We’re looking at making a major shift in the way we sell trusses. The owner asked me what I thought about it the other day, and I thought I’d bounce it off y’all. Basically this is the situation:
Lumberyard “A” has probably been our biggest customer for 15 to 20 years. Since we only sell through lumberyards, this is obviously significant.
But this year Lumberyard “A” opened up their own truss plant and is actively competing against us in a big way. Their plant isn’t yet big enough to supply all their truss needs, as they’re a large chain. So we still sell them a lot of trusses.
But what’s happening is that we quote a job to this chain, and then they send our quote to their own truss plant. Then all the truss plant has to do is beat our price by enough to get the job away from us. The owner has deep pockets, so he can afford to “buy” all the jobs he wants and put the squeeze to us as long as he wants.
So the obvious question is – What do we do now?
The owner of our company is thinking about going direct, or selling to contractors and bypassing lumberyards. My concern with that is that we will piss off lumberyards “B”, “C”, “D”, and “E” that also have been loyal customers for many years but aren’t as big.
We could quit selling anything to Lumberyard “A” altogether and try to steer all our customers to buy through our other customers. But some of the contractors are loyal to Lumberyard “A” and likely won’t switch.
We could try selling to BOTH lumberyards and contractors. But I’ve tried that before, and it gets messy at times.
I personally take care of 2 of the stores for Lumberyard “A”. The people at these stores aren’t happy with the quality and service they get from the company-owned truss plant, so they still want to buy from me. But they’re getting pressure from the owner. And they obviously have to do what their boss tells ’em to do.
Since many of you are contractors, I’m kinda curious how you see things from your perspective and what your thoughts are.
This is gonna be a pretty major shift in the way we do business, no matter what we do.
A statue has never been erected in honor of a critic.
Replies
boss... over the years i've bought trusses from vairous sources
usually direct from the truss plant
every once in awhile i would buy the trusses thru my Lumber yard.. but i never liked the result
we buy all our engineered lumber thru our lumber yard, but ALL our trusses come direct from the truss company
http://www.reliabletruss.com
they have outside salesmen who deal direct with teh contractors.. and the company also deals thru luberyards
Sounds like you're going to lose your biggest customer completely. I'm not sure how much they are still buying from you, but it sounds like it's going to decline to zero.
You could probably benefit from getting your sales force out there, widening the territory, and opening accounts at new lumberyards that are farther than you would usually go. You may have to in order to survive.
You could also do marketing direct to contractors. I get a couple of regional building publications that have advertising directed at me by truss and panel shops and many other types of suppliers. Once in a while I get cold calls from suppliers that are either opening up from scratch or trying to move into the territory. What's the chance of luring contractors away from lumberyard A to buy trusses directly from you, by offering lower pricing?
My suggestion is probably that your boss hire a marketing person that can design a plan of attack. The situation sounds somewhat dire and I would hit it hard.
Overall, in your business, are more jobs going direct to contractors, lumberyards, or homeowners? I assume that HOs are a very small percentage, and that yards are the biggest.
Edited 12/13/2006 11:08 am by davidmeiland
"You could also do marketing direct to contractors."
I mentioned that. But how do we do that wiout pissing off the PTHER lumberyards who have been loyal customers for many years?
"in your business, are more jobs going direct to contractors, lumberyards, or homeowners?"
Some truss plants only go through yards like us. Others will sell to contractors too.
The last place I worked would sell to anyone with a checkbook. So it's basically all over the board.
"I assume that HOs are a very small percentage"
Not to belittle the DIY HOs, but they're pretty insignificant in the overall picture. (At least in this case) I don't see us ever marketing to them.
Opportunities are usually disguised as hard work, so most people don't recognize them.
But how do we do that wiout pissing off the PTHER lumberyards who have been loyal customers for many years?
Ask the other lumberyards where you do significant business for a list of the builders who buy through them. Then agree to pay a commission to the yard if the order comes direct from the builder. In effect the builder does not get a discount for buying direct from the plant. But they don't pay a premium for buying from the yard either.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Seems like that would be hard to track. What if a guy doesn't buy all his materials from one place?Plus I don't really like the idea of paying off lumberyards when they don't do anything.
But the Senator, while insisting he was not intoxicated, could not explain his nudity. [Les Nessman - WKRP in Cincinnati]
Our situation is similar to Mike's. We mainly buy from Blue Ridge Truss but we have used a few other more local yards at times.
What percentage of your sales did lumberyard "A" represent?
I would agree with David that you need to get a great marketing plan together. Your facing a big threat so the opportunity that you need to pursue (create) needs to be even bigger.
Jon Blakemore
RappahannockINC.com Fredericksburg, VA
"What percentage of your sales did lumberyard "A" represent?"
I don't know that for certain. But I'd estimate 20%.
Definitely a big chunk. And probably 80% of the business I personally deal with is through that yard.
You cannot fight against the future. Time is on our side.
Like others have said, sounds like you need some good marketing consultancy and a plan. If yard A is only 20% on a whole (a chunk but not the majority) you should be able to survive.
It sounds like you guys may have to play hardball with yard A. Currently you are supporting your own demise by giving them a benchmark for pricing of jobs. Many of us won't give a bid to a customer if we know they are just going to turn around and let another contractor build his bid off ours so why should you work that way. The slow months are here or coming (for the trades as a whole not sure about your business) and you have probably already slowed production so you might think about cutting yard A off from your supply. What percentage of their trusses do you supply? Sure they can probably find a new supplier but if you are their major supplier now it is going to cause them trouble and they will most likely screw up and lose customers to you. I am willing to bet the yard A owner will try to take all their truss business in-house and their plant will not be able to handle it or he will suddenly see he is losing lots money, neither of which will be allowed to continue for long.
You are either going to have to start selling to contractors or get yards b,c,d and e to sell more, that much is obvious.
If you chose to sell direct to contractors and to yards, keep your pricing the same across the board. All end users should pay price A but you only charge the yards a lower B pricing. Your margin should be low for yard sold trusses and high for direct sold trusses. Your profit for yard trusses will be in volume of sales. That way it will not piss off the yards since their customers can't go direct to you and get them cheaper and there is profit in it for everyone. Good luck and remember that if you don't put up a fight you are going to get stomped,
day
Most of our work is stick frame, but occasionally we need trusses.
Truss companies sell direct here inTX. When I need to order trusses, I usually contact a truss company directly, figuring the lumber company will mark up trusses from the same or similar plant. Dealing directly with the truss company eliminates three way communication in ordering and solving any problems.
Otherwise, I think davidmeiland has some good ideas. When businessmen face previously unrecognized competetion..it is survival of the fittest. It would be good to fully discuss the pros and cons of new marketing ideas.
But what's happening is that we quote a job to this chain, and then they send our quote to their own truss plant. Then all the truss plant has to do is beat our price by enough to get the job away from us. The owner has deep pockets, so he can afford to "buy" all the jobs he wants and put the squeeze to us as long as he wants.
So the obvious question is - What do we do now?
That is dirty pool. If you can show proof of the scenario above, I think I would first recommend that your boss schedule a face to face with Lumberyard A's management, and discuss history and the service you have provided in the past. The meeting may create a peaceful solution that is good for all. If the meeting ends with hostility.......go to marketing war and pull out all of the stops.
One effective way that I compete is good organization, returned phone calls / emails, through and easily understood paperwork and a few included upgrades specs that are inexpensive yet make a differance, but not typically included by other builders.
Good organization, returned phone calls / emails, through and easily understood paperwork goes a long way. I can truly say that I have won some projects based on these items alone when my price has been equal or higher.
I recently received drawings, specs and pricing from our cabinet company. Their as built qualtiy is great, but I can see where they could improve 100% in the aforementioned areas....maybe your company could too.
The paperwork (contract, pricing explanation, specs and drawings, warranty statement, customer selection sheet, etc. ) probably make the most differance. Clients figure and have stated that they feel fully informed and learned more from me of the build process than meetings with other builders. Many have said they are encouraged and comforted that the paperwork reflects the attention to detail and demonstration of character that will carry over to the in the actual build.
Don't you remember that guy or girl in your history class who typed their report, put it in a clear cover folder with a title page, index and included some maps? He or she usually gor an A, partly because of presentation. My papers were usually written in pen with misspelled words, stapled together and slightly crumpled. I don't do that anymore....there is money involved. Of course if I had made As, I probably would be....Oh nevermind.
Edited 12/13/2006 1:58 pm ET by txlandlord
Edited 12/13/2006 2:01 pm ET by txlandlord
Edited 12/13/2006 2:09 pm ET by txlandlord
"I usually contact a truss company directly, figuring the lumber company will mark up trusses from the same or similar plant."
That gets brought up to me a lot. People think we sell to everyone at the same price level, but we don't. Lumberyards get a discount, then mark the trusses up. So you most likely end up paying virtually the same anyway.
"I would first recommend that your boss schedule a face to face with Lumberyard A's management"
I already suggested that, and he refused. He didn't really give me a reason.
"...go to marketing war and pull out all of the stops."
I think we're all ready to go out and kick some butt. But we have to do so without alienating our other customers too. How to do that is a big sticking point.
I play hard to get. If you turn sex down for a couple of days it makes it better [Jessica Simpson]
You are fast. I think I editted and added some more mumbo jumbo since your first reply.
I'm not REALLY fast - Just half-fast.(-:I went back and looked over your highly edited post. BTW - You can take out the "edited by..." part if you go back and edit a 2nd or 3rd time Makes the presentation of the post better.(Sorry - Couldn't resist).I think we could improve on presentation and communication somewhat. But that's really a separate subject. We still have to make the decision about how to change our marketing strategy.
You can't stay in your corner of the forest, waiting for others to come to you. You have to go to them sometimes.
Could you add a % upcharge to Yard A's orders. That could allow your company to help lever up sales for the other yards. Even if they beat the price the ones that you get will be at a higher rate.
What advantages does your plant have over the lumberyard?
Is there some way to setup a consortium with the other lumberyards so that they can put the poressure on the new plant?
One idea is to help the other yards advertise more aggressively.
Do you have the offending yards clientale list ,if so go to direct mailing of these customers offering them a direct discount and more inclusive service.
Get the local paper to write up a story about your plants long term benifits to the community.
As soon as possible consider cutting off your bids if they are abusing that process I see no reason to give them any advantage and if you are going to lose that business anyway you might force them to be more fair pricing oriented.
Talk to your suppliers and see if you can get temporary discounts to be more competitive.
ANDYSZ2
WHY DO I HAVE TO EXPLAIN TO FRIENDS AND FAMILY THAT BEING A SOLE PROPRIETOR IS A REAL JOB?
REMODELER/PUNCHOUT SPECIALIST
Boss,
Andy has pretty well spelled it out for you.. Find your strengths and maximise them , find your markets and become aggressive..
Forklifts all pretty well cost the same.. there isn't 1% differance in apples to apples costs. To sell we looked at our strengths and how we differered from our competition and went after that market..
50% of all forklifts are sold to masons, we by passed that market completely which means our used forklifts are in much much better condition than the competiton and thus hold their resale value better..
In your case you need to figure out what your stengths are.. do you offer a jobsite review? free exchange for incorrect trusses? a stronger truss built with superior material?
Do you offer crane service or faster turn around?
Find your niche and dig yourself in for a hard fight.. do nothing and you lose..
The other suggestion is to cut your loses and pre-empt the lose of the account. Stop selling to them before they stop buying from you. Put word out to your competition that they are in the biz. Lumberyard "A" is obviously too green to handle their full work load. They are hegging their bets that you are desperate enough to carry them threw start up.
I had a customer who was showing all the signs of pulling business. I pulled out of there in less than 2 weeks. They had no option but to buy all the inventory we were holding for them. If I would have waited they could have left us high and dry on inventory.
This is similar. CUT THEM OFF.
Mr. bosshog', I'm a mfg. of furiture. I sell wholesale and retail respectfully. My prices retail are higher than wholesale. This pricing structure is designed to protect my wholesale clients from having to compete with me on the open market. What I lose in profits is usually balanced by the volume and regularity of my wholesale clients. So In your situation you could consider a pricing structure that would favor the retailers first.Then a second tier pricing scedule for contractors. This way you could controll both markets.
The world is full of change. I have experienced the shaft personally on a few occasion's, now it sounds like your company is getting it, and you will be affected. I am sorry for your situation.
What is especially troubling about your situation is that you guys have to create a bid that is then handed to the lumberyards inhouse guys and they can pick and choose if they want to try to beat your price by just enough to get that job. This is the thing I have a problem with, and I would try to sabotage them in any way I could! Like frinstance maybe make proposals accidentally missing things, so that they lose money, but that you will be able to catch and add in as an extra if you get the job. Or maybe some other way to make it difficult on them, it just chaps my hide that they cherry pick on you like that.
Boss,
I'm somewhat confused about the businees your company is in.
Is it maunfacturing trusses to order
or is it
Supplying lumberyards with part of one of their product lines?
SamT
SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo
"I'm somewhat confused about the businees your company is in. Is it maunfacturing trusses to order...?"
Virtually everything we do is built to order.
The colder the X-ray table, the more of your body is required to be on it.
Sorry, Ron,
That was supposed to be sardonic.
My point was to quit worrying about Lumberyard A.
A byproduct of the good things they're doing for their company is to stab yours' in the back.
Cut them off. No more designs without a deposit. Then ignore them. You can't compete with a hack, so don't try.
They are positioniong themselves in the market as the El Cheapo place to go. Guess which contractors will be using them.
First, send a message that El Cheapo must be cutting corners somewhere. Raise your prices 1 1/4% and send a nice apology to everybody that has purchased a truss in the last year and anybody who bought two sets in the last 10. An "Out of our control" thing, yahno?
Tell the world that truss costs have risen.
Not enough to piss them off, but that knowledge plus the shoddiness of El Chepos product will get 2 and 2 put together.
The second problem, and the one that's probably got your boss the most worried, is the loss of 20% of your sales in one big whomp.
The reason this is his biggie is that it means he HAS TO let people go or put a lot of capital into the company to carry them thru the hard time coming.
Did I just hear someone say "Housing bubble"?
I'll make some SWAGs
Direct Labor is 30% of gross salesThat is including the support, design, and manu. depts.
Sales and delivery is 20%
Material is 20%
Indirect costs are 15%
and the 5% left goes in his pocket with a very small Retained Earnings.
Fixed Costs would be 45% in the above. That's 45% of current sales or 56% of sales excluding Company A, El Cheapo.
Assuming that your bosses' goal is the survival of his company and all his employees, two things must happen. All employees accept a rollback in salary to their last raise and he puts in place a marketing dept aimed at doubling your current client base. This is a case where 100 - 1 = 50. You need to double the fifty just to get back where you were.
Any employees who refuse the rollback must be allowed to leave for greener pasture. Even help them with hotlines, answering service, employment dept counselors, whatever freebies you can get.
He can fund the new marketing dept with that 1 1/4% price increase and the funds from the rollback and RIF (|:>)
Plus some additional operating capital from him.
Income has been cut in half! Expenses have been cut 8%.
That's a death blow.
Your boss needs triage and drastic measures to survive.
SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo <!----><!---->
Edited 12/14/2006 12:02 am by SamT
Edited 12/14/2006 12:09 am by SamT
Here's my thoughts on this...
Comany has alot going for them at the moment. It's that your comany is doing all the preliminary leg work for them with for free. They don't need to spend time or monsy on sales, design and other problems that may come up prior to them getting the sale. Their only costs are after the customer signs the order and then they have to get the engineer's stamp. Your present employer is aiding them with their "startup business"
I may reading a little more into your current employers lack of concern or unwillingness for him to try to deal with Compny A. I would wonder what ther other salesmen/designers for your company are doing about it, or are you the only one that is expressing concern since you stated that most of your sales have been through them in the past. This makes me concerned about "future writing on the wall". IE, your job.
When I was in Washington for 3 years, we had on local supplier that purchased trusses from Tacoma Truss and they were always complaining the the local builders were taking their sales away from the because tacoma was also selling directly to builders, and sometimes homeowners. the builders still get a better price in the long run. The local yard was always claiming that they were going to start using another company, but haven't yet, as far as I know.
I believe that what keeps them dealing with Tacoma truss is that they usually had a truck in their area at least 3 times a week and the truss comany gave excellent customer service. Tacoma would deliver trusses and lay them on the ground and when they were ready, they would come back and stack them, usually no charge. Errors were usually out in a day or so.
I think that you would really pi$$ of other lumber companies if you started to deal directly and I don't know if that is worth it in the long run. Also, it still comes back to that your losing 80% of you sales(I thought you posted this figure).
My other concern would be what is Company A using for software, quality of materials, along with who is doing the engineering and how long does it take?
What seems to me as the most important part of a relationship with any supplier is quality and Most imporant, service. this is where your company needs to focus. If the other company is trying to do lumber sales and trusses, do they have the skill to do both?
Another thing to think about is if you employer doesn't seem to be looking out for your best interest and just his, will company A? I would have imagined that some of your workers are already left your comany and are working for them now.
"I may reading a little more into your current employers lack of concern or unwillingness for him to try to deal with Compny A."
Maybe I wasn't really clear on that. He's VERY concerned. But every salesman has a different idea of how to handle the situation. He's talking to everyone and gathering input.
Hell, I was just happy that he asked *ME* what I thought. He never has before.
"What seems to me as the most important part of a relationship with any supplier is quality and Most imporant, service."
Those are absolutely the most important things. Right after the price.
I do have some loyal customers who appreciate what I've done for them. But the amount he's undercut us on some of these things is ridiculous.
As I said earlier, the owner has deep pockets and can play this game as long as he wants.
"Another thing to think about is if you employer doesn't seem to be looking out for your best interest and just his, will company A?"
I know enough about the guy that I don't think I want to work for him. Several of his employees have encouraged me to do that. But I don't consider that as an option right now.
Governments never learn. Only people learn. [Milton Friedman]
BossHog,
When you supply a quote to this lumberyard do you include a take off truss list along with your quote?
If so, maybe you can just supply them with a price quote and if you get the job then you can include your truss list along with the paid order.
This way all they will have is a quote so someone with that company will have to do all the work to make sure the quote is right if they want to bid against it.
If they balk at doing this just tell them the truth that you're not in business to do the work they should be doing and you're tired of them screwing you.
Something you also can do is place an add in the newspaper telling contractors that if they purchase trusses through lumberyards B,C,D or E that you will beat lumberyard A's price by a fixed percentage.
Boss, this is war and you guys better be ready to fight because if not, lumberyard A will put the squeeze on you guys and it sounds like they already have.
busta
"It ain't da seafood dat makes ya fat anyway -- it's da batta!"
I was thinking the same thing: give yard A nothing but a lump-sum price for a package until they place the order.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
I agree with the the intent, but again would try to sabotage. frinstance give a lump sum quote in the form of a carefully worded proposal omitting some part that can be added after the proposal is excepted.
and it needs to be done in a way so that it can be changed in the future, if you just eliminate the delivery charge every time they will figure that out, so you have to plan several different carefully worded proposals to begin with, engineering charges, banding charges, cutting surcharges, etc, etc, etc. making it clear that at the point you decide to no longer do business with lumberyard A you will attempt to stick it to them as much or more than they stuck it to you!
Yahno?
I just gotta disagree with all these guys saying to shaft company A.
The way to win a race is not to have your friend break the girls kneecap, it is to be better than her.SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo <!----><!---->
Have to agree with SamT, I have tried never to be mean spirited in business no matter what the other guy is doing. One of my clients tried to go into competition with me for a while, because he thought he could produce the same product cheaper. I kept on good terms and even offered advise. Well, needless to say, after his vain attemp at mfg. came to a sad end I was still there to help him pick up the pieces and salvage a pretty sizeable order for a client of his out in malibu canyon. Of course theres been a pretty sizeable cost of living increase , material upgrade charges, transportation, and whatever else I could drum up. He's happy now that he still has a quality source of product that he can depend upon. And I'm happy now that I can afford to pay my employees a little bit better. A little good will leverageing is much sweeter than a bitter break.
Boss you are a truss designer right? what software do you use to design the trusses? is that software the industry standard? are you also what may be called a salesman/designer?
your company may be in for hard times, but you may be in for better if you play it right, why couldn't you make designs for customers, and then sub out the building of the trusses to the lowest bidder.
i have seen the TV shows where the cabinet salesman goes to the homeowner or builder and designs a cabinet in 3D CAD, then after approval by customer, sends by e-mail CAD file to CNC machine owner who then makes and ships cabinet (knocked down) to salesman, or sub of salesman, who assembles and installs.
why couldn't a similar thing be done in the truss industry? wouldn't that change the way truss companies do business if it took off? and while it may not be feasable to ship trusses "knocked down" i have an idea about working the angle on that one too! could you not e-mail truss designs to several companies for bids on building trusses, and then arrange purchase trusses from lowest and delivery to customer for less than what current company (or competition) charges? if you could throw in better quality and customer service it would be a winning business plan IMHO!
the same for truss yards, set up to accomodate this exact thing where truss designers/salesmen are subcontractors and the yard just employs the people to feed and maintain the machines and operations, i would imagine a highly robotic type of thing like i read about in automated builders all the time!
i know of guys that haul cars for a living with a one ton duallie and a fifth wheel trailer, they avoid all kinds of taxes and licenses and stopping at weigh stations because they are just pick-ups with "private trailers and private loads" not commercially for hire truckers, do ya think you could haul trusses on a fifth wheel trailer? i wonder what it would cost vs hiring a real truck?
"Boss you are a truss designer right? what software do you use to design the trusses? is that software the industry standard? are you also what may be called a salesman/designer?"
Yes, I'm a truss designer. The software we use is specifically designed for the truss industry. There are a couple of other software companies out there.
And yes, I also do sales.
"...why couldn't you make designs for customers, and then sub out the building of the trusses to the lowest bidder."
With what software? Truss designs aren't interchangeable from one program to another. I don't see that as being feasible.
There are independent designers out there who offer design services for a fee - Basically a designer who's an independant contractor. They're more or less like carpenters who try to go out on their own - upwards of 90% of them fail.
I don't have any interest in trying that.
"i would imagine a highly robotic type of thing like i read about in automated builders all the time!"
They talk a lot about robotics in the truss industry, but they've never taken off. Robots like to deal with things that are very consistent. Things like bowed lumber, undersized + undersized pieces, and wane really throw off machines.
So most of the talk is just that - Only talk.
"do ya think you could haul trusses on a fifth wheel trailer?"
That's been done for many years. Duallies and small trailers work well on tioght jobsites where a semi can't easily get in.
But they have their limits. Anything much over 30' gets hard to haul on small trailers.
Marriage is the chief cause of divorce.
well thank you for the reply, i am sorry that none of my ideas seem to be a help, it looks like you have already thought of the things i have suggested.
specifically it seems you know a lot about the "machines" that i didn't know, mainly that they dont work as well as the talk. the talk i refer to is a publication called automated building. its one of those trade publications and it is filled with adds for machines that robotically cut pieces to size for trusses, and other machines that do other things like assemble panels for walls etc. they also have articles about companies that employ these machines and how successful they are, ya i know they are trying to sell machines.
i thought it was only a matter of time before they work the bugs out, and the more efficient (robotic) truss yards put the small guys out of business, just like pretty much every other industry. if that is the case to some degree, and i were working in that industry, i would try to figure out what i could do to better my position, and be ready for the changes. it occurs to me that since you say that truss designs aren't interchangeable that the guy that makes them interchangeable may have some valuable software? since i am in a related industry, (i are a construction worker trying to be a businessman) i thought i could learn something as well as help you by asking the questions.
my particular area of expertise is layout. i am the guy that gets the complicated stuff on almost every job i work on, and in the early 90's i realized that there was a place for computers on the job. much easier to do that layout on a computer screen in a CAD program than with nails and string lines in the field. I came up with an idea for a program to do layout, but i was unable to develop it. Years later i worked on a project that used an adaptation of a swedish aerospace design CAD program for a 3D building program that automatically changes corresponding elements to fit when any change is made to any piece in the program.
really cool stuff especially since it was my idea, and i enjoy thinking about the different ways things can be done. oh by the way the project was the Walt Disney Concert Hall in Downtown Los Angeles, it was designed by architect Frank Gehry and although Herrick (San Bernardino Steel) was the prime contractor they had a team of Austrailians to administer the 3D CAD blueprint because the aussies are more advanced in this type of thing, it was interesting talking to them about how it all worked!
after working on that project, i can't see not using similar techniques and design programs on even the simplest of square buildings, it just eliminates too many high paid "layout men" in the field. I would be willing to bet the bean counters came to the same conclusion, and its just a matter of time until they work the bugs out.
I've read Automated Builder off and on for abuot 20 years. The magazine gives glowing reviews to any machniery made by any company that advertises heavily in their magazine. They pretty much ignore everything else. They also never talk about any problems with the machinery. Like if it simply doesn't work. So I don't really have any respect at all for the magazine..When you mentioned robotics, I thought you meant for stacking or assembly. CNC saws are now more or less the "norm" for cutting lumber. Probably sometime recently the industry has crossed the 50% mark in manual vs. CNC saws. As the old manual saws wear out they're being replaced with CNC models. The "robots" they tried for assembling trusses or even just for stacking lumber simply didn't work. Lumber isn't precise enough for robots to handle it well.I wouldn't be surprised to see robots built to handle STEEL trusses someday if they gain in market share. But that doesn't seem to be happening..I also switched from manual layouts to computer generated layouts sometime in the 1990s. At that time you did the layout, then had to design the trusses separately. Now if you get the layout input 100% correctly you can just pull the truss profiles directly out of the layout and take them into the truss design program. Unfortunately they haven't been able to perfect automatically webbing and splicing trusses. You can do it now, but it often comes up with some really wacky results that are all but unbuildable..It will be interesting to see how things progress over the next 10 to 20 years. There's been a lot of talk about whole building 3D design. So far any demos I've seen of them are fairly crude and not at all user friendly. But I figure thnigs will be heading that way sooner or later.
My mind not only wanders, it sometime leaves completely.
What the lumber yard is doing is the new way. Since China and Mexico.
DW runs a rubber roller plant .
With out getting into a lot of detail;
Any national meeting worth its salt is talking about bottom line since theres been a lack there of since 911.
Steam line sales into 1 800 sales people . The guy in the car , with expense account is all but gone . Paying commision only which makes a decent second job for the female. Not a good enough one job , job.
Less bosses and expensive salaries. Now is the new age of working crew chiefs with out a supervisor. They report to management in scheduloed meetings with logs for imput into computers. The computers take over expensive bookkeeping . Its all about programs built to match the desires.
Custom work is a sideline which takes a wealth of time. They are selling automated solutions to the problems. a, b, c, etc is what we sell at these prices. That streamlines the main flow of work. What sells in popularity. Cabinets have become that simple.
Lower income people that dont have a college degree , trained to do a job pays less with help of programs. Picture the old checker at the grocery job that could count change to Walmarts with no one pricing the merchandise. Complete automation in computerazation to make it simple .
Less full time empoyees and less benifits . More part time people doing simpler jobs with zero benifits.
Now to your dilemma .
Less farming out the work. DWs plant not makes the mixes the rubber they use instead of buying it from people who do. Bulk buying of rubber compounds instead of small premixed orders. A trucking fleet that is dispatched when and where they want and at the price they will pay. They now not only deliver their orders but they pick up their material on 18 wheelers. 12 of them run all the time now and that has been a growing business . Bulk fuel sales and fleet pricing savings instead of buying at the pump and getting no discounts. They bought others out they farmed out to and now its in house paying no one any profits.
This deal is no different than is happening across the country in many other plants.
They have the customers already and they have the buying power . They have the money to buy equipment and the money to hire people they need to train lower paid help to manufactor trusses . When they get their shid together they will streamline it even more if they can. If it works with them , more will follow.
Its already been proven in other departments where Lowes hires contractors and pays little and nothing to put up with the BS. Sure people come and go like a revolving door but thats Walmart and McDonalds.
Tim
'the world is full of change" i couldn't agree more Tim, it is Tim isnt it- I've had you on my radar since mooney walls were discovered/developed right here in this forum with you and Mike wasn't it? An excellent example of the positives of the new world.
I guess what I am saying is that there are lots of things that are all F'd up, with the way of the world these days, but those changes also make this forum possible, i'd be willing to bet that most of you that are 45 or older if they told you 12-15 years ago you'd be communicating with strangers by typing messages back and forth you would have laughed at them.
I don't like that the rules of the game are changing, I didn't ask to be brought into this game, I was dragged in kicking and screaming (birth). I didn't make the rules, I am forced to play, I very much want to win! The more volatile the game's rules are, the more opportunity there is to score.
Any new developments?
Nothing too major has happened yet.I converted one of my commercial customers over to selling direct, but have left most of them "as is" for now. The lumberyard has opened a 2nd plant north of here, and are reportedly working on a 3rd one.We're trying to hire some of their people away from them, and they're trying to hire some of our people. I've heard rumors that they're going to raise their prices, but don't know that for sure. Only time will tell.
I don't see how an article of clothing can be indecent. A person, yes. [Robert Heinlein]
So are they still using ya'll for quotes? sounds like the gloves are off. What, ifanything has your company done to replace the lost business.
I found this thread interesting personally because my business is in it's infancy and has a major weakness that my competitors don't have. The situations aren't comparable but it is still interesting in how someone else deals with a major adversity. Sooo, that's why I was wondering. There probably hasen't been time since you brought this up with BT to implement new strategies, but have decisions been made. Anything of a proactive action taken?
thanks, Rob
and they're trying to hire some of our people.
That's ok, if you can choose who they take.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
84 lumber is actively doing this in my market as we speak.
Alot of truss mfgs are scrambling.
I haven't read through this whole thread and have no intentions of doing so.... but unless you are an owner, I'd be eyeing up which life boat is most likely to float the longest.
It's been a while since I posted in this thread, and it's taken some interesting turns. So I thought I'd post an update. To recap - just in case you don't remember the deal - Our biggest lumberyard customer started their own truss plants. We've been trying to figure out the best strategy for dealing with the situation..A couple of month back our company hired one of the salesmen away from the new truss plant. Apparently the owner of our company has also tried to recruit other in their company too.About 6 weeks ago I was approached by an employee of the lumberyard. He said they were looking for experienced people, and wanted to know if I would talk to them. I said I would. I figured they're trying to expand, so they need experienced people. And if they're looking to retaliate for us stealing their employees they might make me a good offer.So I had a couple of different interviews with people in the company - Regional managers, the guy who runs the kitchen cabinet division, and the manager of one of the truss plants. They seemed enthusiastic about talking to me. But then I didn't hear anything for about 3 weeks. I thought that was kind of odd. They said I had to actually talk to the owner of the chain of lumberyards before they would hire me. They would set up an interview and call me. But no one ever called..Yesterday I found out why. Apparently the lumberyard owner was upset that we had started selling direct to contractors in some markets, and had started selling lumber and plywood in order to compete directly with them. So he called the owner of our company and told him he wanted to meet. The guy says he doesn't want to get that competitive with us, and he's losing a boatload of money on the truss plants anyawy. So he wants to sell us the 2 truss plants..Guess it's a good thing they didn't hire me. If I had left this company, then they were bought out, I might have been out of a job. I don't know for sure that the sale is going through. But if it does it would certainly make life easier around here.I'll keep ya posted...
Wrinkles only go where the smiles have been. [Jimmy Buffet]
Boss, now they have 2 truss plants losing money.
Are they far enough from you to increase your sales, or would you have 3 plants all feeding your current customer base?
Is your boss still trying to design trusses in East Ethiopia or Paraguay or wherever it was?
Joe H
"Are they far enough from you to increase your sales, or would you have 3 plants all feeding your current customer base?"
Well, for starters - We already have 4 plants.
One of the plants they started is real close to one of our places. But their plant is in a better location in that particular town. If we bought the plants, we'd more than likely close down our plant and use that one.
The other plant of theirs is in a good loacation near markets we've been trying to break into. So no doubt it would be a great asset.
"Is your boss still trying to design trusses in East Ethiopia or Paraguay or wherever it was?"
Yup - Costa Rica.
I've asked my boss about it a couple of times, but haven't gotten a straight answer. Those guys have been in training long enough that they oughta be cranking out work, but they aren't.
I don't know if things aren't going as well as the boss had hoped or what. But he sure is tight lipped about it.
Soldiers usually win the battles and generals get the credit for them. [Napoleon Bonaparte]
"I don't know if things aren't going as well as the boss had hoped or what. But he sure is tight lipped about it."
Losers dont do much bragging.
Tim
Just curious. Did you discuss your intention of meeting with the other firm before, or after you agreed to the meeting?
I would have been more coy, or perhaps not about agreeing to a discussion with the other firm. Question to you Boss: Do you think the other guys informed your boss that you agreed to talk? Do you think your Boss knows that you are looking?
blue
"...if you just do what you think is best testing those limits... it's pretty easy to find exactly where the line is...."
From the best of TauntonU.
I only talked to the other company when I was off the clock. So what difference does it make?
Entrepreneuers must be allowed to retain the wealth they create because only they, collectively, can possibly know how to invest it productively among the millions of existing businesses and the innumerable visions of new enterprise in the world economy [George Gilder]
None to me, but it does affect your relationship with your boss, doesn't it?
Many moons back, my guys were approached about jumping jobs in our common market. They had the loyalty to let me know what was going on and I advised them as to what I would do. I left it up to them and they declined to take the job.
Many moons before that, I was approached by my builder and asked if I should bid a job. At that time, I worked for my mentor, Bill and he told me unequivocally that I should not offer a bid. My intent for discussing the matter with Bill wasn't because I was interested in leaving him, only that I thought he should know that his contracts were being shopped. I was giving him a heads up about business interests that were affecting his business, and therefore my future too.
I believe my employees would give me a heads up today. In fact, I'm sure of it.
I think our situations might be different though.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
Didn't you get your hand slapped in the past for interviewing with another company?I don't know what it's like in your circles, but it seems like there is a good bit of talking back and forth between the competing companies. I would be concerned that your boss would not be happy, even though he is essentially doing the same thing to you with the Costa Rica deal.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
"Didn't you get your hand slapped in the past for interviewing with another company?"
I wouldn't call it a "hand slap" - I got fired from my last job when I interviewed for the job I have now.
My last boss had the emotional maturity level of a 2 year old. He just couldn't stand the fact that I had interviewed with a competitor.
The owner of this company is much more level headed about things like that. So I wouldn't say it doesn't concern me that he night find out. But it doesn't concern me a great deal.
A distraught patient says to her psychiatrist, "Doctor, I keep seeing into the future!"
The psychiatrist asks, "When did this start happening?"
The woman replies, "Next Thursday."
That's right, I forgot about your winner of a boss last go around.Good luck navigating the ever-changing environment.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
"When you supply a quote to this lumberyard do you include a take off truss list along with your quote? If so, maybe you can just supply them with a price quote..."
We've already started doing that. Although I don't think it really makes any difference. They still have to input the layout into their system to get pricing.
"this is war and you guys better be ready to fight because if not, lumberyard A will put the squeeze on you guys and it sounds like they already have."
Yup - They already are. I'm not working tomorrow or Friday because there's nothing for me to do. Don't know what will happen after the first of the year.
If athletes get athlete's foot, do astronauts get mistletoe?
Off topic , but Boss it was suggested you might be of help here.
General Discussion - What did my boss find in his attic?
I saw that thread earlier. But it looked like you had alreadt gotten answers, so I didn't respond.I'll take another look if I can find it...
A conscience is what hurts when all your other parts feel so good.
I'm surprised at the number of people who recommend an adversarial relationship with the lumber yard that now has a truss plant! How is that valuing a past and current customer? How is that customer service? How is a stick going to work better than a carrot?
My guess is that your company as a whole may think it knows more than it does. What do clients really think of your products and services?
I was hired by a consulting engineering firm to develop a marketing plan to help better deal with increased out of state competition. Project managers only received a certain type of feedback from clients so we really didn't know what they really thought of us or our services.
An outside firm was hired specifically to obtain more complete feedback from past clients, which they did. We took that information as a baseline and the project managers and CEO finally had a more realistic view from which to base decisions.
My job was primarily showing them how to get good information on a regular basis, and not leave it to chance and get out of touch again.
I'll bet half my pot pie at lunch tomorrow that few if any follow up visits are made to clients to see how the truss order turned out and how it could have been better. If it does happen, there is no uniformity to the questions asked, or how they are asked, so feedback is all over the board.
Today our truss guy showed up at the jobsite to confirm the specs. Unfortunately we already confirmed the specs two weeks ago, then again last week, this morning was #3, and finally for the fourth time he shows up in person.
Once is normal. Twice is normal buy cautious. Three times seems odd. Four times means they just don't have their act together. I wouldn't be surprised in the slightest to get yet another call from them tomorrow.
Beer was created so carpenters wouldn't rule the world.
I'm surprised at the number of people who recommend an adversarial relationship with the lumber yard that now has a truss plant! How is that valuing a past and current customer? How is that customer service? How is a stick going to work better than a carrot?
What benifit can come of supporting the lumber yard that is opening up competition with his company?
Would they have opened up a truss plant if they had not expected to at sometime be able to supply 100% of their needs?
How are they being loyal to their past supplier when they are under-cutting their prices in an attempt to take business away from them?
If it were me I would make their switch to self built trusses as painful and slow as possible. That's not out of anger or vindication, simply a business move. Helping your direct competition does not benifit your company.
From the sounds of it you're taking your personal issues with your truss supplier and placing them on the truss plant that Boss works for.
Start selling to contractors. I can buy directly from a plant and really enjoy that privelage. When a set of plans hits my desk I give them directly to truss designer and I'll have a price in a couple days.
On easier orders he'll give me a price over the phone per truss. It's a nice option.
Start selling to contractors, they will come to you first. Stop by the jobs your trusses are on. Put you and your company out there.
What benifit can come of supporting the lumber yard that is opening up competition with his company?
Currently the lumber yard is still ordering some trusses. Is it going to punish the yard by declining the work? I'm possitive there is another truss plant that would be glad for the extra work. If you don't have enough work, turning down paying jobs doesn't make much sense does it? New math?
As many lumber yards do, it's very possible that they will screw up their customer service to the point where it's just not profitable to continue making trusses in house. Who is going to get 100% of their truss business then? The truss plant that told them to shove a mending plate where the sun don't shine, or the plant who was more than happy to help when additional work was farmed out to them?
It sounds great to huff and puff and blow their house down, but that's not reality with the limited leverage a truss company has on the competition, suppliers and customers.
Happy Holidays
Beer was created so carpenters wouldn't rule the world.
I couldn't support a company I am more or less in direct competion with and has been under cutting my prices...
That's not huffing and puffing or acting macho, it's business. If someone want's to directly compete with me that's fine but I won't help them out in the process.
Guess we'll just have to agree to disagree
Your idea of a carrot misses the dynamics of what is going on. Yard "A" has made the investment to produce their own truss systems. It would be foolish to think they are not intenting to pull in as much market share as possible. Any relationship that is not win-win is not worth being involved. If you cannot define basic principles from which to operate you will not be able to maintain a consistant decision making process. This is about principle centered business. Their is no value left in this relationship. Knowing when to cut and run is just as important as knowing how to heal relationships.
The effort exhausted chasing another 12 to 24 months of business is wasteful. In the end the account will be lost. Why would you believe otherwise...the yard is in the biz? Deploy the resources into new opportunities and change the complextion of the customer base.
THis is a matter of reality. Your boss needs to accept that the business with "A" will eventually deteriorate to nothing. Get a jump on the loss now instead of vascilating another year.
Edited 12/14/2006 9:32 am ET by mcf
Tell your boss to open a lumber yard ;~)
Sorry............hope it all works out for you.
Eric
[email protected]
It's Never Too Late To Become What You Might Have Been
"Tell your boss to open a lumber yard"
Actually - He's already stocking up on plywood, and wants us to start selling it. In some markets the plywood ships WITH the trusses, and that's what he wants to try.
I haven't sold any yet. Since so much of my personal sales are from Lumberyard "A", I don't want to stir things up just yet.
If practice makes perfect, and nobody's perfect, why practice?
Seriously though; I would cut off "A".
They're competitors now.
Some of what you sell them has to filter back up to the other yards.
You guys need to amp up the marketing.
If you have a few builders in the area that buy ALOT of trusses, perhaps markey directly to them as "preferred" customers.
Eric[email protected]
It's Never Too Late To Become What You Might Have Been
And you probably know which contractors deal mostly with Lumberyard A for your trusses, so focus your marketing efforts on those contractors....don't push on the ones that deal with the other yards that are still good customers....what you want to do is retain your business that used to come from yard A....so you want to market directly to that yard's customers.
I think this was meant for you Boss.
From:
HammerHarry <!----><!---->
11:44 am
To:
EricPaulson <!----><!---->
And you probably know which contractors deal mostly with Lumberyard A for your trusses, so focus your marketing efforts on those contractors....don't push on the ones that deal with the other yards that are still good customers....what you want to do is retain your business that used to come from yard A....so you want to market directly to that yard's customers.
[email protected]
It's Never Too Late To Become What You Might Have Been
I haven't read very far so i do not know of other responses yet.
Your company needs to make it very difficult for the lumberyard "A" to grow its business in the truss market. I would suggest opening up your sales to contractors at the same price you would sell to the yard. They yard would than have to have a reasonable margin to maintain cash flow. You need to protect your interets
Do you know what margin the yard sells your product?
I would also suggest abonding your fears about losing the account. #1 accounts come and go. You cannot expect them to remain forever.
"I would suggest opening up your sales to contractors at the same price you would sell to the yard."
Several have already said that. But no one has come up with a suggestion as to how to NOT piss off our other loyal lumberyard customers.
"Do you know what margin the yard sells your product?"
They're all free to mark it up as much or as little as they want. I think 10% is fairly common. I doubt any of them are over 15%.
Why is it that our memory is good enough to retain the least triviality that happens to us, and yet not good enough to recollect how often we have told it to the same person?
Ron-
I feel for you as a friend, but I have a hard time feeling too bad for your boss. Isn't he the one that wanted to outsource the design work down to Costa Rica or someplace? What goes around comes around.
I would contact a professional marketing company to go over on this. I think I would also contact the other good lumberyards and get everyone together for coffee. They know as well as you what the story is. They may very well be ready to do business with the new company if opportunity knocks. Talk to them, explain that you will be selling to individual builders and explain that you will not be selling at the same price they get. Keep it civil and businesslike and see if there's anything you can do to get more sales from them.
As far as your individual situation, that sucks. You are a dedicated employee and a hard worker. Your boss should be aware of that. What is he offering you, if anything? Were I you, I'd be looking at all options right now, except maybe for working for the new yard where it seems you would feel uncomfortable.
Don K.
EJG Homes Renovations - New Construction - Rentals
sell to the other yards at a lower price. offer the other yards perks...free delivery, improved lead times, 1% 10 net 30, etc.
at this point nothing you do for "A" is going to get you anything longterm...end the relationship on your terms, not theirs. I am dead serious too.
at a minimum stop all valued added services immediately.
does your company deliver direct to job sites for the yard? if so, leverage that market knowledge. you should be able to, at a min, know who the builders are even though you invoice the yard. send mailers to these customers...offer them and them only incentive to buy direct.
start shipping late to this yard, and i mean weeks not days. anything you can do to burden their reputation will help you. why go the extra mile for a company who is actively pulling business from you?
Tough choice. I have been there and done that.
We would spend many days quoting custom jobs that were awarded based on our price then given the opportunity to requote it later.
If this is the core customers you're looking for then price or speed will be the only thing you're selling... Meaning low profit.
Customer A needs to be set adrift with a clean cut, it's time for them to fly and time for your company to chose a path without them. They see a profit center potential by in house manufacturing your only product.... Thinking things will get better is a dream... Move on without them, they no longer have a use for you and you must recognize this.
BossHog,
I just drive a truck for my company in Va., but we have had this happen to us several times.
1. The lumber yard will probably NOT build the quality product that you do.
2. When quality goes, so do the customers.
3. If you build a quality product and give reasonable repair and replacement times, you will have customers come to you.
4. Do you also offer floor and wall panels? Many contractors are buying "package" deals to save money.
5. We would cut "A" off until they go belly-up in the truss building biz.
6. Are you giving the lumber yard engineered drawings with seals? If so, don't till they order from you. ( This is something that Northern Va. requires for approval.)
7. Also, give your customers "perks" such as pencils with company name on them, hats with your company name on them,T-shirts with company name, etc.
Want to make God laugh? Tell Him you've got plans.
- Anonymous
I could not agree with you more. Right On !!!! And we do not sell lumber yards at all. Although we do sell wall and floor panels. Cut off Lumber yard A, now !! Don't let them use you while they get up to speed. Your design staff and your production staff will carry the day. You don't say wether their front office is experienced in design or production. Boss, go get 'em.
I say cut them off too.
Competition is competition. They didn't go into it without thinking long and hard about what their decision meant to Boss's company.
blue
"You don't say wether their front office is experienced in design or production."
Initially, they hired a bunch of people that were pretty green. And the owner thought there were HUGE margins to be made in trusses, so he priced stuff ridiculously high. Their offering of high prices, poor customer service, excessive mistakes, and lousy qulity made for dismal sales.
Anybody could compete with that - We had a busy year, and they did very little.
But now they're sorta hitting their stride. The salesmen have gained experience and are getting better. Same with the designers and plant staff.
Throw in drastic price cuts, and they're busy while I'm taking days off.
Competition isn't so easy when your competitors start getting their act together.
(-:
I think knowing what you cannot do is more important than knowing what you can. [Lucille Ball]
As others have stated. I buy direct from the truss company, put the savings in my pocket. I have purchased trusses thru my lumber yard and realized they were going to cost me more, but it was always for convience. Truth be told I would always rather deal direct one less cog in the wheel.
You are helping them get started.
I would not support my competition. Your salesman needs to make some quick visits to people making it known that you have supplied the trusses for that lumber yard.
I don't know what kind of margins you work at so this may not be practical.
If it were me I would look into whether or not I could offer my trusses to the lumber yards at a price they could offer them to the public which would be, if not equal, just a bit more then what you could offer them direct to the customer/contractor.
That way they can still sell them and are not at a huge competitive dis-advantage. I would also stop selling to lumber yard A. If they want to compete with you why help them out? At some point they will get their truss plant up to the capacity they will not need your trusses and then cut you off completely. Why help them make easy?
Some customers are going to want to buy from the lumber yard with out dealing with the truss plant and some are probably going to want to buy direct from you. I don't see why the two have to be mutually exclusive.
The major flaw in my idea is still that the other lumber yards may still see a problem with you selling direct to the public however I think you can minimize that if you do not undercut them much on price.
I'm curious what problems you have had in the past selling to both contractors and yards?
"I'm curious what problems you have had in the past selling to both contractors and yards?"
The main problem is that it makes the lumberyards mad. Sometimes the same job gets quoted twice, and often 2 different ways.
Like the customer takes the plan to the lumberyard. The regular salesman from the truss plan that's assigned to that lumberyard gets the print and bids it per plan.
Then the customer takes the print to a truss plant, and tells the person he talks to that he wants to find ways to save money. So the roof is re-designed to save costs.
The customer gets the prices for the trusses, and the lumberyard is a whole lot more expensive. So he buys direct.
The lumberyard find out he got a lower price from the truss plant, and is royally pissed off.
Basically I think it's just bad business practice. When you offer people a way to bypass your regular, long term customers it just provides too many opportunities to piss them off.
And pissing off your regular, long term customers is just not a good thing to do.
Is there ever a day that mattresses are not on sale?
You have identified a new competitor. Although they have previously been your customer, they are now your competitor.
You need to assess this competition, and take appropriate actions. One item in the assessment is already done -- you know that this new competitor will be dealing directly with contractors.
As I see it, you have little choice -- you need to start dealing directly with contractors. If you do not, you will have chosen to abandon a significant portion of your market.
And note that you need to continue to assess the competition for other aspects --how is their quality, their price, their delivery, their engineering; what might their marketing strategy be, and how does that affect you? Will they hire sales "engineers" who have curves and blond hair? And if so, how will the customers react?
Unless you're the lead dog, the view just never changes.
Trends? Boss, is this turn of events - yard 'A' setting up their own truss plant - a trend in the industry, or an isolated event? Normally, how successful are yard-owned truss plants? Do yards normally pay less for lumber than truss plants do?
Capacity? Your plant's capacity to produce X volume per shift is a given. Have you guys figured how much excess capacity you have at this point? Whatever plan you come up with, aim to build you bizness up to your current mfg. capacity. If you have the yard/shed/plant space, how much more capy can you add in the future? (obviously,not right now).
Adaptability? Are your systems, jigs, etc such that you can quickly and efficiently change from one truss type/size/configuration to another? Are there upgrades or efficiency gains that your outfit has put off, and that might now help restore health to your margins?
New markets? Reason I'm talking capacity and adaptability is that you might also look into new markets - via other yards or large-scale builders - that are further than your usual central Illinois sales perimeter. Could you build a direct relationship with large tract developers who operate on the Chicago periphery, in Springfield, or Rockford? Out-of-state?
Suppliers? Any advantages/disadvantages to securing another - or a second - lumber supplier? What about buying materials direct from Ontario(Canada) sawmills, a 12 hour drive away?
Buying competitors? Are any of your smaller competitors family-owned businesses that are ready to retire or sell? Purchasing one of these might offer some benefits in terms of easily expanding your customer base, or the size of your sales area, or getting machinery cheap, along with experienced workers.
You and your boss need to pay heed to Sam T's advice, period.
Drastic action needs apply. Sorry to interject politics, but think Iraq.
>>think Iraq
Wait until they're all set up and then bomb the sh!t out of them.
"Wait until they're all set up and then bomb the sh!t out of them."
Best suggestion I've heard yet.
(-:
Politics is a game of elegant ideas, played by bullies.
boss,
this sure ain't my area of expertise--------- but since anybody seems to be able to chime in here---------
1) pull the band-aid off the scab quick. As of monday morning your company should no longer do any business with Yard A------- period. take the high road---call them directly, politely mention they are in competition with you with their new truss plant, WISH THEM WELL, and tell them you are politely closing their account.
2)contact the other 4 or 5 yards--mention that you just turned down 20% of your business. these Yards are ALREADY in competiton with YARD A. you now have a natural alliance with the other yards. DEVELOPE that. work out an agreement with a 2 teir pricing direct to yards vs. direct to contractors.---As a bonus------ do the yards physically stock your trusses( some here do with garage packages)-------- how about if the yard simply become order takers for trusses YOU produce and deliver DIRECT to the job site.
3)-- you mentioned that YOU use different wood than YARD A---hopefully this is a potential advantage---you useing a superior species for the intended purpose?--If not superior-it better be economical
4)---this is actually a blessing--if you choose to look at it that way. you rid yourself of yard A----but you can now devote immense energy into enacting Hackinatits' plan. you may emerge BIGGER and BETTER than before. I see panelized wall systems being delivered on trucks here EVERY week---2 years ago I hardly ever saw them. If even I noticed this trend--it must be growing at a huge rate--because I don't go anywhere near new construction
5) supply the trusses, supply the decking,supply panelized walls, supply beams, supply glulams etc., supply whole house framing packages. do this either directly-Or let the yards take order--fax them to you and you produce and deliver the entire package
6) you are currently in an uncomfortable situation because all change is stressfull----but I really think this is actually an exciting, positive opportunity. Your REAL challenge isn't replacing yard A's 20 %-- your real challenge is implementing ALL of the opportunities you would have ignored if you were sitting on yard A's 20%
your difficulty is your owner-- that's a hobble. the beauty we self employed have-is every day we get to realize there are MORE opportunities,EXCELLENT opportunities than we can reasonably exploit. Each and EVERY day we let opportunities pass buy because we can't pursue them all. Actually in a twisted way---you should thank Yard A---- you can now pursue opportunities even better opportunities than Yard A's 20%
time to "Nut Up" Boss--grab your sack and get at it.
Best wishes, Stephen
Wow! Good Words!SamT
Now if I could just remember that I am a businessman with a hammer and not a craftsman with a business....."anonymous". . .segundo <!----><!---->
Sam,
I am actually kind of interested in how all this eventually plays out------- because the more I think about it--the more potential I see.
20 years ago my wife managed a florist--which was at the time theoretically one of the top ten florists in the country. In our town-the florists got together and pooled deliveries. they met twice a day to swap product for delivery. florist1 delivered all pool members product to hospitalA, florist2 delivered everybodies orders to hospitalB another florist delivered every members orders to neighborhood X and so on.---------------- very efficient.
makes me wonder if boss can't do something with purchasing power ? Truss plant probably buys HUGE amounts of lumber--probably dwarfs what any of the smaller yards buy. how about if the truss plant( which should be trying to work out improved and mutually benificial relationships with the remaining yards)--pools some of the lumber orders from all the remaining yards AND the truss plant. the truss plant becomes kind of a Break bulk terminal splitting the orders up---but because they have rolled 5 orders into one---they can now buy in truly mamoth quantities at better prices. another yard may do the same thing with windows and doors---they can all still stock whatever doors they would ordinarily stock--- but big orders will be filled amongst themselves by one yard--even delivered by that yard.
roofing suppliers sometimes do this to a certain extent--and so do groups of smaller hardware stores.
20 years ago,here, if you wanted roof top delivery of shingles there were only 2-3 choices i think-----now even a lot of the lumberyards offer limmited roof top delivery services.( In some parts of PA roof top delivery of shingles is STILL un-available)-- what if Boss starts offering CRANE service for the trusses he is already delivering?????
really, Sam-- the more i think about this- the more opportunities i see. Boss Hog should go down to the public library TODAY--and get out a good book on John D. Rockefeller--and how he built Standard Oil------- Vertical integration. by adding a couple more services Boss could be making money off of every phase of the truss--from BEFORE the design--right up to the day the crane lifts it into place for install.
really, i see it as a fascinating, exciting challenge. completely feasible--------- but perhaps impossible to implement if the owner is primarily concerned with preserving what he already has-----. also- i don't know how much input ,power,and responsibility BossHogg has in this-------- if he sees himself primarily as a farmer-who only works at the truss plant to support his farming addiction---gunna be tough to implement.-somebody in all this has to have an entreprenurial drive. i would also like to know--if the owner built this from the ground up---or did he inherit it from dad or grandad?-if so--the owner may not have the drive or instinct to rise to the challenge the way the founder maybe did.
Best wishes Sam--and i enjoy your tag line,
Stephen
Pooling lumber isn't really an option. Truss plants use different species and grades of lumber than lumberyards.Besides, everybody buys mill direct in order to save money.We've been offering crane service for 20+ years, so that's not something that we can easily add. The line you used: "if he sees himself primarily as a farmer-who only works at the truss plant to support his farming addiction" is fairly accurate. All I am to this company is an employee. I'm not part of the "inner circle" of decision makers.
You can have no "right" that imposes an obligation upon someone else. [Walter Williams]
you all buy mill direct to save money--but you don't buy mill direct with FIVE orSIX times the volume !
you undoubtably know more about your business than I know-or ever want to know.-that might be a handicap however.
you are certainley conditioned to seeing problems and solutions from a specific perspective--which might cause you to pass up opportunities.
I Steal ideas from a LOT of areas that have NOTHING to do with roofing. If I had gone into the roofing business from a typical roofing background i would NEVER have concieved the type of set up i have now. I would be struggling with the same conventional problems EVERY roofing competitor has. I was lucky to have entered the roofing business in an un-traditional route--so i arranged things differently--and as luck would have it the way it worked out meant that my " competitors "problems and struggles were actually opportunites for me. As a result----- i don't really have any competitors in the conventional sense--although locally their are HUNDREDS of companies in the roofing business.
It's like that trite old saying" thinking outside the box"- i didn't know enough about how the roofing business traditionally operates to even ever get INSIDE the box. If I had known more-- I would have been bogged down with the same conventional solutions that everyone else had.
when you say- " that won't work because-------" I would say "sez WHO?"
A LOT of things work that conventional wisdom with-in an industry says WON'T work.
Really best wishes to you, Stephen
A LOT of things work that conventional wisdom with-in an industry says WON'T work.
I agree Stephen. Sometimes things need a little push and then they work just fine.
blue
"is this turn of events - yard 'A' setting up their own truss plant - a trend in the industry, or an isolated event?"
I know of only one other example of it happening in Illinois in recent years. New truss plants are all but unheard of.
"Normally, how successful are yard-owned truss plants?"
I don't think ownership makes much difference. It's just like any other business - Keeping margins up, expenses down, etc are what's important.
"Do yards normally pay less for lumber than truss plants do?"
Don't really apply - We use different kinds of lumber than they do.
I had a talk with the owner last night at the Christmas party about the situation. He has several changes planned.
One of them is that he's going to let me start pricing my own jobs. I've been wanting to do that for 5 years. Hopefully that will improve turnaround time on quotes. He said his goal is to have all quotes turned around in 2 days. (Nobody else around here can do that)
He's also going to sell lumber and plywood directly to contractors in order to go head-to-head with the lumberyard.
He said they've already started selling directly to contractors in a couple of markets. He all but said that I could start selling direct whenever I wanted to.
That's both good and bad. It will give me some more flexability in marketing. But it will also mean stepping on the toes of people I've done business with for many years and think a great deal of.
The owner also wants me to get out on the road more, which is fine with me. I may even be able to swing a company vehicle out of the deal. (-:
Looks like it's gonna be an interesting year...
How few there are who have courage enough to own their faults, or resolution enough to mend them [Benjamin Franklin]
going to sell lumber and plywood directly to contractors
I thought you said you use different kind of lumber than regular stuff. Does that mean you will have to stock two different kinds?
let me start pricing my own jobs.
How does it work now? What will be the difference?
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
"I thought you said you use different kind of lumber than regular stuff. Does that mean you will have to stock two different kinds?"
Yup.
It will also mean we'll have to start stocking plywood, which we don't do now. I don't know how far he's gonna go with this idea...
Regarding me pricing my own jobs...
Right now when I want a quote done I have to run the trusses, save the job as a zip file, and email it down to the main office. They unpack it and price the trusses. Then they print out a quote and fax it to the customer.
I like having control over the quotes. If I know a job is gonna be a huge PITA I'll pad it some. If it's for a non-profit group I'll cut them a break. Right now I don't have that option.
Life is like toilet paper... when the end is near, we panic
Do yards normally pay less for lumber than truss plants do?"
Don't really apply - We use different kinds of lumber than they do.
I disagree.
I used to run a lumber yard . I could order anything in truck loads. Add the lumber items a lumber yard uses and its bottom line pricing from mills. If I wanted an extra truck load or two it would just get sweeter.
Tim
When I said lumberyards stocked different kinds of lumber, I meant different species and grades of lumber. We already buy about 3 semi loads of lumber a day when we're busy. So trying to buy and resell lumber to chains of lumberyards who are already doing the same thing would be pointless.
Just because you have one, doesn't mean you have to be one.
We already buy about 3 semi loads of lumber a day when we're busy. So trying to buy and resell lumber to chains of lumberyards who are already doing the same thing would be pointless.
Thats not what I meant .
Im saying they have the buying power to order what ever they need and get volume pricing . Its true they dont sell the same type of lumber but it doesnt keep them from ordering it . So that point which was made earliar is moot.
Tim
Boss, I can only relay my own experience. The last truss order I placed was direct from the maker. They're in Maine and truck them down the I-95 corridor. You might know of them. Anyway, I was helping a young Up-and-comer-want-to-be-a-contractor who insisted on dragging me to HD. (I avoid the place when possible) As it turned out, HD got them from the place in Maine. All I needed was stock size trusses and two matching gable ends trusses.
We did an end-around HD and got the trusses sooner ,for less $doe, and they arrived on time. I was happy and so was Up-and-comer. It was his $doe.
If I got a chance to meet your team at say a JLC Live event I would hang on to the info for the next time. I'm sure FHB would like your advertising $doe too.
One other thought. If I was in your company's owner I would talk with ours like myself in non competing markets and get there take on this.
Best to you and yours, Chris.
Some say I know too much.
If I were the boss, I'd be looking for MORE PRODUCT OFFERINGS that aren't offered by the competition.
Do you sell floor joist trusses?
Do you sell shear walls?
Do you offer special mold/bug resistant coatings?
Do you offer preassembled headers?
Do you offer preassembled dormers?
Do you offer preassembled walls?
Can you offer the ENTIRE framing package, sill to roof decking, like a jisaw puzzle?
Do you offer premium items that add to your existing product line?
For instance, Advantech manufacturer Huber is offering MANY new products. In our area, the distributor only offers many of these items in bulk/bundles. I cannot buy 5/8 Advantech sheathing/underlayment unless I purchase an entire bunk. I'd gladly pay a premium for "no minimum quantity" small orders.
Beat the competition through innovation/offerings/packaging/premium products. Don't fight with commodities.
Troy Sprout
Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it."
-- Thomas Sowell
"If I were the boss, I'd be looking for MORE PRODUCT OFFERINGS that aren't offered by the competition."
We sell a lot of stuff they don't - Steel trusses, Steel beams, wood webbed floor trusses, and wall panels. We've been pushing them for a long time.
But roof trusses are really the biggest part of our sales overall.
Okay, who stopped the payment on my reality check?
I think you hit the nail on the head. Boss's company needs to offer things that company A, and any other truss company, or lumberyard for that matter, can't match. Whole-house packages, delivered with a boom truck. Specialty and unusual items. Supply company A and other competitors with specialty items.
A growing trend everywhere is pre-fab and panelized housing. Take as big a part of that as possible. Have several stock house plans, barn plans, and warehouse plans available.
Step one should be to raise your prices to lumberyard A by 15 or 20%; since they're using you for their pricing department, why do it for free? This will have the added benefit of giving their own truss plant a false idea of what the market prices are, which is important when you have to compete with them.
Your company makes a quality truss. The "big" lumber yard company may or may not make quality trusses and from your post, it sounds like they don't. I say: Place a noticeable stamp of some sort, in an obvious location, on each and every truss your company makes that identifies the truss as coming from your plant. Get it, the stamp, registered or copy righted and then continue selling to all the yards. If your quality is better than the big lumber yard then customers will choose your truss over the back stabber's truss and if they can't find your truss at lumber yard 'A' then they'll go elsewhere to find it.
Of course, then your faced with a number of companies that will buy the cheapest truss regardless of quality. Ummmm!
My fall back position, make the owner of the big lumber yard an offer he can't refuse then place a horse's head in his bed!