
Summary
• Dunn Lumber was established in 1911.
• The company has rationalised and restructured in the recession.
• The refurbishment sector is still big business.
• The company expects to see 5% growth in 2012.
Dunn Lumber was established in 1907 in Wisconsin by the current CEO Mike Dunn’s great-grandfather, Albert. Initially a wholesale building products supplier, specialising in cedar shingles, the company moved to Seattle in 1911, shipping rail car loads across to the east coast and the rest of the US.
In 1927 the next generation came into the business and started to develop retail sales, followed by cash and carry for homeowners and DIY mini projects tradesmen. A third site opened in 1948 but it wasn’t until the 1960s that further growth took place. However, by the 1980s Dunn Lumber was a serious force in Seattle, with 10 sites, rising to 12 in 2000.
“More than 50% of our business was retail, but then the box stores [large DIY operations] opened, so we lost a lot of the DIY business, but we gained the remodellers [refurbishment contractors],” said Mr Dunn.
“They are time sensitive – 10% on the price isn’t as important as quality and service. You never know what you’ll find when you cut into a wall and you need to get in and out of the property quickly to stand any chance of making money.”
And, he added, he’s seen the box stores get less competitive as their margins are increasing.
Like many sons, Mr Dunn worked in the family business throughout his schooling and, when he left University of Washington in 1978 he went straight into the business. “We had a brand new store at Kirkland and it was my job to run it,” he said.
Mr Dunn’s father is now 77 years old “and still comes in to see how it’s going, but these days he wants to hear the good news,” said Mr Dunn. “I also have an uncle, a cousin and a brother-in-law in the business too.”
Impact of downturn
By 2007 Dunn Lumber’s 12-site operation had a turnover of US$95m, but then the downturn hit – and hit hard.
“We’ve taken the business back from a US$95m to a US$65m turnover and reduced the number of sites quite heavily,” said Mr Dunn. “Inevitably jobs have gone and we’ve cut back on anything that we can. For example, some sites don’t have their own haulage and get other sites to do the deliveries. Our new build business, Parker Lumber, shares a site and even on US$500,000 monthly turnover, it’s struggling to cover its variable costs.
“As a family business, we were trying to be a company three or four times the size,” he continued. “Now we’re a ‘stay in business’ company, but we’re hearing of a 15% increase in new projects and we remain positive.”
Seattle has a population of around 1 million people and has the good fortune to have the headquarters of bluechip giants Amazon, Microsoft and Starbucks, along with the original Boeing plant. The public and retail sectors are also large employers, so while things may be hard going, there is still money around.
Dunn Lumber’s second largest business base is DIY and, with around 25 trucks to deliver across the city and surrounding area, it is the big player in town and can capitalise on this relative prosperity.
“Back in 2007 a 2,500ft² property would have cost over US$800,000 but today it’s closer to US$600,000. Prices have declined by about 20%, with foreclosures at 50% lower,” said Mr Dunn. However, he added, there are many 1920s and 30s properties in the city, many of which are in need of refurbishment, despite probably having been remodelled several times already through their life. “It’s a huge market that constantly needs work doing,” said Mr Dunn.
Product range
Because most homes are timber framed and clad, sidings, or cladding, are a major product for the company.
“Decking is also a huge volume for us, with composite decking as an increasingly large part of the share,” said Mr Dunn. “Hollow profiles have gone away and we’re now seeing far more solid, wrapped and PVCu profiles; they suit the climate and it’s very expensive, which we like too!”
Timber certification appears to be handled differently, when compared to the UK.
“We used to have full chain of custody in three stores but now we just have it in one. Sure, it’s nice, but it doesn’t amount to much and if it means a higher price, less selection and potentially lower quality, then it doesn’t work. We see energy saving, grey water recycling and green roofs as the ways to meet environmental targets. Just about all our wood has chain of custody and we’re not asked to prove it.”
In terms of software, Dunn Lumber operates Progressive Solutions‘’ Bistrack, a system that is well known in the UK. “We’ve had this for around two years now and it is excellent,” said Mr Dunn.
People business
With 300 staff and a strong family tradition, Dunn Lumber is a people business.
“We have ‘recognition lunches’ for service of 10, 15, 20 and 25 years and ‘pizza parties’ for hitting quality goals, by providing customer solutions. Google, YouTube and the internet might give people ways to shop cheaper, but customers find that they need us more than ever, because we give advice and know what they need,” said Mr Dunn. “It’s unacceptable to say ‘no’; we have to find ways to say ‘yes’.”
So, with the economic difficulties continuing, how does Mr Dunn see the future?
“There isn’t going to be much change until after the next [US] elections in November 2012 and in a way this could be a good thing. It used to be too easy and people were spending too freely; [the economy] needs to heal itself.
“We’re hoping for 5% growth in 2012,” said Mr Dunn. “We had great plans to move out to hub yards in the suburbs but now we’ll let it all play out,” he added. “In the past we felt we were the masters of what we did but now we know we’re the servants and are ready to do whatever it takes.”
So, rather like the climate, business in Seattle doesn’t seem very different from the UK. The grass is green, but that’s probably more to do with the rain than the strength of either economy. What businesses like Dunn Lumber are doing is running strategies that keep them alive and ready for any improvements – just like in the UK.