Industry Execs Converge at LBM Conference
SAN DIEGO —Lumber and building material operators received some no-nonsense advice from several home-building executives at the 11th Annual ProDealer Conference, held Sept. 19 to 21 in San Diego. The conference is annually sponsored by Home Channel News. Representatives from Pulte Homes, K. Hovnanian and several custom home builders pulled no punches during two panel discussions moderated by Rocco Fanna Jr., executive officer of the North Coast Building Industry Association.
“We want to commit [our business] to real partners instead of this continual rebidding process,” said Chase Kushak, national director of supply chain management for Pulte. Competitive bidding surfaced several times during the Production Builder Panel discussion, where Mark Voetsch, vp-purchasing for K. Hovnanian, also expressed his desire to move toward a more transparent model of supplier costs.
“Nobody wants to honestly open up the books,” Voetsch observed. “Until that happens, we’ll stay in the competitive bidding environment.”
An audience question about take-offs seemed to hit a nerve on the panel. A recent audit conducted by Pulte showed that “we were paying for things that weren’t going into our houses, which is totally unacceptable for us,” said Kushak.
Voetsch concurred. “Some people are using [take-offs] for profit centers,” he said.
Both builders said they were intent on cutting waste out of their supply chain, and both are involved in pilots and initiatives that use a variety of methods. K. Hovnanian has documented every product and process involved in the building of one of its homes, including the delivery of building materials and payments to vendors. The Red Bank, N.J.-based home builder, which operates in 19 states, shared the results of the documentation with all its business units in hopes of fostering more cooperation between different parts of the supply chain.
“We now have our national manufacturers and distributors talking to one another,” said Voetsch.
Scott Kubit, executive vp of Bob Schmitt Homes in North Ridgeville, Ohio, recalled the 200plus glass patio doors that leaked after his firm installed them in new homes. Although the defect was caused at the factory, Kubit’s distribution partner helped resolve the problem—something the home builder said he would remember the next time he went looking for a door supplier.
Product warranties also came up on the Custom Builder Panel, which featured home builders from Ohio and South Carolina. Bob Perritt, president of R.J. Perritt Homes, said he uses extended warranties as a marketing tool to distinguish his homes from the competition’s.
“I have a window vendor who [offers] lifetime warranties,” Perritt said. Although most homeowners won’t stay in the house that long, “if you can offer that to a customer, it’s huge.”
David Payne, a builder of high-end residential homes, suggested that dealers target local builders’ associations for potential customers. All the panelists agreed that e-mail has eroded communication skills.
“Face time is important,” said Jeff Hensley, president of Lake Star Building & Remodeling. “With e-mail, you become a faceless supplier, and eventually, the relationship is no longer there.”
Relationships were a key component of the three-day conference, where vendors and dealers exchanged business cards and traded industry gossip during several networking opportunities. The event kicked off with a night at Petco Park, where the San Diego Padres defeated the Pittsburgh Pirates 5-3. A Home Channel News City of Hope golf tournament ended with the first place winners Mark Donovan of Forest City Trading Group, Laura Dwyer of Dupont, and Bruce Brushwood and Mike Fletcher of Moulding & Millwork.
Former NBA star Bill Walton delivered the celebrity keynote speech, reminiscing about his days as a high school student working part time at Dixieline Lumber. Walton stayed on for several hours, telling sports anecdotes, debating politics, and sharing choice moments from his days as a Grateful Dead follower.
On a more serious note, Joshua Rosenbaum of UBS Investment Bank presented his macroeconomic outlook of the building industry, merger and acquisition activity and valuation trends. (See article on page 13) Separate breakout sessions were held on a variety of topics, including How to Implement a Safety Program, Supply Chain Inefficiencies, Commodity Pricing, Attracting Diverse Job Applicants and Litigation Trends.
Sam McDermott of Wood, Smith, Henning & Berman, a California law firm, dispelled some myths about lumberyard mold and whether juries are easily fooled by bogus claims. In the diversity session, Brett Kashanitz of
“The challenge with diversity is not with recruitment,” Kashanitz said. “It’s retention. Once you bring that person into your organization and bring them up, your competition wants them.”
Hiranaga offered attendees several ideas that ranged from mentoring arrangements, inclusion activities and “affinity groups” that offer support to each other in the workplace.
The event’s keynote address was delivered by Kushak, the Pulte executive, who said his firm is cutting costs by simplifying the building process and reducing the number of house plans offered.
“We’re continuing to implement a strategy of simplification, option reduction,” Kushak said. “We’re re-thinking and improving the role of all partners in the supply chain, establishing core distribution partnerships, aggressively attacking waste in the supply chain.”
This “waste” includes Pulte distribution partners making seven trips to a house for a lumber drop when they should only be making three. This adds cost to the house, which is unacceptable in today’s market, he said.
“We’re strategically moving to reduce the number of partners. We clearly can’t do it with as many [suppliers] as we have today, as many footprints on a job site,” Kushak said. “Over time, we need to consolidate to core distribution partners. It’s about trust, opening up, sharing data. It’s amazing what a difference that will make.”
Voetsch, the K. Hovnanian executive, urged conference attendees to “keep a positive attitude” about residential construction and its turnaround prospects. “I think it’s important that your people promote our industry,” he said.