New South Construction Supply eNews - October 2008

 

Dear Friends:

As I write this letter, the economy continues to teeter precariously on the edge of a recession or maybe even a depression. The sub-prime crisis which started in the U.S. has now spread around the world, and we are in the midst of a global economic crisis, the likes of which have not been seen since the Great Depression. Hopefully the economic stimulus measures being implemented by countries around the world will restore faith in the banking system and return the credit markets to normalcy soon.

Since last month, I have been informed of several projects that have been delayed or canceled due to lack of financing, and, while I believe many of them will proceed as originally planned once the banking crisis is resolved, I am afraid that some developers and investors will sit on the sidelines for some time to assess whether the economy will return to “normal.” I also think a lot of projects will stay on hold until after the presidential election as, depending upon who is elected, some projects may not get started if investors are concerned that their taxes will be increasing thereby negating the benefit of putting capital at risk.

I hate to sound like “Chicken Little,” but I pride myself in being totally honest with the readers of our newsletter. To that end, below is from the latest AGC Data Digest:

Separately, McGraw Hill Construction predicted the level of construction starts in 2009 is expected to decline 7%, following a 12% decline predicted for 2008. “Single-family housing for 2009 will be down 2% in dollars, corresponding to a 4% drop in the number of units…. Multifamily housing will retreat 6% in dollars and 8% in units, after the sharp plunge witnessed during 2008. Commercial buildings will drop 12% in dollars and 15% in square feet, similar to the declines experienced in 2008. Stores and warehouses will continue to lose momentum, the office correction will be steeper, and hotel construction will finally pull back after its lengthy boom. Institutional buildings will slip 3% in dollars and 6% in square feet, as the financial crisis affects funding coming from states and localities. Manufacturing buildings will plunge 32% in dollars after an exceptional 2008 that was lifted by the start of several massive oil refinery expansion projects. Public works construction will fall 5%, given flat funding at the federal level combined with restraint by state and local governments. Electric utility construction will retreat 30% after surging 55% to a near record amount in 2008.”

As with last month, the silver lining in the aforementioned dark cloud is that prices of most of the products we sell are either declining or at least not increasing, unlike the last two years or so where inflation was rampant in our industry. Also, another bright spot is oil prices which have declined from a high of $145 a barrel on July 3 to $63 a barrel on October 28, a whopping 57% decline. As predicted a few months ago you can get unleaded fuel now in some markets for under $2 a gallon.

For more information about the current pricing outlook, please see below.

Prices for many construction materials continued to decline in October as commodity prices continue to fall. The price decreases for commodities are due, in most part, to weakened worldwide demand and concerns in general about the economic outlook for the near and long term. Steel prices have seen the largest decreases, as the price for scrap steel has fallen by over $100/ton since the end of August.

Nucor announced a price decrease of $6.50/cwt effective immediately on October 13 and other domestic mills followed quickly with their own price decrease notices. This is the second decrease in as many months, as Nucor also decreased their mill prices by $3.50/cwt on September 10. Although this is the second consecutive month that rebar mills have lowered their prices, prices still remain higher than in June due to the rapid price run ups in July and August. Decreased foreign demand was also a factor in their decision to lower prices in October. With both foreign and domestic demand expected to remain weak at least through the second quarter, most analysts expect domestic rebar prices to remain at current levels or fall more in November.

Concrete reinforcing wire mesh prices softened in late September and early October, due mostly to weakened domestic demand. Although their cost for wire rod remains the same as in September, wire mesh manufacturers have lowered prices between 3 to 5% since the first part of September in order to try and increase their sales volume. Unless their cost for wire rod decreases, expect concrete reinforcing mesh prices to remain at or near their current levels for the remainder of 2008.

Masonry reinforcing prices have also softened over the past few weeks, as manufacturers have seen a slight downturn in orders. If demand remains at current levels, prices should remain relatively unchanged. If demand continues to decrease, expect prices to fall by 5 to 7 % by January 1st.

As reported in our September Newsletter, copper thru-wall flashing prices declined by approximately 11% in late August and early September. Currently prices are still at September levels; however, with continued weakening domestic demand and with the price of copper having fallen to record lows for the year in October, expect prices to soften in November or December.

Although the price for crude oil and natural gas has fallen drastically since September, most prices for construction materials (curing and sealing compounds, penetrating sealers, plastic vapor barriers, foam expansion joint products, etc) made from oil and natural gas derivatives have not decreased. This is due to most manufacturers having to purchase raw materials months in advance. It sometimes takes weeks or even months for the effects of lower oil and natural gas resins to be seen in lower prices for these types of construction materials.

Polyethylene manufacturers lowered prices by approximately 5% in early October, mostly due to weak demand. As polyethylene resin prices remained uncharged for October, prices should remain at current levels through October and for most of November. It is expected that the price for polyethylene resin will fall in November, due to lower natural gas prices. If this occurs, polyethylene prices should move downward in November.

The one exception to the downward trend in costs for construction materials is those which are made with asphalt. The price for asphalt still remains at near record levels, therefore prices for asphalt based products such as sheet membrane and liquid membrane waterproofings, damproofings, fiber expansion joints, etc. are expected to remain at current levels for the next several months.

The latest PPI charts are also out. Click here to view them.

I am also happy to report that our second charity golf tournament benefitting the Make-A-Wish Foundation was held at Sedgefield Country Club in Greensboro, North Carolina, on Monday, October 20, and was even more successful than the tournament we hosted in South Carolina in September. To see pictures from this tournament, click here.

Thanks again to all of our sponsors, players, volunteers, and especially Linda Townes, who coordinated the tournaments for us on top of her normal duties as our Marketing Coordinator. Linda spent countless hours over the last year planning and executing these tournaments, and while the flawless execution of both of them may lead you to believe that being in charge of these two tournaments isn’t very hard, let me assure you that it is a task of gargantuan proportions and requires extreme attention to detail and many late nights after doing her day job. Thank you again, Linda!

This month, we are profiling the following suppliers:

  • Hanes Geosynthetics is one of the largest and most diverse suppliers of Geosynthetic products, such as filter fabric, soil stabilization products, silt fence, and many other products used on all types of jobsites. For more information about their product line, please see below and remember to call us for pricing the next time you need any of their products.
  • Simpson Strong-Tie is the premier manufacturer of anchors and fasteners for the construction industry. Those of you who have used their products know that they have unparalleled quality, the broadest product line in the industry, and a reputation for innovation. The next time one of your projects calls for fasteners or anchors, please give us a call. See below for more specific information about Simpson.
  • Wire-Bond is one of the oldest and most innovative manufacturers of all sorts of masonry reinforcement products. They are constantly innovating and coming up with new ways to save you time and money on your masonry jobs. Please check out their ad below. All of their products are available from any of our branches.

This month’s management article is entitled The Right Way to Deal with Difficult Customers. All of us have customers who sometimes try our patience (and I know that we occasionally try the patience of some of our customers!), and dealing with difficult customers is an art rather than a science. I hope the article will give you some tips on how to more effectively deal with challenging customers.

In closing, once again, I hate to be the bearer of bad news, but I doubt I have told you much that you didn’t already know. We are living in challenging times, and, during these times, we know that more than ever you need a supplier you can count on. We hope that we are that supplier for your company.

Best Regards,

Jim

Jim Sobeck President (864) 325-6518 jim.sobeck@newsouthsupply.com

This month we are featuring the following suppliers:

Supplies the construction industry with ground stabilization, erosion control, silt fence, t-posts, and geotextiles. Hanes is a proud partner of New South Supply since 1981.

Site Work Materials & Supplies | Geotextiles | Grass Seed | Turf & Ornamental Chemicals | Fertilizer | Landscape Fabrics | Erosion Control

For more information call your local New South branch or visit them at www.hanesgeo.com.


New from Simpson Strong-Tie Anchor Systems, EDOT Epoxy-Tie adhesive is formulated to provide an economical and high strength solution for transportation projects. It is a two-component, non-shrink epoxy based anchoring system that meets the ASTM C-881 specifications for Type I, II, IV, Grade 3, Class C.

EDOT adhesive is available for dispensing in 22 oz. and 56oz. cartridges as well as 1-gallon, 10-gallon, and 100-gallon bulk containers for use with bulk dispensing equipment.

Visit us on our website at www.strongtie.com for product details and specifications.

CoreLock is the secured rebar positioner. It installs quickly and easily 1-1/4 inches into the core of the block. This totally eliminates movement of the positioner during block installation. Diagonal placement in the core insures the rebar is always automatically centered. Does not interfere with the placement of wire reinforcement. CoreLock is available for 8" and 12" block.

Click here for more information.

October's Management Article

The right way to deal with difficult customers

by Christine Corelli

According to Confucius, if you are sincere, true to your word, and careful in your actions, you will get along with anyone –well, almost anyone, that is. While what "Confucius says" may be right for your personal life, your interactions with customers on job sites or plant floors are a bit more complicated. Like it or not, at some point, you have to deal with a difficult or upset customer. The trick is to know how to do it the right way.

Most factory and construction pros know that difficult customers “come with the territory.” When dealing in expensive, stressful transactions, even the most mild-mannered customer may get upset on occasion. What is important for your peace of mind and business success is learning how to deal with these encounters and mitigating the negativity that may result.

Whether you are dealing face-to-face or on the phone, these situations are more than mere challenges. If you can’t handle them professionally, resolve the problem, and turn them into a successful situation, your unhappy customers will switch over to your competitor. Inevitably, they will reveal that they were not satisfied with your service. Believe me; bad news in business really does travel fast. The result will be an assault on your reputation – something no company can afford.

Whether your job is sales or service related, you need to know how to handle difficult or irate customers with the utmost professionalism. That requires shifting into the right mindset and communicating with them in a confident, competent and non-combative manner. As a start to the process, just follow these important guidelines to help you through a tough encounter:

Step 1: Maintain your cool
First and foremost, you need to prepare yourself for what is to come. There will be angry words, personal affronts, and highly charged emotions. This is the kind of situation where it is easy to lose your cool and become defensive when you are confronted by someone who is angry – especially if you think they are being unreasonable.

Your mounting stress can lead to increased anger, which will only make your customer more upset. By learning to put some distance between you and the situation, you can control your emotions. This is what I call the “Be Cool” mindset; it is the best protection you have from the angry person confronting you.

Let’s assume you are a service manager and you receive a call from an irate customer who is trying to deal with an equipment problem. The customer is very challenging, but you remind yourself that he/she is not as technically proficient as you are. Therefore, you can be more sympathetic to his or her problem. Assume the “Be Cool” attitude. Be patient, stay calm, and reassure them that you can solve the problem (even if your service department is swamped!).

Do not sound impatient or say anything to make it worse. Now is not the time to remind them that they shouldn't have touched anything and that you had given them the proper maintenance procedure when you delivered the machine. Instead, be cool and start a positive approach. Begin by asking a few questions and talking the customer through the problem – step by step. Reassure him/her along the way. If you can’t talk it through, get a technician on the phone and arrange a follow up as quickly as possible.

2. Admit you are wrong
Now that you have a “Be Cool” attitude and have started to work through the problem, take responsibility immediately if you or your company made the mistake. Even if there is some doubt, take the blame anyway. It diffuses the situation very quickly and will put your customer at ease.

This is hard to do since, ultimately, there is a financial responsibility in all of this. Nevertheless, you still need to own up to the situation. Hopefully, if you handle everything quickly, the financial burden will be light. At the very least, you will have saved a customer and that will mean sales in the future. Everyone can make a mistake – don’t make another one by turning off your customer.

3. Know what the customer wants
Generally, an angry person just wants to vent his or her anger. Usually that means taking the anger out on someone else – in this case, you. You will get the brunt of it – even if you are not to blame. Often, they take it out on you even when the technicians did not respond fast enough or the new equipment purchase was not delivered as promised.

It is always best to let them have their say before you respond. Let them blow off steam. They can vent and calm down. Once that happens, they usually just want reassurance that:

  • You are concerned with their problem.
  • They will be taken seriously.
  • You are capable of handling the situation.
  • They will be given your undivided attention.
  • They will be treated with respect.
  • They can expect a fast response.
  • They will know you are on their side.
  • They are important to you.
  • Your words communicate compassion and empathy.
  • You will honor your warranty.

4. Do not judge or correct
Never judge or correct a customer. If they are angry with you, refrain from making any statements that are judgmental or will make the customer defensive. Now is not the time to say, “Why didn’t you make sure you maintained the excavator properly?” Now is the time for action; now you must solve the problem.

Apologize, empathize, and help them in every way possible. If you can solve the problem and send them out the door as a happy customer, then you have handled the situation well. In fact, studies show that deftly handling tough situations and solving problems with professionalism actually yields the opportunity to build stronger business relationships.

5. Apply verbal cushions
When a customer is angry, you can diffuse the situation by applying "verbal cushions," a communication technique taught by customer service trainers. These words and phrases “cushion” a customer's complaint and will help you to service them more effectively. The verbal cushions below communicate a sense of concern, promote cooperation, and display empathy. Memorize them so that you can apply them in challenging situations.

"I apologize this occurred, John."
"I can understand why you are upset.”
"I'm very sorry this has happened to you."
"I apologize if there's been a misunderstanding."
"I can understand why you would be unhappy."
"I understand your position."
"Thank you for bringing this to my attention."
"I agree with you completely. This is crucial to the job you're doing."
“I recognize the urgency involved. Let me take care of this immediately.”
“I want you to walk off here as a happy customer.”

6. Calm out-of-control customers
When dealing with customers who use foul language and just won't back down, you need to steel yourself against the onslaught and stay calm. This won’t be easy. Your first reaction will be to yell back at them, become defensive, and continue to support your own position – right or wrong. Now, more than ever, you need to use verbal cushions such as:

"Sir, I haven't said or done anything to disrespect you in any way.”
“Let me resolve this for you and make sure we take good care of you.”
“Let us try to work this out in the most professional and productive way.”

7. Be proactive in problem prevention
The best way to offset a situation with difficult customers is be proactive in avoiding mistakes. Make sure your organization has the appropriate, timely systems and procedures in place to avoid problems that can cause customers to become difficult. Consider taking the following leadership actions to ensure that you are ready for any situation:

Make the creation of a “Sales-Service Excellence” culture a major strategic initiative in your company.

Communicate service excellence continuously and make sure your people take it seriously.

Provide training to employees on the soft side of customer service and write specifics on how they should think and act as brand ambassadors who will represent your company in a positive way.

Create a written service policy with the highest standards for service excellence.

Enlist the support of high-performance teams to create guiding principles on how you will communicate, act, and operate that demonstrate the core values of honesty, integrity, caring, professionalism, and respect. These are some suggestions to put in place:

"If a customer calls with a problem, we will own the problem and make sure their problem is resolved.”

“Before we leave home each day, we will make sure all parts that were ordered have been shipped, and make sure back orders have been found.”

"If a customer needs a part and we don’t have it in our inventory, a team of three people will jump in and help the parts manager locate what they need."

"We will apologize immediately if customers have had to wait, or if they have a complaint."

"If our service technician will be more than 10 minutes late, he or she will call the customer to let them know."

"We will come forth with cutting-edge solutions to any service problems that may exist."

"We will bring complaints and problems to management's attention immediately."

"We will double check every order, shipment, and billing entry."

"If a shipment or order will be late, we will call the customer to keep them informed."

"We will always make sure a customer stays informed. We will provide progress updates at all times, and let them know we are working for them."

"If a customer is waiting for important information and we can't obtain it quickly, we will call them to let them know we are still waiting, and will advise them the moment the information comes through."

"We will always strive to give the customer more than he or she expects."

"We will follow up with customers to make sure they are taken care of and are happy with our work."

8. Take the leadership role
Work with your team or enlist the help of a professional to create guiding principles that are specific to your business. Print them out so everyone has them and consistently update them.

The following are additional leadership actions to take that will help you to avoid problems:

  • Document complaints and talk about how they could have been avoided.
  • Work to uncover and eliminate any service flaws.
  • Instruct sales reps and service managers to under promise and over deliver.
  • Strive to seek ways to make it easier for customers to do business with you.
  • Train your employees in the philosophy and actions of teamwork.
  • Commit to servicing your "internal customers" as well as your external customers.
  • Record and distribute service excellence rules so they permeate your entire business.
  • Hold monthly meetings to discuss service.
  • Create a Problem Resolution Report for executives so they can stay informed and can pick up the phone and call customers to make sure they are happy.

9. When you can't help a customer
What do you do when you can't help a customer or do as they ask? Let them down gently using a verbal cushion that displays professionalism and demonstrates empathy. The following are examples of some valuable cushions that should help you face these difficult situations. As you review them, note that each example uses the customer's name. Addressing someone by name shows respect and enhances the importance of the relationship.

"I would like to be able to tell you I can do this for you, Bill. Unfortunately, I’m not able to.” Then, follow it with, "Here's what I CAN do for you," and tell them what action you will take.

"I don't blame you for being upset, Mr. Smith. I would feel the same if I were you."

"I'm sorry this happened to you, John. It's an inconvenience I know."

"I'm sorry you're still waiting, Mr. Jones. I just spoke with the service tech and he's on his way. Please understand that traffic is backed up due to the storm. I appreciate your patience."

"I apologize if there's been a misunderstanding. Mr. Smith, I'll talk with the salesperson immediately and get back to you as soon as I obtain answers for you.”

"I am sorry that you think you were overcharged, Joe. Let’s walk through the invoice. If there are any errors, we will make corrections immediately.”

"I understand your position, John. If I could do more for you, I would."

"Mr. Smith, I would like to be able to tell you I can do this without charging you for it. Unfortunately I can't. Here's what I can do for you..."

A final word on difficult customers.
When it comes to dealing with difficult customers, you can say and do everything right – even stand on your head to make them happy – and still not be able to diffuse the situation. A customer may slam the phone down on you or walk out swearing up a storm. Don't take it personally, don't carry it over to your next customer, or take it out on your coworkers.

Accept that in the distribution business, and in every business, difficult customers come with the territory. What is most important is that you have systems and procedures to prevent problems from occurring. Equally important, you must have the training and knowledge to help you and your customers get through these difficult and trying situations – the right way.

New South Construction Supply Locations

Main Office Shipping: 951 Harbor Rd West Columbia, SC 29169

Mail: PO Box 512 Columbia, SC 29202

Sales Manager - Jon Black Operations Manager - Donald Whatley 803.451.7028 Product Sales: 803.791.8700 Accounting: 803.451.7045 Toll-Free: 800.849.6768 Fax: 803.791.8191 President - Jim Sobeck 864.325.6518 CFO - Kurt Herwald 864.268.3970 VP Purchasing - David Hodgin 704.358.9797 Director of Finance and Operations - Dave Lewis 803.451.7025

Other Locations

9 N. Kings Rd Greenville, SC 29605 Phone: 864.269.7007 Toll-Free: 800.849.4454 Fax: 864.269.6004 Operations Manager- Rob Hovanec Sales Managers- Russ Lott & Jey Yates

1427 Mechanical Blvd Garner, NC (Raleigh) 27529 Phone: 919.662.9012 Toll-Free: 800.849.4677 Fax: 919.662.9412 Operations Manager- Steve Freeman Sales Manager - Vic Murray

Other Locations

4987 Banco Road N. Charleston SC 29418 Phone: 843.760.0780 Toll-Free: 888.224.3140 Fax: 843.760.6127 Operations Manager- David Starr Sales Manager- Trip Moore

9050 D W. Market St. Colfax (Greensboro) NC 27235 Phone: 336.992.0237 Toll-Free: 800.609.0889 Fax: 336.992.0839 Operations Manager- David Perkins Sales Managers - Kearns Cheek & Jeff Hall

180 Rodeo Drive Myrtle Beach SC 29579 Phone: 843.236.6447 Toll-Free: 800.821.2676 Fax: 843.236.6521 Operations Manger- George Acerbi Sales Manager- Clint Paul & Jon Gore

649-51 Anderson St. Charlotte NC 28205 Phone: 704.358.9797 Toll-Free: 866.375.9660 Fax: 704.358.9646 Operations Manager: Adam Kent Sales Managers: Walt Bell & Chris Daleus

358 Industrial Park Rd Hardeeville Hilton Head) SC 29927 Phone: 843.784.1580 Toll-Free: 866.326.8802 Fax: 843.784.1581 Operations Manager - Artie Helmey Sales Managers- Steve Melton & Ray Bryant