Innovate or Die

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Innovate or Die

For Idaho Truss, InteFrame is more than a marketing concept. It represents the company’s new business model…and the key to its survival.

When Idaho Truss was founded in 1973, the technology that its products were based on was already 21 years old. The invention of the metal plate-connected wood truss in 1952 made it possible to prefabricate trusses and deliver them to construction sites, thus simplifying and accelerating the framing of commercial and residential buildings.

While the metal connector was simple enough as a concept, the consequence of separating the design and engineering of framing components from the design of the buildings themselves was to have profound consequences in the decades ahead – carrying the seeds of both challenge and opportunity for Idaho Truss.

For the twenty years following its founding, Idaho Truss established itself as one of the leading suppliers of truss components in the Northwest. From a 2,000 square foot plant in Garden City, Idaho, a labor force of ten employees turned out about 200 trusses per day with a dollar value of approximately $3,600. By 1979 the company had grown to

30 employees, and monthly sales climbed steadily from $100,000 in the mid-1970s to

$400,000 by 1990. By 1991 the company had outgrown its Garden City plant and moved to a 3.1 acre site in nearby Meridian.

Idaho Truss’ expansion was well timed for an explosion in the demand for its products. In the early-1990s, Boise-based computer chip manufacturer Micron

Technologies added jobs and facilities at a breakneck rate, helping to fuel economic growth throughout southwest Idaho. Within a short period of time market demand rocketed Idaho Truss’ sales to over $800,000 per month. The company rose to the occasion, adding and upgrading its cutting, fabrication and delivery equipment to keep pace. Ironically, the microchip business that sparked the explosion in business would eventually be the key to solving an inherent problem within the truss component industry.

The Design Disconnect

At the time of Idaho Truss’ founding, the structural design of buildings, and consequently trusses, was much simpler. Shallow pitches and simple roof lines characterized the bulk of the building designs in those days. As buildings increased in size and complexity, however – particularly in the residential market – so too did the complexity of trusses. Multiple wall heights, multiple pitches, intricate ceiling designs and complicated load transfer paths placed a tremendous burden on truss design.

It soon became apparent that the very innovation that enabled pre-fabricated trusses was at the root of a universal challenge for truss manufacturers. The natural separation that arose between building design and roof design when roof trusses became

a pre-fabricated component evolved into a serious inhibitor to design efficiency. “On one hand, designers were creating drawings with all sorts of planes but with no idea of the kinds of loads that were being created or how these loads would translate to the rest of the building,” observes Kendall Hoyd, president of Idaho Truss. “On the other hand, the truss designers at the truss plants were encountering myriad design problems and lost opportunities for cost savings.”

The result was a growing disconnect between the design and engineering of a building and the engineering of the roof for that building. This created a real dilemma for builders, since there was no way of knowing with certainty what the final truss design would look like. Consequently, load paths ended up being designed with limited information, and the true capability of trusses to contribute to the overall design efficiency of the building was increasingly under-utilized.

Enter the Microchip

With the advent of 32-bit computing, desktop computers increased in power and decreased in cost, and design software capabilities improved dramatically. While this led to a steep increase in the complexity and sophistication of both building design and truss design, the fact that truss design knowledge was lacking on the building design side meant that the new computing power was often taking the two functions in different directions further and faster than ever before.

“As a truss manufacturing company we were left with reconciling this disconnect,” Hoyd notes. “The designer either had to make a wild guess at what the trusses would look like or else ‘punt’ to the truss manufacturer. It was very apparent to us that the re-integration of truss design and building design would offer a better result for our customers.”

The Competition Heats Up

As Idaho Truss was adjusting to the realities of the design disconnect, it was also facing an increasingly competitive market. The explosion of the residential construction market in the Treasure Valley during the 1990s resulted in a proliferation of truss companies. In less than 10 years no fewer than eleven competitors sprang up. While

Idaho Truss’ size, experience and engineering savvy allowed them to defend their market share, they were less prepared for a traumatic series of events that occurred between 1997 and 1999. Two of the company’s largest lumberyard customers became competitors.

Not only did these customers represent 30 percent of Idaho Truss’ business, but their impact as competitors soon cut the company’s share of market from 40 to 14 percent.

Looking back on the events of the late ‘90s, Kendall Hoyd admits that Idaho

Truss was slow in responding to its altered competitive landscape. Shortly after joining the company in 2000, having previously held management positions at Morrison

Knudson and Hewlett-Packard, Hoyd began a rigorous analysis of the company’s pricing structure. By timing every truss manufacturing process, Hoyd applied his background in

finance to develop algorithms that were then incorporated into Idaho Truss’ pricing software. The company soon regained profitability, but Hoyd quickly realized that it would take more than competitive pricing to deal with the threats posed by their largest competitors. “There was no way we were going to out-spend or out-advertise the big lumberyards. We were simply going to have to out think them.”

Bundling Design

As the Idaho Truss management team began to assess their company’s competitive differentiators, it occurred to them that Idaho Truss’ historic strength had been its ability to deal with highly complex projects. For the past 30 years the company had been shaping the nature of the truss market by continually raising the bar in truss design. “Some of our competitors are sales oriented, others are production oriented. We have always been engineering oriented. This was going to have to be where we added value. While the lumberyards had the strategy of bundling products, we decided to become the best at bundling structural design services.”

Within six months, Idaho Truss created a separate entity, Performance Residential

Engineering, to provide engineering services to residential contractors. “Although we originally moved into design as a matter of necessity, we discovered that there were intrinsic advantages for our customers in integrating structural design and component manufacturing,” says Hoyd. “For one thing, there was less likelihood of over-designing for roof loads. While builders certainly had access to structural engineering services, we wanted to combine our experience with wood truss design and manufacturing with structural engineering expertise. This gave us an edge in the level of engineering service that can be applied to the design of wood frame buildings. In essence, we wanted to bridge the design disconnect by making wood truss design a part of the building design instead of something that occurs after most of the design decisions have been made.”

The Power of Integration

In 2003, Idaho Truss took another step in creating a continuum of design services with the creation of Reality Building Design. Reality’s role in the process was to provide drafting services to residential contractors that were not in need of the services of a licensed professional engineer. The underlying principle for both Reality Building

Design and what is now known as Performance Engineers stemmed from Idaho Truss’ realization that truss design was complicated by too many different design models.

The typical process for residential construction starts with a draftsman that creates a set of construction drawings that the builder then takes to component manufacturers for component design and bids, and to lumber yards for lumber bids. The lumber bidding process often entails the lumberyard doing some structural analysis in order to be able to specify the proper sizes and grades of beams and floor joists.

This multi-faceted process introduces a couple of hurdles to the task of getting a building constructed. First of all, in the vast majority of cases, the drafter almost always

has a very limited idea of what can or will actually come out of the truss design process.

The more complicated the structure, the more likely this is to be true. In a similar fashion, many drafters do not have the capability to size and specify beams and floor joists, so their drawings often leave that up to others as well. Secondly, each of the three concerned entities is almost certainly using a CAD-type computer program to create a complete or partial model of the structure in question. Three different and unrelated parties end up performing data input and analysis of the same structure without ever talking to each other.

Reality Building Design was founded with the strategic goal of eliminating the need for downstream redesign, and on the principle that creating the CAD model once instead of three times supports better design decisions (e.g. optimized material usage instead of over- or under- designing) and greatly reduces design mistakes and the disruption and costs that go with them. “After a review of what the new software was capable of,” Hoyd recalls, “we knew we could be much more efficient if we were able to work from a single building model.”

The InteFrame Model

In late 2005, Idaho Truss began to focus more heavily on the integration of the separate entities it had created over the past several years. To Hoyd, the synergy was obvious. “The underlying goal of each, and of all of them collectively, is to lower costs, increase quality and shorten the construction schedule for wood frame buildings. They all contribute to this goal in unique and specific ways, but the unifying principle is that for any process to economically have quality output, it has to first have quality input.”

In 2006, Hoyd added the last component in his company’s design-to-construction continuum: a framing service known as SteadFast. “It had become clear to us that for some of our residential customers we needed to control the process all the way through installation in order to deliver the results they were looking for.” With this final component in place, Hoyd realized that the interaction of the four companies – the process itself – required its own identity. InteFrame was born

The launch of InteFrame has required Idaho Truss to think of sales and marketing in an entirely new way. “In the ‘90s, when our primary customers were lumberyards, we followed a two-stage distribution model,” says Hoyd, “We were used to 40 percent of our customers just calling us and placing orders. When they opened truss plants of their own we not only had to find a way to differentiate ourselves, we had to develop sales and marketing capabilities that we hadn’t needed before.”

Hoyd now had to galvanize a sales force around value-added services aimed at what had once been his customers’ customers: commercial and residential builders.

Armed with an entirely re-engineered branding strategy, Idaho Truss has begun to spread the benefit messages of its InteFrame service.

Delivering the Benefits of Integration

“Selling the InteFrame process requires a level of trust on the part of builders,”

Hoyd observes. “We are removing drafting, engineering, framing materials and installation from their construction supply chain. For builders who get adequate service in these areas, we are essentially asking for the builder’s trust in replacing them. In return, the benefit that we offer is that we manage the process of four distinct entities – a burden that otherwise rests on the shoulders of the contractor. By assuming this burden we can generally remove several percentage points from the cost of a large framing package by simplifying and optimizing the link between design and framing, as well as

25 to 30 percent of the framing time in the construction schedule. In a large project this may represent tens of thousands of dollars as well as several weeks of schedule improvement. That’s a strong incentive to use InteFrame.”

This incentive is already becoming clear to Idaho Truss customers. One example is Dreamworks Construction, a twenty year old design/build company developing a 122acre residential community in Cascade, Idaho. Using a more traditional “stick frame” approach to the construction of the first 15 homes in this development, Dreamworks quickly realized that meeting its cost and timetable goals would require accelerating its build schedule from three months per home to just under 35 days, and turned to

InteFrame to cut time and cost through an optimized building materials package.

Beyond the more tangible benefit of accelerating the building schedule through tighter integration, the InteFrame process uncovered the fact that the initial batch of trusses from a previous supplier was seriously under-engineered for the snow load requirements specified by local building code. Through the structural design efforts of

Performance Engineers, Idaho Truss was also able to correct what would otherwise have been a costly design error. In addition to the cost savings inherent in cutting weeks from the original build schedule, the resulting truss systems also eliminated much of the previously required construction hardware.

For a company that not many years ago was struggling to find its competitive differentiator, InteFrame has placed Idaho Truss in a completely unique industry category. While the concept of “whole house design” has become an industry mantra,

Hoyd steadfastly maintains that Idaho Truss is the only company actually delivering on the concept. “There are some major builders that have in-house design, but we stand alone in our ability to connect this to framing design and manufacture. There are truss plants that integrate framing with engineered trusses but lack integrated design and engineering. We are the only company that is connecting all the dots.”

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