The State of LBM Today- bis Track User Conference - October 2011

8/3/2019 The State of LBM Today- bis Track User Conference - October 2011

1/18Hanley Wood October 24, 2011 PROSALES presentatio

Craig Webb, Editor, ProSales2011 bisTrack User ConferenceOct. 19, 2011Las Vegas, NV

The State of LBM Today

Have Your Plans Gone Awry?

Using Outdated Equipment? Worried About Your Source of Supplies?

Feeling, er, Short-Handed? Concerned About Your Employees?


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Hanley Wood October 24, 2011 PROSALES presentatio

What About Your Key Players?

Relax! WereHere To Help You

Find New WaysTo Survive

and Thrive

How Many Dealers See Technology

This group isdifferent.

Youre aheadof the crowd,

and inexcellent

company.For instance

Award Winner: Millard Lumber Honorable Mention: Concord Lumber


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Joost Douwes, Chinook Lumber Riki Newkold, HPM Bldg Supply

2011 Excellence Awards Winner

Raymond Building Supply

2011 Excellence Awards Winner

Sanford and Hawley

35 Years of Reporting

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48 states visited since joining ProSales in Sept. 06

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Todays Agenda

Whats New With Dealers

Favorite New Ideas

Dealers Seal the Deal

The Big Picture

1. Painful Medicine for the Economy

Cause and Effect Red States, Blue States

Source:MoodysAnalyticsviaHWMI

Current Jobless Rates by County

Red States, Blue States Renters Still Say They Want To Buy

Source: Hanley Wood Housing 360 Survey of 3,000 Americans, September 2011


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So Why Arent They in the Market?


Lots of Pain, Little Gain

U.S. Housing Starts

571,000

417,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2006 2007 2008 2009 2010 2011

2,300

2,100

1,900

1,700

1,500

1,300

1,100

900

700

500

300

(Thousands of units)

MultiSingle-FamilySource: US Census Bureau

Annual Starts:2005: 2,068,000

2006: 1,801,0002007: 1,355,000

2008: 905,5002009: 554,000

2010: 586 ,900

Three More Years of Burnoff No Million-Starts Year til 2015

Source: Hanley Wood Market Intelligence, March vs. September 2011

0

500

1,000

1,500

2,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

S pr in g N ow

Housing Starts, 2005-2010 actualand 2011-2015 forecast, (000s)

2,068

1,801

1,355

905

554 587587

671

803961

1,080

Top 10 Builders Market Share

2010 Share:24.75%

Source:Buildermagazine

Top 100 Builders Market Share

Source: Builder magazine

34.5%32.6% 33.3%

34.4%35.7%

36.7%

43.6%41.2%

38.7%36.7%

43.4%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


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Dont Expect Help From These Guys Mr. Homebuilder Is Feeling Besieged

Fannie/Freddie lending limits have shrunk Mortgage interest deduction is under attack Government tools to jump-start economy lose favor 20% mortgage down payment could become the rule Banks are both kingpins and pawns in the recovery

Whats a Banker To Do? As C&D Lending Soured

0%

5%

10%

15%

20%

25%

30%

2 Q0 7 3 Q0 7 4 Q0 7 1 Q0 8 2 Q0 8 3 Q0 8 4 Q0 8 1 Q0 9 2 Q0 9 3 Q0 9 4 Q0 9 1 Q1 0 2 Q1 0 3 Q1 0 4 Q1 0 1 Q1 1 2 Q1 1

Banks C&D Loan Performance, 2Q07 to 2Q11

Source: FDIC

Charged Off

90+ Days Past Due

30-89 Days Past Due

They More Than Halved C&D Lending

$0

$100

$200

$300

$400

$500

$600

$700

2 Q0 7 3 Q0 7 4 Q0 7 1 Q0 8 2 Q0 8 3 Q0 8 4 Q0 8 1 Q0 9 2 Q0 9 3 Q0 9 4 Q0 9 1 Q1 0 2 Q1 0 3 Q1 0 4 Q1 0 1 Q1 1 2 Q1 1

Source: FDIC

Bank C&D Loans Outstanding, $mlns, 2Q07 to 2Q11

And Theyre Still Hurting

Source: FDIC

Volume and percentage of past-due C&D loans, 6/30/11


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What Needs To Change?


The of the Problem

2. Whats Happening With Dealers Flags Have Fallen in Every State

LBM Facility Closures, Jan. 2008-Present: Near 1,625

Source: ProSales research

Red and Blue Redux

Source:MoodysAnalytics

viaHWMI

Current Jobless Rates by County

RelativelyGood Here

1. Oil Patch (TX,OK, LA, ND)

2. Ag-Dependent

Areas3. Dealers Serving

Upscale Areas4. Dealers With

Solid Financials

Encore Flooring &Building Products,

Springdale, AR


8/18


New Flags Have Been Planted

LBM Facility Openings, Jan. 2008-Present: Over 330

Source: ProSalesresearch

RealisticThinking

Youre talking housingstarts going [in Las

Vegas] from 30,000 to5,000. We downsized

our facility here and wegot into a much cheaper

facility and weve justhunkered down and tried

to operate as efficientlyas we can. We dont

view this as going to endanytime soon, so we

have to survive in themarket as it is. Thats

how weve designed ourbusiness.--Ron Mason,

President,A.C. Houston Lumber

ShiftingFocus

Kimal Lumber,Nokomis, FL,

changed its nameto Kimal Lumber &

Hardware. Itadded more than2,200 new SKUs.

Cloud Cover

Advice You Can REALLY Use

"Never order barbeque in a place that also serves quiche.--Lewis Grizzard


9/18


Pursue Home Buyers, Not Builders Bringing Customers to Your Clients

TW Perrys All About the Home show, Montgomery County, MD

Pursue Architects, Too Step Up Your Prospecting

Ruth Kellick-Grubbs says: On average, it takes 14

attempts to makecontact. Successful salesreps today target 40+calls per week.

Keep a list of 10 to 15active prospects at alltimes.

Practice your voice-mailmessages and actualconversations.

Prospect Prior to Building Permits Sample OSR Profile

Average Target Diff

Sales by OSR: $ 276,045 $250,000 110%

GM$ by OSR: $ 75,160 $ 67,500 111%

Quote Value by OSR: $ 754,959 $750,000 101%

# Penetration Meetings: 20 15 136%

# Penetration Sales: 1 2 60%

# of Prospect Contacts: 36 42 87%

# of Conversions: 1 1 133%

Source: Ruth Kellick-Grubbs,

Effective Sales Strategies for Todays Market,

ProSales white paper, September 2011


10/18

Hanley Wood October 24, 2011 PROSALES presentation

Analyze Your Sales Better Analyze Your Sales Better

Dixie Lumber, Easley, SC

Analyze Your Sales Better


Sell More To Current Customers


Ask the Customer Why You Won Discover Newer Ways of Talking


11/18


Remodelers Want You Wired

What are the top three things that independent lumber and building material dealers (i.e.,NOT the big-box chains) could do to improve the sale of b uilding materials to remodelers?

Offer broader range of products 26%

Facilitate online ordering 25%

Before- and after-hours pickup 19%

Deliver in smaller quantities 16%

Shorten lead times 16%

Make sales reps more available 11%

Improve materials ordering process 9%

Source: ProSales/Farnsworth Group survey of remodelers, January 2011

Younger Remodelers Are Different

A Tablet To Take for All LBM Headaches Competitive Challenges

Lowes is rolling out a websiteupgrade this month that will

Store customers purchasingdetails

Provide a site to get warrantyinfo and installation guides

Help customers envision howa wall color or flooringproduct will look.

Remind them when its time

to get new filters and such.

E-Mail Newsletters

Don Abel Building Supply, Juneau, AK

Provide New Promo Opportunities

Don Abel Building Supply, Juneau, AK


12/18


Twitter

Dunn Lumber, Seattle

Follow Dunn Lumber, Get This Reply

Add QR Codes To Your Card Dont Just Bid on Whats Presented

Turn in one bid with whatthe builder wants, and

then a second bidshowing how, for

instance, selling energy-efficient products could

save the homeownermoney. Or how delivering

the stuff in a few bigshipments rather than

several small ones cansave the builder $$$.

Ruth Kellick-Grubbs,Jane Fesler

Doubling Up: Its Economic

Source:CensusBureau

But Also an Ethnic/Social Trend

49 million Americansabout one in sixlived in 2008in a HH with at least two adult generations. In 1980, 28million did. The number of multigenerational HHsgrew by 500K in 2010 alone. Pew Research Center


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Whos Likely To Want McMansions

Household Native Non.-U.S.Type Citizen Citizen

One person 28.0% 15.1%Two people 35.0% 20.8%Three people 15.4% 20.3%Four people 12.9% 21.1%Five or more people 8.7% 22.7%

Renter Occupied 22.8% 59.7%

Source: U.S. Census Bureau, September 2011

Reach Out to Remodelers

Old Houses Need Repairs

Average Age of U.S. Housing Stock

2005 34 years (oldest in U.S. history)

2013 37 years (projected)Source: Harvard Joint Center for Housing Studies

Source: Freedonia, 2009

Age Breakdownof U.S. HousingStock Before 1960

33%Before 1960

33%

1960s

12%1960s

12%

1970s

20%1970s

20%1980s13%1980s13%

1990s

13%1990s

13%

2000s

8%2000s

8%

Better Prospects Than in Homebuilding

Hanley Wood Market Intelligence Remodeling Index

Rental Housing Rehabs Qualities That Remodelers Value

Source:

ProSales

Survey ofRemodelers,

Dec. 2010

Timely Delivery 8.98Having Products in Stock 8.87Knowledgeable Sales Reps 8.78Product Selection 8.58

Loyalty and/or Past Relationship 8.57Price 8.44Special-Order Capabilities 8.25Return Policy 8.19After-Sales Support 7.92Nationally Recognized Brand 7.35Credit Policy 6.82Can Communicate Electronically 6.68Learning Opportunities 6.47E-Commerce Capabilities 5.76

Vital

DifferenceMakers


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Help Them Be Better Businessmen

Fewer than 15% of allremodelers know the costof being in business.

90% will eventually faileven if profitable.

Every one of themreinvents the wheel.

RemodelingconsultantShawn McCadden

Help Them Be Better Businessmen

What They

Want Need

Tech know-how * Biz management

Product info * Leadership skills

Customer service * Financial mgt help

Design trends * Sales/mktg training

Employee ski lls * Biz p lanning/budgeting

Adver tising help * Industry awareness

Low pr ices

Source: Shawn McCadden

What Architects Are Hearing

2%

2%

26%

34%

41%

-9%

2%

17%

43%

54%

Hobby/Game Room

Au pair/in-law suites

Mud room

Home office

Outside living

2011 2010

% respondents reporting popularity of room increasing minus %reporting decreasing popularity 2Q11

Source: AIA Survey

Silver Streak

Source: Harvard Joint Center for Housing Studies

Universal Design Will Grow

Source: Washington Post, 9/23/11Kitchen Design, Takoma Park, MD

Market More Creatively

The Annual Running of the Dachshunds in Kearny, NE


15/18


Sell Condiments With Your Deck

Voyageur Lumber, Ely, MN

Brush Up Your Shakespeare

Miamis Shell Lumber Hosted a Production of Romeo & Juliet

Smile! 4. Dealers Seal the Deal

What DealersReally Sell:Knowledge

Russell Do-it CenterAlexander City, AL

Four Recent Surveys


16/18


Info Sources for Kitchen/Bath JobsQ: How useful are each of these sources to you?Scale of 1 to 5, where 1 is not influential at all and 5 is very influential.

3.83

3.74

3.65

3.44

3.35

3.33

3.08

2.99

2.97

2.92

dealers/distributors/retailers

web sites: manufacturers

magazines: trade

industry peers

web sites: trade magazines

subcontractors

web sites: industry associations

magazines: consumer

manufacturers sales reps

trade shows

Info Sources for Kitchen/Bath JobsQ: How useful are each of these sources to you?Scale of 1 to 5, where 1 is not influential at all and 5 is very influential.

dealers/distributors/retai

web sites: manufacturers

industry peers

magazines: trade

subcontractors

manufacturers sales reps

web sites: industry

web sites: trade

trade shows

magazines: consumer

3.87

3.73

3.41

3.40

3.31

3.24

3.20

3.18

3.02

2.97

4%

9%

12%

34%

42%

Trade Shows

Colleagues and Coworkers

Magazines and Catalogs

My LBM Suppliers

The Internet

Product Info Sources for Remodelers

Source: ProSales/Farnsworth Group survey of remodelers, January 2011

Not So Good With Architects Yet

Source: Survey for Hanley Wood, Summer 2011

Youre the GuysWho Seal the Deal

A spring 2009 ProSales surveyof dealers found: Nearly 63% get asked daily

about quality andperformance of specificproducts. Another 27% areasked at least weekly.

44% said that, at more thanthree-quarters of theirencounters with clients, theyrecommend particularbrands. Another 42% moresuggest products at half tothree-quarters of all theirmeetings.

Lyndhurst (OH) Lumber

Dealers Train as Well as Sell


17/18


The Place To Go for Hard Answers

What is the primary source of supply for the tools andsupplies you will need to do RRP-related work?

Source: Remodeling magazine reader panel survey, September 2010

You Teach Building Science, Too

Face It: Some Builders Could Use Help Coming Attraction: Savvier Customers

Learn FromHistory

Its All About How You See Things


18/18

Craig [email protected]

One Thomas Circle, NWWashington, DC 20005(202) 736-3307

Thank You!

Documents

The State of LBM Today- bis Track User Conference - October 2011