Episode 42: Skate Where the Puck Is Going: Housing, Labor, and AI in Building Products

Tony Misura (00:02.434)
back for vacation, kind of in the groove and knocking some things down. It’s got a lot of months laid, life would be boring, right, otherwise.

Chris B (00:13.132)
Yeah, better than the alternative, right? Nothing to do?

Tony Misura (00:17.78)
I don’t know what you would, I struggle with that, right?

Chris B (00:23.372)
Yeah, I get antsy. It’s like even just a couple days off and it’s like I gotta do something.

Tony Misura (00:28.702)
ANSI and frankly, mean, full disclosure, I get depressed. if I don’t like, you know, if I don’t have something that I’m like, kind of driving, driving towards to what that is, and don’t get wrong, like I like to relax and I do enjoy that time, but I got to have something I’m competing at. It just makes me happy.

Chris B (00:50.158)
Same, yeah, like an afternoon off and reading a book or something that’s all well and good, but then the next day I’m ready to go.

Tony Misura (00:56.052)
Ready to go again. Yeah, I charge. Yeah, charge charge pretty quick. Any questions at all? Kind of how we shoot this or kind of the format?

Chris B (01:05.518)
I think we just have a discussion, right? And then.

Tony Misura (01:08.042)
Yeah, we just have a conversation. I’ll make an introduction. know, I guess the goal here, right, is to promote your brand. I see there’s two things, right? You know, Chris Beard and and also, you know, the John Burns, you know, consulting program and what that offering is. So let’s, know, if we can weave that in and then along the way, hopefully we give our and I always think like I’m talking to presidents and think like I’m talking to.

You know, the Russ Kath Rines, you know, Steve Swinney’s, right? So they grab a cup of coffee and they walk away like, this is some shit to think about. Like, I’m better, I’m more prepared to take on my day.

Chris B (01:54.568)
Yeah. I’m sorry to hear that.

Tony Misura (01:55.97)
Do you a cold? So we might be editing out me blowing my nose quick, but it is. Yeah, it is what it is.

Chris B (02:10.43)
Okay, we had thunderstorms last night that came through and till about 1 a.m. And we got a eight month old puppy not not even eight month old and And so he was sound asleep because he was tired and then he just started barking like crazy at the thunder and it’s like, okay

Tony Misura (02:27.948)
What kind of puppy do you have?

Chris B (02:30.254)
He is a lab Pyrenees mix and he’s a big boy. He’s already pushing 100 pounds. pounds? Yeah, not even eight months yet. Seven and half months. so he’s a, of his parents were like 120 and, uh, and so he’s big. threw him outside cause it’s still, you know, almost 70 degrees, but he was raring to go this morning. So I took him on my run this morning. So we ran two miles and I thought that tire him out, but now he’s still, uh, he’s still ready to go.

Tony Misura (02:36.398)
Hans is eight months?

Tony Misura (02:59.214)
that’s great. That’s awesome. Again, another one you’re talking about just kind of maintaining a wellness plan, right? I don’t know about you, but dogs are huge. Dogs just keep us in the moment, decompress really quick. Lots of them, huge, huge, huge role. I’ve got an English setter, but yeah, I couldn’t imagine that. But we’re cool. All right.

by the way, I will be drinking something to rest my throat. So go ahead, please. I feel comfortable. Terrific. Good morning. Super excited for our next episode of Hire Smarter. We have Chris Beard with the John Burns organization here with us. And Chris and I just have really enjoyed our conversations as from a macro perspective. Certainly there’s plenty going on from a global economic side, but we’re just we’re hoping that we can share

with our customer groups just kind of how we see the world today and what the dynamics are. Chris, thank you so much for joining us.

Chris B (04:07.118)
Thanks, Tony. Great to be with you this morning. And yeah, we’ve always had some great conversations, so I’m looking forward to the next time together and see if we can solve the world’s problems.

Tony Misura (04:16.396)
Right? Yeah, well, at least, you know, we think we do. I know we’re keeping score on the side, right, to see whose peg dots are more effective than others. kind of just to start things off, you had this phrase in our last conversation I thought was just excellent. Like, what is theater today? And really, what are the facts that we should

really be boiling and focused on as we try to predict what’s going to happen in the near future. And let me just start us from that perspective. How do you see that?

Chris B (04:52.706)
Boy, that’s a loaded question. And so I’ve been thinking, you know, I think if you think about where the American psyche has been since COVID. So we had COVID and then we had the election and then we had the immigration issues. And are we going to go into a recession or are we not going to go into a recession? We have interest rates and inflation and high cost of living and everything is going up and up and up. And then you

just add on the recent stuff that’s been going on. again, immigration has been top of mind, know, how’s that affecting things both from a labor and a demand standpoint, specifically around housing. And then, you know, I don’t think it was on anybody’s bingo card this year that we were going to, you know, just depose a Venezuelan leader president and just remove him. then, and then Iran now too. And, you know, I think it’s just, it’s just,

so much noise and there’s a lot going on and theater, I don’t know if that’s the right word to use or not, but there’s just a lot going on. And so what I’ve been advising people that I talk to is, we can’t change all of the macroeconomic stuff. We can’t change the geopolitical stuff. What we can change is how we react. And so what we look at and look at some of the signs that…

that are going on and figure out, you know, what are the truths in my market? What are the truths in my industry? And how do I react to those? And so, you know, there’s all kinds of ways to think about that. We talked about interest rates, inflation, but also, you know, what’s going on with costs and labor issues and trucking and everything, and how is that affecting demand? And so, you know, from a demand creation standpoint, but then also from a supply standpoint, how do we…

How do we react to that and how do we look at, know, what are the truths, like I say, and just move forward and continue to grow our industry?

Tony Misura (06:52.234)
And well, let’s let’s like so what have starts been year to date? What is what what are we trending right now? One one two.

Chris B (06:59.95)
Yeah, we’re down. Starts are down, single family and multi-family, just because, you know, really what we’ve been seeing is not a whole lot’s changed since 2025. We entered 2025 with a lot of unsold inventory in the books. The spring selling season was a bust. I think there was home buyer expectation that interest rates were going to come down. And then we had the tariff noise last year that kind of that really took a hammer to consumer sentiment.

and people not thinking it’s a good time to buy a home. so builders just kind of built up the inventory, elevated levels of inventory that we haven’t seen since the early 2010s, even 2009 last year. And those homes weren’t moving. So builders kind of as they move through the year said, we’re going to slow our starts until we get some of this unsold inventory off the books. And what we’ve been hearing so far in March is it’s kind of a repeat of last year.

the unsold inventory still is elevated. We have a monthly builder survey. We talked about 15 to 20 % of all the single new home sales each month. And what we’ve been hearing is kind of like, it’s still more of the same. And a lot of that uncertainty with regard to geopolitical conflicts, but also cost of oil, know, the stock market, we’ve moved into correction territory since the Iran conflict started.

And I think people are just skittish and they’re just staying on the sidelines. And so those are the headwinds that we’re still facing this year.

Tony Misura (08:35.478)
Got it. So from a baseline number, we basically have continued Q4 into Q3, now Q2 relative, and it’s roughly one, two. Is that right? Is that accurate?

Chris B (08:47.49)
Yeah, with multifamily and manufacturing,

Tony Misura (08:50.072)
Yeah, everything’s about one, two. I guess, you know, if we’re going to be glass half full, we’re stable. Right. Like there is a steady pace. One of the things that we recognized here just internally is, you know, our clients are still going, I had a vice president of purchasing tell me once that when baseball pants was the number one search item on Google, they knew that’s what they had to buy and get stocked up on five quarter decking.

Right. Right. It’s just like, yeah, right. And it’s literally that’s a that’s an algorithm that they use for their purchasing program. Right. But the point being spring is sprung like even even up here in the Northwoods and Hudson, Wisconsin, like it’s and so we have just just recently, just the past couple of weeks, we’ve launched a lot of projects because companies are calling saying regardless of everything that’s happening here, the seasons don’t stop. It is springtime.

Chris B (09:20.238)
That’s funny.

Tony Misura (09:47.042)
We, know, and this is our busy season that we’re coming into. And we need these leadership positions filled. And the second thing is father time doesn’t stop. We still have individuals that are planning to retire. We still have all this succession planning that we need to execute that was key to our strategy plan. So I guess if there is something we can say and there is stability in the housing starts.

Tell me about the inflation story and what does that look like as we’re all staring down, you know, $4, $4 and $5, know, $4 oil. The bigger concern of course is the $5 diesel.

Chris B (10:23.79)
Yeah, that’s something we’ve been watching. I think the longer this goes on, it’s going to pressure. So obviously a lot of manufacturers that are oil and energy dependent. So, you know, oil for production, like PVC for vinyl siding, vinyl windows, but then also transporting, you know, roofing materials. Asphalt obviously is exposed to oil, too. Asphalt roofing shingles, but then also the transportation.

The longer this goes on and the more that you know, most of the manufacturers will hedge so they’ll have contracts You know, nobody knows what’s going to happen. And so these wild cards come through so they’re hedging on their energy contracts But the longer this this is prolonged and that hedging kind of you know cycles off if you will and rates get reset for the You know q3 q4 moving into next year then to that’s going to be ahead when we started to see some price increases

One of the things that we monitor as we talk to LBM dealers each month is we say, know, what price increases, what announced price increases for manufacturers have you received and post COVID inflation. So thinking like 22, 23, 24, you know, as demand really fell off pricing power from the manufacturers wasn’t there. So there wasn’t a lot of appetite to really push through price increases for a wide array of products. And now we’re in a situation where, okay, well, the input costs are rising.

Gross margins are declining for the manufacturers and for distributors, obviously, as well. So, you know, go back to the drawing board and see that the math pencils, and we have started to see a few price increases come through, specifically on the vinyl siding. I think some vinyl window stuff has come through too. And I think we’re going to see more of that. Obviously, from a builder’s perspective, from a contractor’s perspective, there’s not a lot of appetite because they don’t have pricing power.

because of the weak demand, right? So it’s going to be, I think we’re watching this play out in real time. I understand where the manufacturers are coming from, from the input costs rising, but it’s going to be a tough sell, quite honestly. I think it’s going to be a tough sell to get these pricing crisis coming through. so, you know, just hoping for pretty quick resolution to everything. I do think we’ll see oil prices fall.

Chris B (12:44.98)
But you know, is it going to be next week? Probably not. Is it going to be a month from now? Maybe. I think that’s right now everybody’s gas, but input costs are rising. And so it’s something we’re going to have to be watching.

Tony Misura (12:57.112)
Yeah, oil unfortunately has that is that just universal reach. I don’t care who you are. It just it affects and I heard some media knucklehead say, but yeah, but your gas is only 5 % of your expenses. Your expenditures like come on, like that’s just that’s not all that. That’s what.

Chris B (13:14.338)
People see, right? I mean, you think about the election, the election in 2024 and what was the main sticking point? Inflation and cost of gas and the cost of eggs and groceries. And so we have seen some disinflation in a lot of the staples, which has been good. then, you know, there was a gas station in every corner and people drive by it and see that and think, man, man. And so I think it’s more playing into the psyche than it is.

necessarily the consumer’s bottom line.

Tony Misura (13:46.878)
So of course the big question is what is the duration? Are we talking one week, one month, six months? What does it look like? And it’s also kind of a question around interest rates, mortgage rates specifically. And I guess interest rates and how they help companies grow faster and which increases job growth and income growth. But I mean, what is your long-term view

on interest rates. we’ve got Kevin Warsh coming in here. He’s going to be sworn into office here in the next two months. How do you see that?

Chris B (14:26.296)
Yeah, I mean, our view is we don’t foresee the 30-year fix coming below six anytime soon. I mean, it did. So when the president announced the purchase of mortgage-backed securities, and then before the Iran conflict, the 10-year Treasury declined, and for about a minute and a half, we hit mortgage rates below 6%.

So that was positive. then, obviously, the tariff discussions with the Supreme Court ruling, but then also with the Iran conflict and oil, the tenure of treasuries moving up. the way I like to think about it, too, is we’ve got midterm elections. And I think that there is probably some actions that the administration will take. I don’t know what they are. But I think that there’s some things that are probably going to be

to be taken into account so that we will start to see relief. I’m not really sure, I haven’t seen any concrete plans. I think that the president said, teased a lot of initiatives around housing, nothing’s really taken shape. seems like Venezuela and now Iran has kind of taken the forefront of the administration’s focus. But the good thing is, it’s being talked about. so, whether the plans materialize and what they actually look like, the thing that’s

that’s legislation out of the road to housing act, that’s going nowhere fast it seems like. So the ban of investor purchases and especially the investors have to sell after seven years. So that’s kind of a sticking point. And so that ain’t it, I guess is what I would say.

Tony Misura (16:15.79)
Yeah, yeah, I just I just, you know, I reflect back to in January when you and I were together at the CEO Summit out in New York and we were talking about how, you know, from a from a midterm election cycle perspective, if we’re going to look at the the top three, certainly for sure, the top five factors that are going to that are going to drive that are going to drive votes relative to this, it would be. It would be.

You know, housing and how, how housing is looked upon, by, by all the constituents that are going to be voting in November and, and, and that Trump really was going to take, or the administration was going to take some direction relative to this. know, we’ve had Freddie May, Freddie Mac for a long time, not sure that that’s serving in the way that we want it to serve, today. And.

I just had this long conversation with an individual who was really negative about any type of government involvement with housing. To kind of unpack history, the government’s always been involved with housing from a support perspective. So the question is whether or not it’s the right tool. What are your thoughts on that? What do you think the right tool is?

Chris B (17:35.672)
Yeah, that’s good question. mean, the affordability issue. So we all work in this industry, whether we’re on the advisory side, like you and I both are, working with distributors, working with manufacturers, working with home builders, contractors. We’re all judged on our year over year performance. Even the non-public companies are looking at year over year performance, right? Right.

When prices go down and we have deflation, typically means less revenue, obviously, and that typically leads to job losses and is a downward spiral for the economy. So everybody thinks they want housing to become more affordable or cheaper, if you will, but I think the…

reality is it needs to be more affordable. So the housing cost of an income ratio needs to be more in line. So what we really would like to see is wages kind of rise up so we get that more in balance. That’s a tough nut to crack, right? And so if we think about the labor market, where the labor market is, the headlines are softening. We had job losses, I think it was 92,000 in February.

But yet we still have very low unemployment. And the reason for low unemployment is because labor force participation is really at the highest level since it’s been within the 90s. So labor force participation is up, wages are still rising, real wages are rising. And so, you know, as we move forward, if housing doesn’t get significantly more unaffordable, which is a challenge given all the headwinds that we’ve already talked about, then.

then we can see some relief and housing cost to income ratio coming more in balance. But it’ll take a while. I think it’ll take a while. And so that’s why there’s probably been more of a bias towards renting. And I think that there probably will be over the next several years just because of, it’s not just the mortgage payment, but it’s also the cost of owning the home too, right? So taxes, insurance, everything is going up. so…

Chris B (19:46.606)
That’s why we tend to think that there’s probably going to be more of a bias towards rental for the next few years.

Tony Misura (19:52.748)
I just want to put an exclamation point on something that you said. That basically when it comes to homeownership and the obstacle around the cost of housing and what that is, you say what we really want is for housing values to maintain, but for incomes to rise, right? While the housing maintains in the the big in the big number around that is $40 trillion, right? That there’s

40 trillion dollars of home equity across the U.S. Greater, largest number that we’ve ever had as a country. that right?

Chris B (20:30.924)
Yeah, that’s that. Yeah, we’re near record highs. So we have seen real estate prices come down a little bit. Existing home existing home values have come in and it’s market by market specific. You can’t just say, you know, across the board it was it was it’s yes. But yeah, right. And you know, we are seeing new home prices come come down a little bit again, not, you know, 10, 20 percent. It’s one or two percent is what we’re seeing. But yeah, to get that more balanced and see wages rise.

And that would help. So home values to be maintained. And that’s what the president said, too. was, you know, he kind of said, and this is where when we were in New York, I think I said in my presentation, not really sure how we’re going to do this, because he says, I want home values to be maintained, but homes to become more affordable. So people buying a home, maybe first time homeowners to be able to buy a home, we want those prices to come down, but overall home values to be maintained. And obviously that’s.

the wealth effect and the wealth that people have, a lot of it is in their homes, right? Because if you purchased a home 2019 or before, I don’t care where you are, you’ve got tremendous amount of equity in that home. And then if you were fortunate enough to refinance your mortgage, if you have a mortgage, if you were fortunate enough to refinance a mortgage, then when interest rates were low, then you’re doing even better. And so that lock-in effect, if you will, people just staying in the homes that are holding their value.

and dealing with low mortgage rates, that’s still a prevailing force.

Tony Misura (22:03.128)
But all of those factors, don’t see, mean, there’s certainly homeowners are not going to just donate some of their equity, right, to lower the cost of housing, right? I mean, that’s gonna be super unpopular. But while that 40 trillion number in-home equity value does really create a really nice stable consumer market, it creates an obstacle for those first-time buyers, right? So it’ll be interesting to see how that works. Now, you’ve also mentioned pricing.

Right. And the cost of homes. Did I just see that that Lennar reduced the price of their homes by 30 or 40 percent some some significant number.

Chris B (22:42.798)
And don’t know the percentage. I know that they did say that they have reduced the cost. I’m not sure the percentage. But yeah, mean, it’s so you think about the market share that Lenar and Deir Horton have in the, you know, for them, it’s a volume versus, I wouldn’t say versus, you margins, but certainly, you know, trying to push through that volume. That’s kind of been what they’ve been saying, but they’ve also been saying they’re slowing starts too.

Tony Misura (23:11.182)
And let’s be accurate here, right? So yeah, it’s 10 to 25 % is the reduction. But of course, they’ve also shrunk the size of homes to the square footage and the bells and whistles and what have you, right? It goes with all that, right? But again, though, trying to serve that first home buyer to minimize the obstacles kind of going forward to get them into the market.

Chris B (23:28.14)
in the way that goes with it,

Tony Misura (23:39.694)
You mentioned the the the build to rent market seems to be pretty pretty steady. And do you see it growing or what? What are your thoughts on?

Chris B (23:48.77)
Yeah, mean, it’s when interest rates are moving up, becomes more difficult to pencil, especially when we’re seeing, let’s call it relative flat rent growth, or even in some markets, rent declines. And I think the wild card is the bill that’s trying to move through Congress now too. the investor built a rent

you know, the mandate that they have to liquidate the property in seven years, that makes it even harder to pencil for them. So, you why would you build a home if you’re getting flat rents or even rents may declining in certain areas, and then you got to divest in seven years? Are you going to recoup your costs, your investment costs? That makes it really challenging. So I think that’s the main sticking point right now.

Tony Misura (24:40.738)
There’s a number of factors there that I don’t need to be worked out. I don’t I’m not I’m not sure. I’m not sure what that looks like. One of the things I know that came out of the conference where there was the concept that the government potentially instead of supporting the mortgages, actually supporting national home builders to build homes in a in a, you know, own to rent to.

own program, right, transition. So, you know, the bill would carry the debt for two, three years, equity goes up and then, and then, you know, able to convert that into a conventional home loan kind of a concept.

Chris B (25:21.83)
Yeah, that’s been tried in the past. I don’t think it’s ever been really successful. again, it’s always more details are needed there as to how this would work. And I think that’s, again, one of the things that people are looking at and saying like, okay, how feasible is it? Is it really going to make a difference? You know, I think I think one one area where there could be some change is is the regulatory burden. So, you know, getting getting permitting, getting some of the

Tony Misura (25:26.901)
has been tried more

Chris B (25:51.566)
give some of the regulatory costs, especially, again, this is not uniform across the country. There’s some markets that are better or worse than others, but really taking that regulatory burden, the permitting, getting those land costs down, I think that’ll help too. That’ll help the home builders. And so, what does that look like? Obviously permitting, it’s a state by state issue. Some areas it’s municipality by municipality. And so is there a…

is there a mechanism that the federal government could employ? I don’t believe there is, but there’s a lot of surprises that come out of this administration that perhaps there could be something there, but I think that would really move the needle to get land costs down and the regulatory costs down because I think the NHB says it’s roughly 25 % of the sale price of the home goes into that, and that’s obviously a very significant amount.

Tony Misura (26:46.05)
You mentioned immigration and population growth and what that looks like. Did I read that in 2025? The US population actually declined a little bit. But at the same time, I guess when you compare it against the whole global opportunities that are out there, Japan certainly sees that in a different light. Share with us your thoughts on that.

Chris B (27:06.572)
Yeah, I think the population did decline in 2025. We’re actually anticipating working age population in 2026 to decline too. So for the first time and maybe forever, but certainly in a very, very long time. So that means, you know, the number of people available to work is going down. So I touched on earlier labor force participation is the highest since the 1990s.

And so that’s why we can have prints of 92,000 job losses in February, yet unemployment remains low. And, you know, for all intents and purposes, we’re at full employment. And the reason is because of number one, workers aging out. So the boomers are retiring to an extent, but then also the immigration piece of it. Obviously the rapid immigration that we saw in the Biden years, that’s been stifled. I, you know, I don’t…

think anybody really has a perfect number to say this is what the number was, but obviously significantly less in 2025. US border crossings through the Mexican border almost zero last year and continuing into this year too. So that really removes workers from the workforce. And so that’s why I say the initial job print of job losses.

isn’t a true reflection because of just the available labor that pool has also gone down to.

Tony Misura (28:35.214)
Yeah. that, you know, I guess as we come around, we take a look at that labor pool. I know there’s lots of media attention out there right now relative to jobs and labor pool. And one of the things I wanted to share with everyone, we’ve got to be careful of the confidentiality on this, but.

We’ve recently learned that a common carrier is actually delivering and installing white goods for new construction multifamily projects. And we were kind of shocked by this. Like, so let me let me paint a picture that a company like, you know, like like Yellow Freight or Schneider Trucking has kind of deal with a company like GE or Maytag to install washers, dryers.

Refrigerators, dishwashers, the full appliances for these multifamily projects. basically transportation is smart enough to understand that their value proposition is going to be challenged. I don’t know if you saw the Tesla semis, right? The battery powered semis that California distorted, I don’t know, $500 million worth or something, right? So the disruption is happening.

right from an automation perspective. And they’re teaching their drivers to actually in to carry and install appliances. So it makes me think of the dire straights on, you know, money for nothing right back in the 80s. Right. But I mean, there’s a there’s a definite definite shift there in services offered in preparation for, you know, the changes that are coming forward. going to disrupt the transportation market.

Chris B (30:24.514)
Which is interesting because one of the things that we’re looking down at right now is transportation and driver shortage. So I’ve been following this pretty closely over the past couple of weeks and we’re going to actually put it in our quarterly report that we publish at the end of April. You can see rejection rates. these are people that manufacturers or distribute whoever has a load they want to ship and they put it out for bid.

And the number of companies, trucking companies that reject it, say, now we don’t want to do it because we can get paid better somewhere else, that is increasing. The spot price is really spiking right now. Obviously, diesel is a main factor of that. So costs the diesel is going up. It looks like the trucking dynamics, the pricing is changing on a daily basis. I mean, it always does, but now it’s really spiking and

And you see more and more people talking about that in addition to the federal government touting the number of CDL drivers that were removed from the system because they didn’t meet the qualifications for speaking English, for example, being properly trained. All understandable reasons for removing them. But you’re taking drivers out of the system. And I was talking with a few dealers recently the past couple of months and say, you know, we’re actually starting to see it. We’re starting to see shipments delayed.

Certainly becoming more costly, they’re really digging into to make sure that they’re not running empty loads. they’ve got figuring out the logistics to make sure that the trucks that are moving, that they’re moving very efficiently and always transporting and not running empty for no reason, making sure they get all their job site shipments in one load versus having to make two or three trips a day to the job site.

So that piece of it with taking on the appliance installation under the guise of we’re looking at a shortage right now, to me that’s trying to become sticky and thinking like the more we add value to that, then it becomes less of a discussion about price because then you’re doing a value add service that the manufacturers or distributors, whoever’s contracting with that.

Chris B (32:46.667)
can do that and they’re more willing to pay for that because of that stickiness.

Tony Misura (32:50.872)
Stickiness is definitely the theme and you and I have through enough market variations at various different levels. And it’s always interesting when you’re in a flat to down market to really see which companies are gaining share because they shine like a beacon of light. It’s hard to not give them attention. And from our perspective, organizations that are providing installation,

are gaining massive share. We had one client, we just launched a project with them. Their install commercial multifamily division is up 50 % year over year. Right. And they’re trying to expand it and grow it. And we’re helping them with leadership roles in that direction. But across the board, if you’re designing manufacturing and installing, or if you’re just installing, offering that, because as we stated before, the

turnover rate is in the employment issues are hitting the job site with the most intense, with the most intense negative effects that the economy will ever see, right? And so as dealers can alleviate that, that really becomes a strong competitive advantage.

Chris B (34:06.06)
Yeah, previous organization I worked with that was that was what we rolled out to is is not just manufacture the product, but also install that a lot of the dealers that I talked to, they’re saying, yeah, we’re only doing install services. Number one, because that sticky effect. Number two, you know, by having having people do it that are properly trained, that are under the dealers control, that they you know, they know how to do the product, they know how to install it correctly, that reduces warranty claims, that reduces

that reduces some potential callback issues by saying, we’re going to take care of it. And from a builder’s perspective, they’re like, that’s great, just do it. Because that helps them with labor and getting the jobs done and making sure that everything’s on time and on schedule.

Tony Misura (34:52.893)
So AI and employment disruption is certainly a main theme across the media. How does John Byrne’s research consulting kind of see that playing out?

Chris B (35:02.798)
Yeah, I mean, I think we’re in early days of AI and certainly the doom and gloom of AI is going to wipe out so many jobs. I’m not really sure that. I really share that view. think you and I are both old enough to remember when the internet really became mainstream and people started using that. And that was going to wipe out white collar jobs because information was going to be at people’s fingertips and there was no need to have, you know,

in-depth research and so a lot of jobs are going to get wiped out. And what actually happened was it created more jobs too. And this theme, I think, is throughout history, like industrialization and the assembly line was going to wipe out manufacturing jobs. The automation of farming was going to wipe out farming jobs. Nobody was going to need to farm anymore because you could do so much with less.

obviously know that the opposite happened. So yes, there are fewer farmers today than there were in 1900. We’re also producing a lot more food, food costs are coming down, have come down. And guess what, people find other things to do, right? And so there’s, I think there’s just all these ancillary industries that are gonna come out of this that we have no idea what they’re gonna be like. Farmers becoming airline pilots or other things that just could not be.

comprehended back when this happened. And so I kind of am more of a glass half full person on that too. I think AI is really going to free up some knowledge and accelerate things for people to do other things that we have no visibility to what that’s going to look like 10, 15, 20 years from now.

Tony Misura (36:48.494)
You and I are messing each other back and forth in preparation to this. And I guess we’re a couple of economics geeks, but I don’t know. was having fun going down the lump of labor fallacy versus classic economics. that’s just kind of what you played out that labor and please fill in because I’m, you this is, you’re the pro here. Labor is not a finite number, right?

all of a sudden, if you take a look in from an agricultural perspective, like, I don’t know, 40 % of our wages and 40 % of our workforce went into producing food, right? And today it’s like 2 % of our workforce and 10 % of our wages, right? But yet all those individuals, right, moved off the farms and moved into other areas where they could produce.

whatever durable goods or things that we were interested in supporting, the consumers wanted to buy. So, I mean, I don’t know, from my perspective, and I guess we’ll take this transportation, installing appliances situation. If you want to be a truck driver, and all you want to do is drive a truck, yeah, I think, and you’d have no interest in learning how to install appliances. I mean, yeah, I would think at some point in time,

there’s going to be disruption and you have all those individuals at some scale are going to be facing career questions. From the way we see it, it seems like it’s the thinkers that are going to be disrupted more than the doers. so as we take a look at another theme out there is called halo, high asset, low obsolescence, industry spaces.

which would say that jobs like nursing or construction, right, are going to be the last to really be significantly disrupted because of how intensive they are. And it’s just a far reach for any robotics to replace that. Any thoughts on those concepts and kind of how that plays out?

Chris B (39:01.004)
Yeah, near term, I think you’re absolutely right. But you said it right. You labor is finite, but demand is in theory not right. So there’s a finite amount of labor that in any society, country, whatever, however you want to break that down, but demand isn’t necessarily true. So I think, and we’re still in the early days of where AI is going to be in home building, you know, certainly with plan optimization and

maybe contract, reveal and creation, those types of things. Yeah, there’s certainly a play for that right now. And it’s being used today. You go like optimizing trucking routes, for example, or materials lists. You’ve got Home Depot investing a lot of money in AI to help with building material lists and takeoffs and assembling that. But, know, a robot or something, I’ll just say something, being on the job site.

Or even designing a home where you’ve got different terrains and things that structurally just don’t make sense. I think we’re a ways away from that. And even you’re seeing that in legal profession, doctor profession, AI can be used, but you still need that human touch to say, like, hold on, that’s not quite right. So the factor of error is pretty significant. I think there was a case recently, I can’t remember the details, but it went before court and

and the lawyer argued a precedent that came from AI and it was just completely made up. It was just, and I think the judge chastised the lawyer for bringing that up because, so you still need that human touch. And I think you’re absolutely right. The trades, the hands-on, being able to do that, those jobs are not gonna be as susceptible to being eliminated near term.

Again, I think we’re still a long ways away and I don’t think either you or I can imagine what that’s going to look like 20, 30 years down the road. But I think AI can be used to optimize and build more effectively. But replacing the actual assembly, think that’s a ways away.

Tony Misura (41:15.348)
Right. And what happens from a supply chain perspective? Right. And how are those disruptions and what I guess, where are those optimizations where technology is going to make us more efficient? One of the worst kept secrets right down the building products industry that I’m super excited about is Palantir is engaged with a couple of major home builders as well as dealer distributors trying to optimize and look for opportunities.

to increase the efficiency of our supply chain.

Chris B (41:47.49)
What is just in time delivery look like then, right? Do you really need distribution centers with shelves and pallets full of product that you’re going to either sit there for one to 365 days? just making that up, obviously, but I think there can be some true optimization and supply chain to just in time delivery and demand prediction and understanding like all those wild cards and building some slack. So, you know, do we really need huge distribution centers around the country?

Maybe not.

Tony Misura (42:18.38)
Right. Or skew optimization. Do we need five different colors of white entrance doors? Like what does that really look like? particularly if we are looking to lower the cost of these first-home buyer opportunities, right? There would seem to be an opportunity there to really crush out some expense from that perspective. So you and I have had all these conversations and

John Burns Research and Exulting, just kind of share with us, like what are some of the more exciting projects that you take on and tell us about some of the impact that you made in the industry?

Chris B (42:57.454)
We’ve been, what I like to say about what we do is we touch all parts of the value chain. So from the, we’ll just step back from the homeowner’s perspective, we have a consumer research group that talks about new home insights. We have a new home trends Institute’s part of that. So they’re actually in tune with the consumer, the home buyer, the homeowner. What is it that they’re looking at? We talked to, then we talked to the contractors. We have a contractor survey each quarter.

between five and 700 professional remodeling companies that we talked to. They’re getting insights, they’re sharing their insights on what they’re seeing in the remodeling industry. We have a kitchen and bath market index too, specific to the kitchen and bath industry, new construction and repair and remodel. And then we have a home builder survey I touched on earlier. We talked to roughly 15 to 20 % of all new home sales each month. Builders are telling us in real time.

regionality to what they’re seeing for new home sales, their starts predictions, community counts, new homes by community, pricing, all of the input costs that are going into there. I work specifically with the lumber building materials dealers. So these are the guys that are supplying the builders and contractors. They’re telling us what their customers are hearing, what they’re seeing in the market. Again, pretty national reach there. And then we talked to the manufacturers who’s actually making the product, who’s distributing the product.

What are they seeing? And then even taking a step further, the investor community. So the investors that are investing in the manufacturers or the home builders or the distributors, how are they viewing demand and where are they placing their bets? So kind of a long-winded answer to say, what I like to think about is we touch on all parts of the value chain just because we do have these proprietary surveys and just the conversations we have every single day.

to say like, okay, hey, what’s going on right now? What are the trends that are seeing right now? Or what are the things that you’re seeing that we need to be paying attention to? And by the way, here’s conversations that we’ve been having where we can share what we’re seeing in the market that gets people to think a little bit differently about where the market’s headed. So I hate to use the overused Wayne Gretzky analogy of like, got to skate where the puck is going, not where it is. But that’s really what we think about is understanding the…

Chris B (45:15.372)
the future and what demand is going to look like, not just today because it’s too late to react to what’s going on today, but thinking ahead about what’s coming. We are using AI, so we’ve got a big push internally to look at a lot of our reports and the insights. If we’re talking to, I’ll just say, thousands of people throughout the value chain each month, reading through all the qualitative commentary and distilling that out does become challenging. We’ve used AI to help.

to help kind of distill some of these insights. But again, you know, we need that human touch too, to pressure test that and check what’s actually going on in the market. So really long winded answer just saying like we just have conversations every single day to understand what’s going on. And obviously, regionality is a big piece of it too. You can’t just say the US housing market is all one big market because it’s not. So yeah, that piece of it too. So those are the things that

Tony Misura (46:10.146)
Right.

Chris B (46:14.722)
you know, what I think is unique, maybe not unique, but I think it’s an underlying value that we have. We just love this industry. Everybody loves the home building industry. I’m passionate about it. I’ve been in building products most of my career and it’s an industry that just, I just love it. And we all share that passion for just wanting to do the right thing because people need homes to live in. And at the end of the day, it’s all about the people and building.

building the homes and maintaining the homes that people live in.

Tony Misura (46:46.37)
You know, I think when I just kind of analyze our relationship and the conversations we’ve had, what I really appreciated is, first of all, just the general holistic and comprehensive nature that you look at the entire housing market. It’s like it’s super exciting to have a conversation with you because the depth you’re looking at from manufacturing all the way down to the home buyer and with a view all the way across from Hawaii to Long Island to Alaska and everything in between. And the second thing is,

You distill and weight information really effectively. So you really helped me in just being able to focus on the big things. Let’s focus on the key things. Let’s let everything else that’s kind of the smaller minor factors. Let’s not let them go overweight. And the last thing is, Chris, you and John, you’ve shoot so straight. Like every conversation I have, there is no blur of words or.

or not understood, they’re just a very, you bring a lot of clarity to it. And I really appreciate that. And the last, I guess, a plug I’m gonna make for you as an organization, like we could talk about, and so much of the reporting is done, as you stated, holistically, like from all 50 states, one of those trends. Well, if you’ve got a business in Milwaukee or Petaluma, California, like there’s gonna be significant dynamics as to what that data is.

And as an organization, if you’re not leveraging someone like John Byrd’s research and consulting to really dial in exactly where you’re to place those bets, I think you’re really short sighted because those strategic decisions become super expensive or super beneficial if done the right way.

Chris B (48:28.75)
Yeah, I appreciate that. Thank you. And that’s that’s one thing that sets us apart too is we’re national, but we have people we have boots on the ground, if you will, in all the markets. So we can say like, hey, I’m hearing something’s going on in Milwaukee. Hey, so and so go by and see that. Take a look at that community. Go talk to those homebuilders. Go talk to those those dealers. See what’s actually going on too. So we we do like a bottoms up forecast. But to your point about shooting straight, I mean, we have.

No special interests. We don’t take sponsorship from anybody. You know we are. Our special interest is telling it right, telling the truth, telling the story, and that’s that’s that’s our mantra is is getting it right and and not, you know, twisting a picture because somebody may want a different view of things will have uncomfortable conversations if it’s the right thing to do when it needs to be done. And so we like like to forecast one. We actually track our forecast accuracy.

And look at it from that perspective. How right were we? What did we get wrong? Because, you know, especially on the repair and remodel, there is no good metric to say like how much did remodeling increase or decrease a year over year? There’s no real good metric. But take this piece and this piece and this piece and this piece and kind of lump it all together and inform that thesis. But you know, our and my personal mantra is just get it right, tell the truth and.

provide the best value for this industry that we all love so much.

Tony Misura (49:55.326)
I just have to laugh because maybe Missouri Group needs to be hiring John Byrd’s consulting. So catch this. So we have a $700 million two-step client that their millwork division is growing massively. They’re 500,000 square foot new campus. so of course, you see, like we like doing two-step distribution work because it really helps us gain relationships at the dealer level.

Right. And so trying to unpack that because we placed the vice president sales and president for the company and all these. They shared their top 10 customer list. I only knew one of them because it’s all renovation remodel. Right. So it’s a two step business that’s selling these no work products into the renovation remodel market. And when we think about, as you stated, the level of fragmentation in that space is

crazy is just it’s I mean, I’m multiple decades in this industry and I’m shocked at the fragmentation in art.

Chris B (51:00.876)
Yeah, there’s there’s your and you’re always going to have that too. And and so, you know, obviously there’s with the industry consolidation that’s been happening and on the distribution side from the manufacturer’s perspective, there’s there are always opportunities for independence or for somebody to find a niche in the market and be it either in local market or of a new product offering or something new. There’s that’s I think that’s that’s something that I really enjoy about this industry, too, is it’s.

No day is the same as it was yesterday. There’s always something new. You’re going to learn something new every single day. Somebody is going to be doing something a little bit different every single day, and you’re going to learn about that. And that keeps us young, I guess, right? It keeps us on our toes and looking at stuff like that. so I can’t envision ever not working in this industry or even retiring. I’d like to stay active and keep the brain going. And I think this is the absolute perfect industry for that.

Tony Misura (51:58.498)
Yeah, the challenge is certainly there for everyone, right? I mean, yeah, as we see as we opened with, right? Nobody’s going to get bored.

Chris B (52:06.412)
Right. Yeah, it’s somebody says, I’m talking to somebody about, you know, market share in the windows market, for example. Well, there’s these companies make up, you know, whatever half the half the industry. And then the whole rest is a really long tale of local manufacturers that you’ve never even heard of or cabinet makers, you know, you’ve never even heard of. Nobody’s ever heard of them except for in that local market, too. And you can translate that to any product category. For the most part, you can translate that to to any dealer or distributor for the most part.

Tony Misura (52:22.488)
Christ.

Chris B (52:36.832)
and that it’s going to stay fragmented, I think, and that’s OK.

Tony Misura (52:41.612)
Yeah, our homes are personal and we get emotional about those decisions. Terrific. Thank you again, Chris. Really appreciate it.

Chris B (52:45.782)
Right, exactly.

Chris B (52:50.306)
My pleasure. Thank you.

Tony Misura (52:52.332)
That was excellent. That was good. We’ll edit that down and yeah, we got some good good stuff there. Is there anything else you wanted to touch on or?

Chris B (52:59.192)
don’t think so, was good. My dog’s freaking out outside, I hope it didn’t come through.

Tony Misura (53:02.722)
So don’t

Chris B (53:04.61)
Yeah, no, was, I enjoyed it. Really good conversation. Thank you for that.

Tony Misura (53:09.324)
Yeah, well, I again, appreciate it. And we’ll, you know, get on a regular calendar so we can keep people updated. I just think there’s just so much shit going on that anything that we can do to kind of be able to say it’s a steady state, like the world’s not falling apart. I think it’s going to be really, really helpful for people.

Chris B (53:27.086)
And that’s the thing I think people like it’s it’s like the conversations I’ve had with a lot of the dealers. It’s not great. It’s not terrible. It’s kind of moving along. Yeah, we didn’t touch on it this time, but I was at a conference last week and it was all luxury and move up and custom home builders and like, yeah, my business actually pretty good. We got a waiting list and we’re turning people away because the high end consumers still spending money now. Now that we’re in stock market correction territory, we’ll see how long that holds up.

But for now it seems to be pretty stable.

Tony Misura (54:00.526)
Right, agreed, agreed, Be well, my friend. Have a great week. We’ll see you. Bye.

Chris B (54:02.958)
Opportunities everywhere. You too, thanks Tony, I appreciate it. Alright, see you, bye.