Big builders have been a significant factor in the dramatic changes over recent years in the distribution of residential building products—particularly among dealers serving home builders, remodeling contractors, and others in the building trade. That is one of the conclusions in a recent study from Harvard's Joint Center for Housing Studies.

The study, “Residential Supply Chains in Transition,” notes that the customer base for building product dealers has significantly changed in recent years. Today, more than half of the sales from large professional dealers (those with more than $50 million in annual revenue) are to builders who construct at least 25 homes a year, and 22 percent are to builders producing more than 500 homes a year. With increased purchasing power comes leverage over prices and a related effect on dealers' profit margins, notes the study. Big builders are also applying increasing pressure on dealers to supply certain product lines over others.

Dealers, in response, are pricing products for high-volume builders and expanding to develop economies of scale. Dealers are also attempting to court big builders by developing new strategies such as pre-assembly and installation services.

The Harvard University Distribution Study is continuing its research on the changing residential supply chain. The upcoming round is a survey of builders. The purpose of this study is to determine how well the needs of home builders are being met in today's changing supply-chain environment.

TOP 10 DEALERSBuilding materials dealers, ranked according to total sales to the building trades.

COMPANY
2003 SALES (millions)
% CHANGE 2002-2003
Stock Building Supply (Raleigh, N.C.)
2,595.4
1.0
84 Lumber Company (Eighty-Four, Pa.)
2,196.4
20.8
ABC Supply Co. (Beloit, Wis.)
1,924.4
26.4
Builders FirstSource (Dallas)
1,651.8
9.9
Lanoga Corp. (Redmond, Wash.)
1,560.0
34.5
BMHC (San Francisco, Calif.)
1,415.0
21.9
Allied Building Products (East Rutherford, N.J.)
990.0
16.4
Bradco Supply Corp. (Avenel, N.J.)
965.2
17.5
Beacon Roofing Supply (Somerville, Mass.)
580.2
10.0
Hope Lumber & Supply (Broken Arrow, Okla.)
500.4
17.6
SOURCE: THE PROSALES 100, AN ANNUAL SURVEY BY PROSALES MAGAZINE THAT RANKS FULL-LINE LUMBERYARDS, LUMBERYARDS WITH MANUFACTURING CAPABILITIES, AND SPECIALTY DISTRIBUTORS BASED ON TOTAL SALES TO THE BUILDING TRADES