June, 2004

Thomas Building Center: Supplying the Dream in Sequim, Wa

Thomas Building Center, Sequim, Washington

By Martin Rosenburg

As retirees and high-end vacation home seekers continue to stream into bucolic Sequim, Wash. they invariably become interested in building from the ground up the grandest shelter of their lives. They have little interest in homes already erected and sitting vacant.

Before long, they locate a contractor and settle on a plan.

That building contractor eventually will pass through the doors of Thomas Building Center, located in the heart of the bustling town that sits in the fair weather rain shadow of the Olympic Mountains.

Thomas Building Center has logged great success over the years with revenues this year expected to reach $13 million, up from about $11 million in 2003. Indeed, revenue growth has been a robust 20 percent a year for three years, according to Rand Thomas, company owner.

The popularity of Thomas Building Center, now 32 years old, has been carefully and strategically cultivated by Thomas and his staff of approximately 40.

That is why twice each summer, Thomas and his crew round up a busload of area contractors and head to Seattle, to view a Mariners baseball game from a cozy corporate suite. The goal of the outing is subtle but important. Thomas Building Centers wants builders to see their local building materials store as their partner, jointly allied in an effort to build the best homes with the most suitable materials.

The campaign to get close to customers is actually a year-around effort that is rooted in how Thomas Building Center organizes itself on the sales level to conduct the ongoing solicitation of potential business.

"Most lumberyards have outside salesmen who look for jobs to chase," Thomas said in a recent interview. "We have contractor salesmen assigned to builders to take care of their every need. We become their partner in their business."

More than just lumber.

The results are impressive. Roughly 200 new homes are built each year by Thomas Building Center-supplied builders and the building material company manages to sell about 80 percent of what a lumberyard can conceivably sell into a newly constructed home. For instance, fully 95 percent of those builders purchase their window frames, trim and exterior doors from Thomas Building Center; 80 percent buy their cabinets from Thomas; and 75 percent buy their interior doors.

"We have a more wrap-around, blanketed approach than just going after them for a lumber package," Thomas said. That, more than anything else, underscores the business philosophy that has served Thomas well for more than three decades.

Thomas, with a background in the grocery business, in 1972 bought the business with his father Vern, who had been a partner in a north Seattle lumberyard, Greer and Thomas Lumber Company, since 1952. Indeed, the family ties to lumber extend back generations to a grandfather who operated lumber yards in Nebraska and Colorado and a great-grandfather who was in business in Ohio.

Rand Thomas said that his early exposure to the grocery business sensitized him as to the importance of carefully merchandising building products. As a result, he has come to prize - and to realize - dramatic inventory turnover rates that far exceed industry average operating standards.

Last year, Thomas said, the center achieved a "phenomenal" flow of merchandise and materials, turning its inventory 11.57 times. In comparison, the best contractor stores achieved on average less than 9 inventory turns while mixed stores typically posted less than 6 inventory turnovers a year, Thomas said.

When Thomas and his father acquired the lumberyard business, it dealt only with contractors. They quickly modified the business plan and began to court retail customers as well, while never neglecting the supreme importance of contractors.

Thomas said that he recently faced a challenge when a national chain operator, Lumbermen's Building Center, bought a small local building material supplier that was doing about $2 million a year in business. While Thomas and his crew anticipated losing business to the newly invigorated competition, the opposite actually transpired and many of the rival business's contractors migrated over to Thomas, Thomas said.

"They liked dealing with a locally-owned yard and buyers who knew what they needed for the area, with decisions being made by the moment and not out of corporate headquarters," Thomas said.

The Sequim area is a population of about 4,700. The store, however, draws customers from throughout the area including the larger city of Port Angeles, which is 17 miles away.

The "change" challenge.

A major challenge facing Thomas has been the changing face of the city center of Sequim. The store, which operates on 1.6 acres on the city's main thoroughfare, has been wrestling with the potential business problems posed by a city decision to install new curbing and sidewalks. That has challenged Thomas, affecting customer parking and the regular delivery of materials by large truck.

Thomas and his lieutenants, however, have managed to turn the challenge into an opportunity. The company is now 1.5 years into a 5-year full remodeling effort that promises to dramatically transform the retail operation. One new feature is a changed entryway, new displays of products and materials and office space.

The importance of contractors to the business is underscored by the separate private entry that has been dedicated to them, along with their own private parking lot and counter to transact business. Obviously as the upgrade has progressed, Thomas said, "We made it more contractor-friendly."

Overall store square footage has increased about 10 percent to just about 69,000-square feet, Thomas said.

The biggest opportunity facing Thomas Building Center is continuing to capture a lion's share of the business associated with Sequim's growth, Thomas said. The company generally downplays its advertising, choosing to instead focus on its "one-on-one approach" to dealing with customers. Thomas said. An internet site has been set up (www.thomasbuildingcenter.com) with the potential for customers to make purchases online, but builders generally prefer to come into the store and transact business in person, Thomas said.

Underlying the steady growth of the business has been its owner's laser-like focus on community matters. Thomas was named 2003 Distinguished Dealer of the Year by the Western Building Material Association, based in Olympia, Wash., for superior service to the building material industry. Rand Thomas was recognized for his active involvement in his local community. He co-chaired Sequim's 100th Festival, bringing entertainment acts in from across the United States, which helped to swell attendance for the 10-day celebration to 25,000. In addition, he served on the board of the Washington Festivals and Events Association; he was Rotary Club president in 1981; he was recognized as Sequim Citizen of the Year in 1994; and he became president of the Olympic Memorial Hospital Foundation in 1997.

Rand Thomas has also been active in the building products industry, serving as president of the Western Building Material Association in 1999. He also held a number of key posts at the association and served as chairman of the 100 Year Celebration Committee.

Rand Thomas and his wife Darlene enjoy traveling around Europe and the United States. The couple has three children and 6 grandchildren.

All of the approximately 40 employees at Thomas Building Center are treated as family; they are motivated by a farsighted incentive plan that entails creating a budget and uniquely tailored incentive program for each department.

"All employees are involved in decision-making," Thomas said. "Our lumberyard is run by an incentive program rather than me ruling." Thomas stays abreast of important issues, but says, "I am not involved in daily transactions."

Rather, Rand Thomas at age 56 is hard at work implementing his vision for a successful enterprise in the 21st century in the rural reaches of Washington. That business today shows every sign of continuing the Thomas family involvement in the lumber business far into the future. Now son Andrew works alongside his father as comptroller of the business, and in the process he is extending family involvement in the lumber business into its fifth generation.