [next to their home],” says Allyn Harth. “In turn, they are either looking for, or in some cases even demand-ing, more assistance from the remodeler in product selection. From counters to siding, they want options, but they also want guidance.”
With projects varying from three-story additions on new custom homes to bathroom and kitchen remodels of century-old houses, meeting the high demand for product knowledge—both cutting edge and historical—is something Harth Builders gets only from the pros. “The warehouse stores have wide selection, but every time I go in there I lose an hour of my life,” explains Greg Harth. “With remodeling, you can't apply a generic template to every job, you have to be an artist and a mechanic and an engineer. You have to know current products, but also products from 10 or 20 years ago. We gladly pay for that product knowledge from the pro houses.”
Doylestown, Pa.–based Marvic Supply is about as close as Harth Builders gets to turnkey supply, relying on the six-unit specialty distributor of exterior building materials for siding, roofing, windows, and doors. According to Allyn Harth, Marvic meets his company's need for first-name-basis, top-notch service and consistently passes his informal supplier litmus test: “If a supplier does not have time for us,” he explains, “they obviously don't want our business.”
