March, 2006

Mortimer Lumber, Port Huron, Michigan

Family businesses come with their own unique set of advantages as well as challenges.

By Noelle Creamer

As the company celebrates its 60th anniversary this spring, Gerald (Gerry) Mortimer has joined his father, Franklin (Chip) Mortimer II, in the family-owned business. Chip Mortimer remains president/CEO and owner, while Gerry currently claims the illustrious title of "son of the boss.”

Gerry Mortimer has been back with the company full-time since May 2004 when he graduated from the University of Colorado in Boulder with a degree in business management with an emphasis in human resources. His younger brother, Korey Mortimer, is in college now. Gerry is looking forward to working with his brother in a few years. They will be the first pair of brothers in partnership in the company’s history. Gerry grew up in the business. He worked in various areas of the company during high school and over summer vacations. He also spent valuable time working for a local custom homebuilder to learn the builder’s perspective and processes. There, he gained a broader understanding of the products that Mortimer Lumber sells.

Changes Through Time

Mortimer Lumber began in 1946 in Port Huron. Today, there are three additional locations in the "thumb” of Michigan (Imlay City, Bad Axe, and Sundusky), all in county seats, with 110 employees company-wide. All locations are full-line yards carrying lumber and hardware. Overall, the customer base for Mortimer Lumber is 51% contractor sales, 33% DIY/retail, and 16% industrial/commercial.

The company was started by Gerry Mortimer’s great grandfather and grandfather in a two car garage in Port Huron. They sold lumber and hardware. Before founding Mortimer Lumber, his great grandfather was in partnership at Southside Lumber in Port Huron. The Mortimers added locations in 1948, 1963, and 1985.

Chip Mortimer joined his father in the business in the 1970s. He recalls, "Business has changed dramatically since the 1970s when I began. Today, there are many more special orders. Everything used to be standard, now home building is more complex with more features, add-ons, more sizes, etc.” He adds, "And now, there’s engineered wood. There have been some amazing technological breakthroughs for the industry. But it’s more challenging to maintain a good inventory mix with such a variety of products in the marketplace from which to choose. You have to determine what to carry as a stock item versus what to special order.”

Additionally, he says, "With increased competition on both ends, there’s more pressure on gross profit margin. It’s harder to maintain now. It’s a two-front war for us with the big boxes and the pro dealers in our market. Also, it’s more difficult to control/maintain costs than it was 10-20 years ago.”

One of the most significant changes over Chip Mortimer’s tenure is the pace of business. He says, "Consumers and/or builders today want a quicker response. Lead times are shorter, projects are more intricate, and deliveries require special equipment and/or careful timing. It’s just all more complex.” He notes, too, "Things were not computerized when he began working in the 1970s. Innovations like e-mail and cell phones have changed the way business is done.”

Mortimer Lumber strives to be the best supplier at servicing customers. They call this philosophy the "Mortimer Advantage,” says Gerry.

Being a family-owned company offers certain advantages, which are clear to Chip Mortimer. "We offer a stronger level of communication. We can react quicker and make decisions faster because there aren’t as many layers of management. We’ll talk one-on-one with builders. We can even offer unusual services.” He cites an example where Mortimer Lumber assists builders with paperwork to ensure the lien process works efficiently for both dealer and builder, so everyone gets paid on time.

Other examples of their focus on communication include a program Mortimer Lumber has with their builder customers to communicate via Nextel phones with Mortimer’s contractor sales people. Also, each contractor salesperson has an assistant working with them. Gerry says, "It’s a team-based concept. We improve communication, which, in turn, improves our level of service.”

Two years ago, Mortimer Lumber created its own estimating department with two in-house estimators who use their own custom software. This freed up time for salespeople to focus on selling and to dedicate themselves to their current customers and creating new relationships. They are able to make more job site visits and have developed stronger relationships, according to Gerry.

Chip Mortimer’s philosophy may be a little different than others in the industry. He compares his business to another service industry. He says, "We’re not fast food; we’re a restaurant. We offer different products and different services from the big boxes and some other retailers. We don’t want all the business. We want to service the business we have and exceed our customers’ expectations.”

Gerry says, "The company’s employees are all considered family. They have watched me grow up and helped me acquire knowledge and skills that will help me contribute to the success of the company in the future.”

The employees of Mortimer Lumber are a highly valued asset. Gerry says, "Our employees are a key aspect of achieving a high level of customer service. Our customers trust our employees and our employees understand our customers—the way they build and do business. Our employees have developed immense industry knowledge over time and provide excellent customer service.” He adds that the contractor sales team has an average of 20 years of experience and other employees have an average tenure with the company of nearly10 years.

On going training is important despite long tenures. To improve sales skills, the company has been working with a consulting firm called The Sales Matrix. Gerry says, "This training has made a big difference for us. The Sales Matrix provides all of our employees with formalized training on the sales process using models. It has helped us become more proactive than reactive.” This is continuous training for Mortimer Lumber staff that occurs weekly in meetings.

Gerry says, "It’s helped our employees learn to ask customers the right questions, which increases sales!”

Additional training for employees comes from National Retail Hardware Association courses—Advanced Hardware Retailing and the Building Materials Products course. Gerry says, "Employees also learn from our policy and procedure manual and employee handbook. They provide the perspective on how Mortimer Lumber does things.”

Vendors provide training, as well. Gerry says, "Our vendors do an excellent job keeping us up to date with trends and new products.”

Mortimer Lumber expanded their outside sales force about a year ago. Now, there is one outside salesman for each location. Gerry reiterates, "Having outside sales spreads us out more geographically—across five counties. We have increased our customer service level by having salesmen on the job sites. It creates opportunities and is very convenient for our builder customers.”

Mortimer Lumber does limited installed sales and does not plan on setting up a comprehensive installed sales program. They, instead, refer customers in need of installed sales services to builders and remodelers they know.

They offer "before sales” services such as estimating, blueprints, kitchen/deck/pole building design, and paint matching. Other services include special orders, shopping online, lock keying, and key cutting, screen repair, and metal breaking.

They are able to offer various delivery options, as well, with a specialty fleet including boom and elevator trucks, and truck-mountable portable forklifts. They have been known to do four delivery runs per day.

Mortimer Lumber appreciates the benefits of their association with LMC and Orgill, as well as other suppliers with whom they’ve done business for nearly 60 years. Gerry Mortimer says, "These relationships are long-standing and they’ve helped us excel; they’re key to our success.”

Mortimer Lumber provides opportunities to interact with their customers on different levels, too—breakfasts, barbeques, and an annual contractor show. They have taken a group of builders to the International Home Builders Show each year. They have vendor trips and training, hunting trips, and go to sporting events. They believe this time spent with customers strengthens relationships and, thus, improves business.

The company faces the familiar challenges that other building materials dealers encounter, according to Gerry Mortimer. They are well aware of trends and issues across the industry. He names the cost of providing health insurance, paying for fuel, staying current with technology, and maintaining a healthy gross profit margin as the most significant concerns for the company heading into their seventh decade. They worry about the local unemployment rate and the future of the auto industry, as do other Great Lakes region businesses.

Both Chip and Gerry Mortimer are active in a number of local and state associations, serving on boards and participating in roundtables with the Michigan Lumber and Building Materials Dealers Association. They are active with Habitat for Humanity and with other local groups in the communities in which they’re located. Gerry Mortimer echoes his family’s feeling that being involved is "the responsibility of the business owner.” He says, "You have to put something in to get something out.”

As one of the fourth generation of the Mortimer family begins his mentorship under his father in the family’s business, Mortimer Lumber plans for steady growth through possible new markets and increased sales. They will focus on "five drivers of profitability.” They are: gross profit, sales, inventory turns, DCSO/AR (days charged sales outstanding), and employee productivity. Mortimer Lumber’s CFO, Bill Bedard, emphasizes these five areas company-wide as a set of goals to keep business brisk. Gerry Mortimer maintains, "If we focus on these and are successful in these areas, we’ll be strong going into the future.”

They measure these five drivers at all locations and overall. Gerry says, "We all get regular reminders. The five drivers are emphasized at monthly managers’ meetings and are constantly preached to employees at all levels of the organization.”

These drivers, the continued benefit of experienced, trusted employees, and the adventages inherent in being a family-owned company will propel Mortimer Lumber as the newest generation learns the ropes.

Chip Mortimer says, "Gerry brings efficiency, new ideas, a fresh young perspective. He looks at things differently than I do, and represents the new outlook of Mortimer Lumber’s customers.”

And, Gerry adds, "I am excited about the future of Mortimer Lumber and the building materials industry. I’m confident that when the time comes, I will be ready to lead in the same spirit and tradition of the generations before me.”