Several notables came out of the recent 91st annual Southern Wholesalers Association conference held on Amelia Island, Florida at the Omni Amelia Island Plantation Resort.
For starters, the scuttlebutt was positive in terms of this year’s new convention location in the Fernandina Beach area, a departure from the recent every-other-year Palm Coast, Florida site. Next year’s convention returns to Hilton Head Island, South Carolina.
And attendees of the Sunday afternoon seminars were treated to the in-depth insights of MORSCO CEO and industry veteran Chip Hornsby, who gave his take on the current distribution/construction landscape.
Hornsby wrapped up his talk with some key industry movers that require attention. “The world is changing and has been for quite some time, but it is about to impact our industry for many reasons,” he said. “Labor shortage, affordability, digitization and an enormous amount of dry powder sitting on the sidelines just looking to invest. We are definitely a target. I think we are about to face a lot of disruption, if you will, as an industry.”
One potential distributor Hornsby talked about early-on in his talk was the proliferation of prefabrication and automation in the building construction sector.
“When you look at the construction industry in general, we have this huge labor shortage coming and stagnation in productivity,” Hornsby said. “We’re beginning to see automation kick in and it’s beginning to draw a lot more attention. You are getting into rooms being built, even out of concrete, and then taken in. That could be a hotel room or someone’s residence — a lot of the areas we participate in. And there are factory-built homes. That will continue to evolve primarily for affordability.”
Hornsby pointed out through research MORSCO has done with a consulting company that less than 5% of new construction in the U.S. is done off the jobsite, however, in Sweden the percentage jumps to 40.
“There’s one reason they are using prefabrication in Sweden, affordability,” he said. “That’s a key component in the labor shortage we are facing that will begin to influence virtually everything in construction.”
On the digital front, Hornsby noted the construction industry still lags behind others such as the media, airline and travel industries. “We are way behind, but that will not continue much longer,” he said. “Digitalization has not occurred yet, but we need to be prepared for what is going to occur.
“The amount of software being created for our customers to manage jobs is unimaginable. Why? Because they are trying to drive down the intensity around labor. They can’t get it, and now they have to figure out how to do the job much more efficiently.”
Hornsby said there is opportunity for increased returns in the construction industry. “The opportunity is enormous because of our inefficiencies,” he said. “It means others are beginning to get in and look at our industry, and I can assure you, based on phone calls I get and discussions I have, we’re targets. You have to look beyond our customers today, some of which we share. We have to not only look at our customer’s customer, but we have to look at that customer’s customer.”
Hornsby brought up the Texas-based startup RenoRun, which guarantees it will deliver building material products in two hours or less. “They have simple pricing at $60,” he said. “Run out of something on the jobsite? Open the app. They want you to keep working and not leave the jobsite. And they bring hot coffee. My point is there constantly are people looking for ways to get into our industry and we have to be aware of it.”
One attendee asked Hornsby about the subject of manufacturers selling direct. “If you look at a building under construction, as a plumbing and mechanical distributor, there’s the potential for 100 maybe 300 different manufacturers we can distribute in that facility,” he said. “There’s no one I’ve seen from a manufacturing standpoint that has put the whole package together, so that’s a benefit to us. We’re the last mile. We’re the logistics component, but I wouldn’t want us as an industry to stop thinking that’s the only real threat we are dealing with. You need to be aware of it, but what role are we playing in the entire channel, and not just with our existing customers today? Our existing customers are going to have a heck of a time finding labor to install. That’s where I think technology is going to begin to come in and have an effect.”
Hornsby said MORSCO already is looking at what its 2030 plan of attack could look like. “And then back up into it,” he said. “And as an industry, I hope you all do the same thing.”
Hornsby was introduced by his brother, Hugh Hornsby, a fellow industry veteran and now vice president of sales for Everflow Supplies. Hugh Hornsby gave a lengthy and moving introduction centered on the influence his older brother has had on him over the years.
Attendees also heard from demographer, futurist and author Ken Gronbach, who talked about how the world demographics play into today’s business world, and the importance of considering demographics when making strategic business decisions. IMARK Plumbing President John Aykroyd also spoke at the convention, giving attendees an update on the expanded buying group.
During the Monday morning session, SWA celebrated the tenure of President John Skeppstrom of Columbia, South Carolina-based Gateway Supply. Masters Supply’s Jack Bell is the incoming SWA president with Sandpiper Supply’s Chat Howard moving into the first vice president/treasurer role.
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