I have noticed three changes in the building materials industry that may disrupt your business. The three changes are money from investors, innovative products from smart young people and European companies.
Building Product Investors
I first noticed how the building materials industry is looking more attractive to investors when I saw how investment firms began to buy large blocks of single family homes. They bought them to rent and not to flip. I think there are around 14 investment firms that now own over 2000,000 single family rental properties.
I am now seeing this interest extend into other areas of building materials. I am regularly contacted by investment firms, consultants and large building materials companies. The investment firms are asking if I know any companies for sale or seeking my advice about potential companies they are already considering. The consultants are also seeking my advice as they are assisting their clients in finding companies to take over or purchase. I am also being contacted by larger building materials manufacturers who are searching for companies to purchase.
The investment firms will bring in a strong leadership team with the financial backing and the task of taking business from competitors like you.
The larger manufacturers will be acquiring companies and making them more competitive.
In either case, it’s no longer business as usual
Innovative Building Products
I am seeing more young, scary smart, people who went to places like MIT and Stanford developing product ideas for the building materials industry. They have started to contact me to help them grow; this is a type of building materials company that I haven’t seen before. They want to start their own businesses; they have access to capital, and they aren’t afraid to fail. They see the building materials industry as not very innovative. They feel it will be easier to be successful against the sleepy old building materials industry than many other more competitive industries. And if they fail, they will just start again.
When you first see these products, they will be easy to dismiss. You will be able to think of many ways that they won’t succeed. You would be smart to consider how they may succeed and what that would mean to you. Home automation and technology are certainly areas where you will see these people. No matter what product you make, don’t assume that you won’t be a target for one of these innovators.
You’re going to see more innovative products from people who don’t worry about things like factories or distributors. You should not dismiss these innovations, they will be playing by a different set of rules and you may never see them coming.
Read more here.
European Building Products
There are many successful European building materials companies who are now interested in North America. Beyond interested, they are getting serious. These companies are successful in Europe and on other continents. Until now, they have seen it easier to grow in other areas such as Asia and the Middle East than to face the more competitive U.S. market. Now that growth has slowed in these markets, they see North America as their best opportunity for growth.
European companies who already have a presence here are putting pressure on their US leaders to gain more sales. They are looking at their sales figures and seeing that they are not growing as fast as the market which means they are losing market share. CEO’s from Europe are spending more time over here to learn first hand what they need to do.
There are many other European building materials companies who have, until now, dabbled in the U.S. They have exhibited at a trade show and thought they would somehow get orders. They have sent someone over to take on this huge market without the knowledge or resources required for success. They have also tried using independent reps or even getting a dealer or distributor to carry them. Some of these companies have made a few sales, but they usually stay very small.
European companies frequently think that the reasons why they are successful in other countries will also work in the U.S. They find that American contractors, builders, and architects are motivated for different reasons than they are in other countries.
These companies may not have reached their potential, in the past, but they are serious now. A number of them will learn more, devote the right resources and become more of a competitor to US companies than they have in the past. They now see how much opportunity they have been missing and are willing to do what it takes.
Several times a month I am being contacted by investors or their consultants, young innovators and European companies. I rarely got these inquiries in the past. I am being hired to consult and even being flown to Europe to meet with company leaders to improve their understanding of the U.S. and develop plans for their growth in this market.
As I said earlier, it’s no longer business as usual.