There was no mistaking the melancholy in the Missouri dealer's voice. New-home construction was nearly nonexistent, he said during my visit to his yard this winter. Naturally, the company was exploring other prospects, and he had just heard the government might have some money to spend. But the dealer seemed to want only half-heartedly to pursue those options. His wistful tone suggested that, had he the choice, he'd rather see the new-home market revive and relieve him of his misery.
I bet we all wish housing would rebound, particularly when the construction is done by our favorite customers: small, single-family home builders. But as this issue and recent editions report, the building material market is changing markedly.
I fear many dealers aren't adapting their business models to reflect three big changes.
First, as Andy Carlo's feature article makes clear, builders of all sizes are reshaping themselves by building smaller homes that make greater use of value engineering. Fewer rooms and reduced waste means that even if you delivered the same number of home packages in 2010 as you did in 2005, you still would sell less wood.
Second, while private builders struggle, Uncle Sam is on a spending spree. Bendix Anderson's examination of three government programs makes clear there's money to be made serving agencies that build and retrofit housing for big slices of the American public. Yes, the rules are different here, and winning a contract may require your sales reps sharpen their writing skills and you to get over your dislike of any customer that carries a government seal. But with so much money on the table, why shouldn't you try to get some–particularly when there's so little to be made these days from the private sector?
And third, take a new look at remodelers. Mike Butts' column tells of a builder who stopped hearing from the sales rep at a his local dealer once the builder's business dwindled and he turned to remodeling to survive. This former $750,000 customer may be just a $75,000 customer today, but the lumberyard isn't even getting those dollars; the builder-turned-remodeler finds he gets better service at a big box. I used to think that such snubbing was an exception to the way things are, but now I'm not so sure.
It's time to stop the wistful thinking. The days of 2.2 million annual housing starts are long past–never should have happened, truth to tell–and most forecasts don't put us even as high as 1.2 million starts for another few years. And shifts in housing styles are making it harder than ever to make a profit simply by moving commodities.
How to respond? Aim to become your community's pre-eminent construction expert. Show builders how they can reduce construction costs. Call builders, architects and customers to the table for sessions explaining the rules and options on green construction. And use your knowledge of products and building science to provide value-added services.
Agreed: Taking an order on a new-home package from an established small-builder customer is an easier way to make money. But you can't wish that into reality.
Craig Webb, editor