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REAL ISSUES. REAL ANSWERS: LBM Consolidation: Good Or Bad?

“If all the dealers consolidate we will end up with all big box stores and the small dealers will be pushed out. We small dealers compete by giving better service and personal care and show our customers we appreciate them for stopping in.”


“I’m against consolidation, as it allows a few companies to demand services and prices that squeeze manufacturers to the point of extinction. This limits contractors from having a choice of products and prices, too.”


“Overall, consolidation is bad. More competition is good.”

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“Depends who you are. If you are a one-location yard, it is a bad thing. Competition is getting tougher every year. It is hard to compete with a multi-yard company because they get better deals from manufacturers and distributors.”


“I want it to be a good thing. Outside of the national production builders, there are tons of small, medium and large local/regional builders along with the custom home builders. We have shown that they need to be serviced differently and are willing to pay more for great service. There may be a day that national suppliers figure out how to sell for the right price and service accordingly, but until that happens the strong independents will thrive.”


“The national suppliers who are consolidating good yards are not doing a good job of keeping the good business practices of the successful yards they are purchasing. They are throwing away all of the local knowledge and putting their hierarchy into markets they buy into. I believe we will see the good salespeople start to look for strong local independents once the national suppliers
start messing with compensation. Strong independents are in an excellent position right now and will continue to be successful in the wakes of consolidation.”

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“Great for independent dealers to expand now or startup in new markets.”


“Bad if you’re not one of those jumping on the wagon. To maintain a true independent way of business, one must remain independent. Vendors will always treat the guy buying for four yards better than the single yard. So as an independent, keep your vendors close and your margins up. And we can survive at least till one of those big fish takes a look at us, too.”


“From an independent dealer perspective, consolidation is not necessarily a bad thing if the acquired yards retain some semblance of autonomy, full well knowing that some phases of an operation will be ‘rationalized’ (accounting, perhaps purchasing, enterprise data systems, etc.). If some of the management team remains, the behavior of the acquired yard seems to remain understandable from a pricing perspective, which is our biggest concern. Pricing discipline being maintained is our biggest concern when consolidation takes place.”

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“Consolidation is a double-edged sword. It is certainly good for the companies that are combining, as they are able to use their synergies to cut costs, and hopefully improve their bottom line. Fewer locations, less money spent on advertising, no fighting over the customer base, they’re now all yours. And of course it makes the shareholders happy, and anyone who works for a publicly held company hears the importance of happy shareholders multiple times per day.

However, one need not look further than the railroads to find the downside of consolidation. Less service providers, fewer choices, higher prices, poorer service and many areas that have gone from having iffy to decent service going to having no service at all. Competition used to be the name of the game. Today the name of the game is buying your competition.”

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