Distribution: Mid-term Report
ABC Supply Co. Inc., Beloit, Wis., is the largest wholesale distributor of roofing and siding materials, tools and supplies in the United States. The company currently has more than 260 locations in 45 states.
"Business has been strong in the first quarter, although weather has affected our branches in the Northeast and Midwest, where the season seems to be starting a bit later than usual," says Keith Rozolis, vice president, strategic marketing and planning. "Overall, we feel 2005 will be another good year for our customers and for ABC."
Product availability, though, has been tight. Last year's hurricanes in Florida had a big impact on residential products. "If there are any major hailstorms, then it will only exacerbate the problem," says Rozolis. "Things are tight in the Southeast and as manufacturers moved to meet demand in Florida, lead times stretched out in other parts of the country."
He also points out that oil in the $50 range is having a dramatic effect on pricing. "We are seeing continual increases from our suppliers as the cost of these raw materials has reached historic highs. Eventually, contractors will see these increases as well."
Another trend ABC is watching is the impact of California's Title 24 and how it will affect customers' choices of which products they will use. "There has been tremendous growth in ‘white sheets' in California, and we are investigating various products and systems that will meet the requirements of this new law," Rozolis explains.
Nonetheless Rozolis still believes that it will be a strong year and ABC plans continued growth and expansion. In addition, "ABC is in the midst of developing a national account billing system," he explains. Because there is a lot of expense in billing and invoicing, ABC plans to offer this option to customers "for whom it makes sense," possibly by the third or fourth quarter of 2005. " We believe this can take a lot of the hassle and cost out for us and for our customers," says Rozolis. "It may not be suitable for every customer, but for those with centralized back offices, or for those customers who do business with multiple locations across the country, this could make life a lot easier and really simplify and improve the billing and invoicing process."
Bradco Supply Co., Avenel, N.J., has more than 135 locations nationwide. "Our business is strong in most markets," says Brad Segal, president. "We are benefiting from strong housing demand, a strong remodeling market, and strong pent-up demand for commercial roofing. Obviously demand in Florida is very strong as a result of the four hurricanes that hit last year."
According to Segal, availability varies by product and market. "In Florida and the other markets affected by the hurricanes, the Southeast and to some extent Texas, asphalt roof shingles are still very tight," he says. "In the other markets, we are not having problems getting asphalt roof shingles. On the iso side, we are finding product is readily available since both distributors and contractors have built inventory over the winter, and preloaded jobs that are not ready to be roofed yet. This will most likely change once the season gets into full gear."
Segal expects business to remain strong for the rest of 2005." We may see product get tight in season, especially if we have an active hail and hurricane season." Overall though, "Our plans are to focus on strengthening our operations, particularly on the Wickes side. Wickes is a 20-location lumberyard we purchased in July of 2004. We also expect to open eight to 10 new locations this year, which has been our average for the last four to five years."
Beacon Roofing Supply Inc., Peabody, Mass., is a distributor of roofing materials and complementary building products with locations in the Northeast, Mid-Atlantic, Southeast and Southwest regions of the United States and in eastern Canada.
"The market is good, very strong, commercial business is very strong," says Robert Buck, president and CEO of Beacon. "We have three divisions-residential, commercial and complementary products-and all are doing well. Iso is still a problem, but everyone recognizes that it's a supply issue and we are doing our best. Shingles haven't been a problem in our areas." Overall, "We are bullish on the rest of the year and plan to open more branches."
After getting an idea of what the market looks like from the perspective of distributors, we also asked: What is your idea of the ideal roof contracting business? That is, what are the characteristics of the type of contractor with whom you prefer to do business? In response, Rozolis says that the ideal roofing contractor customer is one who sees the distributor as an extension of his business. "We want to help them grow, save them time and help them be a better business," he says. Segal adds, "I would have to say the ideal roofing contractor is someone that values relationships with his customers and suppliers; someone that runs a professional organization, regardless of size."