Turning Point

July 28th, 2021 by Nathan Hobbs

WMA Delivers on Potent Discussions as COVID Shakes Up Distribution

While analysts agree that the future is bright for millwork, thanks to upturns in housing and remodeling, in order to fulfill those demands distributors must quickly adapt to new technologies amid COVID-19. As a result, “We’ve had five years of progress in five months,” said Mike Marks, of Indian River Consulting Group. With that progress has come some growing pains for an industry that’s trying to balance forward progress with supply chain problems and a need for remote work.

World Millwork Alliance (WMA) didn’t shy away from those issues with the programming for its virtual convention, held October 5-7. Instead, event organizers answered the call head-on with such topics as “Navigating Through the Pandemic: What Does the New Norm Really Mean?” and “Looking Past the Fear and the Noise: 2020-2022.”

“I did not want WMA Virtual Conference to mirror our annual convention and trade show, as it is a special industry networking event,” said WMA’s president and CEO Rosalie Leone. “I wanted the conference to reach every level of employee in the workplace with enriched presentation content and discussion as a return on investment for their time.

Pulled Along

While WMA members have openly discussed the need for technological advancements at prior events in order to lure in younger talent, a global pandemic accelerated a number of changes – including everything from daily operations and sales to hiring, said Tom Gale, CEO for Modern Distribution Management. Even prior to COVID-19, there were supply chain challenges for mouldings, added Mark Savage, vice president of millwork at Builders FirstSource. “COVID just added to the mix of trying to react to that,” he said.

In order to fulfill demands amid shutdowns and social distancing, the industry had to establish stronger communication models and technologies for replacing face-to-face sales. Meanwhile, companies that were slow to adapt—including some of the industry’s suppliers—suffered consequences. “We started to gravitate to suppliers who were better with communication,” said Chris Mercier, vice president of sales and operations for Dyke Industries.

New business models also require the use of remote technologies, such as cloud-based software and video conferencing. In the meantime, “I didn’t know what Zoom was until April,” admitted one attendee in a group discussion about technology.

With customer preferences changing rapidly amid COVID-19, “There is a new rhythm of communication in our business and it now crosses all parts. That will persist forever,” suggested Carl McKenzie, chief commercial officer at U.S. Lumber. That has some employers raising an eyebrow at employees who’ve struggled to keep up with new technologies, said Marks. As some of the industry’s most experienced salespeople find it difficult to work remotely, and to keep up with the need for data entry, a desire for fresh talent is now exacerbated, he said. In a presentation titled, Navigating Through the Pandemic, Marks recounted a story about distributors saying their salespeople simply decided they weren’t going to use Zoom. “They think that is their decision,” said Marks. “It’s not.”

In another session labeled “The Future of Work in Distribution Channels,” Marks and Salvador delivered a cutting message for those who insist on the age-old techniques of face-to-face sales.

“What we’re seeing is a pretty dramatic shift among [business] owners looking at their inside sales staffs quite differently than they have in the past,” Salvador said. “Today, you need people who are tech savvy,” he added. As a result, there are no more “hall passes” for employees who are unable or unwilling to adapt, he said, and that has some employers aggressively seeking new talent—including individuals who have no industry experience but are well versed in technology. Some distributors are so aggressive about the idea that they’re stockpiling candidates— taking advantage of the shakeup that COVID-19 has brought to employment, Salvador said. Some of those advantages arrive from other companies that are now losing talent, as even the most dedicated employees feel compelled to jump ship for more progressive employers that can provide better long-term stability.

Fear Not

As companies weigh the option for investments, a level of uncertainty for the U.S. economy leads some to hold off. When it comes to mergers and acquisitions, for instance, activity came to a screeching halt in April—with some companies postponing their activities until the market improved, said John McNamara, managing director for Stifel Investment Services. “We saw some signs of life in the May timeframe and activity level picked up,” McNamara added. “They moved forward in a more virtual environment.”

But those delays could prove detrimental to companies seeking to take advantage of opportunities, Marks said—especially when it comes to operational improvements. “If you sit and wait to see what others are doing, then emulate that, you are putting yourself on the back half of that [forthcoming] innovation,” he said. “You can’t just sit and watch. You have to invest.”

As the pandemic stretches on, some owners have already come to that conclusion. “I felt like a turtle with my head stuck in the shell for months, and then I realized it’s time to go on offense,” said one attendee.

Alex Chausovsky, co-founder of ITR Economics, urged distributors not to overreact or to become too fearful of what lies ahead when making decisions. “There’s a lot of fear and noise coming at you all day these days,” he warned.

Even if cases increase, indicators suggest that a secondary wave of COVID-19 may not have as severe of economic impacts as the earlier pandemic, Chausovsky suggested. For instance, as some states reversed or paused reopening due to recent upticks, unlike earlier instances, they’re doing so in ways that aren’t “shutting down the entire economy,” he said. While data analysis by his company forecasted the recession of 2008 as early as in 2006, at the time of WMA’s conference, all micro- and macro-economic indicators were currently in rising trends, he said, whereas in 2006- 07 they were in decline.

Chausovsky said he does not expect the outcome of the presidential election to change his company’s predictions, as past data shows that there is essentially no difference in economic growth in the years immediately following any election. Instead, policy remains the leading indicator for economic change, which takes many years to take effect.

“I’m here to tell you with a lot of confidence that this recession will end and there will be growth in the U.S. economy,” he said. “We’ve already seen the green shoots of a recovery.”

Changing Tastes

Amid moulding and millwork distributor’s struggle to provide builders and remodelers with enough product, a trend has emerged for products made of medium-density fiberboard (MDF). While in the past some customers wouldn’t consider mouldings made from MDF, with a shortage of solid wood, they’re beginning to give those products consideration. “We have seen some trend changes,” said Mark Savage, vice president, millwork, at Builders FirstSource. “Different species are being used, for example, as companies are trying to get product to the job site and to the customer.”

The industry will also see new options among fingerjoint mouldings coming in from overseas, suggested Andres Alarcon, millwork sales director for Arauco.

Often times it’s about telling the customer what you can give them—and when—rather than what you can’t, some distributors said.

“In the past, it was enough to have a good product and competitive pricing, but today we believe customer experience is a true differentiator in this mature market,” said Bristol Feeney, inside sales manager for Prime-Line Inc.

Ron Taylor Award Goes to Nick Carter

The World Millwork Alliance (WMA) named Nick Carter the recipient of its 2020 Ron Taylor Award of Integrity and Commitment (RTA). The award recognizes individuals who have achieved the highest standard of three key components associated with the RTA, WMA officials said, including: connection, commitment and contribution.

Carter is the president of WoodWare Systems, located in Cordova, Tenn, where, since 1990, he’s grown the company into a leading millwork software business. In 2017, the company was a finalist for the Small Business of the Year Award from The Memphis Business Journal.

A longtime supporter and member of World Millwork Alliance, Carter supports the progress and prosperity of the association, officials said. He served as the 2009-2011 WMA Associate vice chairperson, board of director, has chaired and served on numerous committees, is a long-time WMA exhibitor, a WMA Ambassador, and remains an active member in the organization.

The award was presented to Carter by Tim Hicks, WMA chairperson who said, “He is a beacon to others in achieving success beyond our jobs.”

“Shock and awe can’t even explain how I felt when I got the call about this,” said Carter.

Drew Vass is the editor of [DWM] magazine.
dvass@glass.com

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