Fireside Chat with LBM Experts: What’s Really Going on in the Lumber Industry?

With the current lumber shortage bringing new changes each week, one question is top of mind for all of us right now: what’s really going on in the lumber industry? To answer this question, we’re bringing together a panel of leading industry experts from top lumber and building materials companies across the country. 

If you work for or with LBM companies, join this live roundtable discussion to learn:

• Why the lumber shortage is happening and how to handle it
• Ways to navigate credit, collections, and customer relations during the lumber shortage
• Takeaways from the past year and industry trends so you can stay ahead of the curve

Transcript

Lori J. Drake (00:00:06):
Good afternoon, everybody. Thank you for taking time out of your busy schedules to join us today. As we have a fireside chat with some of the lumber and building industry’s premier experts, they know everything that’s going on. Hopefully in this industry, there’s a lot of issues. So we’re going to talk about what’s going on. Exactly you dislike. If you don’t know who Levelset is we, uh, we understand that the construction industry is confusing. So we offer free educational classes and webinars. We have a community of credit professionals that are here to answer questions and share their experience. Uh, we have software that manages your lien rights processes, waivers, and much, much more. If you don’t know me, I’m Lori Drake. I am the new payment professionals, community manager. So I run the one. That’s got the credit professionals with all the meet and greets and the education and the blogs as well. My first person today on our panel is Mike Wisnefski. Mike, thanks for being with us today. I appreciate it. I appreciate being here. Would you like to tell us a little about yourself?

Mike Wisnefski (00:01:12):
Uh, so I have been in the lumber industry, um, kinda my whole life because I grew up in a construction family, but started in the mid nineties, uh, learn how to buy and sell lumber in the wholesale marketplace and, um, you know, learned about trading and then the financial risk management using futures and, um, tools like that. Um, in 2009, I basically left the lumber industry per se, and became an independent floor trader at the Chicago mercantile exchange in the lumber futures pit. Um, and then in 2019, my partners and I launched materials exchange, which is an electronic B2B marketplace for buying and selling lumber. Perfect.

Lori J. Drake (00:01:53):
You got a lot of experience going back. Wow. It doesn’t feel like it,

Lori J. Drake (00:02:00):
Well, thank you for being here next on our panel. We have Thea Dudley. She’s known as the credit overlord. Yeah. Do you want to tell him a little about yourself?

Thea Dudley (00:02:08):
Um, well, like Mike, I grew up in a construction family. My dad was a contractor and I married a man whose family owned lumber yards. So it, I think once you get into this industry, it’s kind of like a tar pit. You’re just never going to get out. But my company focuses on, um, helping, uh, lumber companies, supply yards, contractors, all make sure that their credit collections process are where they need to be. And that they’re positioning themselves in a proactive cashflow position instead of kind of just relying on the hope as a credit tool kind of thing.

Lori J. Drake (00:02:40):
Awesome. Well, thank you for being here as well. Uh, Craig is actually having some technical difficulties. Um, he is with web analytics and if you ever watch LinkedIn, there’s tons of information. I’ll let you look him up on yourself. As soon as he joins. I’ll go ahead and let him introduce himself. Next up is Jen Martin. Jen, do you want to introduce yourself, right? Yeah. Thanks Laurie. Thanks for having me today. Um, so I’m a credit manager in the building materials space. I’ve been doing this for just over 25 years, um, have worked for several large distributors, um, but far as wholesome roofing supply group, beacon roofing products. And now I serve as a senior director of credit and AR for Kodiak building partners. Um, Kodiak’s a fun organization that is very, um, diversified. If you will. We operate in the lumber space, the gypsum space. Um, we sell appliances as well as structural steel and rebar. So we really have a focus on a decentralized environment where we can keep decision-making close to the local customers. Um, as for me, I’m just a strong advocate of credit as an extension of sales. I’m always trying to sell that credit relationship within our industry and best practices. Thank you. That’s awesome stuff. Credit and sales is always a fun topic.

Lori J. Drake (00:04:02):
Well, today’s agenda. Uh, we have a few different directions we’re going to do. Why is the lumber shortage happening? How to handle the complications from this shortage ways to navigate through the credit collections and customer relations side, as well as some takeaways and insight that people have seen just over the last year. And we did put a little note at the goddess. The entire supply chain is affected by the shortage we’re seeing impacts in drywall roofing insulation and more. So we just want to let you know, this was more than, than just lumber and building, and we will get into that. And whoever wants to speak first on these topics, the first one is lumber shortage and how to handle it. Go ahead and take it away. I think we turn this over to Mike.

Mike Wisnefski (00:04:48):
There absolutely is a lumber shortage. Um, and most people don’t recognize that this whole thing started back in 20 2008. Um, because back in 2008 is when we had that financial crisis and housing starts went down to like 600. Um, the industry was devastated by that. And what happened was they shut down so many of the high cost mills and they, they really did a good job of right-sizing themselves for an industry that’s going to, or for housing, um, industry they’ll have somewhere around one, a million to a million, two housing starts, which turned out to be a really good plan because that’s where we were for about 10 years. Um, then you, uh, you know, fast forward to today and we’re probably running around 1.5, um, and they don’t have the capacity to fill that. But what, what I think is interesting is you asked the question, is there really a shortage in lumber?

Mike Wisnefski (00:05:53):
And the answer actually is no, because at price you can get lumber. So if I can guarantee you, if the price of lumber was $3,000 per thousand, we would have enough lumber still in the United States. It would be coming from overseas from all these other areas. So it’s a, there isn’t as ample and readily available supply to us today, but that the fact is there is there is enough wood to build the houses that we are building. And in fact, I think there’s a shortage of other materials that is more detrimental, which, uh, the number one thing I’m hearing and I talked to a retail dealer today about it is windows. And the interesting thing about windows is those are more difficult to import from another country that may have excess production. Um, so I’m going to say maybe there’s a shortage of money going after the lumber that that’s probably, uh, what’s happening. And, um, I think that is good, you know, for this group to talk about, because really what we’re talking about is money here and how much of it is okay to spend on lumber or, you know, the supplies for building a house.

Lori J. Drake (00:07:12):
So a couple of questions on there, it’s more about the price level. Is there a difference if you sell something for a low price, if you’re trying to buy something for a higher price as to get the demand, maybe is there like a first person that pays the higher price gets first or anything like that?

Mike Wisnefski (00:07:26):
Yeah, I mean, lumber is a commodity. So, um, it theoretically, uh, you know, is, is tied right to the laws of supply and demand. Um, while I think this last move we’ve proven that that demand is not nearly as elastic as we had considered it to be meaning it’s going to take a while for that demand to come back to the market locally. Um, we are seeing that the United States is the best place in the world to sell your lumber. So, you know, there are boatloads, let’s really boat loads of lumber coming over from Europe. Um, but what, what has fascinated me as much as the supplier has been any Lastic that demand has been any Lastic it’s like at any price let’s, you know, we’re going forward. Um, I think we’re in the midst of seeing the demand start to come off, um, where, you know, there’s there’s projects that are being pushed off. Um, so that doesn’t mean the demands going away. It’s just being delayed, right?

Lori J. Drake (00:08:32):
Yeah. I, I would, I would echo what Mike is saying. I mean, we’re seeing the same things up until this point. It’s been, um, kind of a free for all, but the majority of the folks that we’re dealing with, they don’t care how much they’re going to pay for this. I shouldn’t say they don’t care. They care because they complained about it a bit, but it has not deterred them from continuing to build, build, build, and, um, you know, many of markets that we’re operating in have kind of those higher demand, or maybe that’s second home type situation and they’re, they’re willing to pay whatever it takes right now to get that, um, to get those materials. And, and again, it is not just the lumber side. We’re really seeing on the appliance side that, you know, window and doors, as you just said, right. Um, that’s a piece we’re seeing it across the board, um, as well as a problem with the labor to move the materials once we’ve sourced them. So that’s, uh, also playing in from our standpoint. Will you talk a little more about that labor? I know Thea had mentioned that to me the other day as well.

Mike Wisnefski (00:09:36):
Well, you know, labor is an interesting one. Um, it comes back to price again. Um, you know, and prior to this, uh, situation we’re in right now, um, the price of labor or the labor costs were priced at historic levels. Well, what we’re finding is they need to raise the price that people they’re paying people to get the jobs completed. Like we need to attract more help. And it’s being compounded by the fact that we have this pandemic going on and our borders are relatively closed. Um, you know, there, there was a lot of people from Latin America that would travel to, uh, the south to, um, work and like in Chicago, if you are not, uh, either Mexican or Polish, you’re not going to be in the construction industry. So it, a lot of Eastern Europeans come over and work in the Northern climates as well. And obviously that border has been shut down.

Lori J. Drake (00:10:38):
Oh, sorry, go ahead. Oh,

Thea Dudley (00:10:40):
I’m sorry. Lori, let me, you compound that with people having been able to collect unemployment that span, you know, that kind of, that tipping point where it almost, you’re almost paying people to stay home. So you’ve got between material shortages, priced bikes, um, and the labor shortages, transportation shortages. So it’s like the perfect storm for all of this to come together. So that’s, that’s where I see Craig has joined us. So I wanted to make sure he got his name. Your name says Thea, but I know who you are. Yeah,

Craig Webb (00:11:11):
I unfortunately, the, uh, the invitation that came came came via Thea rather than the, uh, the main system, but I, I I’m here. And if, if anybody there in the back shop knows how to change my name, that would be, that would be great. Although to live a w would be a great life

Lori J. Drake (00:11:30):
Gone. Do you want to go ahead and say a little bit about yourself?

Craig Webb (00:11:33):
Um, I’m the president of web analytics, a long time observer of the industry for the past 14 or 15 years? I I’m old enough to remember, uh, not only the conditions that Mike talked about with regard to, um, the, uh, the great recession, but also remembering the mountain pine beetle, which was enough to wipe out an area of, of trees in British Columbia that could fill the entire state of New York and was, it could be viewed from outer space, um, and, and thus lead to a shortage or a slow, gimme a notion of, um, the amount of wood that got cut in British Columbia and thus was available. Uh, when you’re talking in general about the lumber shortage, it’s, it’s already been brought up that we also have shortages with regards to a huge number of other products out there. And I think in many ways the how to handle a question right now is not necessarily a question of how to handle price, prices, price, people understand that there are some issues with regard to, uh, the, what you charge a company based on how much it buys and how far ahead it wants to buy and what your price guarantees are.

Craig Webb (00:12:44):
But I think the real challenge right now is, um, is, is, is customer relations with regard to the shortages that people are facing. And this has some real consequences for, uh, credit and collections people. Uh, the first thing is that, um, for the first time in my memory, dealers are really having to engage in the same sort of allocations and rationing of supplies that, um, they’ve always complained about the lumber companies doing to them. Uh, as an example, I was talking to a, um, uh, a building material dealer, uh, in one part of the country. And he said, um, uh, I had a customer who came in and asked for seven, 700 of the, uh, electrical boxes that you use just to put in the wall for your plugs and your, your other things. Um, no, I’m sorry. He said, I asked. Yeah. Um, I asked for a thousand of those he’s he said, and, uh, I came back to him and said, I can only sell you 300.

Craig Webb (00:13:52):
And the reason why I can only sell you 300 is that I’ve got other customers, I’ve got to sell the other, you know, I’ve got to take care of the others. So that kind of rationing is something that I really haven’t seen dealers have to do before. What this means is that the communications that you’re doing are phenomenal, the amount of the amount of bad news you have to send out is phenomenal. The second thing about this is talking to a, I remember talking to another deal where I said, how are you spending your time? And he said, I’m spending virtually all my time reviewing the credit limits of my customers because a $50,000 package has now become a 75 or a hundred thousand dollar package. And that just limits what they can do. And then the third thing I’m tending to here is the question of, well, what happens when we get over this and is anybody ever going to remember to go back and change people’s credit limits later on? So those are three of the things that I think are really a challenge right now that, um, make this one just a little bit different than some of the other price roundups we’ve seen in the past. Well, I

Thea Dudley (00:15:00):
Think I can address, uh, you know, Craig, when you talk about, cause those are conversations that I have with, you know, dealers across the country right now is, and especially, you know, several months ago, as things were ramping up, they’re like, what do we do? And so we did, we enacted with a lot of companies, like a temporary spike where, Hey, let’s, let’s review them and we’ll get them. Here’s, here’s what that max looks like. Can we utilize lien rights? Can we, you know, what, what can we, what, what can we put, what security can we put around this? And then let’s have our list of who we temporarily spiked and let’s bring them back down, you know, or periodically re-review them. Cause at some point everybody taps out for credit. I don’t care who you are and you can only let someone get out so far and you’re not really helping your customer.

Thea Dudley (00:15:47):
If you’re allowing them to bury themselves under a mountain of debt and it’s getting, you know, it’s eking out there. And I know everybody, especially our hometown guys where they’re like, you know, we’re, we’re involved in the community. People rely on us. It’s like, honey, if you don’t, you don’t reel this in, you might not be there to support your community. So it it’s, you know, it’s a really fine tipping point. And those conversations when, when GCs or contractors are up against the, you know, up against the ropes on stuff, they’re very volatile and how you handle them is, is a real challenge because you’re, you’re talking about people’s livelihood and it’s a little talking about money is probably one of the most emotional things people will tell me. And I know we’re keeping it PG, but people will tell me about their sex life long before they tell me about their financial. And it’s like, I just want to know how we’re, you know, how we’re gonna work through this together. And, and I, you know, please don’t shut me out because I can help you through this, but you gotta be honest with me. You gotta talk to me.

Craig Webb (00:16:45):
Well, there’s a future for you in romance novels with all the sex talk you’re getting, but that writing for fortune magazine. One thing I, one thing I also would bring up is that in some ways, in terms of communicating with your customer, um, w w we went through a period in which, um, the general agreement was, is that you needed to communicate more. And, uh, we saw that among dealers all over the United States, they, they really ramped up dramatically. The number of emails they sent out, the number of things they did. We are injustice big, a period in which you, you need to communicate a great deal with your customer. However, it’s all individual communications. And so consequently, we have to go from a world in which maybe just one person wrote one memo and send it out to everybody, to a lot of people getting training in talking to a lot of customers, but keeping the message consistent and also keeping in touch with each other so that each one of them doesn’t make a promise to a customer that the company, as a whole connect cannot fulfill.

Lori J. Drake (00:17:56):
I think this idea, Craig of, um, no surprises and communication and transparency you’re right, has become really critically important to us and things are moving so fast, right? Within a day, we’re spending far more time, actually just, just discussing with each other then than we ever, ever have. I mean, much more time sourcing the materials, communicating if we have the materials, um, communicating what the pricing’s going to be. And then ultimately from a credit standpoint, what are we willing to, um, expose ourselves to, if you will, um, from a, from a pricing standpoint and it’s, it’s taking a toll on folks, I think we could be conscious of that and, and the expectations and really the way that we communicate and keep talking to each other, because it is taking a toll on, on many of us.

Craig Webb (00:18:48):
Yeah. I was wondering, Mike, do you think people are playing games with, uh, trying to, trying to time the market as much as they used to, or are they just really just trying to fill supply and they don’t care about price as much?

Mike Wisnefski (00:19:01):
Um, you know, everyone’s going to try to buy the best they can and try to time it. Um, but the market is moving so fast that they don’t even have an opportunity to, um, make a decision. You have to make a decision on a phone call, basically just for perspective, the lumber futures contract has gone limit up and limit down in probably five sessions. Um, so the, the market is limited by how much it can go up and down in one day. Um, currently it’s $126. So did that today. We started out the morning limit up, we hit limit down, and now we’re back kind of in the middle a little bit, but to, for perspective, on that $126, the total price of the contract is trading at $1,435. So you’re almost a 10% market move in two hours, but I mean, you can’t wrap your head around that. Um,

Craig Webb (00:20:01):
Probably when they set that that dollar limit was the Delaware limit fixed. And, and in the old days, when lever was $300, a London

Mike Wisnefski (00:20:09):
Was huge and you know, they’ve expanded it, they’ve expanded it as well. So it’s commensurate with the overall value of the contract, but the point is the volatility in pricing is astronomical. Um, my biggest concern is really going to be when this market rolls over, which it will, all things come to an end. Um, now we’ve got a different issue on our hand, as far as credit goes, and it’s not that they don’t have enough money it’s that they’re not going to send their money to you because they’re going to cancel an order and send it to someone else. So this, this can be a double-edged. Um, and I don’t have an answer for that. You know, I’m sure there’s some legal contracts that previously we were a handshake business. Um, maybe, uh, Jennifer can shed some light on, are you guys getting, are you documenting stuff a lot more?

Lori J. Drake (00:21:04):
Well, that’s definitely the recommendation, um, is just like diligence in our, in our contract review, understanding what we’re committing to, you know, a can, can we achieve that and really trying to educate our customers along the way as well. I mean, I have some, some major concerns when we see this supply chain disruption and you see projects get delayed and that impacts cash flow. No money comes down the pipeline, the bulk of the, really the bulk of, you know, what I would call our customer base or really the, um, subcontractors in general, they tend to be small to medium size outfits. They don’t have a tremendous amount of cashflow outside of these projects. I mean, they live and die by if they get paid or not. Um, and so folks getting tied into specific pricing on longterm projects has already been an issue and there’s discussions on all sides of that.

Lori J. Drake (00:21:59):
Um, from a customer standpoint, um, we are now just really, and maybe I should back up. I’ve always been very big on best practices and looking at being proactive versus reactive, but even more so now this idea of, you know, really read the contracts in front of you understand what they’re saying? Um, we’re adding force measure causes. We’re talking about, you know, should we be looking at cost plus type contracts instead of a fixed dollar value contract? Um, you know, do, do we need to be in entering into price, escalation clauses and, and really reviewing that on a case by case basis. And that’s the challenge. I think it goes back to what Craig session Thea said originally is this, it’s not one broad, Hey, do it this way. It’s every, every single relationship, every single contract needs to be looked at and reviewed in detail. And in that takes an amount of time and attention that maybe we’ve gotten a little lazy in the past of just pushing things through and pushing things through.

Craig Webb (00:23:02):
Yeah. I’ll give you an example of that actually, Jennifer, uh, which has nothing to do with lumber. Um, I was talking to some people who, uh, do kitchen and bath installations and they said, um, suddenly the amount of time it was going to take them to get cabinets for their kitchen and bath projects went from two weeks to six weeks or six weeks to 10 weeks. And these were the kinds of, um, high-end, um, cabinet and, uh, w Knb people who, as a philosophy do not start a project until the cabinets are arrived in, in, in our, in their shop. Um, and so suddenly they were talking and they were saying, well, if we’re not going to get cabinets for the next four weeks, what are we going to do? How are we going to make any money? And so the moral of the story here is that we in the construction supply business have to be aware not only of the knock on effects of lumber, frightening as they are weird as they are, but also the knock on effects of not having cabinets of not having the straps for trusses of not having those electrical boxes because of backups at the port of Los Angeles, not having PVC.

Craig Webb (00:24:20):
Um, it’s almost to the point where our supply chain people, our buyers have to be reporters daily reporters as much as they are sourcers.

Lori J. Drake (00:24:30):
That is an awesome comment. And it kind of goes with our first question there, what is the impact this is having on suppliers with their cashflow? Is it aging year? Is it putting your aging out farther? I mean, I’m sure it’s having difficulty on your customers like you, it has

Thea Dudley (00:24:44):
To start that impact to a supplier’s cashflow is going to start at the contractor base. And so what we’re seeing in that contractor space is when those projects get delayed, because either, you know, a product is on allocation or, you know, the pricing, or it’s just out so far, you know, whatever the case may be, those it’s almost a catch 22 for the contractor because they might be locked into a contract that here are the timelines you have to have. And these contracts were entered into before a lot of these issues came in, they were signed. So they might not be able to go back and get those price increases. So I’ve spent a lot of time coaching counseling, having those conversations with contractors and with their customer saying, okay, what can we do? Because this is, you know, we’re going to have a partnership in a relationship.

Thea Dudley (00:25:33):
How can we make this a little bit more even playing field for everyone? Because it doesn’t do you any good to hold your contractor to the line if he ends up having to file bankruptcy, because he can’t live with, with some of these preexisting, um, contracts, and then to add to it, you’ve got building inspectors who, when you finally get your product and you get it installed, then you’ve got to get them out there. So the whole timeline is just so skewed. So being able to get paid by your customer, whether it’s a commercial project or a remodel, then that’s going to impact the supplier. Cause a lot of times some of your product is on the ground, but you may, you may deliver a package of something and you can’t get the inspector out there, or there’s another trade that’s still on it. And depending on what region of the country you’re on, you’re still operating under, you know, some COVID restrictions for how many trades can be on there at one time.

Thea Dudley (00:26:22):
So there’s, it’s like this big alphabet soup of stuff going on. And it’s a region by region almost. It’s very customer by customer, but those are the supply chain cashflow issues that are kind of coming down the way. And that’s, you know, unfortunately you’ve got to be on the phone a lot as from the supply point of view. Okay. Talk to me about what’s happening here. And you almost start taking that coaching role of not only coaching internally your, your coworkers and your team, but now you’re coaching your customers and how to deal with their customers. So it’s, it’s really become an interesting time in credit.

Craig Webb (00:27:00):
I’ve also been hearing of dealers who have basically said, I’m going to limit the number of customers I have. I’m not taking on any new customers. I’m just spending time with my favorite customers. And I worry. That’s true. I worry about the longterm impact of that too.

Mike Wisnefski (00:27:18):
Oh, I think there’s, there’s a dirty little secret out there that, uh, people don’t want to kind of, I don’t want to, they don’t admit all the money is there to pay everyone. It’s just in the wrong hands. So we, you know, we’re talking about our relationship. I really feel strongly that our supply chain is, was broken from the start that we are relying on the wrong people to actually be responsible for the money flow. If you consider a multifamily project, when you are relying on your framer to secure the material that he’s going to use to frame up his expertise is in framing. It’s not necessarily per curing material or paying for it. So my idea, and I’ve had conversations about this with the people, with the money, the developers, if they were a little more proactive and they actually secured the material or became part of the procurement process, it would take so much stress off of the rest of the people inside of the chain, because you wouldn’t be too worried about your credit issue because you know that the guy building the building has the money already secured via some, you know, financial arrangements got with the bank, but he’s not going to release that money until he knows this project’s going to get built.

Mike Wisnefski (00:28:38):
It makes sense, right. Basically if we get everybody to the table, we can take out so much of the increase in the margins that are just due to credit risk and probably make the money flow better.

Craig Webb (00:28:53):
It’s funny. Uh, the NHB just had a podcast recently in which they, uh, asked a, uh, uh, lumber, a lumber company, a milling company, uh, up in the Northeast. Uh, Hey, what do you think about the idea given the way lumber is, is that we F we get everybody together and have some sort of government conference to, uh, organize conference to help brewery all the parties to the table so we can figure out how to get over this problem. And the first thing he said is, is that I don’t trust the government to do anything that’s good for me. So, uh, so consequently, I think that the deep seated animosity that each link in the supply chain has to the next link in the supply chain is so great that unless we all develop a kumbaya spirit and learn to work together and, and have enlightened best interests at heart, we got problems. You just said earlier, Hey, lumber is available. If you’re willing to spend the price we also have in this country, an affordable housing crisis. So yeah, you know, we can, we can have $3,000 lumber, but we’ll have people living on the streets too, you know, so, okay. I think that

Mike Wisnefski (00:30:09):
Those are all gonna live in tiny homes, tiny, very tiny homes,

Lori J. Drake (00:30:16):
I think from a, from a credit perspective. And Mike brings up a good point with, you know, your average framer. He is a great tradesman, not great at managing his money or his cashflow, perhaps. Um, and that’s, I think where us, um, larger supply houses really kind of come into the mix from an educational standpoint. And in one of the pieces that I keyed in on, as you were talking, Mike was just this, this thought that, um, Hey, this is a perfect scenario for us credit managers, because we are in a position where we can kind of pick and choose a bit where the bulk of our exposure goes. Now we’re not always going to be in that seat. And anyone who’s been in this business for any length of time knows that that just ebbs and flows. And you know, if you don’t handle it well here, you’re going to pay for it five years from now.

Lori J. Drake (00:31:04):
So the relationship is, is critically important. I think we need to recognize that, especially all the credit managers on, on, on this call, if you know, you can’t just say, Hey, I’m only selling to my eight players and my BNC players are gone and I don’t need them anymore because you’re gonna need them. And, um, but, but the other piece, I think that we have some responsibility in helping to educate those framers that might not be good business folks. Um, you know, when I was talking a bit about contract diligence and getting things in writing and understanding what you’re agreeing to, we are still seeing just, um, nearly every contract that hits my desk has a pay of paid clause in it. And as a, as a credit person, I just think this is the most unfair, crazy thing that, that is out there yet. We have smaller, um, outfits, who they need the work, they need the work. So they’re going to sign whatever you put in front of them. And they get themselves in trouble when that cash doesn’t flow down. So I guess what I would is what I’m alluding to is we just have a responsibility to help elevate their business skillset. So they know how to secure their selves. They know how to get that money and they don’t agree to bad contracts upfront.

Thea Dudley (00:32:17):
There’s a lot of them, Jen, that do. And that’s where, you know, I’ve asked a couple of them, like, why did you sign this pay when pay? Cause there’s not a lot I can do for you now. And they were like, well, in our state, it doesn’t hold up. It’s like, yeah, but you realize you have to go to court to make that point because he, who has the gold makes the rules. So you, you want to be careful what you’re signing and, you know, cross it off your, you run the risk that if you say I’m going to take this job because I’m afraid to, to remove some of the clauses or I worse yet, I didn’t even read it. I just signed it. Um, then yeah, you’re going to, you’re going to end up with what you have, but cross it off. Chances are, they’re not going to push back. I’ve never lost a contract because I challenged somebody on it. It’s how you approach it.

Craig Webb (00:33:03):
Okay. One of my favorite statistics from the Harvard joint center for housing studies is that in any given year, one out of every eight remodelers who has payroll and one out of every nine, small builders who has payroll is not in business the next year with payroll, they’ve either become a sole person or they’ve gone out of business entirely. And at the same time, the number of remodelers, the number of small builders in America has if anything grown. So what we have every year in America is four credit managers, a new group of kindergartners coming in every year. I mean,

Thea Dudley (00:33:45):
We never have a shortage of, of people that you can teach and train it. It just on the upside of that, you know, Jen and I have talked about this quite a bit where it’s, it’s hard to train one at a time. A lot of times you spend your credit team, spend a lot of time talking to your customers, teaching them, training them. And some people take it really well and they take it to heart and you get the gratification of having that great partnership. And then you get some of those guys that are, you know, they’re just either whether it’s just arrogance or, you know, being naive, they just don’t take it. And those are probably the ones that don’t make it. Because let me ask

Craig Webb (00:34:24):
A related question. We’ve been talking about the, the challenges and the delays and the bump ups and things. Do you think building material dealers ever will go to a standard of 60 day payments like home Depot does no.

Thea Dudley (00:34:44):
You’re asking credit people. No, no, no, no, no shame on you. Shame on you. I thought her friends, Craig, but apparently our friendship will end, but it’s not good. I won’t like Mike’s approach

Lori J. Drake (00:35:02):
Pay in advance. I’d be good with that. There’s a lot of

Thea Dudley (00:35:08):
People I think I would be good with. Yeah, honey, you need to roll up here with your cash in hand.

Mike Wisnefski (00:35:14):
Well, and this goes back to the idea that the money is there. If I just read before we got on the call, um, there was a company that buys up, uh, single family homes and run the rents them back. They just borrowed through the bond market $2.5 billion at 2% interest. So this is such a crazy idea. Money is everywhere. Lumber is not. And because of this, we have a credit issue that doesn’t compute. You would think that if the money is there, we wouldn’t have the credit issue. The problem is the money is in the wrong hands, right? I’m not, I’m not

Craig Webb (00:35:52):
Gonna, I’m not gonna give up right away on this though, for two reasons. One is that home Depot regularly does 60 days.

Thea Dudley (00:36:00):
Okay, great. Do you really want to open this can of worms Craig? He really,

Craig Webb (00:36:06):
And, and, well, the second is, is that I know some dealers, some very, very big dealers during the downturn that started talking about how they had deals with their special partners, which allowed them to pay 180 days. Uh,

Thea Dudley (00:36:20):
Yeah. Craig, I, um, yeah, I know cause I’ve worked in some of those credit departments and um, yeah, you, you do have where you might be able to leverage a deal or you do special buys or there some commitment. And, and I have to tell you that makes credit people very uncomfortable because I trade credit is one of those things that if I’m a bank there’s there’s land I can get, or there’s a building on it or something, but if I’m in trade credit and I’m just shipping to like, as a manufacturer, as a supplier and I’m shipping to your, your building, I have, I’m just, I’m, I’m hoping that you are going to come through and do everything you say you’re going to do. And that I’ve adequately protected myself. If I’m shipping to a job site, then I’ve got a shot at lien rights on it. But if the project goes south, you know, I might be in line with a whole bunch of other people waiting to get a, a chunk of that money. So, you know, on, on lumber, my experience has always been a very tight timeframe on that. And on, on supplies, trade credit is a short term loan. Honey, if you’re looking for 180 days, you need to be stepping to the bank because I’m not that woman.

Mike Wisnefski (00:37:32):
Exactly why. Well, I mean the last time I checked it, didn’t say the first national bank of a lumber dealer out in front of there. It’s crazy why we, why people want to make their suppliers, their bankers, you know, the easy question I would have back to them is are you having a problem at the bank?

Thea Dudley (00:37:50):
Yeah. But they don’t treat you like a bank. I mean, most people roll up and they’re like, Hey, lumber girl. Um, you know, you should be lucky that I’m here and I’m choosing to buy from you. It’s like, wait a minute. I don’t know that we’ve chosen to give you credit yet. Cause we might not see each other the same. And you, the trade credit doesn’t get the same reverence that like, if you’re buying from a, if you’re borrowing from a bank or a finance company, and that’s, that’s where as an industry, we’ve done a poor job setting that table. And so when you buck up against it and you hold people accountable and you put those, those, um, restrictions around it, you know, you get all kinds of bowl ups of, you know, gosh, you’re a sales blocker. You don’t, um, you know, you don’t understand how the industry has. You might, your competitors I’ll do this. It’s like, I don’t know any credit manager that goes, wow, I can’t wait to get someone 180 days. That’s fantastic.

Lori J. Drake (00:38:44):
I think the other piece to that, um, really is from a trade credit standpoint, we extend far more credit than any of these folks could ever go to a bank and get that they don’t have the assets. They don’t have the cashflow. We are relying on really kind of that, that whole supply chain, the, the cash flow that moves down the construction chain. It’s not, it’s not these customers, it’s not the subs. They couldn’t go to a bank and get a hundred thousand dollars in material. So it, and not only that, I think a lot of times too often, again, um, as a credit manager, this hurts me with, we’re not charging them, anything for that. Right? Crazy. We’re not charging them interest. It’s part of the service and that’s how it’s always been sound well or, or sold to folks. Um, and it kind of works as long as you, you know, dot your I’s and cross your T’s upfront and follow through.

Lori J. Drake (00:39:39):
I think, um, you know, the other piece that we haven’t got to, and, and Craig, where I start to get really worried when you say things like give him 60 days or 180 days, um, you know, much of this is done by managing our lien rights and what we can ultimately secure. We’re we’re gambling, we’re playing a poker game with each of these customers. And do we think that they’re going to be able to pay us back? And if they can’t, what, you know, what can I secure myself? Or how much can I offset my losses? Um, and depending on where you’re at, I mean, if we go even 60 days, you could be in a situation where you have to be sending notices and that’s a hugely transactional process. If you go 180 days, nearly everywhere, you’ve pretty much expired your lien rights. And so you have a receivable that’s not due. Yeah.

Craig Webb (00:40:29):
Yeah. I, I I’ll say once again, it was the building material dealer, like a Kodiak, like a builder’s first source that was arranging to pay 180 days to its customers. It wasn’t the dealer talking to it’s it’s, it’s, it’s, it’s, uh, remodeling customers and it’s small building customers, but so I’ll just so I know you’ve got fixated in 180, the 60 was really sort of what I was still having a heart attack. Remember the days when there were a couple of lumberyards in Minneapolis, in Detroit that were giving 365 day credit. Oh,

Mike Wisnefski (00:41:09):
Oh, you know, what’s crazy. You know, it’s awesome. If you get the right banking partner, 365 days of credit can be a huge profit center.

Craig Webb (00:41:18):
Yeah. And that was what these guys. Yeah. Well, who

Mike Wisnefski (00:41:22):
Wouldn’t want to throw half a point or a full point on top of the interest rate that the bank is taking the risk on anyway. So I think what it comes down to is into the costs involved in a transaction. And I learned this directly through having conversations with the, where the money is at with the developers. And I remember distinctly these developers saying how, you know, how great they are at chiseling down their suppliers. I’m like, eh, at what cost, you know, do you recognize that if you know that you’re going to go back, if the market turns and, you know, try to rework your deal, they’re not silly. They factored that in. So it’s like, let’s all get together at the beginning. Let’s figure out how much time we really need to pay what to pay. And then we can give options if you want no time to pay. Great. If you want 10 days, it’s this rate. If you want 60, 180, we’ll give you 365 days, but there’s a, there’s a cost, right?

Craig Webb (00:42:28):
Yeah. I agree. I think that those things, all those things all do do make sense.

Mike Wisnefski (00:42:33):
And if there, if the industry could come up with some sort of standardization, I know that’s an evil word, but as far as the documents and everything go, because if you’re not protected legally going forward, there was a question that came up, you know, our lumber price is going to fall fast. History says that they will. Yeah, I think they will. Um, what if we’re half the price we are today in two months, you know, there’s, there’s theories out there that the reason we are at, where we’re at right now is because people got off sides and needed to build an inventory to protect themselves, which is the buy and hold strategy. Right. And that right now, there is a large shadow inventory sitting out in the field. Right. So maybe we’re covered on our projects through August or September.

Craig Webb (00:43:28):
I, I, one of the, yeah, one of the things I’ve been wondering about in a sense is what is the future of Justin time in the construction supply industry? I know that in the automotive industry, they’ve been really thinking about the days going by now of how you used to get in the morning, what you needed in the afternoon. I remember when nine 11 happened and I was covering the hospital industry. One of the great concerns that people had in hospitals was that they were going to run out of materials almost instantly because they were getting up to three deliveries a day of, of linens and, and other medical supplies they had gotten just in time to that point. I wonder whether in our industry and in construction in general, we are in effect abandoning just in time right now, because we’re all increasing. We’re all increasing our toilet paper supplies to use another example, uh, uh, just to, just to protect our own personal rear ends, so to speak. And so, uh, consequently, you are right. We may very well crest very soon when people all realize, okay, I’ve got enough to keep me going for the next couple of months. Now I can go back to my normal buying pace.

Mike Wisnefski (00:44:45):
If your, if your windows, aren’t going to show up, if the sightings not going to be there, you’re not going to finish the project anyway. Why would you start it? That’s

Craig Webb (00:44:52):
Right. Um, now I do believe that the great thing we’ve got going for us is that demand remains strong. Millennials are moving out. They’re all have, you know, the people having babies, people wanting to work from home. Um, we’ve got all those kinds of factors that at least can, should make people feel confident that over the next couple of years, we are going to continue to have strong demand. Uh, and, and, uh, so consequently, it’s a little bit less of a gamble that it might be, you know, uh, falling off the, you know, stuff, falling off and dropping like a rock. I find that hard to believe that that’s going to happen given the demand that’s out there. Um, and even if we do, we get to $500 lumber, which used to be an outrageous price. Now it’s a deal. That’s a deal. You know,

Lori J. Drake (00:45:47):
While you guys are talking on this, the last question there is, how can we deal with performance or cancellation risks? I mean, maybe somebody cancels thinking they can get a better deal or faster with somebody else

Mike Wisnefski (00:45:59):
Fun, you know, go to court. I don’t know what that, that’s just integrity right there,

Lori J. Drake (00:46:10):
Here, Jen, have you experienced this yet?

Thea Dudley (00:46:14):
Not yet. I mean, the only thing that’s really come up is kind of jamming up from not being able to get the product in time, to be able to meet timelines on the contract. And then we’ve been able to go back and do some renegotiation because one thing that does work in our favor is that everybody’s in the same boat. So it’s not like they can say, Hey, you’re out of one particular thing and they can go get it from someone else because everybody’s experiencing the same thing. So then the nice thing is it’s kind of a universal. So when you go back and say, look, here’s how many weeks out we are? Can we do some shifting on some timelines? Can we work on, can we bring this and can some other trades come in, those are where you’re able to do something. And then you can go back to your supplier. And typically all the suppliers that I work with have we’ve managed to work something out with everybody and get everybody to a good place. But you know, we’ve also cautioned them. There’s, there’s a limit to what we can all do. And there’s, there’s a limit to your credit. You know, I can’t, whether you’re Bob, the builder or Warren Buffett, everybody’s got a credit limit.

Lori J. Drake (00:47:17):
Yeah. I think the, I think the other piece and my constant concern is, is the smaller guy. Um, and they’re the ones who typically get, um, stuck in this crunch if you will, when things happen. So really to me, it’s, it’s education, it’s communication, it’s transparency. It’s, it’s talking about, you know, what, what can we do, uh, as, as a, as a team, if you will. I mean, really, you know, whether you’re coming from supplier to general contractor subcontractor, we need to be very transparent in what’s going on. Is, is the biggest piece. The other thing I’ll throw out there and it’s very, um, product line specific. It depends on the product that you’re selling, but, um, you know, in certain situations we can definitely take down deposits or, um, you know, really not in the lumber space so much, but when we get into very specific materials like appliances or cabinets or flooring, those type things that are very specific and a very specific quantity, um, but need to be ordered and have long lead times. We’re, we’re at the point, we are seeing lead times out to like the three month mark. And so that’s, I think it’s asking a bit, when you ask someone to put some money down for something they’re not going to have for three months, but at the same time, if you don’t do that, you might not ever get the product.

Craig Webb (00:48:39):
Actually, it’s a very common thing in, well, among some really high-end remodelers, it’s actually a fairly common thing to ask for the posit just to get on their calendar. Um, and the sports teams, I’m sure the Cubs and the, the white Sox are selling seat licenses, which is merely merely an opportunity to buy a seat later on, you know, and, and, and they, they, they, they get involved that way. So I don’t see that necessarily as being all that outrageous an idea going forward, there are enough things happening already on that, in that regard,

Thea Dudley (00:49:15):
But that’s where you’re coaching your customer. That if, Hey, if, if I, as a supplier, I’m asking for a deposit, they need to be asking for deposits from their end user customer. Because again, if you want to be on my schedule and you want me to allocate resources in the form of labor and materials, I’ve got, you got to come to the table too and not dump me for somebody else that might be able to get to your project a little quicker or, you know, or something like that. So I think educating them to have that conversation all the way down the supply chain to the end user, it’s like, we’re, we’re all going to be in this together. If you want this project done, you want me to order these products and get them in here. You’re going to have to put money down to get on my calendar.

Mike Wisnefski (00:49:58):
That means it sounds like it comes down to play by the rules.

Thea Dudley (00:50:04):
And I do agree, Mike, if we could, you know, it would be great if we could have some sort of universal, um, or at least have a, an approach that was more widely accepted by the industry instead of just, Hey, I, you know, you’ve got your, your contractors kind of leveraging suppliers against each other. So as tire you’re, you’re basically you we’re, we’re kind of our own worst enemy on that.

Lori J. Drake (00:50:33):
Thanks for everybody on that. The next one is learning from the past year, as well as industry trends. Just kind of, if you have any experience from say last year to this year, what’s changed. If you’ve got any tricks that you can do that sort of thing.

Mike Wisnefski (00:50:50):
Well, I’ll do a shameless plug for, for my company, um, which is just transparency on pricing. Um, you know, and that’s, that’s what we’ve learned is that the market moves so fast, that it’s hard to keep up with. So if you know, if there are ways with which the end users can see pricing and make decisions, as opposed to, oh, it’s Monday, I buy my, I buy my lumber on Monday. So now I start calling around when, you know, last week, Thursday, the market blew up or something, right? So communication and transparency are, are the key.

Craig Webb (00:51:28):
One thing I was wondering about Mike, that maybe could be helpful is, are you seeing any differences or gaps opening up between the futures price, the random length spot price, and frankly, the contract price that a relatively decent size builder would pay. So

Mike Wisnefski (00:51:53):
Futures is what it is. It’s not spot buying. Um, the price reports are what they are. They are a slice in time on a Thursday afternoon of a survey of a slice of the industry. You take those two, which are the two things that have the most transparency yet cover the smallest segment of the industry. And everyone wants to look to them for guidance. It’s, it’s a recipe for disaster is what it ends up being. So I think Craig more than ever, those two indicators have become irrelevant, um, because your business changes it, it changes more week to week or hour to hour than it ever has. And it’s all about this extreme volatility. Um, and this impacts the credit department because if the credit department isn’t on top of these massive moves, which could be blowing through their comfort levels of where they have business sold and where the market is, um, it comes back to price transparency, knowing where the market is, um, and knowing how it’s moving.

Craig Webb (00:53:14):
So I think the tricks, one of the tricks that people should have learned from the past year is that they’ve got a collect data far more often share data far, often inside their, inside their, their shops.

Mike Wisnefski (00:53:28):
Absolutely. Yes. And the world we live in right now, let me think about this. We’re all in different parts of the world, United States on a call talking like we’re sitting around the table and there’s a bunch of, you know, 48 people listening to this. This is the world we live in. We can communicate and we can pull this off. So it’s just a matter of putting our efforts towards it. Um, taken down the walls that we build around ourselves and our customers, um, because in inside of the shadows lurks, the, the monsters that will come out and bite you that you don’t know about. So if we sh you know, bring everything out to the open as an industry, we’ll be better off. And you know, that the more we can get to a set of standards and documents that are have legal strength, we’ll be better off. Um, if we, I think if we look to the financial markets who they deal with volatility day in and day out yet all of those players are pretty well protected against each other. You know, of course we do have blowups from time to time, but it doesn’t take down anyone or any major part of the industry.

Lori J. Drake (00:54:47):
Hey, Mike, just really quick before we do some questions about last question on that side before was saying, have you learned any tricks or anything over the last year that maybe people, I know a lot of people say, Hey, can I go to home Depot and maybe get something faster than dealing with my supplier? Anything that people can work with, or should they just wait, be patient and deal with the supplier like they always do.

Mike Wisnefski (00:55:09):
Um, so, you know, one of the things that has come to light in this last market is that the supply chain, the traditional supply chain, um, broke down and, um, it was difficult sometimes to match up supply and demand. What we’ve seen on our platform is that we are matching up non-traditional, um, supply and demand. Uh, we have had retailers selling back to distributors. We’ve had retailers selling to retailers. Um, we call it the supply web, and I think that’s going to be the trick moving forward is anyone who has supply in an inventory that can ship out, should be able to connect with anyone else. And that supply should flow, you know, with very little resistance. Um,

Craig Webb (00:56:02):
Yeah. And related to that, I think is also a shift in, um, builder’s attitudes toward the, would they buy, um, Southern yellow pine is now being sold into Canada. Like as your, as happened at mentioned on one of your podcasts recently or recently Mike, um, you know, people are using that product. People are using European products. Like they’ve never used them before. Uh, so, you know, if you’re, if you’re, if you’re trying to buy the same old, same old, that’s where that’s where you get some of the price shocks, as opposed to maybe there are other ways to build a house that you haven’t thought about. I am fascinated too, that I am seeing very, very, very little evidence that builders are changing, how they build a house to, uh, to use value engineering, California corners or whatever. And so in some ways the problem, it has it, you know, the problem is being exacerbated by a lack of willingness by the people, some of the people most effected to actually make shifts in their lifestyle and their constructions.

Lori J. Drake (00:57:14):
You know, it’s funny that you bring that up. One of the questions that we have is there, are there any alternatives to using lumber? I mean, can you build with anything else?

Craig Webb (00:57:24):
Not at the, the price is still better on lumber compared with a lot of other products. But I do think there are ways to build a house with fewer sticks that a lot of people use if you Google or get use on LinkedIn to, uh, um, mark a lot LIBOR tape, he is showing some of the most frightening pictures I’ve ever seen of people putting in windows and the like where they’ve got 15, 18 different studs, all, you know, helping fill out that window because people aren’t thinking,

Mike Wisnefski (00:57:59):
We have to remember that we’re 12 months into this right now. So the lead time on a project, through all of the design phase and everything, um, I think you will see 12 months from now. There will be changes in design. Yeah,

Craig Webb (00:58:16):
There are, there, there are some indications that more trusses and wall panels are on their way slightly.

Mike Wisnefski (00:58:23):
Yup. Um, and the, you know, flipping to alternative products and alternative methods isn’t working because this isn’t an isolated incident instance in just lumber it’s across the board on all commodities. Yeah.

Craig Webb (00:58:36):
The shortages of a concrete, if I recall concrete,

Mike Wisnefski (00:58:40):
Copper steel, um, you know, agriculture, commodities of a recent oil, you know, 12 months ago it went negative. Now it’s at a $70 a barrel.

Lori J. Drake (00:58:52):
So going along with alternatives, what are some examples of barriers they need to entry?

Mike Wisnefski (00:58:59):
Oh, the barriers for alternative products,

Lori J. Drake (00:59:02):
Uh, barriers to entry. Yeah. I think so. Or barriers for lumber, um,

Mike Wisnefski (00:59:06):
Education, design education, you know, you design it and then you teach someone how to put it up.

Craig Webb (00:59:13):
Yeah. I think, uh, business education is also one. I see a reference to building codes also being, oh, but building codes are terrible.

Mike Wisnefski (00:59:22):
It’s just ridiculous that we’re relying on 50, 60, 70 year old coats to build houses in today’s world,

Craig Webb (00:59:32):
Partly at the urging of builders.

Mike Wisnefski (00:59:34):
Well, that’s, that’s the barrier to entry to keep other people out.

Thea Dudley (00:59:38):
Well, some parts of the country were doing their building inspections by phone where the, the contractor was walking, the building inspector through with their, their smartphone. And like, you know, I don’t know about you guys, but I’m not wild about buying one of those houses. Nope. It was crazy. I mean, I understand you want to keep, you want to keep things moving, but I don’t, that that kind of floored me and I’m thinking I mental note to self don’t move to that part of the country.

Lori J. Drake (01:00:18):
Hey, this question comes to you directly, who is, who is having the toughest time managing credit of their customer? Would it be manufacturers or the dealer distributor dealing directly with the builders?

Thea Dudley (01:00:31):
I’m going to say, it’s, it’s going to be, I’m going to take it one step down. I’m going to say it’s the contractors are having a hard time managing their cashflow in general, managing their customer, and then managing the relationship with the dealer. So then if the dealer is relying, you know, if the dealer or distributor is relying solely on the methodology that they’ve used, you know, this has worked for us, you know, in all these years of business. And now suddenly, you know, they, they come into this climate and they haven’t altered anything. And they haven’t like Mike said that transparency, if they’re not having those conversations, if they’re not, you know, putting the help behind it, then yeah. They’re, they’re going to see it flow into theirs as well. But probably right now, the contractor is having the toughest time there a lot.

Thea Dudley (01:01:16):
We’ve already covered that. Where a lot of times they might be a really good craftsmen, but they’re, they’re not equipped the way that like a distributor or a dealer would have a department that deals with this. And hopefully some very talented people in it. They’re, you know, they’re, they’re kind of doing it all or relying on the tried and true. So if you’re in that situation where you can go and coach your customers and talk to them and get them working with you, you can help smooth them through that. But a lot of them just don’t have the bandwidth or, you know, the business life experience to have those conversations.

Craig Webb (01:01:51):
One of the things I would say that that probably figures in, in terms of who’s having it both worst, I would guess would be the people who set their prices before they start the job, as opposed to people who can set a price midway or after they’ve done the job. So, consequently, as an example, a person who is a custom builder signs, a contract to build a house over the next year and a half, you know, they’re, they’re the ones who are, are in, in the, in the deepest of the do-do, as opposed to the person who is a spec builder and can set the price. Once they finished building the house, a track builder sort of does it halfway in between a time and materials person, they theoretically should be golden.

Thea Dudley (01:02:39):
Well, the track builders are going back now, you know, putting the bite on their, their subs to say, Hey, can you, can you, can you take a little bit out of this, maybe, you know, give us, you know, five or 10% relief we’re going to pass it onto our customers. It’s like, honey, nobody believes that, you know, if, if you’re going to do that, then I want to see it. And I want something in writing. And then when do I get to roll this back? So those are some things that always come to mind, but yeah, those, those customer commercial jobs that were, were nailed down a year, maybe a year and a half ago, those are the contractors that are in the most trouble. The ones that I’ve seen handle it successfully, they’re coming to the table going, okay, how do I go back and have this conversation? And, and typically if you’re working with somebody who I don’t want to say, it’s fair, cause that’s, that’s, you know, kind of an overused word, but let’s sit down and have an honest conversation because again, it doesn’t do you any good for me to get halfway through this and then go bankrupt and that’s going to be a bigger problem for your project. So let’s talk about how we can make this good for both of us.

Lori J. Drake (01:03:43):
Thank you, Thea. And we are going to lose Mike. So I just want to say thank you for joining us today. And

Mike Wisnefski (01:03:48):
If anyone wants to reach out to me on LinkedIn, I’d be more than happy to shed light on, you know, what I’m thinking about for lumber prices going forward and how to protect yourself using tools that are currently available. Thank you, Mike. We appreciate your time.

Lori J. Drake (01:04:09):
Hey Jen, this question comes directly to you and product priced. How has Kodiak’s credit or revenue been disturbed and how are you addressing the issue? Um, I think this is just from a broad industry standpoint. I will say, you know, our exposure has gone up as prices go up, your exposure goes up. So we have to determine, um, you know, how, how much are we willing to have out there at any given time? And I think it’s, it’s very specific and it comes back to knowing your customer, knowing the projects they’re on, knowing what the, what the cashflow is on each of those projects. Um, but I think it’s an industry issue that we are all, we all have much more exposure than, than we had at this time a year ago or at this time five years ago. Yeah. Thank you to anybody. When prices do come down, will it be, do you believe it, I’m guessing it’ll be slow or gradual or dropped like crazy, like in 2000 to 2001,

Craig Webb (01:05:13):
I’ve tended to think that I’ll be slow and gradual because there is all that demand out there and, and jobs getting delayed don’t mean jobs getting scrubbed. So I would think that it’s, um, it’s going to be more gradual. Um, they’re there every year, there’s, you know, a falls, a fall decline. I was going to say a fall fall, but you know, it falls a Cline. And, um, but you know, it very well could be that we might not see that we actually didn’t see it last year. It didn’t drop anywhere near as much in October as people thought.

Lori J. Drake (01:05:50):
So I have another question. Is it best to buy it now while you think the price is crazy and expensive or to wait, think it will be a better price later? Or should you grab it now while you can? Let me think. I don’t know. Where’s your crystal ball.

Thea Dudley (01:06:09):
It’s out of the cleaner. I’m not clairvoyant either, so that didn’t help.

Craig Webb (01:06:15):
Well, as they, as they, the magic eight ball would have sold you. That depends. Right. Um, and I, I, you know, the number one thing I’m hearing around the country is that a lot of people are just not worrying about trying to make money on the price. They’re just fulfilling their customer’s demands.

Thea Dudley (01:06:33):
That’s that’s what I’m experiencing is that the push is more, let’s try to get our customers taken care of. Um, we don’t want to disappoint. And that’s where that conversation comes back in, where it’s like, look, if we’re not able to get insulation or roofing or lumber or the pricing’s crazy, or, you know, whatever’s going on, if you’re having that conversation with them and bringing them into it and talking it through, it’s not even so much about what the cost is. It’s more the timelines.

Lori J. Drake (01:07:01):
Right? I have one more question that is completely outside of what we discussed. It says I’ve heard that people can get their personalized stamp for the lumber. What does that process

Thea Dudley (01:07:16):
Say? That again, apparently

Lori J. Drake (01:07:19):
Lumber team have a stamp on it that says your name. They want to know what it is, the process to go about doing that. How do you get a stamp? Is it like specific to somebody, one company or something? Or can anybody do that

Thea Dudley (01:07:33):
Last question? Crickets? I never heard of that. I was going to go with hobby lobby, but

Craig Webb (01:07:45):
I wonder if maybe when they’re talking about a personalized stamp it’s to help track down the lumber, if it’s been stolen on the job site, that would make sense. Uh, but uh, if the person who asked that question could, could talk a little bit further about what they have in mind. Maybe we can. Uh, but it’s not something I think any of us have heard of. I don’t have anything for a second. You go to the next slide. That’s all that we have right now. Uh, I want to thank the,

Lori J. Drake (01:08:19):
Uh, Jennifer, uh, almost set the, again, cry for your future for joining us today. If anybody needs to reach out to anybody or have some additional questions, go ahead and reach out to me the same information that their registration came from. And I can always address the CTV other people involved yet. Jennifer, thank you again for taking time out of your day and joining us. Bye-bye thank you.

Speaker 5 (01:08:58):
[inaudible].