Remodelers: How well do you know your lumberyard, and how can you better work with it to be more profitable? We spoke with Keith Coleman, co-owner of independent dealer Hamilton Building Supply in central New Jersey. Craig Webb, editor of REMODELING's sister publication ProSales, says that Coleman’s company exemplifies a lumber and building material (LBM) dealer that serves the remodeling community, citing its extensive selection (10,000 stock items), kitchen showroom, custom door and window operation, molding shop, and deep understanding of remodelers’ needs, including terrifically useful educational events and product guidance.

REMODELING: How’s business for Hamilton Building Supply?

COLEMAN: Our remodeling business is about 40% off since 2006; that was a great year! Our new-construction business is about 45% off. Our area is very built up, so we’ve always worked primarily with remodelers.

We’re working with our budgets to get to break-even. We’ve cut just about every line item you can cut, and we now have 53 employees, down from 80 in 2006. Last week we posted a note in the break room saying, ‘When the coffee’s gone, it’s gone.’ We’re no longer buying coffee for everyone. It was $600 a month.

Still, there are so many line items you can’t touch or make a noticeable change with: health care, real-estate and property taxes, utilities, vehicle maintenance, insurances.

REMODELING: What are you seeing in your remodeler customers?

COLEMAN: Remodelers are essentially trying to survive. Even though we enjoy an area of the country that‘s about as recession-proof as you can get, thanks in part to Princeton University and the community it supports, when Princeton announces a 30% decrease in its endowment, that’s a serious amount of money and has a ripple effect [throughout the local economy]. Many remodelers and builders are in pure survival mode. They operate on relatively tight margins, and when the volume isn’t there, it’s particularly difficult.

And, like us on the supplier end, many remodelers have not made deep enough cuts. The last thing any of us want to do is to lose relationships with the people we’ve worked with for years and years, so we all do whatever we can do to hold onto employees. And that in some cases means taking on jobs at cost or even below costs.

REMODELING: What trends are you seeing in remodelers’ purchases?

COLEMAN: We definitely see remodelers buying more maintenance and restorative types of products, as opposed to new construction products. They’re taking on jobs they wouldn’t normally have entertained a few years ago, and in some cases they’re having to compete even for very small jobs.

Nobody, for the most part, is building an addition these days. We’re seeing some garages being built, some work on very high-end homes in the range of $3, $4, $5 million. But the addition has almost gone away. People are making do with the square footage they have.

A saving grace is that home maintenance will be ongoing, especially when it involves poor-quality products that deteriorate.

REMODELING: What product trends concern you?

COLEMAN: We’ve seen an influx of lower-cost, lower-quality materials, mostly from China. We have to fight constantly to keep it out of our facility. For example, with commodity-type items like paint brushes, we’re finding that the good-quality items are being swapped with cheaper items and sent in with the same SKU. This pretty much cuts across all product categories.

So we have to be very vigilant. We spot check deliveries, and if something doesn’t seem to be the same quality, we call the vendor and say this isn’t the same quality we’ve had before. It can be hard to tell. Some products look great on day one, but five or six years later the finish wears off. It really comes down to: does it hold up over time? And often, the answer is no.

As an independent dealer, we have to maintain our quality. That’s what we depend on. We don’t shout this message form the rooftops but it’s implicit. Our customers and clients know that we’re going to have a level of quality they can count on and we’ll stand behind. We’ve developed that reputation over the years

Also, a lot of major manufacturers try to play both sides of the fence, and we have to explain why our products may be better than the big boxes’. Power tool companies will put out a 7.0 volt drill for Home Depot, and we’ll be selling an 8.4 volt drill. The manufacturer differentiates the products so that we can justify a higher price, supposedly, but what it means for us is that we have to educate our customers. They want to know why something is $25 more than it is at the big box.

REMODELING: As cheap products become more pervasive, are your remodeling customers becoming more discriminating buyers on behalf of their clients?

COLEMAN: It depends. People who intend to stay in their homes for a long period tend to be much more quality-conscious than those who say, ‘You know what, five years and I’m out.’

In reality, it’s a trying period for all manufacturers, and if one is weak, remodelers are taking a risk by installing their products. For instance, if you specify a national brand window that is number 15 or 20 on the best-selling list, you might not have a warranty you can rely on three or four years from now .

REMODELING: What other product concerns do you have with respect to remodelers?

COLEMAN: A big problem with remodelers is that with newer generation products, you really do need to read the instructions. We’re dealing with different materials now. Often it’s not wood, and it’s certainly not your grandfather's wood. Even with composite materials, you need to be very diligent with proper installation techniques.

I hear it all the time: ‘Oh yeah, I’ve been doing this for years.’ The problem is that these are totally different materials that react differently to other materials, paints, fasteners, etc. You’ve got to be on your game or you’ll likely install it improperly.

In fact, what often seem to be very straightforward installs, like windows and doors, are changing dramatically, to the point that the window and door industry is coming together to say this is the right way to do it. This prescribed methodology is filtering into the code too. It might take longer than remodelers are used to and involve additional products (like sill pans) that they haven’t accounted for in their bid packages

The fact is that most products fail today not because there’s an inherent flaw in the product but because of the installation. And that’s always a tough conversation to have with a remodeler. They don’t care to hear that. At the very least, they should rely upon us to warn them of certain installation issues or recommendations. We try to do that to the best of our ability.

Next Page: Remodelers "need to be very strong businesspeople."