November 30, 2020

Volatility in the lumber industry is here to stay

While recording the most recent episode of the Hire Smarter podcast, the conversation with Kyle Little provided such great insight to the commodity lumber and distribution side to our industry, we wanted to share full highlights of the conversation.

Kyle grew up in a family lumber business, and is currently the COO of Sherwood Lumber, a family-owned lumber distribution business. We first dive into Kyle’s background, which allows us to draw comparisons between lumber industry patterns in the 90s compared to today. We go in-depth into both the supply and the demand side of commodity lumber, Kyle is excellent at articulating, in simple terms, the market drivers and why we can expect this market volatility to continue past 2021.

Kyle: “I will say without a doubt, volatility for the next five years, at minimum, is here to stay. It started in 2017/2018. It continued into this COVID supply crunch in 2020. And 2021 should prove no different. And the reason for that is….” 

Read the conversation

Leaders – LBM leaders commonly will complain about the 2020 commodity market eroding profits. Comments like: “Had we not experienced the volatility in the market, we would’ve made our budget.” As if saying, “When you look at our P&L pre-tax profit, understand we are an excellent company outside how the lumber market treated us.” My follow-up question, “What do you plan to do about it?” is usually met with some version of, “We plan on rolling the dice again this year, and 7s and 11s are sure come, as we are due.” Commanding leaders take action to avoid being tricked, duped, or sacrificed by the lumber market. Ask yourself, what are you prepared to do differently in 2021? When evaluating your procurement team, their performance in 2020 might be the best prediction of their performance in 2021. It’s a new world. Please reach out to schedule a conversation; we can help evaluate the strengths and growth opportunities within the team. 

Industry purchasing professionals – smart progressive leaders know that a great buyer might add 1-2% points of pre-tax profit to the bottom line company wide. People making a $1m impact on a company’s P&L are being valued accordingly. Please reach out to our team to better understand your market value. 

Hire Smarter – Tony Misura