The Design Builder's Blog

Update On The Lowes 2X4 Story and Controversy

Last week on September 9, 2014 I posted a blog titled California Judge May Have Created Huge Challenges for Contractors.  At that time the information reported indicated that a California Superior Court judge by the name of Paul M. Haakenson had ordered Lowes to pay $1.6 million dollars for selling 2x4’s that are not really 2” x 4”.   The story and my blog caught quite a bit of attention in the construction and building materials industries.   Additional information has now surfaced.

Some clarifications

I had originally found the information in an article posted to ProSales magazine, a publication for professional building products dealers.  Remodeling magazine recently posted an update about the story, offering some clarifications provided by the West Coast Lumber & Building Material Association (WCLBMA).  In the article WCLBMA clarified the $1.6 million final judgment Lowe's reached with the State of California appears, at least in part, to involve labeling certain non-wood products as wood as well as the incorrect labeling of certain other lumber products.

In an August 27th press release by Marin County, the county where a local weights and measures division visited one of Lowes’ retail store locations, said the district attorneys' civil enforcement action claimed that "Lowe’s stores throughout the state unlawfully advertised structural dimensional building products for sale and those advertisements stated, contained, and described product dimensions that were not the actual product dimensions".  The press release also states; “The judgment requires Lowe's to immediately remove products from sale or correct false, misleading, deceptive or inaccurate product descriptions when Lowe's knows or should know that the product descriptions are untrue or misleading”.

Don't blame the source

It would appear that in the original interview ProSales had with Lowes about the story the fact that Lowes was selling 2x4’s that did not meet the standard accepted size of 1 ½” x 3 ½” was a detail left out of the interview.  I say this with a high level of confidence because I find ProSales to be consistently accurate and the magazine editor, Craig Webb, does a great job vetting the information being published. 

Do contractors still have plenty of reason for concern?

On the other hand I and many of the commenters at my blog are still concerned about the ruling details Lowes and other retailers must now follow.   According to another ProSales article Judge Haakenson’s order lists the following three main rules for the retailer to follow going forward:

• "Common descriptions" must be followed by actual dimensions and labeled as such. For instance, a 2x4 must be followed with a disclaimer that the wood is actually 1.5-inches by 3.5-inches and include a phrase equal or similar to "actual dimensions."
• "Popular or common product description," like the word 2x4, must be "clearly described as 'popular name,' 'popular description,' or 'commonly called.'"
• Dimension descriptions are required to use the "inch-pound unit", meaning they must include abbreviations such as "in., ft., or yd.," and can't use symbols like ' or '' to denote measurements.

The concern I am expressing is  if these rules apply to retailers will they also apply to contractors? If they do, or eventually will, contractors in California and the rest of the country may also run into challenges not only with the government, but also with their customers.   Perhaps trade associations such as NAHB and NARI should proactively seek out the answer to this question to help guide and protect their members and the rest of the construction industry.   The RRP Rule came about because our industry didn’t proactively deal with the hazards of lead during construction on its own before the government stepped in and dictated regulations many do not agree with.  

Perhaps this case against Lowes can serve as a warning and the industry can get out ahead of what the government could require of contractors.  If these are or do become requirements contractors must follow perhaps the trade associations and industry publications can inform contractors before they experience costly challenges that could put them out of business.

What are your thoughts? 

Are you concerned enough to ask your trade association to look into this? 

Note:

Click here for an update on this story

California Judge May Have Created Huge Challenges For Contractors

I couldn’t believe it when I read it.   A California Superior Court judge by the name of Paul M. Haakenson  ordered Lowes to pay $1.6 million dollars for selling 2x4’s that are not really 2” x 4”.  

Yes, your read that right! 

According to the Marin County, CA district attorney's office Lowes "unlawfully advertised structural dimensional building products for sale."  To put it a different way, prosecutors say that if products, including building products like a 2x4 or 2x8, aren’t actually 2” x 4” or 2” x 8” when purchased, consumers are being mislead.

It would appear to anyone who knows and understands how lumber is graded and sold that the state of California is looking for ways to fine legitimate businesses, even if those businesses are conducting business using traditional and industry accepted methods and terminology. 

According to a report by Tim Regan of ProSales magazine, Amanda Manna, a spokesperson for Lowe's, told ProSales by phone that this case began when representatives from a local weights and measures division visited one of the company's retail store locations and "expressed concerns" about product measurements.

Apparently even the district attorney got involved

According to the same ProSales article Marin County District Attorney Edward S. Berberian said "Consumers should expect when making product purchases that retailers are providing accurate information.  Especially when misinformation could adversely affect building projects that more often than not rely on precise measurements."

As part of the judgment Lowes was ordered to pay $1.47 million in civil penalties and costs of the investigation, as well as an additional $150,000 to fund further consumer protection-related activities.  Lowes also will now display the actual dimensions next to "commonly used measurements" in product descriptions and on in-store signage in its stores across California.

How and why this may affect contractors

Lowes may be able to afford to pay these fines and make changes to make the government go away, but what about the typical small business contractor?  Will the state of California go after contractors in the same way?  Does this judgment create awareness and open the door for more consumer law suits against contractors?  Here are a few questions to think about:

• Will you have to describe the actual dimensions of every framing product you specify in your next proposal, including the actual thickness of sheet goods?
• Should architects and designers now provide similar information when they create plans, just to be safe?
• How much can manufactured lumber vary from its actual published size; will 1/16” over or under  be OK, but 1/8” or more is not?
• What if the lumber is actually larger than the size you specified because it is wet?
• If you contract to build an 8’ by 12’ deck will you have to explain in your contract why it will be a few inches smaller than that, each way?   If you don’t, in California will your client be able to sue you because the deck wasn’t exactly 8’ X 12’?

The Bigger Picture

Some of you might say, well that’s in California; it doesn’t or won’t affect me.  

I say you are wrong. 

If we as an industry let even one government agency get away with such stupidity and allow them to use regulations in ways they were not intended, we are all opening up the door for more special interest groups and government agencies to regulate us out of being able to run profitable businesses. 

Think I’m being a fear monger? 

How about this additional detail about the settlement.  According to another report by ProSales California now requires Lowes to use the "inch-pound unit," meaning they must include abbreviations such as "in., ft., or yd.," and can't use symbols like ' or '' to denote measurements. 

Better start editing your stock proposals and or project specifications!

Checklist of What LBM Dealers Will Need To Do To Get Ready For Gen Y Contractors

Back in February I did a presentation at the NRLA LBM Expo titled "Will Your LBM Business Be Ready For The Next Generation of Contractors”.  At that seminar I shared my thoughts about what LBM dealers and distributors need to consider about Generation Y members who will soon take over as the next generation of contractors.  I estimate that Gen Y will become the majority of construction business owners within the next ten years.  Although a handful of attendees already had Generation Y contractors on their radar screens, the rest of the attendees admitted they had no idea regarding the significant changes their businesses (or their employers' businesses) would need to make to be ready to sell to and service this new type of contractor.

If like many of the attendees at that event this topic is new to you, check out this blog post titled “Will LBM Dealers Be Ready For The Next Generation of Contractors” for a little more insight before reading the checklist offered below. 

Checklist: What to do to get your LBM Business ready for Gen Y Contractors

Here are a few pointers for LBM dealers who want to get ahead of the curve and be ready for Generation Y before they are already the majority of construction business owners. 

• Learn who Generation Y is, what’s different about them and why they are different.
• Keep in mind that some Generation Y contractors will be tech savvy, but, more important, most will be tech dependent.
• Recognize that in addition to being your next contractor customer, they will soon make up the majority of your retail customers and your work force as well.
• Learn how, and the many reasons why, they will be using technology inside their businesses and will be expecting you to use it as well.
• Commit to what your LBM business will need to do to get ready for this new generation of customers and paying for the changes.
• Be realistic about the condition and effectiveness of your current marketing methods, sales methods and service offerings. 
• Recognize now that your sales methods and maybe even your sales staff will need to be replaced and the related changes will take years to put in place and master.
• Learn how to interact and communicate with Generation Y in ways they will respond to; using both technology and social media.
• Figure out what you need to do, physically and emotionally, so contractors can shop, price and buy from you via your web site.

Keep in mind this is only a partial list.

LBM Dealers and the distributors that supply Gen Y will need to make many changes to their business models and tactics.  In order to successfully complete and support those changes they will need to upgrade both their staff and their technology.  Here are a few quotes from Gen Y contractors that should help motivate both to get going before it’s already too late:

“A lot of the suppliers are represented by older men and most of those people are just not tech-savvy”

“For about three-quarters of our suppliers, we’re using them because of their customer service and account management.  If they’re not into electronic communication, it’s probably not going to work out very well”

“For us technology isn’t a nice thing to have, it’s a necessity.”

LBM Dealers, Will You Be Ready For The Next Generation of Contractors?

I hate to be the bearer of bad news; I’m really just the messenger.  Servicing and doing business with contractors is about to change dramatically, again.  That’s right, after the home building crash, if as an LBM Dealer you thought you had finally figured out how to get business from the remaining contractors, get ready, things are about to change, again! 

At the upcoming NRLA LBM EXPO in Boston I will be presenting a lunchtime seminar for LBM Dealers on this topic titled “Will Your LBM Business Be Ready for the Next Generation of Contractors?”  This blog will give you an idea of what the seminar will include.  I hope you can attend.

Many LBM Dealers struggled to make it through the recession. A good number of them stayed alive by finding better ways to service and sell to remodelers.  Savvy dealers quickly identified the unique differences between remodelers and builders.  Realizing the differences they changed things like their selling methods, pricing strategies and product offerings to capture needed business and revenue.   As a result many remodeling businesses enjoyed much better service and could offer their clients a greater variety of products and price points.  Dealers who did not make the changes, or didn’t make significant enough changes, ended up closing their doors and or were bought up by larger dealers.

The mindset of the contractor will be changing

One thing that remained fairly constant during this evolution was who the contractors were and how they did business.   For decades the majority of contractors operated their businesses as technicians.   They thought of themselves as contractors, not construction business owners.   The joy of building things and advancing their trade skills where the driving factors that made them who they were.   As a result of this mentality, and the fact that there was almost always way more work available than contractors to do it, they could command profitable prices.  And unfortunately, at the same time, they could also get by with poor business practices in the areas of sales, marketing and accounting. 

Now is the time to recognize almost everything in the residential construction industry we could assume to be considered the norm about contractors, the marketplace and doing business will be going away.  A new generation of contractors is rising to the surface.  This next generation won’t accept the old ways of doing things.  Get ready for Generation Y!

Here are several factors causing and or contributing to the coming changes

• About nine of every ten remodeling contractors go out of business within ten years of getting started.  That means the construction industry has a new generation of remodeling business owners about every ten years, regardless of other factors. 
• Employees who worked at failed firms often start their own businesses.
• Due to their age and physical abilities, a good number of baby boomer contractors will also be retiring.   Many of these businesses will either be led by the next generation of the family or will simply close up shop.
• Many “old school” contractors who operated on “low bid” will need to work until they retire, die or their bodies give out due to a lack of retirement savings.
• Many older contractors will end up working for more savvy younger construction business owners.
• The next generation of remodeling and construction company owners will come from members of Generation Y. 

They are tech savvy and ready to take on the world 

At about 80 million strong, Generation Y is hell-bent on changing the world and is totally impatient with outdated business models.   How they will do business and how they will buy what they need from LBM dealers will be dramatically different than what dealers have experienced from all previous generations of contractors. Use of technology, theirs and yours, will be the biggest factor.

Dealers and their staff will first need to recognize that this change is coming and that it will be significant.  Then they will need to learn about these new contractors and embrace the changes needed if they want to be ready for Generation Y as they arrive.   If not ready for Gen Y, like the “old school” contractors, LBM businesses will eventually end up closing their doors, seeking new leadership to survive, or be swallowed up by dealers who were the early adopters of new ways of doing business.

The Marketplace is Improving; Are You Sure You Are Working With The Right Vendors?

The marketplace seems to be picking up for contractors.  Many are reporting increased leads and sales.  With increased demand for the products contractors need to build their projects we will definitely see supply and demand challenges with local lumberyards, the big boxes and specialty product vendors.  This supply and demand challenge is one of the reasons many in the construction industry are predicting as much as a 25% increase in cost on many building products.  Although contractors need to be aware of these increases as they price their projects, I suggest they also need to make sure the vendors and suppliers they purchase their materials and products from will be prepared for the increased demand.

If you are a contractor who has been buying on price from vendors who have been selling on low price to get your business, you might want to think twice.   If that vendor has a good business, low or no debt and is using efficient business systems and technology to keep their costs low, you may be OK.  But if your vendor has very high debt, has cut back on staffing, equipment and service, just so they could sell at low prices, their business may not be prepared for a surge in sales as the economy improves.

Choosing and keeping the right building product dealers for your business and your customers

Here are some things to think about regarding the vendors you are currently using.  This same list can also help you decide which vendor or vendors you should work with going forward:

• Many lumberyards and specialty dealers are short staffed.   To save money and to stay in business many of these businesses have reduced staff during the recession and often times the people they let go were the higher paid employees.   If this is a tactic any of your suppliers used they may have let go many of their most knowledgeable staff.   The remaining staff, often less skilled and far less knowledgeable about building products, construction and contractors, will be challenged to serve contractors as the number of contractors doing work and buying materials picks up.
• Building product suppliers who have high debt may not be able to finance the cost of increasing their inventories to keep up with the predicted supply and demand challenges as the economy improves.   If this happens at your supplier you may find that many products, even common commodities like framing lumber, will be out of stock.  Imagine going to the lumberyard first thing in the morning to get the materials you need to frame a deck or reframe that kitchen, only to find out you can’t get what you need.  To keep working that day you might have to pay for longer lengths than you need, or might even have to drive to a different supplier in the hopes that they will have what you need so you can work that day.  Remember, if you lose two hours chasing materials, in reality you also lost two hours of productive time on the job.   That would mean you lost a total of four hours you could have billed your client for if the materials were already at the jobsite.
• Lumber and building materials dealers who cut back on staff may also be challenged to help you sell to your customers.   If you had a customer who wanted to see the door, cabinets or windows you recommend, will you be able to send them down to your local supplier to see the products they are looking for?  What is the condition of the showroom?  Is there going to be anyone there to make and take the time to meet with and help your customer?   Will the person working at that dealer have the sales skills, product knowledge and knowledge about you and your business to help you make the sale?

The risks of low price

Selling on low price typically puts any business on a path to failure.  Sure, it may seem to help things at first when money gets tight.  However, unless they can ramp up their businesses, and do so before the market place improves, they will be forced to play a game of keep up and catch up as their customers’ needs and demands for products and service increases.   Working with a low price vendor might seem attractive, but can you be confident they will have what you need when you needed it?   If they require a deposit on special order items, are you confident they will still be in business by the time you expect delivery of what you ordered?   What will your customers think of you and your business if their project start date gets delayed and or the completion date gets extended because you can’t get what you need from your vendors to keep their project and your business on schedule?

Summary

Choosing the wrong vendors by saving a few bucks on materials may cost you and your construction business lots of wasted time, money and the valuable referrals your business has enjoyed from what used to be happy customers.  I highly recommend you choose your vendors wisely!

Green Building and Green Products: Understanding and Selling the Many Shades of Green

Contractors and building materials dealers (LBM dealers) have found it challenging figuring out how to tap into the green building opportunity.  Some say the problem is caused by “green washing”.  Without a single and accepted definition of what green building is and what products are or are not green, it’s no wonder they are challenged.  Whether you’re an LBM Dealer, a product distributer, a professional designer or a contractor, it might not really make much difference what you consider to be green.  Before you get all upset at that statement and or with me, please hear me out.

Here’s my rationale

I’m not saying you can’t have your own definition.  What I am saying is if you want to sell green, you better make sure you know how your target customer defines and decides what is green if you want to sell green to them. 

Sounds easy right?  Not really. 

Unfortunately, if you ask 10 people what green is, you’ll get at least 10 different answers!  So, how should contractors and LBM dealers (and even their staff) respond to homeowners who ask for green products when these same customers might not even know what they’re looking for?  Solution; You need to know the questions to ask before you risk providing any answers! 

“What is green and what is not is up to the person with the money!”

On February 8, 2013 I’ll be presenting a seminar at the NRLA LBM EXPO in Boston titled “Understanding and Selling the Many Shades of Green”.  One of my goals at this seminar is to help LBM dealers take advantage of the green building and renovation market that is expected to grow significantly as the economy improves.  Another goal is to help them so they can help their contractor customers sell and use more green products. 

In addition to discussing how different consumers define green and why, I plan to help them decided which products to sell and how to sell them.  To do so I will be offering and discussing the list of criteria below.  Contractors trying to decide what to sell should also find the list very helpful.  The key to success will be matching some or all of the criteria below to the green motivations of the home owner with the money.

Seven Criteria for Choosing Green Products to Sell

#1: Is the material effective in your conditions/climate?

Heat, cold, moisture, insects…

#2: Is the material healthy and safe?

For workers, consumers and the planet

#3: Is the material durable and easily maintained?

Saves time, money, replacement, and disposal costs

#4: Is the material available in your area and can contractors work with it?

Saves time and money

#5: Is the material used efficiently?

Locally sourced, transportation considerations, processing considerations

Efficient use of resources, recycled and/or recyclable

#6: Is the material cost effective?

Now and in the future: maintenance, replacement, comfort, health effects/costs

#7: Is the material aesthetically satisfying to the consumer?

That’s important too!

Lumberyard Ambassadors - Partnering With A Lumber Dealer’s Yard Staff

Several recent surveys and polls indicate that contractors, when they have more than one option to consider, put a lot of weight on relationships when they share why they choose one lumber yard or supply house over another. Let’s face it, whether shopping at a lumber yard or at your local grocery store, when you enjoy some type of positive and mutually beneficial relationship with the employees representing that business you become much more motivated to stick with that business and even refer others to that business.   Good lumber dealers know this and make it a priority to offer training and mentoring for their employees.

Earlier this week I presented a webinar hosted by The Northeast Retail Lumber Association (NRLA) and sponsored by The Lumber and Building Material Dealers Foundation (LBMDF).  LBMDF supports and advances the educational and charitable programs of the NRLA.  The webinar was for lumber dealers’ yard staff.  The purpose of the webinar was to help yard staff see and take advantage of how their efforts can help the lumber dealer they work for, the contractors they serve, as well as the yard staff employees themselves. I like to refer to them and hope they see themselves as “Lumberyard Ambassadors”

During the webinar I asked the attendees to share their suggestions for how contractors could help them do their jobs better and make their jobs more enjoyable when doing so. 

Here are some of the suggestions they had to offer and some of my thoughts as well

As a contractor please don't come in with a bad attitude.

This one can go both ways.  Actually, it was also on my list of pet peeves to share with the attendees!  Contractors and yard staff can both have legitimate reasons to be in a bad mood.  However, it doesn’t mean that bad moods need to be shared or demonstrated by either party.  As professionals we all need to control our emotions.   Plus, if you let your bad mood effect how you interact with lumber yard staff, they might just be inclined to return the “favor” the next time you’re in the yard.

Better planning by contractors. When we have to go out multiple times to one jobsite it costs us time, when we could just go there once.

I shared with the attendees that this was one of those things I have been working on for years; trying to help contractors and their employees improve their processes and even use checklists to help make sure everything is on the job site before it is needed.  Here’s the thing; making multiple trips cost both the contractor and the lumber dealer money that could be better invested elsewhere.  Plus, if as a contractor your employees aren’t smart enough or don’t care enough to plan ahead, it might be time to find new employees who can and will plan ahead.  If you or your employees need training to help curb this problem, consider attending this production workshop.

My drivers need good directions from the contractors; many times the contractor isn't very helpful.

Again, I think this is one that both the lumber dealer and the contractor can share responsibility in.  Whoever takes the order at the yard needs to ask for directions and should also probably make a point of always asking if there is anything they should know that would help the driver find the right location for the delivery.  At the same time I think contractors should also be proactive by speaking up and offering advice if they know their job site is difficult to find or access.   Posting a job sign in a visible location could be helpful.  Also, if there’s no room to turn around to strategically drop a load where you want it, why not suggest that the driver back in from the street when you’re placing your order.

Bottom Line

By fostering a good working relationship, contractors and lumber dealers’ yard staff employees can both make their jobs and their day much more enjoyable.   And keep in mind; each has an opportunity to set the example for their peers.  Many thanks to the webinar attendees for sharing their thoughts!

Have a suggestion to add to the discussion?  Please share it by leaving a comment below.