State of the Industry: Mid-Year Market Outlook

July 27th, 2023 by Caleb Hodgkinson

In this Q&A, Shawn Montague, VP of Building Materials, shares his perspective on the current state of the industry and offers advice for addressing economic concerns.

He also offers some predictions for 2024 and encouragement on how to proceed with optimism!

 

Q: You spend a lot of time visiting and meeting with Dealers. As the second half of the year is upon us, what feedback are you receiving from them related to their businesses and the state of the industry? 

The general consensus is that the 2nd half of the year has the ability to be stronger than the 1st half. Crazy to think about! Most of us were sitting here in early Q1 wondering what was 2023 going to yield us and after grinding out the first couple months, I think we are all pleasantly surprised. Demand remains strong on the R&R side of the business and new construction continues to strengthen as well. Builder confidence in the market for newly-built homes in June rose five points to 55, according to the NAHB. This marks the sixth straight month that builder confidence has increased. Additionally, we are seeing builders reduce their home prices to bolster sales and there are signs that we are nearing the end of the tightening cycle on rates.

We will continue to face some headwinds but it is nothing we haven’t already been through. Rates continue to be unpredictable and product inventory levels are starting to flush up out in the market. Flush inventory levels usually create price wars from time-to-time that we all have to be sensitive to. Overall, the 2nd half of 2023 looks positive for us all.

Q: Operating costs continue to rise. What advice do you have for Dealers to help maximize their spend?

I would encourage everyone to refer back to this last article we published and re-visit that. Not much will change…in fact, I would encourage Dealers even more now than ever to not be afraid to sit down with a distributor partner (biased towards Lumbermen’s, of course 😀). Carve out win-win scenarios for the remainder of the year. I just sat down with a strategic customer last week and created a campaign to help grow incremental share for both of us the rest of the year. This type of strategic thinking is part of the new normal. Some of the continued headwinds we will face the remainder of 2023 will extend into 2024, which means it is an opportunity for people to work together to create mutually beneficial scenarios.

Q: What is something that you see as a missed opportunity for Dealers?
Hard to really put my finger on this because we have so many seasoned Dealers out there run by really great people. However, if there is one thing I have to say it would be to partner with Lumbermen’s on a Dealer Event. If your business is one of the lucky ones that has taken advantage of this opportunity, you know what I am talking about. To date this year, we have held 16 events and helped get in front of over 700+ contractors, builders, remodelers, etc. Our goal with a Dealer Event is to create a memorable experience for all who attend and give our Dealers and Vendors the opportunity to educate the market on the products we service. It is an absolute HOMERUN of a time investment. Dealers are missing out if they have not experienced one of these yet.

Q: Any predictions for 2024?
I am not going to take the easy way out on this and say the predictable, “you’re guess is as good as mine…”.  I could be wrong, but I think we are in for a slower version of 2023. This year we are seeing more seasonality to the business.  Seasonality can be a good thing if we are good stewards of inventory, labor, and time. But it can also sneak up on you come month-end. We are seeing price stabilization in specialty building products, which could go away in 2024. Price increases were limited so far this year (unless you are in Roofing 😀) but overall, inflation was limited.  This might go away in 2024, and that is not necessarily a bad thing. Sometimes these increases create opportunities to work together and find ways to be creative. I believe we will all need to continue to find ways to gain share, educate the market, and get closer to the build process to see where we can help.

Q: While those who know you appreciate that you’re a straight shooter, you’re also an optimist. Can you end with some encouraging words for those in our industry as we look forward to the rest of the year and beyond? 
HAVE FUN! What an amazing time to be in our industry. Coming off of a few years where the demand was infinite and supply was finite, I’m not sure that was any “fun.” We found ourselves saying “NO” more than “YES.” We were constantly fighting the decisions between when do we wear masks, how do we handle whatever new situation was given to us that day, and why is there no one that wants to work?!?! What we are going through right now is the bridge between COVID and the new normal. This is a fun and exciting time to be a Leader in our industry. The workforce is a bit more plentiful, masks are a thing of the past (fingers crossed), and we are able to get back out there and strategize for growth. The future here at Lumbermen’s is bright and my hope is that it is for you too!

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