Custom job: as dealers position component operations to service contractors with more diversified and detailed home designs, the business is getting more complicated—and more profitable

Prosales, Feb, 2003 by Rich Binsacca

When dealers manufacture roof trusses or factory-built framing components to complement their core lumber and building materials businesses, the general rule of thumb for success has been to punch out the same trusses or panels over and over for the same bunch of tract builders. Simply, efficient production and repeat business breed profitability.

Don't tell that to Rey Garcia. As truss division manager for Naples Lumber & Supply Co., a single-location, $34.8 million dealer in Naples, Fla., Garcia has prospered in a market of custom builders who continue to demand increasing complexity and customization from his component production operations. "We really don't have the luxury of a production market here," he says. "We have lots of long-time customers [but] not a lot of repetitive work."

Despite going against conventional production wisdom, or perhaps because it serves the demands of its custom-builder market, Naples' truss sales--including decorative and heavy timber designs--account for 25 percent of the dealer's annual revenue and almost always lead to Naples getting a larger share of the entire house package.

Changing Times

While Naples' success in producing custom trusses is perhaps rare among most dealers today, it's a sign of the times that all component operations need to heed. It's no secret that today's new homes are getting bigger and more complex in design, and that tract builders are using "mass customization" and more complicated detailing to sell spec homes.

Meanwhile, many builders like the efficiency of swapping a stick-framed roof job for factory-built trusses to reduce cycle time and labor costs. According to the Wood Truss Council of America, roof trusses now command at least 62 percent of the roof framing market nationwide, nearly double that of rafters. Additionally, I-joists, wall panels, and floor joists also are gaining share against sticks.

New Demands

In the case of truss production, the combination of increasing complexity, larger homes, and higher demand has ramifications across the entire operation, from engineering and design through production and shipping. And, of course, sales.

An oxymoron if there ever was one, custom roof and floor trusses demand that dealers offer services beyond a standard component operation. "If you're dealing with custom builders, you have to be in the game early, at the design stage," says Garcia.

To that end, Naples employs an inhouse engineering and design staff that works with local builders and design professionals to create custom trusses. "It's a big selling tool for us, especially with architects and engineers" says Garcia. "It's not just `per print.'"

Often, he says, designers and builders will use Naples to turn their ideas into reality. "They'll come in with a beautiful design and ask us to make it work," Garcia says.

That kind of service, aided by computer engineering and design systems, allows Naples to make a few more bucks and/or margin points on each truss order. "Custom builders are less price sensitive than tract builders" he says. "Cost is an issue, but they won't question it if the service and quality are there."

Getting in on a home's design up front also allows Garcia to manage production. "We require a final approval of the design before final engineering and production," he says. "Our personal approach [to sales] allows any changes before that." Once a truss gets in the production pipeline, however, it's ready to ship in less than five days.

While it doesn't use the most state-of-the-art equipment available today, Naples' truss operation ideally suits the company's market needs. Designed by Garcia, the pit-system operation--in which assembly workers (one of whom works from below, in a "pit") are able to plate both sides of a truss simultaneously--is twice as fast as a typical roller-gantry operation, he claims. It's also a cost-effective capital investment, allowing Naples to spend minimal amounts on the plant and on maintenance and upgrades to high-tech machinery, and thus capture higher margins on its truss sales. Its speedy turnaround is a big reason why 95 percent of builders who buy trusses at Naples also purchase the rest of their framing and building packages from the dealer. "We seldom sell just trusses," says Garcia.

Additional Implications

In addition to more personal service up front, trends in truss manufacturing also impact the back end of the operation. "Because trusses have gotten more complex and bigger, there are transportation issues for getting them to the job and delivered undamaged," says Frank Serpa, vice president and general manager of Schuck & Sons Construction Co., a two-location operation based in Glendale, Ariz., which evolved from a framing company in 1966 into a full-service dealer and truss supplier.

Schuck & Sons, for instance, recently switched to flatbed trucks and roll-off delivery after years of shipping its trusses vertically--thus changing how his crews load, stack, and deliver components. "The way it's packaged together is critical," Serpa says; noting additional costs for training his workers and drivers to adjust from loading a uniform pack of trusses to a carefully configured stack, and then easing them off the truck instead of craning them off of a flatbed. "You think it's simple ... until you try it."