Hawaiian retailer reorganlzes to grow

IETERMINED to return to profI-litability, Trojan Lumber Co., Hilo and Kona, Hi., just completed a fiveweek reorganization placing a new emphasis on contractor, commercial and do-it-yourself homebuilders.

"The biggest change is that now we are actively pursuing business," says president Rocky Campbell. "Before, we were waiting for it to come through the door. We already have people out on the road."

With no outside sales force, only 15% of Trojan's business was to contractors and just 4Eo commercial, despite the area's military base and large concentration of hotels, condominiums, and opportunities for government business.

Operating two locations provides convenience for Trojan's retail customers, but also led the company to duplicate many efforts. Both locations, for instance, had their own managers, yard supervisors, buyers, and accounting personnel.

Now, Trojan has centralized accounting and administrative functions at the Kona location. Newly promoted chief operating officer and general manager Marcy Strate, a lO-year veteran of the company, now oversees both locations. Doug Nabeshima, who had been Kona yard supervisor, will supervise both yards.

As a result, a handful of employees were released, always a difficult decision for an established familv business.

The company's roots date back to Rocky's father, Paul W. Campbell, who operated Trojan Lumber as a wholesale business in Southern California for more than 20 years. He closed the business and retired in 1970 to the Big Island of Hawaii, where his father ran a koa mill.

Disinterested in the milling business, Campbell opened Trojan Lumber in Hilo as a true mom and pop shop: the entire staff included Campbell, his wife and a truck driver. Rocky joined the business in 1972, and a year later they added a second store in Kona.

A building boom on Hawaii spelled tremendous growth during the 1980s. But after the Gulf War, the economy collapsed. Hotels went bankrupt. Lumberyards closed. Trojan, reportedly the last small lumberyard on the island, has been losing money and watching sales decline for the last five years.

In late January, the company enlisted industry turnaround specialist Clark Colvin, Clark Sherman Colvin Inc., Salem, Or., who suggested the change from expensive location-based management to a "profit center" approach. By splitting the business into retail, contractor and commercial departments, Trojan could better recognize who was buying what.

The Dimensions computer system was reformatted to provide accurate management accounting and breakeven costing. "Before, we never knew where we were making money and where we were losing money," Strate explained. "Now we can get real information, factoring in overhead, to find break-even points. We found an incredible amount of dead inventory. We can evaluate each product line to see if it's worth carrying."

What the co-op won't take back, Trojan will price to move. "Even though the turn reports weren't indicating it, they actually were sitting on over $50,000 worth of co-op merchandise, and there was no customer for it," Colvin said. "They have to focus on their customers by figuring out who their customers are and what they're really buying."

Each profit center has its own manager, who can be held accountable. Through a new incentive program, said Campbell, "if their profit center does well, they do well. They don't get a bonus unless they perform. We have ' 18 employees between the two yards, and we've gotten everyone involved."

Campbell is sales manager of the new commercial department, tied in with TruServ's successful commercial program. Robert Irvine is retail sales manager; Dave Worsham, contractor sales manager; Clinton Mercado, Hilo store supervisor; Kelly Goold, Kona store supervisor, and Lito Mercado, head of a new architectural design department at Hilo.

Even the union employees, once removed from decision making, are now included. Yard supervisor Nabeshima is a critical part of the budget committee. As such, he is both empowered and held accountable for yard efficiencies including inventory receiving and personnel supervision.

While stationed on opposite ends of the island, the newly empowered staffs at both stores feel part of the same team. "Before, the two locations operated as if they were two separate companies. Now they operate as one," said Colvin. The company is so confident the changes will work, he said, that "we are budgeting for a more than 5Vo bottom line this year from a previous negative."