84 Lumber Co.

After attending college and serving in world War II, Joseph Hardy Sr. could very well have kicked off a professional career as a jeweler. After all, his father ran Hardy & Hayes Jewelers, a company Hardy says was the “Tiffany of Pittsburgh” in the 1950s. At 31, he instead wanted to flex his entrepreneurial muscle in a business that would always be in high demand.

“I was looking for a business that would have a constant need instead of jewelry, which is a luxury item,” Hardy explains. “In the 1950s, shortly after World War II, the government had opportunities for families who wanted to take out a mortgage and there was a lot of building going on.

“It doesn’t take a genius to figure out what would happen,” he continues. “There was a great need for building supplies and I thirsted to go where there was a constant need.”

His thirst led him to abundant waters with the founding of what would become 84 Lumber. In 1952, Hardy, his younger brothers and a friend, ventured into the building materials supply business, and opened Green Hills Lumber.

Within a few years, Hardy and his brothers built the lumber yard into a $3 million business. The venture was successful enough, but a few years later, the Hardys’ pooled resources to purchase land in the rural town of Eighty Four, Pa.

There, in 1956, he opened the first 84 Lumber Co. and began selling “cashand- carry” lumber to home builders in the tri-state region of Pennsylvania, Ohio and West Virginia.

“My father has an internal drive that his mother instilled into him when he was a child – she said that he was special and that he would make a difference in the world,” says Hardy’s daughter, Maggie Hardy Magerko, who today is 84 Lumber president. “He fears failure and always tries to exceed his own expectations. He aims to do better every day.”

It has been Hardy’s drive to excel that would take his company to No. 1 years later.

Record Annual Growth

Nearly 50 years since 84 Lumber was founded, it has become the nation’s largest privately held supplier of building materials to professional contractors. Today, there are 440 stores in 34 states and the numbers keeps growing. In 2001, the company posted its ninth consecutive year of record sales and is well-positioned to do the same in 2002.

Countless professional builders have counted on 84 Lumber because it provides low-cost lumber and building materials including siding, drywall, windows and other supplies, as well as kits to make barns, playsets, decks and even homes. The company has a flourishing international business; countries such as China buy package homes from the lumber giant.

Although the company remains focused on low overhead, the method of how 84 Lumber goes to market has changed since the early days. Under Hardy Magerko’s leadership, the needs of the local market rather than an economies-of-scale approach are determining store format and product and service mix.

“I would say the biggest change at 84 Lumber was the abandonment of the cash-and-carry philosophy, considering 80 percent of our sales now is on accounts receivable,” Hardy Magerko says. “We had to do that if we were seriously going to go after the pro business.”

Though professional builders and remodelers account for the bulk of sales, other customers include do-it-yourselfers. The company has been ranked No. 1 nationally in sales to professional contractors in two of the past four years by National Home Center News, and consistently ranks in the top tier in sales to professionals contractors.

A Well-Filled Niche

The secret to 84 Lumber's early and unswerving success has been a focus on professional builders. “Whatever the builder needs, we can supply,” Hardy says. The halfhearted competition of the1950s was the impetus for Hardy to create a chain of lumber yards that stocked what builders really needed. Steadfast and welltimed, 84 Lumber quickly wiped out much of the competition.

Back in the 1950s, the industry was speckled with many small, family-run “mom-and-pop”lumber yards. A majority of these outfits were in the second, third or fourth generation of ownership and were often “complacent” and “treated builders like they were doing them a favor,” Hardy says.

Builders at the time had no choice but to succumb to these operators. “There was a crying need for service that 84 Lumber provided,” Hardy says. “We filled the void.”

Within a few years, Hardy was buying up these small, inadequate competitors or forcing them to shut down altogether. He grew by consolidating the industry, a tactic that other great entrepreneurs have used. Though some small lumber yards still exist, their product and service offerings pale in comparison to those of 84 Lumber. By 1956, when he established 84 Lumber, Hardy recalls business “went off like an oil gush” and people came from 100 miles away to buy products from this distinctive all-in-one supplier. By the1970s, the lumber giant was expansion-crazy.

“I love to travel and I’ve traveled all over the country,” he says. “In the 1970s, I was bent on expansion. Although we opened one store per week in 1973, we’ve closed about 260, but I’m glad I did it because I learned my limitations.”

Admitting he’s not an “operations guy,” over the years, Hardy brought people on board – such as Bill Myrick as COO, and daughter Hardy Magerko as president – who had the same expansion and sales growth targets, but were more operations savvy.

“Today, we are very sharp in day-to-day and long-term operation strategies – in the last 10 years alone, there have been visible improvements in operations,” he asserts. “Now I can dream up new ideas for expansion and it’s put in place with Bill and Maggie’s backing. I am still able to have my fun.”

Hardy is undoubtedly having his fun these days because the company is growing at record numbers due to a demand for building supplies across the nation.

Incidentally, Hardy’s daughter owns about 80 percent of the firm and is one of the 400 wealthiest people in America (Hardy Magerko’s full bio is on page 32). Hardy Magerko’s father praises her business style, although he admits it’s different from his own.

“I grew up during the peak of 84 Lumber’s growth and I was always around 84 Lumber people – it’s our family,” Hardy Magerko says. “It has been an important part of me from the time I was born. Though my father never pushed this path upon me, it would have seemed unnatural not to choose this as a career.”

Reaching new markets is a business objective that 84 Lumber’s leaders plan on continually pursuing. Recent expansion includes 23 new stores, for which 84 Lumber laid the groundwork in 2001. In addition to opening new stores, the company has purchased 20 Payless-Cashways locations. These purchases of a builder supply competitor pave the way for 84 Lumber to expand into three key markets in states new to the company – Nebraska, Nevada and Oklahoma – and to strengthen its position in many existing markets.

Each purchased store was redesigned to include a 20,000-squarefoot showroom, door-hanging shop and modified lumberyard to allow additional lumber storage.

“Since most of these markets are new to us we are currently researching the builders’ needs in each market to determine our product mix,” says COO Bill Myrick.

Hardy adds, “The places we’re concentrated on are large developing cities, not the boonies. [An example of a profitable store location is] Las Vegas, which is the fastest-growing area in the United States today. The acquisition of the Nevada Payless Cashways store has moved us in that region.”

The 32,000-square-foot Las Vegas store sits on about 8 acres, larger than the typical 4- to 5-acre layout for 84 Lumber stores. Las Vegas has consistently been one of the most active housing markets in the country with a record 22,940 new home sales last year, and Hardy Magerko says that trend presents a great opportunity to build market share and possibly expand in Nevada.

“We had each of these markets on our targeted list of expansion, and the purchase allowed us to further expand in key markets and enter into new markets quickly,” she says. “We believe we have the associates, programs, plants and locations in place to continue our well-planned expansion into both existing and new markets, allowing us to continue to meet the specific product and service needs of professional builders.”

Playing By its Own Rules

Business practices tend to vary from company to company, especially from privately owned to publicly held companies. It is in private ownership where 84 Lumber truly distinguishes itself. The company’s long-term decision making and employee development are two areas that Hardy says exemplify the advantage of being private.

“Being privately held means we are able to make decisions in three minutes instead of three days or three weeks,” Hardy says. “Mag, our operations people and I can make rapid decisions – our business is void of politics. We’d rather make a wrong decision once in awhile and learn from it than to make none at all.”

Hardy Magerko adds, “Being privately held is wonderful because our associates and customers drive the decisions of our business. We don’t have to worry about stockholders, which allows us to concern ourselves with objectives such as turning a good profit, gaining market share and making good business decisions.

“Hidden agendas and politics that you might see in a public company are completely absent here,” she says. “It’s a very hands-on business that has a clearly communicated direction, which [has] included expanding our markets and focusing on the pro builder.”

Another benefit, in addition to being private, Hardy says, is that 84 Lumber owns its own real estate and doesn’t have rent or mortgage. “We’re conservative in that we have no long-term debt,” he says. “Sure, we’ve had the opportunity to sell out, but why would I do that? I have all the money I need and besides, no one could put up with me – I like to have too much fun.”

“Build on What We Know”

Ask any 84 Lumber employee - from management to sales to the store floor – and he or she will probably admit to having fun working for 84 Lumber, too. Employees are crucial players in building the 84 Lumber empire and as such, are given access to promotion and incentive opportunities based on performance. Nearly 80 percent of promotions are within the company, which Hardy approves himself, he says.

“Employees are as close to being owners of 84 Lumber as anyone – our people mean everything to the business,” Hardy says. “Our focus is on turning our employees into the ‘whole man’ who is proficient in what we sell and effectively assists builders. Our employees have to be professionals, not just clerks.”

Joe Hardy couldn’t have founded 84 Lumber at a more opportune time: The post-war residential building boom was on, and Americans were moving into new suburban houses in record numbers. Since then, the home ownership level in the United States has continued to grow.

In the early 1950s, 55 percent of Americans owned their own homes, a 15 percent increase over ownership rates at the beginning of the century, according to the National Association of Home Builders (NAHB). Today, the percentage of Americans owning their own homes is close to 68 percent.

In 1950, the average new home price was $11,000, and the median family income was $3,319. The average home today costs about $206,400.

What did a homebuyer of 1950 get for the money? The “typical” new American home, according to NAHB, was a 1,000-square-foot, one-story building with two bedrooms and one bathroom. The specs for a used home of the era were even more modest; as NAHB notes, more than 35 percent of houses lacked complete plumbing facilities. Today’s new home buyer – who, statistically speaking, is more likely than ever to be single or have a relatively small family – can move into a much more roomy house.

Typically, it has three or more bedrooms, two-and-a-half bathrooms and a garage for two or more cars. Sprawling over 2,265 square feet, the two-story structure is built with amenities that today’s consumers take for granted, such as a fireplace and central air conditioning.

In a survey of consumers, NAHB found that homebuyers want “upscale features” such as high ceilings and island work areas in the kitchen. Exterior features such as a front porch, deck or rear patio also are on their wish lists.

NAHB notes that “Today, the difference between average homes and upscale/luxury homes is that upscale homes are larger, with top-of-the-line equipment and materials.”

In 1950, there were 1.95 million housing starts, and the vast majority of new houses were singlefamily homes. In 2000, housing starts were a moremodest 1.6 million, with a growing percentage of multi-unit dwellings being built.

Where is homebuilding headed? NAHB predicts that the typical new house in 2010 will:

  • Contain 2,200 or more square feet of floor space.
  • Sit on an average lot that is about 1,000 square feet smaller than in 2000.
  • Allow the owner to “age in place,” with a design that accommodates young people and senior citizens alike.
  • Have more-efficient HVAC systems that also allow two zones to be heated or cooled separately.
  • Have interior designs that allow spaces to be adapted to a variety of purposes, such as home offices.
  • Have modular wiring systems and high-speed data access.
  • Contain more factory-built components, as well as more products manufactured from engineered wood, steel, concrete and recycled materials.

“New homes will increasingly have amenities and features making them safer, more comfortable and more energy and resource efficient,” the NAHB forecasts in Housing Facts, Figures and Trends 2001.

“Experts believe they will look very much like today’s new homes.”

The key to success, Hardy says, is to have employees who effectively work with and understand the needs of professional builders. This begins the moment the employee and builder first meet.

“It’s about taking interest in the individual you’re providing a service for,” Hardy explains. “Our employees listen to the customer’s name, ask what they’re building and help them find what they’re looking for. Employees who excel in meeting customers’ needs are going fast down the road to a really good future here.”

Indeed, 84 Lumber is chock-full of success stories that Hardy believes are in part due to the company’s commitment to employee development. “Build on what we know” is more than a catchy motto at 84 Lumber. It is carried out with help from 84 University, a weeklong training program for new employees, coupled with ongoing development.

In addition to 84 University, half-time meetings consist of product knowledge training during the summer months each year. These meetings offer an opportunity to train associates in small, informal group settings.

Also, “spring visits” allow each associate and store team to demonstrate their training to their area manager and other top management personnel. Every 84 Lumber associate is given the opportunity to advance within the company. One method of recognizing an individual’s management skills is through written evaluations that take place during the year.

Hardy says the time and effort put into training and development results in success stories for the individual and the company at large. As a business leader and mentor, success stories are what Hardy considers his proudest moments.

“It is great to see common individuals do exceptional jobs,” he says. “I feel good about helping create an environment where common men come in and accomplish uncommon deeds. I love seeing people develop and take on challenges that would not have been presented to them had they gone to work with someone else.” Employees garner more than a pat on the back when they take on major challenges or exceed expectations. The company rewards associates in many different ways, from monthly bonuses and prizes to tropical vacations.

As for the former employees of stores purchased by 84 Lumber, such as Payless-Cashways, the company interviews the employees affected by the purchase.

“We know there are a great many talented, knowledgeable and hardworking people at these stores,” says Frank Cicero, vice president of store operations. “While we won’t necessarily be able to retain all of them,we will seek to place as many of them as possible either at their present location or at other 84 Lumber stores in their local market.”

Finding the Right People

When 84 Lumber finds the right mix of staff and management for any given store, it will run nearly perfectly, Cicero affirms. But ask him or his fellow executives about the biggest challenge 84 Lumber faces, and they’ll agree that it’s attracting and retaining the best managers for their stores.

“The manager is the most important person at each store,” Cicero says. “He is given autonomy to run the business as if it was his own. When he is successful in doing so, it is an asset to his store and 84 Lumber as a whole.”

Most 84 Lumber associates start their careers as manager trainees and have the opportunity to work their way up the ladder. The company’s front-loaded training program provides a solid foundation of building industry knowledge and business management practices.

“Our success is in finding the type of intelligent risk-takers who have an entrepreneurial spirit,” Hardy Magerko says. “On the other hand, it’s also our biggest challenge. If each store had the right person for the right job, [Frank, Bill and I could be on vacation].” So, what’s at the center of the challenge? Sometimes, as Cicero explains, the company isn’t prepared to staff new stores. The solution, he says, is hiring managers and beginning the development and training process before the new store is constructed or acquired.

“We must train people right from the beginning to ensure they have the knowledge and confidence to do their best,” Cicero says. “Whether an employee is selling one board or materials for 500 homes, we want managers and staff to be able to best assist builders. Customer service is key.”

And for their dedication, employees can move up rather quickly. Manager trainees are eligible for their first raise after completing a home-study program at their own pace. Usually within the first year, successful manager trainees are promoted to co-manager of a store, a contractor sales representative or a position at corporate headquarters.

In two years, Cicero says it is realistic for a manager trainee to become a store manager. Both Myrick and Cicero are prime examples of how promotion from within works at 84 Lumber. They both began as manager trainees and worked their way up through the years.

“A turning point in my career was in 1992, when I was in charge of turning troubled stores around,” Cicero says. “Overcoming challenges is a rewarding part of my work and [Myrick] would agree that there are many opportunities to really make a difference here.” Myrick adds, “Here we give people the same opportunity to do better than the day before, just as Joe (Hardy) gave us. Joe’s motto is that ‘nothing is impossible’ and he lives by it. I can say that yes, I do believe anything is possible here. Frank and I are living proof that the sky is the limit.”

Indeed, in the lumber industry, good managers make the difference and are clearly what keeps 84 Lumber ahead of the competition.

“Basically, every lumber company sells the same product and uses the same types of delivery trucks,” Hardy Magerko says. “It’s the people that make the difference and that’s why we work so hard to attract and retain the very best. And because they are paid on incentive, the more profit they make for the store is the more profit they will attain. It’s a win-win situation.”

It All Comes Down to Interest

The construction industry is not so easily taken down by an economic slump, which is great news for companies such as 84 Lumber. But, of course, the industry is not altogether unshakable. There is a factor that can make or break sales for those involved in the building industry: interest rates, as reflected in the rising or falling mortgage rates. “We don’t even look at the economy. It all comes down to interest rates,” Hardy Magerko says.

Hardy adds, “I’ve been in this industry for 50 years and I’ve found that you can have 12 percent unemployment, but if the interest rate is 6 percent or less, we’ll be busy. Monthly payments drive this industry and right now, because of low interest rates, the opportunity for building is tremendous.

“I look around at areas five or 10 miles away from Eighty Four, which is primarily a farming town, and there are $1 million to $5 million-dollar homes being constructed and it’s true all over the country,” he explains. “This business is booming.”

Hardy Magerko agrees and adds that because interest rates are at an all-time low, people are actively investing in homes, which continues to drive the company’s focus. “In the past eight years, there has been a housing boom,” she says. “We plan on serving the demand by gaining new market share.”

And because 84 Lumber’s cost of business is so low, unlike the competition, bad economic times “don’t rock our world,” Hardy Magerko says.

No Bubble In Sight

The housing outlook remains strong and there are no signs of a housing price “bubble” on the horizon, according to economists for the National Association of Home Builders (NAHB) and National Association of Realtors (NAR), speaking in April at the National Press Club Newsmaker Briefing.

“All the numbers we are seeing point to a good balance of housing supply and demand in most of the country,” said NAHB Chief Economist David F. Seiders. “Fear of a pricing bubble would drive people back into stocks – which Wall Street would surely love – but it is just not the case.”

According to the NAHB, Seiders also noted that with the inventory of unsold new homes on the market hovering around 4.2 months, housing will not have to make a “payback” for overbuilding during past recessions.

“The economic and financial market environment in our forecasts should provide a solid foundation for the housing market in both 2002 and 2003,” he said. “While some fallback in housing starts seem inevitable in the second quarter of this year, following a huge first quarter, total starts are expected to hover around the 1.6 million annual rate over the balance of this forecast period.”

Adds David Lereah, NAR’s chief economist: “You always need to go back to the fundamentals. With the economy growing, the job market rebounding and mortgage rates staying relatively low, we see the housing market staying healthy through 2003.” A record 906,000 new homes and 5.3 million existing homes were sold in 2001.

Seiders and Lereah both forecast that mortgage rates will rise only marginally,moving toward 7.4 percent by the end of 2002 and 7.7 percent in 2003. The unemployment rate, a key indicator of overall economic health, is forecast to peak at around 5.7 percent. The Gross Domestic Product (GDP) is now estimated to grow at a 3.9 percent rate for the year.

Housing production and housing-related services account for about 14 percent of the GDP and drive other closely related sectors of the economy. After purchasing a newly built home, owners within 12 months spend an average of $8,900 to furnish, decorate and improve that home – more than twice the average spent by nonmovers. Buyers of existing homes spend $3,766 more than non-moving home owners in the first year after purchasing their homes, and renters also spend significant amounts on furnishing their new apartments, the NAHB reported.

Unique Markets Dictate Needs

The professional builder is king in the eyes of 84 Lumber, and the company goes to great lengths to make sure this customer is fully served. Not only are employees on the store floor raring to assist this large and demanding client base, but there are other means of analyzing and understanding this market’s needs.

For example, Hardy says 84 Lumber researches builders’ needs and works to fulfill them. “We really research methods of the professional builder,” Hardy says. If you’re expecting some complex formula to figure out which builders need what supplies in which region, you’ll instead find 84 takes a rather common sense approach.

“It’s actually pretty simple how we research builders’ needs – it all begins with our one-on-one service philosophy,” Hardy Magerko says. “Instead of having to go through 10 84 Lumber associates to get answers, builders work with one person, who asks what he or she is looking for to complete a project.

“Our goal is to figure out how we, as a supplier, can help builders make more money,” she continues. “We’re known for bending over backwards to serve builders because in the long run,we both profit.”

Lumber and Beyond

One way 84 Lumber has expanded is through its production builder services program, which was launched in three states in 2000. This program provides large-scale production builders with value-added resources. From component manufacturing and installation services to a dedicated on-site contractor service representative, the program is geared to maximize building cycle times and improve the builder’s cash flow.

Maggie Hardy Magerko had the opportunity to become anything she wanted, but it never occurred to her to do anything but work for 84 Lumber. After all, her father, Joe Hardy, founded the building supplies giant. It’s no surprise she followed in his footsteps; since she was just a toddler, she’d been accompanying her father to the corporate office and on business trips. All through her life, she says, “I grew up with 84 people” and “there was always talk about 84 stores and new locations.” Since her birth, 84 Lumber has had a huge impact on her life, and becoming part of it was only natural.

When she was in her twenties, she went to work at the Bridgeville, Pa., store to get a better understanding of day-to-day store operations. In 1994, her first full year as president, she led the company to numerous milestones, including becoming the No. 1-ranked supplier of building materials to professional contractors in the country and topping the billion-dollar sales mark for the first time in company history. The company continued to achieve record-breaking sales totals each of the next six years, and set a new standard of $1.8 billion in 1999. Today, Hardy Magerko owns the majority of the company and in 2001, Forbes listed her as the 336th wealthiest person in the United States, worth $775 million.

Although Hardy Magerko and her father’s management styles differ, they share the same energetic approach and aggressive goals, which have greatly complemented 84 Lumber’s operation. She has made a number of strategic moves to strengthen the company’s position as the leader in professional contractor sales. Her objective consists of maintaining 84 Lumber’s traditional approach to doing business and adapting to meet the ever-changing needs of the customer.

Under her guidance, 84 Lumber significantly expanded its contractor sales force in the 1990s as the company refocused its concentration on its original niche – the professional market. In both 1997 and 1998, National Home Center News ranked 84 Lumber the No. 1 Pro Dealer in the United States.

The company also underwent a fundamental shift in how it approaches the marketplace, due primarily to the innovative thinking of Hardy Magerko. Since the beginning, for the most part, 84 Lumber has operated each of its stores identically. Within the past two years, however, 84 Lumber began to evaluate markets on an individual basis, which led to the introduction of a new store format.

The new store is quite different from the traditional 84 Lumber warehouses. Half of a new store’s 20,000 square feet has been converted into a hardware store and showroom, featuring an expanded line of plumbing, electrical, hardware, paint and sundries, while increasing 84 Lumber’s typical SKU count from 5,000 to 12,000. The showroom showcases kitchen, bath, door and window displays in a bright, customer-friendly, climate-controlled environment.

Under her leadership, the company has built many new stores using the new format, while converting dozens of existing locations to better serve the market as a “one-stop shop.”

In addition to Hardy Magerko’s duties as president of 84 Lumber, she also serves as president of the Hardy family-owned Nemacolin Woodlands Resort and Spa (see page 52 for more information) in Farmington, Pa.

“All production builders have different needs, which vary from market to market,” Myrick says. “Our goals are to fulfill their needs by asking them what they want and treating them all with the same accommodating service.”

Through 2001, the program was expanded to several other markets including Cincinnati; Indianapolis; Greensboro, N.C.; and Columbia, S.C. In 2002, 84 Lumber plans to expand its production builder services with a second plant in Indianapolis and a new facility in Atlanta.

Hardy Magerko notes that 84 Lumber’s philosophy of operating each store on a market-specific basis will hold true.

“This program has worked extremely well and provided benefits to both our large-scale production builders and to those working on a smaller scale of less than 40 homes,” Hardy Magerko says. “Because the program operates separately from our 84 Lumber stores, it allows us to provide a singular focus on the needs of large-scale builders and at the same time better meet the needs of smaller-scale builders through the traditional 84 Lumber.”

84 Lumber has been an industry leader in not only selling lumber, but also in marketing engineered wood products such as a composite wall panels, wood I-beams and laminated veneer lumber (LVL). 84 Lumber has greatly expanded its production of manufactured wood products such as roof and floor trusses at its manufacturing plants, making builders more efficient while reducing consumption and waste of wood products.

As a “sister” company to 84 Lumber, 84 Components uses 84 Lumber’s purchasing power to provide builders with high-quality products at very competitive prices.

The company opened its first component plant in Eighty-Four in 1986. Each succeeding plant that has gone online has operated at over-capacity from virtually the first day.

The plants, which construct roof trusses, floor trusses and wall panels, use the latest software to design, lay out and produce trusses. By using the Mitek Cyber-Saw, components are cut with extreme accuracy. Trusses are built to the customers’ strict specifications and delivered to the job site on time.

Because 84 Lumber realizes down time and waiting are a professional builder’s worst nightmare, its components facilities offer fast and reliable design and delivery services, as well as qualified representatives that can visit the job site to make sure components are correct and erected properly.

Each plant plays an integral role in 84 Lumber’s production builder strategy and services building developments within a 75- mile radius. The Tipton, Ind., plant near Indianapolis opened in June and the Lithonia, Ga., plant near Atlanta will open in October.

84 Lumber Co. building materials Joe Hardy, founder of 84 Lumber and Nemacolin Woodlands Resort, believes “nothing is impossible” and combines that philosophy with a genuine interest in people and their personal development and fulfillment. His philosophy is one of the reasons for his success in business and his reputation as a model entrepreneur.

Hardy began his career working for his father at Hardy & Hayes jewelers in 1946. During the four years he worked there, Hardy attended the University of Pittsburgh part-time. His appreciation for beauty that began as a college student led him to become a world-class collector. “My first real investment was a work of art,” Hardy recalls. “I always knew that someday, when I had money, I would be able to own the things I had always admired.”

A Pittsburgh native, hardy attended Shadyside Academy, Mt. Lebanon High School, the University of Pittsburgh and Lehigh University until military service in World War II interrupted his college career. After the war, in 1947, he earned a degree in industrial engineering from the University of Pittsburgh. In recognition of his achievements, he was awarded an honorary Doctor of Laws degree from Washington and Jefferson College, Washington, Pa., in 1984.

Venture magazine named him Entrepreneur of the Year in 1987 and the University of Pittsburgh elected him to the board of trustees in 1989.

Hardy has provided both the creative and financial support of the one-of-a-kind Entrepreneurial Studies Program at Washington and Jefferson College. Hundreds of students, referred to as Eagle Scholars by Hardy, have elected to study entrepreneurship since the program was created. He is also the father of seven – Joe Hardy Jr., Paul Hardy, Robin Freed, Kathleen Drake, Maggie Hardy Magerko, Paige Hardy and Taylor Hardy.

Though his role in the day-to-day operations of the company has been passed to Hardy Magerko, his leadership is ever-present. He still loves to identify new locations for 84 Lumber stores and regularly attends weekly training sessions for new managers.

“The individual is very important to 84 Lumber – I believe that people can do great things,” Hardy says. “It’s rewarding and fun to work with young people and watch them evolve.”

From one lumber store in 1954, Hardy built 84 Lumber into America’s largest privately owned lumber yard chain. There are more than 430 stores nationwide with sales in excess of $1.7 billion.

In addition to 84 Lumber, Hardy owns Nemacolin Woodlands Resort and Spa, the only five-star resort in Pennsylvania.

Hardy bought the former hunting lodge, located in Farmington, Pa., at a bankruptcy sale in 1987 for $3.1 million and has converted the property into a lavish world-class facility (see page 52 for more information). “We’ve had Bill Clinton, Tiger Woods, Robin Williams and other prominent figures come out to visit,” Hardy says. “Bill Cosby even came out for my birthday. The resort is filled with the fun things in life that are meant to [be enjoyed].”

Hardy is even able to recapture his work with his father’s jewelry store though Nemacolin – the resort includes Hardy & Hayes Jewelers, which offers a collection of fine jewelry and gifts.

Myrick adds, “By the end of 2002, we will have 12 component plants. These manufacturing plants are really an arm of our main stores that we began about 16 years ago in response to the reduction in supply chain. We expect these plants to continue to grow.”

Other features 84 Lumber offers besides its core building products include two programs: 84 Lumber credit card and the Builder Lending Program with Liberty Savings Bank. 84 Lumber offers a credit card designed especially for the individual builder. Whether building a house or building steps to a new deck, builders can place all purchases on their 84 Lumber credit card.

The card is accepted for purchases at all 84 Lumber locations, coast to coast. 84 Lumber says the benefits of the credit card include: fast and easy credit approval; low monthly payments; no annual fee; and special promotions for cardholders.

Another valuable service 84 Lumber offers is a builder lending program with Liberty Savings Bank, a direct financing program designed for builders.

“We're constantly working to provide builders with more convenient ways of doing business with us,” Hardy Magerko says. “We receive feedback to determine ways that we can simplify the building process.”

A League of Its Own: 84’s Competitive Edge

Unlike home improvement stores such as the home depot and Lowes, 84 Lumber is pretty much a no-frills supplier to building professionals. Add to that a warehouse that’s set up with enough inventory to meet builders’ needs and 84 Lumber has “a fantastic future,” Hardy says.

“We differentiate ourselves from our competition in that, generally, we’re located in rural areas on a lot of land and with low overhead,” he says. “Our stores are not heated or air conditioned. We carry very narrow inventory of about $350 million, which allows for very fast turnovers. And because 30 percent of lumber prices are in transportation, we strategically locate ourselves near rail areas, a cheaper way to move commodities. This allows us to sell lumber at competitive prices.”

Other competition comes from publicly held companies such as Carolina Holdings, a top U.S. supplier of building materials to contractors. It operates about 220 building supply stores in 24 states, and it, too, has grown by acquiring regional lumberyards. Unlike 84 Lumber – whose stores average $5 million in annual revenues with the capability of $10 million – Carolina Holdings’ stores are committed to produce $60 million at each location. In comparison, Carolina Holdings has about half as many stores located nationwide as 84 Lumber.

Outside Contractor Sales

With nearly 1,300 outside contractor sales professionals, 84 Lumber continues to make sure that pro builders have a dedicated expert as a consistent point of contact with the company. These professionals are a critical link between 84 Lumber and professional contractors and ensure that each pro customer receives exemplary service and accurate, on-time delivery of high-quality building materials.

Contractor sales employees, who Myrick calls “pseudo-employees of the builder,” are responsible for staying one step ahead of the builders’ job site.

“Our contractor sales pros must be at the job site in order to anticipate needs of the builder,” Myrick says. “This person basically acts as the construction manager.”

A True Environmental Steward

According to the American Forest and Paper Association (AF&PA), the relationship between a healthy, productive forest and the forest and paper industry is elementary because if there is no forest, there can not be forest products industries, such as 84 Lumber’s business.

History and science demonstrate that an efficient industry can coexist with a healthy environment. Today, the U.S. forest products industry is underscoring that point by protecting wildlife and forest health at the same time that it harvests trees to manufacture the products Americans want and need.

In the 1920s, there were predictions that demand for lumber, paper and other wood products would fully deplete the country's supply of trees by 1945.

Obviously, those predictions were wrong – today the United States has 20 percent more trees than it did on the first Earth Day celebration more than 25 years ago, AF&PA reports.

Because 84 Lumber sells lumber and other supplies builders need, it has made a commitment to preserving the environment by phasing out sales of products from endangered forests by the end of 2003. “84 Lumber will continue its commitment of practicing sound environmental wood procurement policies by phasing out sales of wood from endangered forests during the next three years while continuing to promote the sale of alternative products,” Hardy Magerko says.

She says 84 Lumber strongly believes that practicing sound forest management is the responsibility of producers, distributors and, ultimately, consumers.

“While we currently purchase a vast majority of our wood products from the most responsible producers in North America and around the world,” she says, “we are increasing our environmental preservation efforts immediately to ensure that our suppliers practice responsible forestry.”

A few years ago, 84 Lumber conducted an extensive evaluation of its purchasing policies and procedures, with the intention of implementing environmental policies that eliminate the sale of wood that is harvested from endangered forests.

Most of 84 Lumber’s wood supply does not come from endangered areas, the company says. The company currently works closely with its suppliers to implement independent, third-party certification systems to ensure the products sold in 84 Lumber’s stores come from well-managed forests.

“Many of our suppliers have already implemented independent certification systems, and we will strongly encourage those who haven’t to join this collaborative effort as we build environmental partnerships that benefit everyone,” Hardy Magerko says. “We are proud of our efforts in helping to make builders more efficient, not only by saving them time and money with our engineered wood products, but also in helping them reduce the pressure on the world’s forests by practicing better building techniques. The demand for engineered wood products continues to increase and we will market these products accordingly.”

Many 84 Lumber stores also stock additional alternative products such as Trex decking, which is manufactured from reclaimed and recycled products including wood particles and grocery store sacks. “We will continue to seek ways to improve the way we do business, and that certainly includes developing and fostering partnerships with suppliers who strive to be responsible stewards of the environment,” she explains. “We all have a responsibility to preserve the earth for future generations, and 84 Lumber is pleased to take its commitment to a higher level.”

Supplier Relations Built on Solid Ground

84 Lumber relies on scores of vendors to supply it with high quality products and reliable service. Hardy says, “Vendors are certainly in a partnership with us” and supply “fine products at competitive prices.” He says good vendor relationships are responsible for making 84 Lumber a successful supplier to professional builders. Owens Corning, the company that invented glass fiber and the world leader in advanced glass and building material systems, is an example of a vendor that has formed a strong partnership with 84 Lumber since the company was founded in 1956.

Owens Corning ships a number of supplies to 84 Lumber’s stores, including OC residential roofing, insulation, a proprietary vinyl siding line, metal products, foam sheathing and house wrap that supports 84 Lumber’s builder customers.

“Our goal is to make 84 profitable and we work to achieve their goals,” says Jim Drew, Owens Corning’s vice president of building materials distribution sales. “In turn, this helps us achieve our goals by providing us with excellent placement in the marketplace.”

Drew says there are a few key methods that have helped Owens Corning and 84 Lumber sustain their partnership. “We’ve had a good working relationship with 84 Lumber for a long time and we’ve built this relationship in two ways,” Drew explains. “First, we understand our objective, including building 84 Lumber’s revenue growth and aligning our resources to meet 84 Lumber’s goals.

“Second, we know it takes good senior management relationships and communication to maintain a strong relationship,” he continues. “If there is an opportunity, we communicate it. I have the luxury of working with Bill Myrick and 84 Lumber’s senior management.”

84 Lumber’s 1,100 salespeople and hundreds of nationwide stores are an integral part of boosting Owens Corning’s market placement, too. “84 is an efficient operator with sales to key builders in the United States,” he says. “The 84 brand complements Owens Corning’s brand. The company provides good service, consistency and reliability that helps enhance our reputation.”

Owens Corning’s future plans include continuing to introduce new products to 84 Lumber to enhance its product offerings and a joint sales effort between 84 Lumber and Owens Corning’s sales forces to gain product placement at the builder level.

“We’ve worked hard over the years to build a quality brand and we’re known throughout the builder marketplace,” Drew says. “We’ve built reliability in our service option by allowing 84 Lumber to deal with fewer suppliers.”

Orgill Inc., a hardlines goods distributor to a number of retail operations throughout the country, is another partner that believes 84 Lumber has played a large role in growing both companies. Having worked together for 14 years, Orgill and 84 use their combined strengths to negotiate with other vendors, finding an equally attractive plan for growth. This is all part of 84 Lumber’s goal of maintaining profitability for its vendors.

“Both 84 and Orgill are attractive to the vendor communities,” says Grady Jennings, Orgill national account manager. “We both pay our bills on time and are growing rapidly. We mutually drive better deals with our suppliers – their volume contributes to ours.”

During 84 Lumber’s recent acquisition of 18 former Payless- Cashways stores, Orgill was on hand to help the company transform these stores into the 84 format, and because of the strong relationship between the two companies, Orgill was able to have everything ready for the opening of the revamped stores in very little time. Jennings notes that 84 Lumber’s focused message of what it needs has helped Orgill deliver what is expected.

“84 is very tough, but very fair, and that is all we can ask of a customer,” he says. “Their dealings are straightforward, and they are very aggressive in their intent to grow the business. We appreciate that – it is the kind of customer we want.”

Jennings also believes the goals and business structures of Orgill and 84 Lumber are similar, which has helped the two companies develop close, personal relationships over the years. “As we look at 84, they are conservative by nature, but so are we,” he says. “We like to be aligned with customers that have strong finances – they pay their bills on time and are positioned for growth. We have a common interest in that regard. We look for professional customers that we can grow with.”

This sentiment is shared by another of 84 Lumber’s suppliers, Georgia-Pacific. The large distributor of building products has worked with 84 for almost 20 years; Georgia-Pacific believes that 84 Lumber’s solid financial record and dedication to paying its bills on time make its operations more efficient. 84 Lumber has also helped Georgia-Pacific’s profitability by organizing itself to meet its suppliers’ needs.

“Our relationship with them has been very good,” says Sam Gatis, vice president of national sales at Georgia-Pacific. “They really try to give us enough business so that we can make economical order quantities and it is feasible to deliver. They are also efficient at handling the product once it gets there – we can get our trucks in and get out easily.”

Gatis notes that 84 has an annual planning session with Georgia- Pacific to determine product forecasts, which helps with Georgia- Pacific’s production capacities. He believes its main strength, however, is its people.

“It is a good solid company, with good quality people,” he says. “Sometimes it is easy to forget the people at a company, but not in this case.”

More Pro Builders Choose 84 Lumber

Hardy says professional builders continually work with 84 Lumber for many reasons, from the high level of quality and service to reliable, on-time delivery and access to professional, expert employees.

“We contract with mills, which have strict quality control,” Hardy says. “Our low overhead translates into competitive prices for our customers. With 2,000 representatives and outside salesmen,we are able to make sure deliveries are on time. These are attributes that win us customers.”

Bernie Iacovangelo, president of Faber Homes in Rochester, N.Y., says his company does business with 84 Lumber because of its mentality of “earning an account” rather than “owning an account” with his company.

He explains 84 Lumber earns Faber’s business by offering lower prices along with what he describes as the best service and prices. “As long as they continue with those principles,we’ll continue doing business with them,” Iacovangelo says.

He says 84 Lumber will go out of its way to help customers, which is the kind of relationship a builder needs from its suppliers. For example, the company’s salesmen are proactive in sharing information about new products with customers. “That’s what they bring to the table,” he says.

He recalls that once Faber began running into problems in its flooring by using wood that wasn’t mature and strong enough. Iacovangelo says 84 Lumber steered Faber toward a steel company, and Faber began using steel floor frames, which helped tremendously with their construction.

“Right now, they’re one of the best,” Iacovangelo says of 84 Lumber. Iacovangelo says Faber, which has been building homes around Rochester since 1983, has been doing business with 84 Lumber for about four years.

84 Lumber provides them with framing materials, roof trusses, windows, stair rails, steps and other products. Faber, which has a large share of the market in Monroe County, has built more than 2,000 homes, townhomes and apartments. Bernie Iacovangelo, and two of his brothers, Frank and Anthony, founded Faber Homes by rehabilitating and building local commercial structures.

Iacovangelo says Faber will stay with 84 Lumber as long as it does not become complacent, but he does not see that happening. Other key customers such as Marrano Marc/Equity agree with Iacovangelo.

“We deal with [84 Lumber] on a daily basis and their service is exceptional, as well as their material and cost,” says Mark Marrano, executive vice president of Marrano Marc/Equity. Marrano says 84 Lumber has been providing his company with rough lumber for a long time.

Based in West Seneca, N.Y.,Marrano has been building homes in western New York for 45 years. The company says that since 1986, it has been the No. 1 homebuilder in that area of the state in terms of sales volume. In fact, Marrano, which constructs single-family resident homes, townhomes and patio homes, says it built one out of four homes in western New York in 1997, and that it will soon reach a total of 15,000 homes built.

Marrano says it is among the top 350 home builders in the United States and among the Buffalo area’s top 100 privately held companies. Mark Marrano says his contacts at 84 Lumber provide top-notch attention. “Their method of service is excellent,” he says.

Barry Andrews Homes, a mid-sized new homebuilder based in Bel Air, Md., has been a customer of 84 Lumber since 1994. Company owner Barry Andrews, like Marrano, believes the most beneficial aspect of working with 84 Lumber has been the quality of service it provides.

“With 84 Lumber, their prices are great, and their terms are great,” Andrews says. “But their uniqueness – what sets them apart – is definitely their service. Price is one thing, but service is what is key to their account with me. It would be so hard for another company to come in here and take their business away from us, for several reasons, but mainly because their service is so outstanding.”

Andrews says his company, which will build approximately 250 homes this year and is ranked as one of the 20 largest home builders in the Baltimore area, is one of 84 Lumber’s largest accounts. 84 Lumber works directly with Barry Andrews Homes by assigning an outside salesman, Chris Neilson, directly to the account.

“He’s like a member of our team,” Andrews says of Neilson. “He comes to our offices every day. He’s so committed to our business. He has been fantastic to work with.”

Neilson’s main job is to assist with and expedite all the ordering activities between Andrews Homes and 84 Lumber, and ensure that all materials reach the company in a timely manner. He performs “take offs” – meaning he assesses Andrew Homes blueprints to determine how many doors, windows and other products supplied by 84 Lumber are required for a given job, then takes care of the orders personally.

Neilson will be at his client’s job sites when the orders come in, and if the order is incorrect or short, he’ll drive his pickup to the nearest 84 Lumber store to pick up the necessary items and bring them back to the job site.

In addition, Neilson ensures the quality of any services that 84 Lumber provides on Andrews Homes’ job sites. For example, on sites where 84 Lumber performs window installation, he’ll make sure that the installation was done correctly.

“He’s probably on a couple of job sites every day,” Andrews says. “If I was to call him right now, he’d almost certainly be on one of our job sites.”

While 84 Lumber has 10 stores in the Baltimore area, Barry Andrews Homes does a majority of its extensive business with 84 Lumber’s Joppa-Bradshaw location. But don’t ask Andrews for driving directions to the store.

“I probably haven’t stepped foot in there in over two years,” Andrews says. “On the rare occasion I call the store, they’re stunned. “The way 84 Lumber works with a builder,we don’t need to go to the store,” he continues. “They take care of us; they stand behind us 100 percent.”

Prior to 1994, numerous suppliers provided Barry Andrews Homes with its myriad construction needs. The company has been able to consolidate its vast vendor base by becoming a client of 84 Lumber.

“Now it’s all one-stop shopping,” Andrews says, giggling. “Not only does 84 Lumber supply all of our framing lumber, all of our trim lumber, but it also provides us with all of the other materials we need, like trusses, steel, all the windows and all the doors. 84 Lumber is truly a one-stop shopping experience.”

Finally, Andrews cites 84 Lumber’s accessibility as a major strength. “I can call their headquarters and speak to them at any time,” he says. “Even though they are probably one of the largest companies in their field, they act like a small family business. Coming from a small family builder – we started out building 10 houses a year – that’s very attractive to me.”

Building Strong Communities

With facilities all over the country, it's no surprise 84 Lumber is involved with the community beyond professional builders. “Community activities are high priority for 84 Lumber,” Hardy says. “We are involved in the Make-a-Wish Foundation and have several scholarship opportunities available.”

Habitat for Humanity is another organization that benefits from 84 Lumber’s philanthropic focus. “84 Lumber believes in the spirit of volunteerism, and the philosophies of Habitat, and that’s why we have sponsored many Habitat builds in the past,” Hardy Magerko says. “We are excited to work with such great organizations and we hope our involvement helps to draw even greater attention to this great organization across the country.”

When mother nature strikes, 84 Lumber is there to help out, too. Several 84 Lumber stores and employees in Texas worked non-stop to aid victims of the flooding resulting from tropical storm Allison last summer.

“It is part of our community commitment and concern to help in times of great need such as this,” Hardy Magerko says. “A disaster of this magnitude reminds us all of how quickly our lives can be impacted and changed. We feel it’s our place to help these affected families get back on their feet.”

Going beyond the call of duty for customers has always been 84 Lumber’s mantra, but in the case of the Allison, 84 Lumber did the same for the community by providing various building supplies.

Clear Vision, Exciting Future

As for the future goals of 84 Lumber, continued growth and increased sales will continue to drive the business. But the company wants to make it clear that it’s not about to reinvent the wheel; rather, it will “ask our customers how they want the wheel to be made,” Myrick says.

Though growth is a major objective, it is finding the right locations that will determine 84 Lumber’s success. Between 2000 and 2002, the company had originally expected to open 50 new stores each year, but only 30 new stores opened in the first year. However, 20 others were upgraded to the newer format.

“We’re always expanding,” Hardy Magerko says. “But I want to back off on that idea of 50 new yards each year.”

Hardy Magerko says the company will likely open stores in clusters rather than build yards isolated from other 84 Lumber facilities. These regional market groupings establish deeper market penetration and provide operational and sales support for individual management teams, Hardy Magerko explains.

Myrick adds,“The company’s growth will be in more components facilities and more stores. Currently, most of our markets are mapped out mostly east of the Mississippi, so it’s our objective to explore more geographic markets.”

This tactic has been successful in the San Francisco Bay area and in St. Louis, where 84 Lumber operates five units in each market. Magerko says the success of the components division, in particular, has helped encourage the company to enter western markets dominated by large production builders who are after value-added services.

84 Lumber remains committed to a calculated growth strategy, especially with the elaborate, market-to-market demands of professional accounts. Since Hardy Magerko did away with building cookie-cutter 84 Lumber stores, company growth nationwide has demanded a higher, more time-consuming level of market research, she says, including figuring out site acquisition, suitable store formats and the proper mix of value-added services.

Myrick adds: “We’ll continue to work with the philosophy of maintaining low overheads and asking customers what they want.” And while the commitment to low overhead and one-on-one service is expected to remain part of 84 Lumber’s ongoing profitbuilding objective, Hardy Magerko says its newest operating mantra is flexibility: “We need the managers and the customer base, and then it’s a matter of fulfilling those customer needs.

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