July, 2008

Not All Bad News

The secret is to focus on areas with traction, and prepare for tomorrow.

By Rick Schumacher

One of our jobs is to deliver the news— even when the news is ugly. This is one of those times. “The nation is in the throes of a housing downturn that is shaping up to be the worst in a generation,” according to the 2008 version of the annual report, “The State of the Nation’s Housing,” issued by the Joint Center for Housing Studies at Harvard University. “While the falloff in housing starts, new home sales, and existing home sales already rivals the worst downturns in the post World War II era, home price declines and mortgage defaults are the worst on records that date back to the 1960s and 1970s.” *

I share this because to know where we’re going, we need to know exactly where we are, and where we’ve been. Despite the hard reality of the building market, there is hope, and there is a future for our business.

Delivering the news, while part of what we do, is secondary to our real mission: providing you with relevant, practical information to help you grow your business, your brand, and your bottom line. That’s why each issue of LBM Journal has page-after-page of insights from the most respected names in the industry. People like Bill Lee, John Wagner, Tom Fife, Steve Easley, Gary Katz….

The harsh reality is that we are at (or near) the bottom of the housing cycle. It’s not the first downturn, nor will it be the last. The key is to know that the upcycle will return, and consciously position your company for success. One critical area to examine is the chemistry of your team. At a time when layoffs are a painful inevitability for many dealers, it’s time to take a thoughtful look at your associates, and make sure that you have the very best team moving forward. In a note from old friend and industry veteran Bud Howe, he notes that a soft market also means that there are likely some well-qualified candidates looking for work. [Bud’s note, by the way, was the inspiration for this month’s Tough Call (Page 64).]

While each market is different, there are a couple of areas that are still clicking in many regions.

Remodeling. Remodeling is expected to be off just slightly for 2008, so this market deserves your attention. As you likely know, remodelers are a completely different species of customer. If you want to sell to this market, don’t miss our every-issue column, “Bob Buck and Dave Klun on Selling to Remodelers.” Buck, co-founder of an upmarket remodeling firm and Klun, a LBM dealer whose passion is remodeling, deliver insights you’ll find nowhere else.

Green Building. If you’re struggling to wrap your arms around the concept of green building, you’re not alone. That’s why Managing Editor Kelly O’Hara interviewed awardwinning green builders in this month’s cover story—to help you understand how to get your share of this fast-growing market. Bottom line: green building is so new, builders and remodelers will depend on you for product guidance. Even if green isn’t big in your market now, concerns over rising energy costs and indoor air quality make it inevitable. To quote Thomas Paine (or more famously Lee Iacocca), “You can lead, follow or get out of the way.”

* For the full report, visit www.jchs.harvard.edu. If you’d rather we do the work and have links to fresh industry research like this delivered to your inbox, subscribe to our free biweekly e-newsletter at www.LBMJournal.com.