Competition Family-run Hardware Hawaii, nurtured for the past half century on the Windward side of Oahu, is leaping over the Ko'olau Mountains to vie for the business of supplying contractors.
is building
Hardware Hawaii addresses
By Tim Ruel
a crowded marketplace
by expanding
Star-BulletinThe company's move to build a lumberyard in Mapunapuna drives it closer to its main competitors.
"A company has to grow," said David Lundquist, Hardware Hawaii president and chief executive. "Fortunately or unfortunately, that's the way it is. The secret, I believe, is to grow strategically."
Oahu's contractors have been hungry for a new player to take the field, Lundquist said, especially with the recent liquidation of MidPac Lumber Co.
"If they can fill that void they can be successful," said Steven Ai, president and chief executive of City Mill, which has two stores nearby in Iwilei and Pearl City and is also looking to expand.
MidPac's shutdown follows decades of closings at other Oahu lumber companies.
"I think if we hadn't come here, someone else would have," Lundquist said.
In expanding, the company is taking on Honsador Lumber Corp., which has a total of five branches on all islands and $70 million in sales statewide for 2000. Since Chairman James Pappas joined the company in 1978, Honsador has acquired a dozen other local materials companies. Its main lumberyard is in Campbell Industrial Park.
"Our attitude towards Honsador is that this is a market that needs two lumber companies," said Lundquist.
Pappas said Hardware Hawaii has been a strong competitor and he wishes them well in growth. "We like to see local companies do well," he said.
Hardware Hawaii is owned by the Lundquist family, including David and his brother, Chief Operating Officer Barry Lundquist.
The expansion is a substantial investment for the company, Lundquist said, fed by its profitable building-supply business. "We didn't blow all our powder," he said. The company is looking to grow further, and has a goal of doubling its lumber sales.
The new Hardware Hawaii location, opened earlier this month on 60,000 square feet in the Mapunapuna Industrial Park, is an old storage site for the former MidPac Lumber. Hardware Hawaii leases the space from landowner Damon Estate.
Hardware Hawaii, which four years ago began looking to expand beyond its two retail stores in Kailua and Kaneohe and its lumberyard in Kapaa Quarry, had set its eyes on the Mapunapuna area even before MidPac closed. "It's Oahu's center for commercial supply," said Lundquist, and contractors won't drive over the Pali Highway for materials.
The lumberyard is designed like a courtyard, with four main walls of materials surrounding a parking lot. The lumberyard also houses an 8,000-square-foot store carrying building goods for contractors.
"It's stripped of retail fluff," Lundquist said. "It's filled with builders' needs."
On each border of the lumberyard, boards and materials are piled into more than 1,000 bins, stacked atop each other in rows with roller bars underneath each bin. The result, the company says, is that contractors can pull into the facility, place an order, drive up to the right bin, load the lumber and exit within 15 minutes.
That's the key to the business, said Lundquist. Speed.
"A contractor's time is money," he said. "What we did is build a contractors' dream."
The configuration carries other advantages, including efficient inventory tracking, said David Purington, a Kailua contractor who played a key role in picking, designing and building the new site.
The company can keep plenty of stock and reorder every 24 hours from its main lumberyard on 2.3 acres in Kapaa Quarry, said Purington, who is vice president of Hardware Hawaii.
Hardware Hawaii is part of the 7,000-member True Value cooperative, where individual store owners share buying power to cut costs.
Those advantages may come in handy, since one of Hardware Hawaii's new neighbors will be "big-box" home improvement retailer Home Depot Inc., an Atlanta-based chain of 1,166 stores in North and South America. Also nearby is City Mill, which has stores in Iwilei and Pearl City.
"Obviously there is some interplay between us and Home Depot," Lundquist said.
A growing giant
Home Depot, which already runs a 145,000-square-foot store in Iwilei, is poised to open its second Oahu outlet in Pearl City this summer, not far from Hardware Hawaii's new location. Home Depot bought the 13.75-acre site in Pearl City from the city for $17.5 million in May. Home Depot last year canceled plans to open a third site in Hawaii Kai after pressure from Honolulu Mayor Jeremy Harris. The company is scheduled to open its first neighbor island outlet in Kahului, Maui, in May.Lundquist said Home Depot has already been checking out Hardware Hawaii's prices. "They call us up asking for all kinds of prices, then you hear someone in the background asking, 'Hello, Home Depot?'"
"They're coming after everybody, whether you like it or not," Lundquist said. "I've always felt if you have an opponent, I'm not going to back down."
Home Depot spokesman Chuck Sifuentes said the company does scout its competitors in keeping with its promise to beat competitors' prices.
"We have a pretty good sense of what the market can bear and how to price our product on the islands," he said.
Local companies can thrive among mainland big-box retailers, but only by focusing on value and service in niche markets, said retail analyst and commercial real estate agent Stephany Sofos. "In all avenues, they compete at the highest level," she said of Home Depot.
Hardware Hawaii can compete on price and value, particularly since the Mapunapuna lumberyard is designed for contractors, Lundquist said. Home Depot is more of an all-in-one retail store, with contractors parking in the same lot and waiting in the same lines as do-it-yourselfers, he said.
Sifuentes responded that contracting is one-third of Home Depot's business, and the company is always looking for new ways to become more convenient for the segment, such as accepting faxed orders, arranging deliveries to job sites and selling in bulk.
But the real competition in the Oahu lumberyard business for Hardware Hawaii is Honsador. All the other major players have pretty much left the islands.
The biggest void in Oahu lumber was left in the mid-1970s when Lewers & Cooke went out of business, notes Fred Smales, a Kaneohe resident who served as president of Lewers in the 1960s. Smales, who is now 86, started his own plywood distribution company, Plywood Hawaii Inc., in Moanalua in 1995, and looks forward to competing with Hardware Hawaii. Smales, after all, lived next door to the Lundquists for 11 years.
"I think they know what they're doing and they do it very well," Smales said.
Hardware Hawaii's success will partly depend on the strength of the construction industry on Oahu, noted City Mill's Ai.
Last year, the total value of building permits fell 3.8 percent to $891.3 million from $926.9 million in 1999, according to the city's Department of Planning and Permitting.
This year's performance is hard to predict, Ai said. On the positive side, interest rates are going down. However, the stock market has been headed in the same direction, which hurts Hawaii tourism and real estate.
Family spirit
Hardware Hawaii started as a $5,000 investment of Dana and Mary Lundquist, who moved to the islands from Minnesota in 1952. Dana, a contractor, kept the company alive with remodeling jobs on nearly every street on the Windward side, David Lundquist said. His father's supply yard became the company's first lumberyard, behind the Kailua Shopping Center.In 1989, Hardware Hawaii moved to its current 34,000-square-foot lumber and retail sales facility in Kailua.
Dana Lundquist died in 1999 at age 83.
"His office is still his office. His desk is still there. His phone is still there. That's our meeting room. His spirit is very much with us all the time," Lundquist said.
The elder Lundquist knew about the plans for the new store and approved.
"He'd be down there, you know, with kneepads on, stocking the shelves."
Founded: 1899 City Mill
Locations: 8
Employees: 400
Founded: 1954 Hardware Hawaii
Locations: 4
Employees: 200
Founded: 1978 Home Depot Inc.
Locations: 2 (by this summer)
Employees: 460
Founded: 1935 Honsador Lumber Corp.
Locations: 1
Employees: 124
Founded: Recently purchased Eagle Hardware & Garden Lowe's
Locations: 1
Employees: Declined to answer
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Michele Harris, Blue Moon Builders Inc. and Home Inspections Inc. in Kaneohe: "Hardware Hawaii. I really am very satisfied with their company. Overall selection, availability, prices, services, administration. ... I'm not going to drive into town to save 3 cents on a board foot." Speaking up
Where do you buy your lumber and why?
Bob Armstrong, Armstrong Builders Ltd. on Sand Island Access Road: "Honsador is one of our major suppliers. We have a pretty long history with them."
Jim Byxbee, Homeworks Construction on South Street: "Right now, most of our material comes from Honsador. They were the ones doing the bonding. (Hawaii laws require bonds to back financing for construction projects, and Honsador provides bonds for its customers.) "However now, we're starting to bond with Pacific Source. They're out of Washington (state). ... "We're looking to buy more from Hardware Hawaii."
Marcus Gillespie, Kailua-based Sunrise Construction Inc.: "Most of the lumber I buy is from Honsador Lumber Corp. It's based on a relationship. I do buy some from Hardware Hawaii. It fits. The price is right. You know, when something's not broke, you don't fix it. But there's always room for competition."
Fred Rehm, Aluminum Shake Roofing Inc. The company uses wood to replace rotting roof pieces:"I'll get lumber where I'm working. If I have to spend an hour (buying lumber) ... I might think about driving 30 minutes to some place else that'll take less time."