Where are We Going?
It’s unclear if CMs have a good map to their next destination
Technology has significantly changed how we travel over the past couple decades. Today, we can simply enter an address into our phone and have it guide us every step to our destination. It’s a very different experience from my road trips in college, when I was reading maps, planning routes, and occasionally having to stop and ask for directions in order for my buddy, Schatzy, and me to get to our destination. Despite these technological changes, every trip typically starts with a destination and a general idea of how to get there. But I wonder if it is the same for our industry. We obviously have a pretty good idea of where we are now, but do we have an idea of where we are going?
Component manufacturing has changed over the last several decades, from wood tables and various methods of pressing plates into lumber to include advanced wall panels, robotics, and sequencing of trusses for easier installation on site. Discussions of whole house design have ceded to offsite construction as builders strive for more efficient framing solutions in the face of volatile raw material prices, an increasing skills gap for onsite labor, and elevated interest rates not seen for over 30+ years. So how do component manufacturers (CMs) react? By doing the same things they’ve always done (essentially, a “head down/hammer down” approach), or seeking to offer solutions that address builders’ issues?
Our industry remains highly fragmented despite ongoing consolidation in recent years. Recent SBCA estimates approximate the industry has 1,000 companies with over 1,300 locations. Large LBM corporations have realized the importance of component solutions in their product mix and have acquired several mid-level regional CMs, leaving a wider gap between the largest players with a national presence and independent, local CMs. I could outline the advantages and disadvantages for each position, but the truth of the matter is all types of CMs play an important role in any healthy local competitive landscape. SBCA aims to provide solutions to all CMs, understanding that needs may vary, but remaining steadfast in providing a trade association solution to the entirety of the component manufacturing industry.
SBCA offers regular opportunities for CMs, large and small, from across the country to come together and discuss what is going on in their markets and with their businesses (See OQM Ad Page 6). Part of this conversation should focus on what the future holds for manufactured components. We’ve seen a lot of effort and investment dedicated to disrupting the construction industry in recent years. While many of these efforts have fallen short of their goals, they’ve brought about smaller, more gradual change while also highlighting the need for improvements in the construction industry. While we’ve been able to operate relatively unscathed by disruptors, it doesn’t mean the next disruption won’t be successful in putting every CM at risk for the need of change on a timeline that is not of their choosing.
I constantly keep an eye out for disruptions to the component industry, essentially a mixture of a SWOT analysis overlayed on a Porters 5 Forces model to understand opportunities and threats with those upstream and downstream in the construction supply chain. I recommend you do the same for whatever level you operate in within your particular market(s). As the ancient Greek philosopher Heraclitus said, “The only constant in life is change.” You need to decide if you want to affect the change or be the effect of change. Think of SBCA as your “Google Maps” to navigate your component manufacturing future! We will do our part to observe and report on potential disruptions as well as the primary place to navigate CMs on innovations they can employ to remain relevant long into the future. All you have to do is use our service!
Jess Lohse, Executive Director