Builders, big, independent, small and medium, now have a levelled playing field and the simple approach is leaving many wondering, “why didn’t I think of that?” Combined Building Supplies Co-operative chairman Carl Taylor talks about making small operators more competitive.
The Combined Building Supplies Co-operative or, in simpler terms, CBS Co-op, allows anyone in the construction industry who are members of the co-op, access to the same low rates on materials and services that, up until now, were only accessible to major housing companies and large corporate construction companies.
“It’s a game changer,” says CBS Co-op, chairman/procurement director, Carl Taylor.
You may recognise the name ‘Carl Taylor’, if you’ve lived in Canterbury at all in the past 20 years. Carl runs a successful company known as Carl Taylor Homes. His experience in this field played a significant part in the formation of the co-operative.
“The building supplies co-operative concept came about from constantly missing out on jobs to the bigger guys. The only way we could see to address this issue was to get a team together that had vast experience in areas including; coops, the building sector, business and finance, which is why we have the team that we have,” Carl says.
The team includes: CEO Ian Lamb; CFO Simon White; director of marketing, strategy and communications Mike Blackburn; director of legal and corporate affairs Karen Overend; consultant Wayne Bailey and of course Carl Taylor.
“Our goal is to even the playing field by enabling smaller and medium builders to compete with the bigger companies.” And for the ones thinking ‘why didn’t I think of that?’ Carl says it’s not as simple as it sounds.
“People always say to us ‘if it’s so easy why hasn’t it been done before?’ the simple answer is; it’s a bit more complex than it looks. It has taken hundreds of hours to get to this point. We are professionals and as such it is essential that things are done correctly and well, which is where the time has been invested.”
It was clear this approach would create somewhat of a buzz and for it to be launched in Christchurch is an asset to the Canterbury region and will be a turning point for builders nationwide in the near future.
The launch was held at the Papanui Club on April 24th. More than 100 invited guests were joined by Housing and Urban Development Minister Hon. Phil Twyford. The evening was a great opportunity for shareholders to meet with suppliers over a drink and some nibbles in a relaxed environment.
A simple approach
The CBS Co-op is an approach that is a successfully proven and sustainable model of business operation.
The co-op brings together multiple building companies (currently only in Canterbury, but with expansion on the horizon), combining their volume of spend across the suppliers involved. Carl believes this will make the co-operative one of the biggest buyers of building materials in Canterbury.
“In the residential construction sector, most houses are built by small home building companies and yet they do not have the ‘buying’ power the larger companies do.” Carl says it was about time something like this came about – “the builders like the fact that they now have some power”.
And getting some of that power for yourself could not be easier. To become a shareholder you must make the minimum investment of $1,000 which is equal to 1,000 shares. “There are no other commitments, contingent liabilities and no annual fees or subscriptions,” and there is no limit to the number of shareholders within the co-operative – as Carl sees it, the more the merrier.
It’s also important to note that buying into the co-op doesn’t lock you down to specific suppliers, however; buying from co-op suppliers will bring you the most benefit.
“We will actively encourage members to consider using CBS’s suppliers, because obviously the bigger the combined purchases, the better the pricing and more profit is returned to each member at the end of the year.”
Yes, you read that correctly “that’s why being in a co-operative is unique” Carl says. A profit return at the end of the year on top of material and service discounts.
“Suppliers pay a rebate directly to the co-operative. This is used to cover operational and management expenses. Our business plan shows that CBS will make a profit after expenses – which will then be distributed each year to shareholders based on the size of the business they have put through CBS suppliers.”
Who’s reaping the rewards?
Obviously small to medium builders are reaping the rewards, but there’s something in this for everyone, as cliché as that sounds.
Not only are builders more aware of what they can accomplish as a co-operative, but suppliers are starting to see that the market is changing. “It’s fair to say we have shaken a few cages,” Carl muses.
“They all want a piece of the pie and want to be involved wherever they can be. That’s got to be great news for the co-op and of course the members.”
CBS launched with more than a dozen suppliers on board, within Canterbury, offering rates, in some cases, better than those being offered to large group home builders.
Since the launch, CBS has been inundated with more than 100 emails from suppliers wanting further information. “We didn’t expect that number to honest,” Carl admits.
“The suppliers, with whom CBS has agreements, recognise the value in the combined business from every builder who has already signed up with CBS. They can see the exciting potential of the co-operative and are well aware of how successfully other co-operatives work.”
And for homeowners; this could mean more cash in your pockets. “We certainly support and encourage builders to pass on any savings,” Carl says, however he is quick to state that the co-op doesn’t dictate how anyone should run their business.
Expansion was always on the cards but it’s coming sooner than anyone anticipated. The mutual excitement among builders, shareholders and suppliers has seen a “phenomenal response” since the launch.
“The number of signed co-op members has more than tripled. There have been more than 100 downloads of the member application form and negotiations have started with new suppliers.
“The response has put significant pressure on the timing of a national rollout, we intended to be in Auckland by the end of this year but the enquiry level from the top of the North Island may bring that forward.”
It’s easy to see why CBS has created such a hype. It’s a concept that just makes sense and is a concept that benefits all involved.
You know it’s a good idea when you’re left wondering ‘why didn’t I think of that?’ thankfully you don’t have to think it, the field has been levelled – embrace it.
By Natalia Rietveld