12/01/2023
How a building materials dealer hired a Truss General Manager to take the truss plant from loss leader to $15m with 12% EBITDA.
EXECUTIVE SUMMARY:
A family-owned and operated lumber and building materials dealer had a truss plant with leadership that oversold their production capacity in the first 90 days. This led to adding a 2nd shift that lacked efficiency and quality control driving production to the ground, increasing turnover to 150%, and increasing labor costs by 40%.
The CEO recognized the need to replace the Truss General Manager and trusted Misura Group to find this turnaround leader. Misura Group helped the client see the importance of financial modeling to effectively establish the cost per project. The top candidate had a proven history of success turning around truss plants as well as re-building the business from the ground up.
The results:
The Truss General Manager backed down the sales, removed the low-margin tract builder commitments, and established clear cost and budgeting practices
In the first 12 months they are trending at $15m in sales with 12% EBITDA
Labor rates were reduced from 50% of sales to 20%
THE CHALLENGE:
LACK OF EFFICIENCY AND LOW MARGINS
A family-owned and operated lumber and building materials dealer had a truss plant with leadership that took a sales-first approach to growing the plant, taking on $3m of new sales within 90 days, and under bid the business. This led to adding a 2nd shift that lacked efficiency and quality control driving production to the ground. Turnover increased to 150% and temporary labor increased labor costs by 40%. The leader lacked a clear understanding of project-based costing, leading to capturing sales with a low gross margin that did not cover their cost structure.
The CEO recognized the need to replace the Truss General Manager and trusted Misura Group to find this turnaround leader.
OUR SOLUTION:
FINANCIAL MODELING
Misura Group helped the client see the importance of financial modeling to effectively establish the cost per project, something the ownership team did not realize was possible. The most critical traits identified for this position would include financial and manufacturing acumen.
PROVEN TURNAROUND SUCCESS
The top candidate had a proven history of success turning around truss plants as well as building the team from the ground up. A bold leader, they were able to convince the ownership that trusses would no longer be a loss leader for them.
THE RESULTS:
The Truss General Manager backed down the sales, removed the low-margin tract builder commitments, and established clear cost and budgeting practices. They invested in Mitek software, implemented metrics measurements, and developed an incentive-based compensation program for the quality and production teams.
They uncovered fraudulent activity from legacy employees receiving kickbacks and temporary employees receiving pay from multiple agencies. They brought this to the attention of the ownership team and made new hires. Labor rates were reduced from 50% of sales to 20%.
FINANCIAL IMPACT:
In the first 9 months since the hire, they hit $12m in sales.
In the first 12 months, they are trending at $15m in sales with 12% EBITDA.
CULTURAL IMPACT:
The Truss GM personally makes 4-8 job site visits per day, getting to know the customers and checking for full and complete deliveries.
Strong talent within the company was promoted and mentored, including a production supervisor who went from frustrated to happy and thriving.
WHAT THE CLIENT HAD TO SAY:
“We believe in an entrepreneurial business model and want leaders who can keep people happy and hit their budget. This GM has done both and is so effective at developing leaders we have plans on building a 2nd truss plant.”
WHAT THE CANDIDATE HAD TO SAY:
“Like every business, it’s about the people. Build a business model that allows you to surround yourself with people who want to be successful and the rest becomes easy. Our customers respect high value and smart business, we consistently deliver on quality and timeliness and run a high margin business as a result.”
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