The current housing downturn has caused a lot of problems to all members of the supply chain on many levels, and its effect goes deeper than one might think. We are all aware of the obvious: wide spread layoffs, branch closings, bankruptcies, etc. But there have been more subtle and “disguised” changes in the structure and thinking of some of the members of the supply chain. Here are just a few examples.
• Many manufacturers and trade contractors have deemphasized their home builder strategies and programs and have re-focused on the remodeling market segment.
• There have been a lot of changes at the senior management level at many of the building material manufacturers, and many of these new managers have no experience in the home building industry.
• Most manufacturers have cut back their sales force, which resulted in individual sales personnel having territories that have doubled and tripled in size.
• Builder rebate programs and other builder marketing support programs have been drastically cut or eliminated.
So what does all this mean? Well, it means that these events have resulted in a deep chasm between the home builder and the manufacturer, which will take a long time to eliminate when the market comes back. It will take quite a while for many manufacturers to understand the importance of developing deep relationships with builders and to understand the importance of builders to their respective strategies.