Reevaluating Your Investment Strategy
Reevaluating Your Investment Strategy
How are you are investing in the future of your business?
Primarily, you’re probably thinking about your physical assets. What production equipment do you need to meet the growing demand for your product? Can your saws handle the throughput? Do you have enough assembly table space? Is your facility large enough to accommodate additional equipment, if it’s needed?
You’re probably also thinking about technology. Do you have enough computers and are they fast enough to efficiently run today’s software? Is your network capable of handling all the data that needs to be stored and shared? Are you taking full advantage of technology throughout your production process to increase efficiency?
You’re likely also concerned about your workforce. Where are you going to find more individuals who can be trained to become good designers and sales staff? If you have to expand, do you have enough production workers to make it possible? Can you run more shifts if you need to?
Okay, stop reading for a minute and think through the specifics of your approach to investing in the future.
Now, how many of your investment activities are focused on areas that aren’t recorded on your P&L statement? For example, since you read my previous articles in November and December about the importance and value of relationships, how much time have you invested in reaching out and forging new connections in your market? How much time does your company spend on differentiating itself and marketing those differences to existing and potential customers?
Future growth depends on a growing market and an expanding market share. But how do you grow your market share? Once you grow it, how do you keep it from eroding?
Through SBCA, we’ve found that one of the most effective approaches is gathering and sharing good information. For example, in 1996, we built two houses side-by-side in the parking lot of the Astrodome in Houston, TX. Called Framing the American Dream® (FAD), this project aimed to quantify the time and financial benefits of componentized framing versus conventional framing. The results were dramatic: the conventional home took 67 percent longer to frame and consumed 26 percent more lumber. For the past 20 years, component manufacturers (CMs) across the country have used that data as a foundation to successfully convince builders to switch to components.
Today, labor is one of the most difficult challenges facing our builder customers. The recent downturn saw many experienced framers leave the industry and, from what I’ve read, most won’t return. There is also increasing pressure to take structural material out of a building to save costs and make room for insulation and other approaches to increase the energy efficiency of a building. Those two forces create more opportunities for our products. Armed with accurate data, we can make increasing market share for components even easier.
That’s why the SBCA Board has been talking about updating FAD over the past few years. A lot has changed in the components industry over the past two decades, and a new FAD project would allow us to quantify just how much. This year, SBCA will build two homes in Milwaukee, WI, the host city of the BCMC show. Both homes will have identical floorplans, but one will be entirely framed using components while the other home will be stick built following the prescriptive building code.
We will partner with Operation FINALLY HOME again to ensure these two mortgage-free homes go to deserving wounded veterans, to thank them for their great sacrifice to our nation and to give them and their families a step forward toward pursuing their dreams. When you think about investing in the future of your business, think about how investing in FAD can help you (and the entire industry) effectively grow market share. It will also have the additional benefit of helping secure a better future for some very deserving individuals.
Beyond FAD, SBCA is also focusing on helping CMs across the country fight an unfair provision in the model building code. R501.3 in the 2012 and 2015 International Residential Code (IRC) mandates that unprotected floor assemblies above basements and storage areas must be sheathed with gypsum. We’ve covered this issue extensively in past issues of SBC (see Sept/Oct 2013 and November 2014), and it’s clear the exception carved out in this code section by the American Wood Council (AWC) and the National Association of Home Builders (NAHB) for solid sawn 2x10 joists (and equivalent floor systems) puts our industry at a significant cost disadvantage and does considerable harm to the whole structural building component industry.
CMs in states that have adopted this code provision have witnessed their builder customers move away from floor trusses and I-joists toward solid sawn joists, sacrificing span lengths to save the higher costs of construction labor. This is a very real issue for our industry, and because it’s in both the 2012 and 2015 versions of the IRC, it isn’t going to go away any time soon. That’s why SBCA is prepared to address this issue head on. SBCA will be talking directly to CMs about their needs with respect to floor system market changes over the coming months. If your company is witnessing changes to your floor product sales because of this code provision, please let me or SBCA staff know.
Now, you may not sell floor trusses to residential markets. You may not have to compete very heavily against stick framers in your market. If so, it’s natural you might be thinking to yourself, “This isn't my problem.” The thing is, you never know what the next issue might be. The association works because it brings us all together to take on tough issues like these. Ten years ago, it was going to bat for northern truss plants that couldn’t compete against their Canadian counterparts because of trade tariffs our government put on Canadian lumber. Two years ago, it was helping southern truss plants navigate necessary changes to Southern Pine design values, while at the same time ensuring a stable market for engineered components.
Lumber design values still remain a significant issue for CMs, when you consider the changes recently made to the American Lumber Standards Committee’s (ALSC) Voluntary Product Standard 20-10 American Softwood Lumber Standard (PS 20), which applies to all visually graded lumber, not just Southern Pine. I promise it’s worth reading the revised PS 20 a few times (see sidebar below) and understanding what it says about the reliability of the visually graded lumber design values we buy from our lumber suppliers.
What I’m trying to say is that we’re all in this together. So as you think about investing in the future of your business, think about how much you’re willing to invest this year in these two projects to ensure a bright future for all of us.
Proposed Revision to Voluntary Product Standard (PS) 20-10 “American Softwood Lumber Standard”
Original Language 2.6 Design values--Mechanical properties of wood as prepared for design use. Allowable properties of wood are identified with stress-grade descriptions and reflect the orthotropic structure of wood.
SBCA Recommended Change to 2.6 Design values--Mechanical properties of wood for use in load bearing resistance equations (e.g. ANSI/AWC NDS). Allowable properties of wood are identified with stress-grade descriptions and reflect the orthotropic structure of wood.
Final PS20 Language 2.6 Design Values--Published design data that are representative of the strength and stiffness of specific grades and species/species groups of lumber. The motion passed unanimously.
Original Language 2.8-Grade marked (grade stamped)--Lumber that displays the official grading mark of an agency that is made by rubber stamps, ink jet sprayers, tags and/or other methods …. Except for marks used in connection with Certificates of Inspection or Reinspection, all grade marks shall indicate the following: 1) the mill number, name, or abbreviation; 2) the agency symbol; 3) the species or combination of species of the lumber; 4) for lumber of less than nominal 5-inch thickness, whether the lumber was dry or green when dressed; and 5) the appropriate grade. Where required by the grading rules, grade marks shall also denote rule paragraphs under which the lumber was graded or other similar information.
SBCA Recommended Change to 2.8-Grade marked (grade stamped)--Lumber that displays the official grading mark of an agency that is made by rubber stamps, ink jet sprayers, tags and/or other methods …. Except for marks used in connection with Certificates of Inspection or Reinspection, all grade marks shall indicate the following: 1) the mill number, name, or abbreviation; 2) the agency symbol; 3) the species or combination of species of the lumber; 4) for lumber of less than nominal 5-inch thickness, whether the lumber was dry or green when dressed;
and 5) the appropriate grade and 6) the visual or mechanical, as designated, design values that apply to that grade (at a minimum Fb, Ft and MOE). Where required by the grading rules, grade marks shall also denote rule paragraphs under which the lumber was graded or other similar information.
The original language remained the same in the proposed PS 20-15. Here is what the ALSC minutes say about the proposed change by SBCA to Section 2.8:
Mr. Grundahl stated that placement of the additional information on the grade mark would provide clarity and be beneficial to users of lumber. The group discussed the request. It was noted that the request would not work for all grades assigned design values and the use of grade stamps with allowable properties for the different widths of dimension could present implementation problems. It was noted by counsel that the presence of allowable properties on the grade mark constituted a warranty and could pose problems when used with globally derived design values. Mr. Grundahl made a motion to recommend to the ALSC Standing Committee to revise Section 2.8-Grade marked (grade stamped) as shown above. The motion did not receive a second.