For 13 years, Mike Brown managed Stock Building Supply locations throughout North Carolina and South Carolina, catering to the custom home builders--and to a smaller extent repair and remodel contractors--that are responsible in large part for the overall growth of one of the nation's largest pro dealers. Some of the locations had a mix of regional production builder activity, but most markets were dominated--usually at upwards of 90 percent--by custom accounts with low annual starts and high-margin dollar purchases.

But since the mid-'90s, all of that has changed, as Stock--like virtually every other pro dealer--has been forced to readjust operations to account for the huge market shares in new-home construction being consumed by national and regional production builders. Despite a size and scale rivaling any pro dealer operation out there, Stock has still had to reorchestrate its market approach through corporate reorganization and the further development of value-added services to better match up the company's local supply and service offerings with production builder markets.

"The production business has grown by so much just over the last five years. It's just phenomenal, and I think everybody [in the industry] is seeing that," says Brown, who in 2003 was named Stock's production sales manager for North and South Carolina. "Especially in metro markets, the production guy is building the lion's share of the housing. You just don't see many local builders building there anymore, because the price points [to compete on land acquisition and development] are being driven higher and higher."

For Brown and a growing number of other Stock production sales managers just like him, working to secure big builder business has evolved in tandem with these rapidly shifting markets. Although the buzz surrounding national supply partnerships continues, the emphasis--from Stock's standpoint at least--is focused almost entirely on local service execution, and boardroom strategy sessions are just as likely to include Brown, an outside sales rep, and a local jobsite supervisor as they are to involve top-level executives from Stock and a national big builder.

Brown's experience in the markets of the Carolinas--including the shift in market share toward production builders and the pro dealer tactics used to garner more of their business--mirrors to a certain degree ongoing changes at Stock Building Supply as a corporate whole. Although the Raleigh, N.C.-based company still relies heavily on a custom builder base for approximately 70 percent of its business, changes are afoot as the dealer continues to leverage the growing big builder hold on the housing market. Even as the housing market cools, some experts are expecting big builders to gain an even larger share of residential starts across the United States. For the top 10 builders, that share is estimated to hit 30 percent in 2006, according to an October 2005 home builder market white paper by Margaret Whelan, an analyst for investment firm UBS. According to Whelan, as the builder economy slows, scale could afford the top 10 better access to labor, land, and the capital markets to acquire both, possibly driving their cumulative market share to 50 percent or greater by 2010.

"I think those estimates of market share are pretty accurate," says Stock president and CEO Fenton Hord, who predicts that within the next 10 years Stock's own customer breakdown will be an equal share of production versus custom business, with smaller shares of approximately 15 percent in commercial and repair and remodel. "In the major metro markets I wouldn't be surprised if we are already at 50 percent or more." With 270 locations across 30 states, Stock's exposure to the full gamut of big builder businesses rivals only several other almost-national pro dealers, including Eighty Four, Pa.-based 84 Lumber; Redmond, Wash.-based Lanoga Corp. (which in January merged with Brooklyn, N.Y.-based The Strober Organization, forming the nation's largest pro dealer operation); San Francisco-based Building Materials Holding Corp. (BMHC); and Dallas-based Builders FirstSource. The idea of a one builder/one dealer supply chain partnership that will span across all markets is still a goal that all of these companies are working out on a limited basis, and while most have a relationship with a majority--if not all--of the nation's top 20 builders, full-spectrum coverage of the entire big builder market remains for the most part a long-term strategic goal.