It took Wheeler's Building Materials seven years to snare Sean Doughtie's business. As co-owner of Atlanta-based Mayfield Homes, which builds 100 to 150 houses annually, Doughtie started purchasing building materials from Wheeler's in 2002, but only after the Rome, Ga.–based dealer dedicated “several” salespeople to his account, including inside and outside sellers and a truss salesperson. Now Mayfield orders between $250,000 and $400,000 each month from Wheeler's, which also installs siding, windows, and soffit for this builder.
“They are a great production-builder supplier, and their sales force is awesome,” says Doughtie, who appreciates that he can draw products and services from seven of Wheeler's 16 yards located in markets where he builds.
Testimonials like Doughtie's give Wheeler's owners the confidence that their company's prospects for capturing greater market share among builders and remodelers are promising. To that end, they opened a yard in Madison, Ga., last October, and in February ventured outside of their home state to plant the Wheeler's flag in Charlotte, N.C., with a 30,000-square-foot location on 6 acres. Chattanooga, Tenn., could be their next target, to replace a yard in Cleveland, Tenn., where Wheeler's relinquished its lease a few years ago.
Mark Manis, Wheeler's CEO and co-owner with his brother Jim, the dealer's president, says they're looking to enter “major markets” throughout the Southeast and “fill-in” markets around Atlanta. But the Manises aren't obsessed about adding yards, and their business model is designed to enhance Wheeler's distribution by expanding manufacturing and installed sales support. In 2005, installation accounted for 20 percent of the dealer's $229.5 million in sales, and the division processed more than 4,000 invoices. “Wheeler's is the most aggressive dealer around here when it comes to providing installation,” says Skip Harper, owner of Marietta, Ga.–based builder Sansea Properties, which spent around $10 million with the dealer last year.
Further proof of the company's commitment to enhancing value-added are the products it makes at four plants—trusses, wall panels, vinyl and wood windows, and doors—that accounted for $55 million of its 2005 revenue, a 30 percent increase over 2004. “Manufacturing is finally starting to kick in,” says Dan DeYoung, Wheeler's director of manufacturing, who joined the company in 2003 and almost immediately started reorganizing plant operations to make them more efficient. DeYoung expects manufacturing to increase at the same pace this year, and he and the owners are evaluating a list of 25 to 30 products to determine the next big thing for Wheeler's to produce and install. Once they figure that out, Wheeler's has 65 outside salespeople ready to sell it and a centralized sales center in Kennesaw, Ga., which Wheeler's opened in January 1999, through which all orders are processed.
Mark Manis' shorthand description of Wheeler's growth strategy is “upstream, downstream,” which means that by vertically integrating its operations, Wheeler's is better able to “pass the baton to ourselves cheaper” than it would be by using outside providers. The way Mark and Jim see it, opening more yards means more work but not necessarily more profit. “In this business, once you get to a certain size, there aren't major economies of scale,” Mark notes. On the other hand, both owners see gold to be mined from exploiting the “synergies” between distribution and the manufacturing and installation that support it.
Entries to Growth Even though Wheeler's hasn't added many yards over the past five years, its manufacturing division's revenue increased, on average, 20 percent each year. In 2005, the company's 300 manufacturing employees produced 16 million board feet of structural components, more than 150,000 doors, and more than 200,000 windows, the latter of which translates into more than 500 windows per shift, compared to 50 per shift four years ago.
“We believe we're taking market share” from local competitors, claims DeYoung, which include formidable pro dealers such as Ply Mart and Stock Building Supply. “And because we're ‘vertical,' we have more control over our fate.” Wheeler's is already talking about opening another truss plant south of Atlanta by 2007, and a few years ago acquired Marietta, Ga.–based Peterson Products, a millwork distribution and manufacturing company. But it also has plenty of room to grow organically by maximizing its existing facilities, which are at 60 percent capacity for trusses and panels, 40 percent for windows, and 30 percent for doors.
Both DeYoung and Jim Manis point out that, over the past two years, Wheeler's has streamlined the plants' chain of command, which now has supervisors—called “leads”—reporting to three area managers who oversee, respectively, customer service, production, and engineering. Area managers report to plant managers. In the past, rush orders or inventory problems had to be addressed by line workers. Now, though, there's more “administrative support,” says Jim Manis, with an extra layer of management so the people on the line can do their jobs more efficiently.
The plants include a 140,000-square-foot window facility in West Rome, Ga., a former carpet yarn-blending plant that the dealer bought in 2002 and moved into in January 2003. Wheeler's had been churning out wood windows since 1949, but started gravitating toward vinyl products in the 1990s when it replaced wood trim with PVC, thereby making the exterior of its wood frames rot-proof. In 1999 it purchased vinyl window production equipment from Simonton Windows, and one year later started making its own products under the “Advantage” brand. That same year, Wheeler's also replaced its wood window shapes with PVC.
