Through crazy good times – and now on the verge of crazy challenging and adverse conditions – construction’s grinding, sometimes frustratingly hesitant transformation to what it will someday be may hit speed bumps. But it goes on.

A whipsaw of moment and tumult plowed last week across sectors and domains that matter to us. The ultimate importance of all that high-decibel clamor – housing market, political, financial, tech, global, and environmental, to say the least – will filter through the immediate term noise and declare itself as fleeting or lasting.

What all of the attention-grabbing can’t hide in this world of lives and livelihoods for people who make, and improve, and impact homes and communities is this: A cold, dark, tough winter lies ahead.

That’s why this declaration from $20 billion construction channel bulwark Builders FirstSource, whose strategic leaders

Dave Flitman – on investment in tech transformation

The end of the third quarter marks just over one year since the completion of our Paradigm and Apollo acquisitions. The original Paradigm business continues to perform exceptionally well and we are investing in the long-term growth of that business.

On the homebuilder software side, we remain committed to executing our development plan to build out of our digital sales team and integration with BFS operations. As we highlighted last quarter, we successfully integrated our structural design, material takeoff and visualization models into one streamlined process for our pilot customers. We now have 18 new digital sales representatives in place with more than 330 customer meetings held during the third quarter.

And we are excited to tell you about a new technology that we will be introducing to the marketplace at the beginning of 2023, our new mybldr.com website which will provide our small builder customers easy-to-use digital tools to virtually design and build their next home and engage with key operational functions, including planning, specifying products, ordering materials and budgeting. We believe our launch of this platform will help us grow the BFS brand and build on our momentum as the supplier of choice in the homebuilding industry.

Long-term strategic investment in technology

Cracking the code of the digitization of the start-to-complete build-cycle, its ability to port elegantly into construction documentation, virtual walk-throughs, and precision-manufacturing of construction components, panels, and modules is – as the slide above notes – a $1 billion upside “opportunity to BFS” its strategists believe.

The time to push forward – as they have in pilot projects with the likes of Century Communities, which is putting Paradigm’s array of digitalization and automation solutions to work on one of its communities – is not after the cyclical swoon ahead, but now, according to Flitman.

Dave Flitman – on the commitment to push through change

We bought a platform that was — we were very excited about with Paradigm, but it was very narrowly focused again on window and door manufacturers in the retail side of the business. And as we said, we’ve been investing heavily in the development of that platform to build it out to be able to handle the whole house design and configuration.

We’re hitting a major milestone with that launch. And as we’ve said from the beginning, we are targeting this at the small builders first. So consistent with what we said, we’re excited about that milestone. And there will be more to come over time. But 15, 16 months in, with the heavy lifting we have and continue to have on the development side, we’re excited to bring that forward.

Dave Flitman – The ‘Downturn Playbook’ for a 20% starts drop

We do anticipate there to be declines on a number of different areas. We think starts will go down. We think commodities will continue to revert back to that long-term average. And we think there’ll be some regression to the historical norms in margins. Beginning to see that in the third and fourth quarters and certainly expect that to play out through the year.

But it’s an environment where even with those pretty significant slowdown estimates included in the metric, we’re still at double-digit margins. We’re still in a position where we’ve got a market-leading platform where we’ve got investments in value-add and digital and improvements internally and our productivity is helping to lead us through a very difficult time with a very profitable business.”

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