Issue link: https://read.dmtmag.com/i/559769
26 • SEPTEMBER 2015 • WORLD FENCE NEWS This month I continue a series of articles based on interviews with some of the leading suppliers to the fence industry, in order to ascertain and identify some of the important trends and issues at play in today's market. At the same time, the people I in- terview are able to provide insight on the forces that have shaped the supply side over the past several years, and I think you will find this insight inter- esting. My first interview for last month's issue was with Ben Wallace, CEO of Jamieson Fence Supply. For this month's installment I interviewed Kobe Yamamoto, CEO of Master Halco. Although the com- pany really needs no introduction, it is North America's largest fencing ma- terials manufactur- er and distributor. I again want to remind readers that I only ask the questions; the answers may or may not agree with the opinion of this writer and are not necessarily the opinion of the publishers of World Fence News. These are simply questions that inter- est the folks at World Fence News and me personally, and are not arranged in any particular order of importance or priority. Tom Luby: In your opinion, what is the biggest challenge facing the fence industry from the manufactur- ers' and distributors' point of view? Kobe Yamamoto: The biggest challenge we face as an industry is the loose structure of the value chain. Manufacturers, distributors, fence contractors and end users (general contractors) have certain roles in the value chain. However, often the bor- derline of these roles gets vague and the value chain structure, to some de- gree, gets compromised. This creates business distrust and confusion among the players. As an industry, I strongly feel that we all need to pay more respect to players in each layer. In addition to that, they should be treated differently within the layer as well. For example, as a distributor, we provide volume discounts to our large customers who typically have higher overhead costs to cover. It wouldn't make a lot of sense if we set prices for a truckload sale and a bundle sale at the same level. Manufacturers should focus more on things such as improving quality, increasing production efficiency, en- hancing the brand equity and invest- ing resources in new product develop- ment. Distributors, on the other hand, should focus on providing the best distribution service to contractors, and so forth. Each player has different roles in the value chain and I believe that when we have deeper mutual respect, our industry will get healthier overall. Luby: In your opinion, from the supply side of the equation, what is the biggest challenge facing suppliers in dealing with the fencing contractors, and do you see things improving? Yamamoto: To some fencing con- tractors, pricing has become the major factor when looking for a supplier. I won't say it's always a bad thing, but from the supplier standpoint, it is get- ting tougher because we have to fight on prices for every order, and eventu- ally it drags down the market price. Then, to service those accounts profitably, distributors have to lower their costs. And that would mean less headcounts to operate, less number of trucks and less amount of inventory. Soon, our customer service level would start to deteriorate. Instead of making daily deliveries, now we can probably make only twice a week de- liveries. Some distributors will start to look for the lowest cost manufac- turers instead of looking for quality products. And furthermore, when the lower price seems to bring benefit to the fence contractors who negotiated the deal, it actually does not. Once one contractor gets a low price, in a couple of days all their peers' prices go down as well. So it is sometimes counterproductive to shop around for lower prices. The industry needs to compete more on better service and quality and less on the price. Luby: Have you seen any chang- es in the industry as far as viable new product types and/or new service of- ferings that your customers have re- sponded well to? In other words, what's the hottest new thing in fencing? Yamamoto: Faster quote turn- around is one of the key initiatives that we are working on this year to A view from the supply side – Part 2 of a series Major suppliers discuss industry trends, issues at work in today's market BY TOM LUBY, PRESIDENT, PROFIT BUILDERS INTERNATIONAL continued on page 30 Kobe Yamamoto CUSTOM ITEMS AVAILABLE!