Carter Lumber Company

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Carter Lumber Company

601 Tallmadge Road
Kent, Ohio 44240
U.S.A.
Telephone: (330) 673-6100
Fax: (330) 678-6134
Web site: http://www.carterlumber.com

Private Company
Founded: 1932 as Carter-Jones Lumber
Employees: 4,300
Sales: $570 million (2000 est.)
NAIC: 421300 Lumber and Other Construction Materials Wholesalers

Family owned and operated for three generations, Carter Lumber Company is a regional lumberyard chain based in Kent, Ohio. The company owns approximately 250 stores in nine states, and is growing by ten to 15 units per year by focusing mostly on smaller towns in Ohio, Illinois, Indiana, Michigan, North Carolina, South Carolina, Kentucky, and Virginia. Serving smaller markets has helped the much smaller stores of Carter Lumber to thrive in a business generally dominated by such home improvement giants as Lowe’s and Home Depot. While the latter may feature stores of 100,000 square feet, a typical Carter Lumber store is just 6,000 square feet. The company positions itself as a true lumberyard, devoted to both contractors, who account for almost 70 percent of its business, as well as do-it-yourself customers. Although it features plumbing, electric, and heating departments, Carter Lumber does not sell appliances and other home improvement merchandise. Because of the size of its chain, however, Carter Lumber does enjoy the benefits of volume purchasing in order to discount prices. In addition to stocking building materials, Carter Lumber also sells kits which include all the necessary materials for building projects that range from full-size houses and garages (its most popular kits) to smaller projects such as decks, swing sets, and kitchen designs. In addition to its stores, Carter Lumber owns two lumber and supply distribution centers, a 2,000-acre horse and cattle farm, and approximately 60,000 acres of timberland in Arkansas.

Company’s Founder Born in 1898

The life of Warren E. Carter, the founder of Carter Lumber, is the quintessential American success story. He was born in Arkansas in 1898 in former slave quarters, then his family moved to a heavily wooded area in Arkansas in 1904 to raise hogs. To help clear the land, Carter became handy with an ax and also gained skills sawing logs and making barrel staves. He received an elementary school education, then dropped out of school after the eighth grade, a choice typically made by rural youth at the time. He went to work transporting logs with teams of horses through the Arkansas woodlands to the sawmills. In the 1920s he became the white foreman of a team primarily comprised of black workers who loaded lumber for a sawmill onto railroad cars ten hours a day, six days a week. He quickly displayed traits that were a harbinger of his personal ethic and future business career. Within months, his team became productive enough to reduce the cost of loading a railroad car from 84 cents to 76 cents. To reward his men, he requested and received a two and one-half cent raise, despite complaints from other teams. He continued to improve the productivity of his men, so that within a year the cost per carload had been reduced to 64 cents, and by the time he left the job, his men had seen their pay increased by a nickel to 50 cents a day. Carter would become known for his habits of hard work and honesty, as well as showing a compassion for other people. He became a civic leader, actively involved in politics and charitable endeavors such as Goodwill Industries and the Salvation Army.

Carter gained some additional education, attending business school in Tyler, Texas. In 1927 he traveled to Akron, Ohio, to visit his brother Frank, who worked at the Goodyear Tire plant. After dropping his brother off at work one day he visited a lumberyard to talk to the owner, Clyde Gough, who immediately hired Carter as his general foreman at $22 a month. With the advent of the Depression, business suffered and by 1932 Gough lost the lumberyard in a bank foreclosure. Carter teamed with coworker T. Neil Jones to buy the Gough assets from the bank, creating Carter-Jones Lumber. It was an austere operation at first, with Carter paying himself just $12 a week to support his wife and three children while living in quarters at the yard. Despite difficult business conditions, Carter-Jones Lumber turned a $1,600 profit in its first year.

By today’s standards Carter might be considered a workaholic, a trait that became a source of friction between the two partners. Jones sold out in 1937, although according to Carter they remained the best of friends the rest of their lives. Aside from working hard, Carter also displayed a sense of honesty that was apparently rare in the lumberyards of the day, when it was common practice for an estimate for the amount of wood required in a building project to be an elastic number. Extra charges always emerged, so that a developer was never certain of his costs until the final bill came in. After loading lumber onto train cars and being held accountable for every piece, Carter ran his lumberyard the same way, estimating and delivering to contractors exactly what was needed and ordered. Despite being informed by fellow lumberyard owners about the proper way to run such a business, Carter ignored their advice, and in short order contractors were giving him their business, because they knew they could count on his honesty. Carter also drew another lesson from his days loading railcars. Knowing the value of a strong bond between workers and a leader, he delegated hiring to his managers, insisting that each department head should hire his own people.

Carter’s business grew to the point where he was soon able to open lumberyards in the Ohio towns of Wooster and Fairlawn. (His brother Louis entered the lumberyard business as well, establishing the Wooster Lumber chain, which would eventually be absorbed by Carter Lumber in 1972.) Carter also became involved in the construction of tract housing in a number of small Ohio towns. A respected business leader, he served in major positions with the Akron Builders Exchange, the Ohio Association of Retail Lumber Dealers, the Akron Chamber of Commerce, and the Better Business Bureau of Akron. He even ran for mayor of Akron in 1955. Although defeated, he was glad in retrospect that he had not been distracted from his thriving business. To supply his growing operations, he bought thousands of acres of timberland in Arkansas, including the house and land where he grew up.

Changes Following 1964 Heart Attack

The energetic Carter suffered a heart attack in 1964, but it would prove to be far from debilitating. Nevertheless, in 1966 he took steps to protect his wealth and assets for his children by creating Building Services Co., a partnership designed to own the assets of Carter Lumber and pass the benefits onto his heirs. Although Carter would step back from the business, allowing his son, Van Dale Carter, to succeed him as chief executive officer, he would continue to come into the office a few days a week for many years to come, insuring that his influence on the company would endure.

In the mid-1960s Carter Lumber owned 12 yards. By the end of the decade the company expanded beyond lumber, adding plumbing, electric, and heating departments to better serve contractors as well as the growing do-it-yourself market. Under Van Carter the company began to grow at a steady clip. By the mid-1980s Carter Lumber boasted more than 150 stores. To support such a large-scale operation, a management training program was instituted. In keeping with the principles of Warren Carter, each management trainee started out in the warehouse and manually unloaded boxcars to become familiar with what the stores sold, piece by piece.

The company ran into some problems making the transition to a second generation of management. In 1985 the Carter family experienced a public rift when four members filed a suit against the company and some of its officers, in particular Van Carter, alleging that the Building Services partnership had been deliberately drained of assets in order to deprive them of their rightful share of the family’s wealth. All of the plaintiffs had been formerly employed by Carter Lumber, but according to the suit had been afraid to question Van Carter’s operation of the business, concerned that he would retaliate by firing them. Now that they no longer worked for the company, they lodged a number of charges in their suit, which requested an audit and $ 1 million in punitive damages. Warren Carter was not named in the suit and the matter was eventually resolved outside of the public spotlight, but it was a nasty open spat for an extremely private family.

Company Perspectives:

In 1932 Warren E. Carter opened a lumberyard in Akron, Ohio: The Carter-Jones Lumber Company. His idea was to operate a lumberyard based on the simple principle of providing the greatest customer service while offering quality products at a fair price. Through the years this idea has helped the Carter Lumber Company grow to one of the top building material retailers in the country.

Third Generation Taking the Helm: 1988

Van Carter died in 1988 and leadership of the company passed to a third generation, his son Bryan Carter. Other grandchildren also assumed prominent roles in the organization. As the company continued to add stores to its lumberyard chain in the 1990s, it faced a new challenge from the rise of Home Depot and Lowe’s. Although Carter Lumber was well established and believed that its reputation for providing quality service and products with a personal touch would keep it competitive in a changing retail world, it had never promoted itself much beyond the publication of a monthly Sunday flier. While modesty was an admirable trait in the company’s founder, which led Carter Lumber to favor service over promotional efforts, it was apparent to the new generation of management that Carter Lumber had to improve its marketing. Before it could even consider an advertising campaign, however, it needed to know what consumers thought about the company, rather than what the company thought about itself. A study by an Ohio advertising and public relations firm revealed that contractors now viewed Carter Lumber as a store for the do-it-yourself market, while general consumers thought of it as catering to contractors. The contractors were turning to small yards, which they saw as specialists in their particular fields. Consumers, meanwhile, were shopping at big box stores, not realizing that Carter Lumber was selling higher quality goods at cheaper prices and offering more knowledgeable advice for the do-it-yourselfer. To educate the contractor market, Carter Lumber developed a newsletter, “Plane & Simple,” to announce new programs. Each store added a contractor sales representative who traveled to sites to not only provide complete lists of supplies offered by Carter Lumber, but to also take orders and offer advice. The stores made a point of staying current on area building codes to make sure that they stocked approved products, an important benefit for both contractors and do-it-yourselfers. Carter Lumber also initiated a customer loyalty rewards program for contractors, giving away televisions, stereos, gas grills, and weeklong trips to Hawaii. On the consumer side, the company introduced a similar incentive program, and to increase brand recognition launched a marketing campaign that featured radio and television advertising. It even spent money on signage behind homeplate at Jacobs’ Field, home of the Cleveland Indians baseball team.

With a thriving economy that stimulated the building of new homes, along with improved marketing, Carter Lumber flourished in the late 1990s, continuing to add stores at the rate of around ten a year, with the emphasis remaining on the smaller towns often overlooked by big box rivals. To take advantage of the rise in building starts, the company again engaged in some contracting. Not only did this stimulate lumber sales but served as another way to form bonds with the commercial customers they engaged on the projects.

In 1999 Carter Lumber was rocked by scandal when it fired, then sued, its chief financial officer of ten years, Kenneth J. Azar, Jr., accusing him of fraudulently appropriating more than $6 million, which he transferred to a number of financial companies he controlled, and used to purchase real estate, including an $815,000 home. He also faced criminal charges, which he would eventually settle by pleading guilty in a settlement with state prosecutors.

In June 2000 Warren E. Carter died at the age of 101. The company he founded continued to grow under the leadership of his grandchildren, despite a flagging economy that severely crippled the number of housing starts and depressed lumber prices that adversely affected the bottom line. For a privately run company that was born out of the Depression and did not have to answer to shareholders, however, a downturn in the economy was not cause for panic. Carter Lumber was well positioned to continue its long-term pattern of steady growth.