A
Th e
Component Manufacturing dverti$ dverti $ er
Don’t Forget! You Saw it in the
Adverti$$er
May 2023 #15286 Page #27
Will ‘Too Little, Too Late’ Define Your Company? Todd Drummond
uilding history facts: Before the 2008 financial crash, there were about 2,100 wood truss and wall panel component manufacturing (CM) companies across North America. The vast majority of the locations were independently owned and operated. When the worst of the effects of the recession finally hit bottom, approximately 750 CMs remained operating. Since the 2008 crash, the building industry has grown and recovered quite well with one distinction: mergers and acquisitions have created a market where multi-location LBM and CM operations are a far more significant portion of the overall market.
B
Multi-location companies may be more prevalent now, but you would be mistaken if you thought job security was better with multi-location companies. I witnessed a phone conversation when a VP of a large multi-location LBM/CM company informed an area GM that the location would be shut down Monday. This conversation occurred on the Thursday before Monday’s closing, and it was the first the GM knew their site would be closed. Multi-location area operations are shut off like a light switch during market recessions, and the remaining locations pick up the previously served market. In contrast, independently owned operations normally will fight tooth and nail to remain in business and only shut down when their finances dry up. As stated in previous articles, tough times are coming, and companies must prepare for them. All the capital expenditure on new buildings and automated equipment will not be enough. (See Don’t Be Blind to Simple Truths for the 2023 Build Season.) Sales of new homes are already slowing in many markets. With all the expansion of component manufacturing, it will add enormous pressure to reduce margins to maintain sales volume to keep the never-ending manufacturing capacity beast fed. Only real positive process improvement based on lean manufacturing continuous improvement will help a company weather the coming storm.
Continued next page
PHONE: 800-289-5627
Read/Subscribe online at www.componentadvertiser.com
FAX: 800-524-4982