Proposed Marketing and Distribution Plan 2004 - 2005

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Proposed Marketing and Distribution Plan 2004 - 2005 Powered By Docstoc
					Marketing and Distribution Plan
         2004 - 2005

   Working together to exceed expectations
        Overview of Presentation

•   History
•   Determinations of Success
•   Solutions for Success
•   Future Growth
•   Topics of Discussion
                      Welco History

• Welco since 1983
        • Ownership and partnership
        • Financial growth and stability
• Mill sales and distribution
        • Twelve reloads
        • Freight contracts
• Fascia distribution in California
        • Manufacturing and distribution since 1984
• Commitment to excellence in distribution
• Canfor relationship
        • Commodity and specialty business since 1993
        • Volume 2003 - 55 million fbm        2004 - EST. 60 million fbm
           Market Potential –
       Housing starts for California

• California housing market                 Califonia Housing Start 2000-2004
  should grow 3-6% over       200
  next 5 years
                              150

                              100
• 2002-03 up 7.3%                                                               house starts
                              50
• 2003-04 up 3.3% EST.
                               0
• 2004-05 up 4.0% EST.              2,000    2001    2002 2003 est2004 est
                                                Starts in 1000's
              Profile of Fascia Usage

                                                        •
90
80                                                          Typical usage per home
70
60                                                          300-450 FBM
50
40                                                      •   Sheer volume of orders and
30
20                                                          customers to build volume
10
 0                                                      •   Limits Silva Star Program
     2001   2002      2003 est    2004 est   2005 est

                     Silva Star
                                                            volume due to actual volume per
                                                            house
                   Million FBM
                                                        •   Fascia usage is shrinking
                                                             – siding design 600-800fbm
                                                             – stucco design 250-350fbm
                                                             – general switch from 2x8 to 2x6
                                                               to compress the building costs
        For 2003 Silva Star has about 35% of California Fascia Market
Profile of Account Base

              •   Welco’s push towards direct
                  sales to Contractor Yards
              •   Value of contract yard to
                  break units into pieces for job
                  site delivery
              •   Top 5 Southern CA Contractor
                  Yards ship almost one million
                  FBM per day EACH
              •   Smaller Contract yards buy
                  minimal amounts of Fascia,
                  buy specific tallies from our
                  Distribution yard-sometimes
                  one or two units at a time
                Direct Vs Indirect Sales
                   Goal is to reduce indirect sales
Canfor               Welco                  Distributor                                                          Centex
                                                               Contractor
Bellingham           Lumber                 Yard Office                                   Framer                 Type
                                                               Yard
Mill                 Corp.                  Wholesaler                                                           Builder


     Profit Margins                    4%                  6-9%             12-20%                      10-15%
     Based on full units only


        WELCO LUMB ER              DISTRIBUTION YARD          CONTRACTOR YARD                         FRAMER
       Distribution of           One stop shopping for      Specified piece tallies          Set pricing per home built
       prompt material           smaller yards              delivered on a timely basis
                                                            direct to job site

       Specified tallies, less   Extended payment terms     Full inventory or Custom         Supply all building labour
       than truck load                                      cutting
       orders
       Prompt payment to         Long term relationships    Price protection for 60-90       Supply all Specialized
       Canfor –shipments                                    days                             contractors or installers
       Thur.-Wed Due
       Friday

       Marketing                                            Extended payment terms           Even flow quality and
                                                                                             consistency for projects
           Details of SKU per truck
               shipments from Welco’s Reload


• Importance to Customer to buy complete orders or they
  will shop elsewhere - inventory “outs” really hurt us
       • Very few substitutes allowed by Framers - order 20ft, need 20ft
                 » Limited workforce eliminates flexibility
• Up to 18 different SKU’s per truck load order
• Importance to have no stock outages - no substitutions
• Over 60% of all orders placed must ship with 1 week
       •   20% orders   ship 1-2 days
       •   45% orders   ship within 1 week
       •   25% orders   ship within 2 weeks
       •   10% orders   ship within 3 weeks - usually due to SKU shortage
Major Challenges to Welco Lumber

•   Fill rates and shortages
           •   Longer ship times from Bellingham
           •   Original plan of 2 week shipment times                                Shipments from
•   Loss of orders                                                                    Bellingham
     –   percentage of orders lost                                                 2002         2003
           •   2002 2% about 500,000 fbm
           •   2003 7% about 2,000,000 fbm                                    14%       1 week   12%
     –   Reasons for lost orders
                  –    80% Lead time for product                              36%       2 week   27%
                  –    20% Price- 2x8 20ft, all 1x2-1x8 Boards,
                       2002 - 50% 2 weeks or sooner                           33%       3 week   31%
                  –    0-2% Quality of Fascia, 2
                       003 - 39% 2 weeks or sooner                            13%       4 week   17%
•   Competition                                                               4%        5+week   13%
           •   push towards more PROFIT – answer Prime
                  – most Fascia suppliers pushing to supply Primed Fascia
           • Sierra Pacific, Unity,Western Wood, Fraser Pacific, Taiga, Dakeryn,
               even Golden State Lumber (Stockton based Contract Yard)
           •   competing species, engineered wood, imports
•   Price point,      Bellingham mill returns show losses to Program
            Major Challenges to
            Canfor and Silva Star

• Supply - what can be to shorten shipping time
   – Better trend and forecasting
   – Back up inventory at Bellingham, more finished inventory
   – Can Welco help source material ?
       • Possible quarterly supply program


• Mill Net Returns
   – Better order files
   – Need higher Net returns for Bellingham
             Solutions for Success

• Better mill nets for Bellingham
    – Move towards more Profitable Primed fascia
    – Work towards better reman returns - more efficiency
• Increase market share for Primed
   – Develop Southern CA market from Green D/Fir to Natural KD
      SPF then to Primed KD SPF
   – Develop pull through demand from Builders, Designers and
      Architects
   – Become Primed fascia of choice, specified on job specs
       • “ASK FOR IT BY NAME”
• Customer trips, Industry shows
     Increase Bellingham Mill Nets
• Increase add ons for reman
           – price points
               » what will the market bare?
• Since 50/m price increase on 2x8 20ft
           – average profitability drops from 4.2% to - 2.4%
           – price increase without commitment to supply
               » shortages are still common in Bellingham
           – 2x8 20ft has become a Lost Leader, very few accounts will
             pay higher price unless stuck for product
               » switch to KD White Fir or Hem Fir
               » 2x8 20ft is 45% of all 2x8 Fascia sales
                                 Develop Primed Sales
              40                                                       •   Pull through marketing on
              35                                                           Primed
              30
                                                                       •   Natural Fascia demand
                                                                           peaked
              25                                                            – switch from 2x8 to 2x6
              20                                                       •   Switch Natural Fascia sales to
                                                              Total        Primed Fascia
              15
                                                              Primed   •   Create new markets in
              10                                                           Southern CA
               5                                                            – 1/3 market for green Fir
                                                                       •   Possible Welco distribution
               0                                                           yard in Southern CA
                                        2004 est

                                                   2005 est
                   2001

                          2002

                                 2003




                                                                            – Pull piece orders for Framers
Million FBM                                                            •   Measurable success
                                                                            – Centex Homes, Shea Homes
              Creating Demand for
            Silva Star Primed Fascia

•   Southern CA switching to Kiln Dried from Green Fir
     – Example Contract yard with order file of 2x8 Resawn
        • 1996 order file 90% Green Fir and 10% KD White Wood or SPF
        • 2003 order file 25% Green Fir 75% KD White Wood or SPF


•   Work with higher end Framers / Builders to boost Prime sales
     – TWR Framing, Quality Structures, H & R Framing, Mid Coast
     – Centex Homes, Shea Homes, KB Homes, Lennar Homes, etc


•   Push to supply models on track projects
     – Must have Silva Star specified from project inception
     – 7 Model Homes starting project of 70-150 Homes - Centex “Stone Canyon”
         Profile of Top Builders in CA

• Identify costs and savings on appropriate projects
     – Savings on siding projects far higher than stucco projects
          • More fascia used on “Ginger Bread Homes”
     – Stucco design              250-350 FBM             extra cost $40/home
     – Siding design              700-1200 FBM            extra cost $150/home
          •   Savings from Painter for not Priming Fascia or Soffit - Hard Sell
          •   Ensure quality prime coat, Olympic PPG with 15 year Warranty
          •   No job delays waiting for Painters - Must sell to Framers
          •   One less setup on scaffold or security lines, Liability savings
                – Very hard sell, might exist but hard to qualify

•   Note: Large percentage of Builders do not perceive a current problem
    using Natural KD SPF Fascia, must show savings per home to switch to
    Pre-Primed Fascia
 Future Growth of Primed Silva Star
• Marketing directly to Builders and Framers
   – More trips to Centex, Shea Homes, KB Homes, etc
   – Exposure through Building Supply Shows
      • NAWLA, PCBC, Building Industry Show
• Combined marketing in publications or trade shows
       • Promote inventory in Woodland, CA. Reload
          – Tie Welco Lumber Reload into Canfor advertising
              » Merchant Magazine, Softwood Lumber Buyer
          – Joint Welco/Silva Star business cards
          – Joint logo shirts for Building shows or Customer gifts
          – Joint Welco/Silva Star information jackets for samples
              Topics of Discussion

•   Price increases
•   Changes in Raw Material Supply to Bellingham
•   Distribution Channels
•   Goals for Increases Sales of Primed Fascia
•   Joint marketing

				
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