Believing in A Spirit of Goodwill

A Spirit of Goodwill

In the April edition of this communication, my father again wrote proudly of Bowens’ favourite son, Jeff Harvey. 60 years of service is enormous in any context and to witness his unimpeded engagement and seemingly endless motivation to do the right thing for the business and our customers is something to behold. Above all, Jeff is a good person and the wisdom he continues to share only improves us as a business and as individuals. While timber related experiences dominate his life’s lessons, the advice I have most taken to heart goes something like this, “ … almost anything can be achieved with ‘A Spirit of Goodwill’.”

Bowens Croydon

For us to live Jeff’s maxim we need to put ourselves in the other party’s shoes. To feel what they feel, to understand the matter from their point of view. In our industry’s current, manic state, apart from uncovering a secret stash of pine framing or truck loads of LVL, could any other priority be more relevant?

Through my own, lived involvement over three decades, I am well aware of what we need to look out for within our own walls. In times past, when the heat is on, we are more likely to take our frustrations out on each other, first. As it can be within many families, we are often harder on our own than those outside. While there is no doubt this will happen again, and is possibly occurring in isolated places already, my job and that of the Bowens and Timbertruss leaders is to be aware of what to look for and intervene, before the damage becomes irreversible. At all times we must encourage those within our purview to live Jeff’s ‘Spirit of Goodwill’.

The circumstances we are preparing to protect ourselves against are unlike any this industry has ever seen. The old adage, ‘we need to be careful what we wish for’ could not be more relevant. Only a year ago many businesses were not sure they would survive to see 2021. Incredibly, we have not only continued to breathe, we are thriving. Activity has grown to astonishing heights in many industries, with the detached housing and home renovation markets rising to a level of intensity never before seen. According to Core Logic;

“… over February, (Australian) house approvals reached a record 14,072, which is 50.7% higher than the decade average. Unit approvals rose in the month but remain -25.7% below the decade average.”

In the year to March 2021, sales increased by 42.6 per cent compared to the previous year (HIA data). While new contracts will cool from their HomeBuilder stimulated highs, it is a near certainty there will be a strong level of building activity through 2021 and into 2022. We are living our new normal, for the next year at least. Finding workers, managing substantial price increases and ensuring material supply are all premium priorities. Becoming overly emotional when circumstances turn wobbly, which they will, assists no one. We need to think our way through and never miss an opportunity to communicate effectively.

“Finding workers, managing substantial price increases and ensuring material supply are all premium priorities.”

Among many priorities for the Bowens team is the need to understand our customers’ pain points. Material supply is the first of these. As eluded to above, we are living in extraordinary times. Never have so many products been so difficult to source. I am frequently asked, “why?” There is no single answer. Poor planning due to Covid-19, bush fires, a booming Australian market, a constipation in world shipping, manufacturing go-slows due to the pandemic, strong worldwide demand for wood fibre, labour in short supply, a 400 per cent growth in U.S. lumber prices …. the list of reasons appear endless and mulling over them is unhelpful. Our customers have committed to build homes for their clients and should expect pine framing, engineered wood products, hardwood decking and other mainstays to be available at a whim. Like milk and bread at our supermarkets, we should have them all in abundance. I wish it were so. Unfortunately, things will only become more difficult in coming months as an increase in site starts draws on already tight supply lines.

“Never have so many products been so difficult to source.”

The second concern of our customers is one we are well aware of and have great empathy for: the reality of managing steep price increases while honouring fixed price building contracts. Under a fixed price contract, the builder agrees to bear any costs above the agreed sum, except for those costs incurred because of variations requested by the client or matters outside the control of the builder, such as a fire, war or natural disaster. Just as an owner is not able to reduce the amount paid if the price of materials decrease, a builder is not entitled to pass cost increases to the owner. A desperately difficult situation in the current market.

As is always the case for Bowens and Timbertruss, we have a medium to long-term view. Just as many of our suppliers could garner better rates selling to others, we are only selling to those who have been faithful to us over an extended period. And, we are only adjusting prices in line with the increases we ourselves are receiving. We are living through a new paradigm, as demand for our precious inventory is significantly outstripping what we are able to provide. With our customers prioritised the next test is to keep up with their growing volumes. To the end of March we were only just keeping pace, for the coming months I am not so confident. Many mills and/or suppliers are forecasting shortfalls and our ability to predict when stores will receive timber deliveries is becoming increasingly difficult. These are unprecedented times.

While being busy is better than the alternative, the year ahead will test us all. As hard as it is likely to be, we must live within our means and remember Harv’s advice. With a Spirit of Goodwill, we give ourselves the best chance of coming out the other side fit enough to take on whatever the next challenges will be.