Non-Residential Construction

With the economic times being what they are, some members have been wondering if it is time to explore additional markets. One of these potential sectors is Non-Residential Construction (NRC). The NLA has recently completed a survey to find out exactly how prominent NRC is within the membership.

The survey was completed by 33 Retail Dealers and 8 Wholesalers/Distributors. Some key numbers are summarized below…

• 90% of those responding say they currently work/supply for some NRC projects.
• 40% of those responding say have seen an increase in NRC projects the past year (2009).
• 74% of those responding report that NRC projects are between 6 and 25% of their total sales.

At least 70% of those responding report working

• Education/Academic Buildings
• Worship Facilities
• Office Buildings
• Retail Commercial Buildings
• Housing projects

Some of those responding submitted their experiences and theories about NRC projects:

• “Most commercial construction projects deal with items beyond the normal ‘retail lumber dealer's’ inventory (ie concrete, block, steel, etc.) and some commercial contractors have direct means to purchase some items (ie foam insulation, interior millwork, trim, etc.).”
• “We mainly supply commercial contractors with lumber only. We work hard to get business from our City, schools, and others. But it seems they have other suppliers that are easily accessible and lower priced on most products...I believe most of their suppliers are specialized.”
• “We have decided to go after this typically lower margin business for the volume and have made it work well for us. We have even tried some “new ideas”; working with customers on a “cost plus” basis.”

It is clear the vast majority of NLA members contribute in some way to Non-Residential Construction projects (90%). It is also important to note that some members have made a conscious effort to target this segment with success.

However, the initial graphic would indicate that even though some members are experiencing an increase in NRC projects the majority of members have seen no change or a decrease in the area over the past year. I think we can safely say that this market segment is a viable option to consider, but it may be too early to consider it a trend.

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