Business cycle goes at slow pace in South America
- October 30, 2012
Gary Saunders, president of Timber Truss Housing Systems in Salem, loves Chile’s natural beauty, seeing Chilean palm trees and snow-capped mountains in the same view. Yet, he finds it takes perseverance to conduct business in the South American country. This year, he spent 31 days in the city of Concepción hoping to finalize a sale to private developers.
“It’s always something that seems to delay it — they have had forest fires. They go on a lot of holidays,” he says. “Things in South America move much slower than here. You have to be very patient.”
Business is handled differently, he adds. “Here in the U.S. you establish a need, a price and then you move on it. In South America you have to add in timing. You can’t expect results quickly. It’s a waiting game.”
When Al James founded Timber Truss in 1960, it was one of the first truss fabricators on the East Coast. Today, it also sells TrussMark Homes, custom-made house packages using Timber Truss’ plans and designs that include all carpentry-related products, from pre-hung doors to roofing.
James, now 86, still has an active role in the company. “He comes in every day,” says Saunders who explains why he was asked to join the company in 1975. “Al wanted someone on staff to do the designs, and I had a degree in architecture from Virginia Tech.”
A native of Roanoke, James built the company’s 140,000-square-foot Salem plant in 1974. The location is a good fit. “The city has excellent services and good leadership in government,” Saunders says. “We have a good relationship with the mayor and the town council.”
The area is convenient as well. Salem is close to Interstate 81 and is served by railroad. Timber Truss also has an FAA registered airport, TrussMark Airport, on its property. “It’s a leveled grass field with a hangar and wind sock,” Saunders says.
The recession has made business challenging for the company. The number of employees has dropped from 275 to 65 since 2006. “The housing industry is still languishing,” explains Saunders. “The demand is there, but it’s just so hard right now because of government regulations to get a loan. Banks have gotten so conservative.”
Timber Truss started selling its products internationally in the late 1980s after learning that Germany was interested in importing wood frame houses. “We sold 60 to 75 houses to Germany and ended up supplying some military base housing,” Saunders says. The company had a similar arrangement for houses with Israel.
Timber Truss is a recent graduate of the Virginia Economic Development Partnership’s VALET program, which assists Virginia companies in expanding their international business. The company now sells to 12 countries. They include Russia, Spain, Greece, Japan, China, Korea, Chile, Turkey and Mexico. Saunders also is working with an individual business owner in China who wants a rustic wood, “western style” building. “He is making women’s fashions, and he has western buyers. He wants them to feel at home,” Saunders says. “This is a test run. Next year, he hopes to build 100 houses.”
This fall, the company shipped out the first two of several homes to Japan. “We are trying to develop that market as well as the market in Chile,” Saunders says. “They are two of the hottest areas right now.”
Since the 1990s, the company’s international sales have dropped from 33 percent to approximately 4 percent. “We’ve been working extremely hard to bump up that percentage, but it’s hard to do because of the world economy,” Saunders says.
He has found it difficult to convince people in some countries that wood framing is often more effective and efficient than masonry. “Japan is somewhat familiar with it as are some Scandinavian countries,” he says. “In other areas of the world, wood is considered sort of an inferior product. They think of it as something that will burn. They think that insects will eat it.”
Chile is a prime market for Timber Truss because it has a sophisticated wood industry. “They understand wood and know that it is a good material,” Saunders says. Plus, Chile’s reverse seasons are a plus. “When they are headed toward summer and their top building season, we are in the dead of winter” when business is typically slow in the U.S.
When in Chile, Saunders schedules face-to-face meetings with his South American clients. “They want to see you and meet you,” he says. “They want to have dinner and socialize. They want to know what kind of company you are and what kind of person you are before they will do anything with you.”