By virtually any metric, it’s a very good time to be in the LBM industry. Builder confidence hit a very strong 70 in May (any number over 50 is positive), so our builder customers are bullish about the market. As of April, we were on track for a solid 1.29 million housing starts. This is far from the pre-crash peak of two-million plus, but with the post-crash realities of wide-spread labor shortages and transportation bottlenecks, it’s a healthy number nonetheless. Prices for both new and existing homes continue to climb, demonstrating strong pent-up demand as well as rising material and transportation costs.
While the news is mostly positive, it’s not always black and white. For example, record-high lumber prices are having a serious impact throughout our industry. For the week ending May 25, Random Lengths reported lumber prices hit a record $578 per thousand board feet. This represents a 42% jump from one year ago, 62% since Jan. 1, 2017 and 81% since the start of 2016. While this reality is bad for housing affordability, there’s a strong upside for many dealers who are enjoying larger margins generated by the higher prices. Columnist Bob Heidenreich addresses this view in his column on page 24.
The other view is represented in this month’s Real Issue, which begins on page 46, where an LBM dealer states that the combination of rising material prices and static credit lines have forced his company to change their buying habits—resulting in inventories with the same value but containing much less product. As with most things in life, whether something is good or bad comes down to perception, which is a direct reflection of our circumstances.
For anyone who has been in this business for more than a decade, we’ve all seen our circumstances vary wildly—from the depths of the Great Recession, through a slow, steady rebound that’s brought us to the strong market we’re enjoying today. While we can’t always control our circumstances, we can control how our companies react. In my view, the secret to reacting positively comes down to leadership.
That’s why I’m excited to announce another new addition to our editorial team and our column lineup. Russ Kathrein, President and CEO of Alexander Lumber, will be sharing his insights and experience in an every-issue column focusing on leadership. If you recall seeing Russ’s name in our pages before, you’re correct. His column, which officially launched in our June LBM Journal, resulted from a commentary that Russ wrote for our November/December 2017 issue. Also, attendees at LBM Strategies Conference 2017 heard Russ address “The Secret to Hiring and Developing Top Performing Teams.” Russ grew up working in his family’s lumberyard, then built his career with progressively tougher positions with 84 Lumber, BMC West, and ProBuild before taking on his current position with Illinois-based Alexander Lumber. Russ is passionate about the art of leadership, and the people side of our business. Armed with intelligence, humility and humor, Russ is a great addition to your magazine.