Diversification drives Hills Flat Lumber

Hills Flat Lumber
Together, owners David Caddy, Jason Pardini, Jeff Pardini, and Kennan Pardini work together to operate two pro-oriented home centers and lumberyards in the foothills of Northern California.

Few of us could have decided at the age of 19 what we wanted to do when we grew up. Jeff Pardini, third-generation owner of Hills Flat Lumber Co., knew since he was a young boy that he wanted to run the family’s lumberyard. And he was fully committed by 19 when his father decided to take an early retirement.

Even at that young age Jeff had the confidence, and nearly as much experience (his grandfather had him counting change and interacting with customers when he was just four years old) to take over the business. So, after high school, he enrolled in community college and took classes in construction, plumbing, and electrical, and learned to read blueprints. He also worked on a crew that built houses for a customer who donated to the college.

Today, Jeff serves as president of Hills Flat and works alongside his brothers Kennan and Jason Pardini, and his sister Deborah’s husband David Caddy. Hills Flat operates two home centers serving professional builders and contractors as well as walk-in retail customers in the foothills of Northern California. Jeff’s consistent optimism and positive outlook have been instilled in his team over the years, laying the foundation for a successful business built on long-term relationships throughout the region.

- Sponsor -

Hills Flat Lumber

History

Hills Flat Lumber has been in the Pardini family for 100 years, started by Jeff’s grandfather, Edward J. Pardini Sr., who was born in Grass Valley, California in 1901. The family moved to the area in the late 1800s and the lumberyard was born unintentionally as the Pardinis expanded their farm. They had milled lumber to build a barn and soon neighbors were stopping by to ask if they could buy some lumber.

In 1921, the business was formed and expanded to include three sawmills that provided materials for housing as well as building structures for mines in the area. Jeff says there were standing orders for sugar pine because it is very rot-resistant and was used for shoring undergrounds. It was sold for 68 cents per board foot.

“They also sold a lot of lumber to the irrigation district for flumes,” Jeff says, due to the large amount of hydraulic mining in the Nevada County, California area.

In 1949, Jeff’s grandfather officially opened a retail side of the business in Grass Valley with his son, Ed Jr., focusing mostly on pro builders who provided homes for the area. In 1977 Jeff’s uncle, David Pardini, joined the family business as well. They operated the business together until 1983 when Edward Pardini Sr. passed away at the age of 82.

The following year, David Pardini passed away in a hiking accident. It was then that Jeff’s father approached him about stepping up to help him run the business.

The company held at one location while building relationships with area builders and homeowners for more than 50 years until, in 2001, the Pardinis opened a second location a half hour away in Colfax, California. In 2007, the company rebuilt a new, much larger Grass Valley location to serve even more homeowners in the area. Both major moves coincided with times of economic uncertainty.

“I had impeccable timing on those,” Jeff says, chuckling. “Sept. 11 and the Great Recession. But, if we hadn’t had the new store with the new product offerings during the recession, you never know. Other stores with only heavy contractor business, a lot of those didn’t make it. But having the new Grass Valley facility meant we were able to get into a lot of new lines of products.”

The recession brought about a focus on homeowners as well, and in 2009, Jeff started to sell a full line of high-end appliances and he never looked back. “That has turned into a business within a business,” he says. Other product diversification includes selling kayaks (he keeps 40 to 50 in stock), Carhartt clothing, fishing supplies, hunting and fishing licenses, and even a deli in the store.

“We also have a full-line door shop, people doing small engine repair, and a nursery. We sell a lot of stuff,” Jeff says. “There’s 100 different SKUs of just composite decking in stock. We have more than half a million dollars in appliances in stock too.”

Both Hills Flat locations are full-line lumberyards, and both sell pretty much everything customers have asked for, including appliances or cabinets, at the Grass Valley store but are available to customers from both stores. “It doesn’t matter where it comes from, it just appears at the customer’s house,” Jeff says.

Jeff and Operations Manager Dave Caddy, along with their team served as the contractors from the ground up on both businesses. His father, Ed Jr., was construction foreman and on the job site everyday overseeing quality control and progress. The Grass Valley store was located on top of a mountain that had to be detonated for two months with six drill rigs. “We moved 138,000 yards of blasted rock and dirt and spent more than $460,000 in blasting alone.”

The Colfax facility opened exactly seven months and two weeks after ground was broken, Jeff recalls. “It was incredibly fast with my dad’s attention to detail. The team was putting in store fixtures while the roof was being installed and insulation was falling on us.”

Hills Flat Lumber

Competition

With 100 years of history on its side, the two-location Hills Flat Lumber competes with big box stores, major hardware retailers, and independent lumberyards alike. As Jeff says, “there’s actually too much competition for a little town like this.” Western Nevada County, the primary region Hills Flat serves, is home to about 83,000 people with unincorporated areas around Grass Valley proper, which has fewer than 13,000 residents. There are just 2,000 who reside in Colfax, but professional contractors and DIYers in the area stick with the long-haul family business at Hills Flat. Roughly 60% of the company’s customers are DIY retail and 40% professional contractors.

Like many home centers, the COVID-19 pandemic has brought Hills Flat a lot more retail business over the past 18 months as people stayed closer to home and took on remodeling projects.

“We’ve done everything we can to keep product on the shelf,” Jeff says. “Our purchasing team, managed by my brothers Jason, who orders all Do it Best hardware and commodities, and Kennan, who oversees purchasing for the lumber, plywood, OSB, and composite decking, have done really well. Today, you win the game by being in stock. Price is important, but stock is everything.”

For example, Jeff says, the team bought four to five months’ worth of things like paint and PVC product to keep in stock.

“If you come to a store like ours, we stock everything our customers need. I like to physically look at what I’m buying and know there is a large selection to choose from. We sell Carhartt clothing and stock a wide variety of sizes, from short and small to big and tall, because our customers like coming to one spot to get their work clothes and building materials.”

Perhaps the most unique area in which Jeff has diversified is in food service, serving customers and employees at an in-store deli counter.

“We serve breakfast burritos, high-end coffee, and then deli sandwiches at lunch. As they say, time is money. I’ve done projects where you want to get a cup of coffee at one place, then a sandwich at another place, then go to pick up your products. Why not come here get your food, coffee, building materials, rental, everything you need to do your project? It gives you more time to get the real work done.”

Jeff tells the story of a local business owner who geofences all company phones to see where his installers are located during the day. It’s typical for his staff to run for supplies around lunchtime. He found they would stay a little extra to eat in the store.

“It’s also nice for employees, too,” Jeff says, noting that many of his roughly 150 team members will often have breakfast or lunch at work.

Another area in which Jeff has improved the stores is parking. With parking at a premium in the area, the Grass Valley location features 187 parking spots, all of them able to accommodate full-size trucks. The store is also open seven days a week, 362 days a year.

What’s ahead for Hills Flat Lumber

Jeff has been careful to grow the Hills Flat business at scale, so that adding a certain amount of business wouldn’t hurt as much in costs. Still, even in this red-hot mergers and acquisitions market, adding another store “is not the number one thing on my list of things to do,” he says.

Frankly, he adds, the last year and a half has been a bit of a challenge keeping up. “It’s been taking the whole family to keep stuff on the shelf and keep things going along, so I think maybe a vacation would be nice.”

As for family, Jeff says that when his daughter Grace turned 18 this year, he told her of the time he decided, at 19, to take over the family business.

“She said that’s a big decision to be making, and now that I’m older I’ve realized that I was way too young to be making a decision like that…any decision.” Now at 55, Jeff has plenty of time to construct a succession plan, but he admits doing so is probably one of the biggest challenges to many independently owned businesses.

Currently, Kennan’s son, Christian, works at Hills Flat full-time. Jason’s sons Joe, Jake, and Andrew are, or have worked, part-time and Deborah and Dave’s daughters lsabella and Marabelle Caddy also work part-time.

“There are lots of opportunities out here,” Jeff says, “but it really comes back to succession planning. I don’t think my four daughters are interested, but if any of my nieces or nephews are, I’m happy to start expanding. We have the ability and I have the energy and I’m happy to do it.”

Until that day comes, Jeff is focused on running his two stores and serving as a board member at Do it Best, which he joined in 1991 as its first California yard.

If anything presents a challenge in his area, it’s the State of California and its laws, rules, and regulations, in addition to labor shortages and wildfires, Jeff says. In a wildfire area, which this year includes both the Grass Valley and Colfax stores, insurance costs are much higher, along with other California Proposition 65 rules, which Jeff says has limited everything from filters on his trucks to the type of shower cleaners he can sell in his store.

As he did when he was 19, Jeff is tackling the company’s challenges head-on. He serves on the legislative council of the National Federation of Independent Business and is getting involved again with the West Coast Lumber and Building Materials Association’s political objectives.

 

Stay Updated

Get our email newsletter with LBM industry trends, data, new products, and best practices.