June, 2004

Entrepreneur of the Year 2007: Wheeler Building Materials

After a year spent nailing down real estate, Wheeler’s Building Materials plans to launch both horizontal and vertical expansions in 2007.

By Craig A. Shutt

Owning a successful business requires many skills, including the ability to overcome any challenge that the economy or customers can create. But being a successful entrepreneur takes even more talent. It requires always feeling the pulse of the market, recognizing gaps in customers’ needs, and then doing something about them.

Entrepreneurs may expand into new markets or even create new businesses when they see customers being underserved. Or entrepreneurs may want to provide better, faster service as their base grows. Sometimes these business people take risks that don’t pay off—or the new venture may not recoup its investment for quite a while. As the saying goes, knowing when to hold them and when to fold them is key to becoming a successful entrepreneur.

Many building material dealers know the difficulties involved in expanding and starting new businesses. The industry is rife with entrepreneurs looking for new niches, new markets, and new ways to better serve customers. The independent, opportunistic attitude of dealers has seen this industry through both high and low times.

To celebrate that spirit, this year LBM Journal has expanded its Entrepreneur of the Year award to include three companies at different revenue levels.

As you'll see from reading their stories, there is no doubt that the entrepreneurial spirit is alive and kicking in today's lumber/building material industry.

Wheeler’s Building Materials has long had an eye for expansion, opening its 17th store in late 2005.

But in 2006, brothers Mark and Jim Manis spent the year slogging through real-estate negotiations and waiting for pieces to come together, which meant that no significant additions took place.

But with a new year, the company anticipates dramatic growth in both its horizontal expansion of stores and its vertical integration of new approaches to its manufacturing and service operations.

"We ran into a little trouble getting our deals finalized in 2006,” says CEO Mark Manis. "But now things are in place for a great 2007.”

Those plans include three new or expanded markets, which will generate new business for the company’s production of vinyl windows, doors, trusses, and wall panels, as well as new products to expand or enhance the current offerings.

This month, the company will close on a location in Chattanooga, Tenn., that will represent the company’s first store in that market. "It’s a natural extension for us,” says Mark. Wheeler’s headquarters in Rome, Ga., is just 75 miles away, and the company has operated a location in Dalton, just 30 miles away, for 40 years. "Chattanooga is a beautiful town and it lets us add onto our line going out that direction,” Mark says. "It has really good growth prospects.”

The company also will enter Greenville, S.C., through a new property it purchased in November.

"The land has some storage facilities, but it needs to be reconfigured to suit our needs so it will take some time to get up and running,” says president Jim Manis. "The key for us is that all of the properties we’re looking at are rail-served, which is important, but we [also] need to build a rail siding for access. So there is some work to be done.”

In November the company secured a 15-acre site in Charlotte, N.C., with an existing 177,000-sq.-ft building. The company also purchased a six-acre Charlotte facility in 2004, but it took longer to complete that deal than expected.

"We didn’t gain rail access until last fall, so it really hasn’t been fully running,” says Mark. "But now, it’s doing $1.5 million in business a month selling our entire product line, which is pretty good for a small location.”

Three Operations Expand

The new location will offer space to expand three major operations: the company’s distribution facilities, which currently operate from one location; the millwork manufacturing; and its truss plants. "That’s a trifecta for us, and we’re really excited about it,” Mark says. "Charlotte is a natural expansion target. When you’re in Atlanta and you look at key markets, Charlotte jumps out at you.”

The family also has ties to the market. Mark attended Duke University for undergraduate work and the University of North Carolina for graduate work; Jim is a UNC graduate, and Mark’s son attends UNC now. In addition, their sister lives in the area.

"We’ve been interested in that corridor for a long time, and we saw so many good markets there that we wanted to establish ourselves,” Mark adds.

The markets offer great potential for expanding the company’s manufacturing business, which includes 350,000 sq. ft. of space at the Rome headquarters. The company also is evaluating products to see what it can add to its current mix.

"We have about a half-dozen products we’re evaluating, from fairly small millwork items that could augment those lines, up to structural components that could generate a lot of revenue,” Jim says.

A key item that began shipping in December is the Advantage III vinyl window, which builds on the success the company achieved with its Advantage II model. "It has significant upgrades over the second generation, and it will position us as having clearly the best vinyl windows in the market,” Mark says.

The expansion of product lines and locations represents the horizontal expansion on which the company prides itself. But even more critical, the brothers say, is the vertical expansion they’ve undertaken to create better efficiencies among their manufacturing, retail, and installed-sales operations that build value for customers.

"We’re always trying to become more vertically integrated in our manufacturing process to take advantage of our economies of scale,” says Mark.

Early this year, the brothers expect to introduce new programs "that will improve our internal efficiencies and enhance our products,” says Jim. Although he declines to elaborate, he does note that major changes to the company’s window manufacturing will be part of the process. "We keep plugging away at improving efficiencies anywhere we can,” he says.

Adds Mark, "We want to improve our operation both upstream and downstream. Our goal is to find ways to add value for our builders, however that happens. We want to increase our locations to expand our reach and increase our economies of scale if we can, but our focus is providing value to the supply chain overall, including on the manufacturing side.”

Any products that they buy through suppliers, Mark notes, are evaluated. "We want to see if we can bring them in-house and improve their quality or the service we provide with them to our customers,” he explains. "We ask ourselves if we can add something to the value equation that our competitors can’t provide. That’s our basic business philosophy.”

Technology Enhances Service

Strong service is a central part of the Manises’ philosophy, even though that remains difficult to quantify since it means something different to every customer. Even so, the company has recently expanded into new technologies that make sales people more responsive. Sales people now carry Blackberry handheld e-mail devices that allow them to quickly text and e-mail messages from the road.

"It really speeds up communication between sales and the customers,” says Jim. (He initially experimented with providing the devices to installed-sales managers who manage multiple jobs.)

"Now there’s been a proliferation of Blackberries among the sales people,” he adds.

To encourage even more responsiveness, the installed-sales teams also have wireless laptops in each truck, complete with printers.

"The teams can transmit plans, make changes, and update information immediately,” Jim says. Change orders can be entered and printed out for an authorization signature on the spot. "We can handle everything in real time. It’s a small thing, but it’s a huge boost to our productivity. It’s a real value and it’s clearly helping us, even if I can’t quantify the dollar amount.”

The brothers aren’t daunted by the notion of moving ahead with expansion plans in the midst of a housing downturn. "Our market needs to work off some of its excess inventory,” says Mark. "Fortunately, the economies of our market have not been distorted by investors. But I was surprised to discover that some builders have gotten out ahead of themselves and built more than they can sell. The media spooked a lot of homebuyers, who now are holding off in hopes of getting a better deal. That can’t go on forever, and it’ll work itself out.”

From his talks with customers, Mark expects that it might be a tough winter, but the market should open up after that. Job growth, interest rates, and the economy are all very positive, he notes. "I consider those the three pillars of a strong housing market. I don’t expect the market to take off again, but I expect it will return to being solid in the not-too-distant future.”

If that assessment pans out, Wheeler’s may find itself even busier than usual come spring, as sales grow, as it promotes the Advantage III window, and as the brothers work on opening three new locations.

"Those stores ought to keep us busy in 2007,” says Mark.

With more than 30 years’ experience covering the LBM industry, CRAIG A. SHUTT is senior contributing writer for the magazine and is based in Chicago.