One For All

Turnkey installation has certainly had a change in status since in the early 1980s, when the Timberlake division of American Woodmark was one of the few suppliers offering that option to builders. Consolidation and the race to close more homes find more builders outsourcing elements of their supply chain managements to reliable service providers. These include manufacturers like Timberlake, whose builder service centers in 13 markets currently install cabinets for 17 of the industry's 25 largest builders. Don Repshas, Timberlake's vice president of national accounts, says “the overwhelming majority of builders” now requires a turnkey package.

Builder demand for turnkey installation of nearly every product that goes into a home's construction is creating new opportunities for suppliers that can step up to the plate. San Francisco-based Building Material Holding Corp. continues to aggressively expand its BMC Construction subsidiary, which focuses mostly on providing turnkey shell construction and saw its revenue from 26 locations in nine states jump 85 percent in 2004 to $754 million. On June 13, BMC Construction acquired a 51 percent stake in BBP Cos., an Ariz.-based concrete foundation services provider whose sales in 2004 topped $100 million. In April, BMC Construction ventured into new territory when it acquired a majority stake in another Arizona firm, Riggs Plumbing, which provides rough and finished plumbing installation.

The plumbing category has been dicey for other turnkey providers. American Plumbing and Mechanical, the Texas-based consortium of contractors better known as AMPAM, is in the process of dissolving as a corporate entity as part of its bankruptcy reorganization, according to CEO Robert Christianson.

But there's ample evidence that large builders factor scale into their choices of turnkey sources. For example, in February, Lennar signed a three-year agreement with Hearth & Home Technologies, the world's largest fireplace maker, to become the exclusive installer of hearth products. Donnie DeMarie, president of Masco Contractor Services, identifies “scale, in terms of our locations, our 17,000 installers, and our financial power,” as one of his company's competitive advantages.

MCS competes with two sizeable multiple-product installers: One is Columbus, Ohio-based Installed Building Products, with 72 locations in 20 states. The other, Edina, Minn.-based United Subcontractors, with 55 branches in 15 states, recently got a boost when Wind Point Partners, a Chicago investment firm, paid $72 million to acquire a majority stake, and hired former Honeywell official Kevin Gilligan as USI's CEO. Gilligan hit the ground running when he told the Minneapolis-St. Paul Business Journal in March that he wants USI's revenue to double from $280 million in 2004—within five years. Nathan Brown, Wind Point's managing director, says “a significant amount of capital” has been set aside for future acquisitions.