We’ve been hearing for some months now that a group of Canterbury builders was seeking to get together to form a buying group and now we know that it’s called the Combined Building Supplies Co-operative (CBS Co-op).
CEO is Ian Lamb, who spent 16 years with Combined Rural Traders at a senior level as well as having extensive experience with other co-operative businesses including LIC and Fonterra.
Simon White is the co-op’s first CFO and he too comes armed with senior level management experience and relevant track record with the likes of Wrightson’s, Cooperative Bank and Trust Bank Canterbury.
Well-known Canterbury builder Carl Taylor is billed as Procurement Director while management consultant Mike Blackburn is Director of Marketing, Strategy & Communications.
By mid-February that the co-op had already signed 30 small to medium Canterbury firms building 5-25 homes a year and that national supply agreements had been established with 10 or so suppliers of key building materials.
Mike Blackburn explains: “The way it’s going to work is twofold. There’ll be an upfront discount, so when you when you walk in the door you’ll get literally a ‘Tier 1’ deal. So we’re expecting that you’ll get the same deal as the larger group home builders.”
That could mean savings for the members of as much as 30-60% on materials that will be delivered direct to site.
“And then obviously based on volume we will get a rebate from each of those suppliers and that will be distributed as a dividend at the end of the year to all the shareholders.”
What’s in it for suppliers? No guarantee of sales, but, as Mike Blackburn explains, plenty of potential: “Between the 30 builders that we’ve already got signed up we believe that we’re probably going to be building 400 odd houses and that potentially makes us the largest buyer of building materials in the region.”
Due to be formally launched in Christchurch during April, CBS Co-op also has half an eye on potential in the North Island, Auckland in particular.
It’s also possible later on that the new co-op will seek to become 100% funded, enabling guaranteed payments for suppliers, like the Farmlands model, says Mike Blackburn.
For now, though, the idea is to give a leg up to some of the many builders who are “doing it really, really tough” and competing mainly with their hourly rates in Canterbury’s still declining residential market.
We'll bring you more as this initiative develops.