Volume 46, Issue 5 - June 2007
Lummus Supplies Atlanta’s Elite
Don’t tell Robert H. Lummus III and Bill Lummus there’s a slowdown. Even though the Commerce Department says homebuilders sold their fewest homes in seven years, the brothers’ dispositions are almost as bright as the April sun shining down on the Atlanta-based company.
How can Robert, chairman and chief financial officer of Lummus, and Bill, president and chief executive officer, of Lummus, smile and joke when they saw the business drop by 16 percent this year? Well for one thing, there’s a lot of family support in the company. Nine members of the Lummus clan are employed by the company, which has been in the group for four generations.
That amount of experience also gives them perspective. “Some of our competitors fell 30 percent or more this year,” Bill says.
Yes, perspective can ease the stress of a sluggish economy. But perspective doesn’t pay the bills. Customers do. And, that’s why the Lummus brothers remain positive. Their grandfather and father built Lummus Building Supply by courting local builders. Bill and Robert continue that tradition by servicing the sons of those original customers while cultivating new business along the way.
The Lummus brothers don’t just market to any builders, though. They want people who build customized homes and possess good credit. If you’re in that narrow niche of customers, they’ll offer you all of the services and products they can muster. It’s a formula that allowed the brothers to earn $60 million in revenue last year, despite the slowdown and fierce local competition (including from Atlanta-based Home Depot).
Want to know how Lummus developed the customer focus, versatility and efficiency to get to its present size? Look no further than the family tree. “They came by it genetically,” says Don Barnett, vice president of the company’s wholesale division and the unofficial Lummus historian (he’s worked there since 1973). “Their grandfather was an entrepreneur and they are too.”
Bill and Robert’s grandfather, Robert H. Lummus Sr., started the company in 1925. The company originally pumped sand and sold it throughout Atlanta. Lummus added coal in 1938. In 1945, Robert Sr. partnered with his son, R.H. Lummus Jr. to form Lummus Sand and Coal. When the sand and coal business slowed, the company deftly moved into building supplies. In 1961, it changed its name to Lummus Supply. That year, it built a new facility on Bolton Road (where it’s still located today) and added a full line of hardware and building materials.
As a building materials company, Lummus gradually tweaked its product offerings and services to cater to its clients and even employees. At one time, Lummus even offered drywall. “As they got older, the employees didn’t feel like toting that drywall anymore,” Barnett says. “So, we found the door and window business was an opportunity for us.”
Competition also spawned an evolution at Lummus. In the late 1970s, large home centers began to gain popularity. Since the company played in that business, it decided to follow along, opening up a 10,000-square-foot showroom. That venture didn’t work out, though, and Lummus discovered its competitors, such as Home Depot, had an edge with off-the-street customers. (The company does maintain some retail space at its headquarters). “When Home Depot first started, they hurt us,” Bill says.
But, as it has throughout its history, Lummus adjusted.
“We let them [Home Depot and Lowe’s] slug it out,” Barnett says. “We decided to sit here in the shadows.”
The soft-spoken Barnett naturally comes across as very modest. But when he talks about Lummus just sitting in the shadows, he may be underestimating exactly what the company does. In fact when Home Depot arrived, Lummus adjusted. “We had to change our niche,” Bill says. “We went from a retail-based business to working with the custom builder.”
Lummus keeps its customer profile fairly narrow. Typically, these customers produce customized, high-end homes. “We mainly work with the small builder, not the track builder,” Robert says. “We have a lot of builders that build 8,000- to 15,000-square-foot homes.”
Bill says he has about 1,000 active customers. While some people may prefer to serve a small number of builders, the Lummus brothers choose to serve many customers. “If he [the small builder] stumps his foot, it doesn’t hurt [Lummus] nearly as bad,” Robert says.
On the other hand, Lummus doesn’t open things up too much. It wants quality customers and isn’t afraid to turn away those who don’t meet their criteria and want credit. “We have a reputation of having strict credit criteria,” says Bob Underwood, who handles millwork for Lummus. “We could get more customers with shakier credit.”
Bill estimates that Lummus’s could reach $80 to $90 million in revenue. Right now, the Lummus brothers handle collections themselves. Their receivables turnover was 37 days on 2006. If they lowered their credit requirements, they’d also have to spend more time chasing customers for payment.
One reason Lummus’s builders may be able to pay the supplier relatively quickly is that its customers aren’t exactly hurting for cash. Robert says the company’s products have gone into the homes of many wealthy Atlanta residents, including baseball stars John Smoltz, Tom Glavine and Andruw Jones.
Catering to high-end clientele definitely comes with advantages. While the larger homebuilders and their suppliers have seen demand screech to a halt as entry-level and second homebuyers fled the market, upper-end purchasers generally aren’t as effected by up ticks in interest rates and hiccups in the economy.
“The market variations aren’t quite as meaningful,” Underwood says. “They have the money and they are willing to spend.”
That’s not to say everything is rosy. Remember, Lummus did see a double-digit drop in sales this year. But things could have been worse. In fact, in some wealthier areas of Atlanta, business remains brisk.
“Some of the high-end builders in Atlanta and Buckhead are still busy,” says Ron Box, sales manager for Lummus for the past eight years.
Serving custom builders certainly has its advantages, but as anyone in the Lummus organization can attest, it also comes with added demands. Remember those wealthy customers custom builders court? They demand high-end products. “We’re looking for a good product that we can present to our customers,” says Ron Dye, a partner with Lanier Resort Homes and Lanier Custom Homes in Gainsville, Ga., and a longtime Lummus customer.
Whether customers ask for a rolling library ladder for an especially tall closet (Lummus found a manufacturer in California to supply this product) or copper-clad window or door units, Lummus gets a lot of challenges. “You have to be in the higher end with products,” Bill says.
The challenge of finding these products usually falls on Barnett. Sometimes he will call people he’s come across during his almost three decades in the industry. Other times, he’ll go to the Internet. “I’ve always investigated things a lot,” he says.
Lummus also relies on its suppliers to provide it with the newest and coolest products. For instance, Robert says the company was the first to offer the Truss-Joist floor system in the area.
Finding products is not the only task Lummus struggles with though. With increasingly diverse door and window tastes in the marketplace, the company must be flexible.
“They do custom sizing, shapes and architectural design that not everyone else does,” says Don Maxey, regional sale managers for Anniston, Ala.-based Monarch Windows and Doors and a longtime Lummus supplier. “They’ve created a niche that no one else wants to touch.”
Even when Lummus doesn’t create a niche, it’s nimble enough to keep up. Six or seven years ago, the company began installing locks, shutters, shelving, mirrors, showers, doors, windows, garage doors, housewrap, window screens and bath hardware. “We were losing business because builders were going to other people to install,” Bill says.
Despite its best efforts to stay on top of products and services, Barnett admits the company doesn’t always come through. “We’re not perfect,” he says. “But if we have a misorder, we do something to get it right.”
If you talk to some of the homebuilders who work with Lummus, you may think Barnett is being modest. “Their service is the biggest advantage,” Dye says. “They provide great all-around service in windows and doors and everything.”
Phillip Gressly, vice president of Summerfield Homes in Woodstock, Ga., has bought from Lummus for 27 years. He builds about eight to ten homes a year and service and quality mean a lot to him. Like Dye, the company’s service, professionalism and speed keep him coming back.
“They’re not the cheapest, but I can count on them,” Gressly says. “They’ll work with me and help me out. I get what I ordered in the grade that I order it in.”
Gressly expects his order to get there when he needs it. “From their shipping department all the way up, they don’t have a weak link in the chain,” Gressly says. “If I order something right now, I can count on it being there by at least 10 tomorrow morning.”
by Les Shaver, editorial director of Shelter™ magazine.
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