Signs taped to the doors at Taylor Lumber Co. in Newfane tell the tale: "Closed. Thank you for your patronage. Ted."

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A 30-year-old company with roots going back 117 years in this Niagara County hamlet, Taylor Lumber shut down in January, the latest in a steady progression of local lumberyards, especially small-town lumber yards, to go out of business.

It's a phenomenon playing out all over the country. In the Buffalo area, some estimates place the decline at 78 percent in less than 15 years.

Among the lumber yards that now are history are such formerly well-known names as: Forbush Lumber, Hamburg; Tenney Lumber, East Aurora; Kenmore Lumber and Kenmore Builders Supply; West Seneca Lumber; Sadlo Lumber, Pendleton; Orchard Park Lumber; and Quality Lumber, West Seneca.

"If you drew a line with a radius of 30 miles away from City Hall, 42 retail lumber yards within that area have closed or gone bankrupt since 1990. There are maybe a dozen survivors," says Ronald Schopf, who retired in 2002 as New York state regional vice president for Babcock Lumber Co. in Orchard Park.

The failures are blamed on many causes, including the area's long-term poor economy, consolidation in the commercial and home-building industries where lumberyard customers come from, competition from national retailers and bigger local lumberyards, the high cost of operating in New York and mismanagement by the business owners.

Some lumber dealers have survived by finding niches in the building supplies industry, but many others bit the dust because they could no longer absorb mounting losses as consumers drove past on their way to the chain stores that sell a variety of building materials and hardware at discount prices.

Taylor Lumber owner Ted Taylor could not be reached for comment. But others aware of the situation facing him and other small dealers say they are not surprised.

"I also wouldn't be surprised to see more closings in the future," said Trey McDermid III, vice president of Frontier Lumber Co. in Buffalo, a third generation owner of the family business founded in 1940. "I don't know that it will get down to half what it is now. But those that survive may have to change the way they do business. Distribution channels might change. We may see more direct sales from mills."

Large building material stores such as Home Depot, 84 Lumber and Lowe's appeal to consumers because they offer a complete line of products to meet an individual's building and construction needs. Smaller dealers - probably including Taylor Lumber and Sadlo Lumber & Wood Products Inc., a Pendleton lumber and milling business that closed last March - find it hard to cover the cost of carrying the inventory to compete across-the-board.

"Smaller businesses like Taylor and Sadlo were be-all, stop-and-shop lumber yards. They carried multiple items and serviced smaller populated regions. They were Home Depots on a much smaller scale. But that meant they had to keep their inventory and their cash-flow under tight control and that gets very difficult," said McDermid, who is a board member of the Western New York Lumber Dealers Association.

Lumberyards, including McDermid's, have been forced to give up market share in some product and service areas and concentrate instead on other aspects of their business.

"We no longer carry insulation or roofing shingles or things like that. We had to focus on our core businesses which are commercial and residential building companies," he said.

Giving up some product lines in order to prune the business to its key elements might be an answer for larger lumberyards, but it can be devastating for smaller ones.

"When you remove some items, such as when you lose hardware, tool sales, insulation and items of that nature, it is a big portion of a small company's sales. It could be one-third of annual sales, and when you lose that you also lose the ability to cover your overhead," McDermid said.

Taylor Lumber was founded in the 1970s when the owner of Newfane Lumber & Manufacturing Co. Inc., which had Newfane and Lockport locations, decided to sell his Newfane yard to an employee, Leon Taylor, the father of Taylor Lumber's current owner.

Newfane Lumber was founded in 1887 as Newfane Basket Co. The business, which served local fruit growers, became a lumber yard around the time of World War I and prospered to the extent that it opened a Lockport operation in the 1940s. The original location became a separate company when Taylor Lumber was formed.

Newfane Lumber, located in Lockport at 54 Ohio St., continues to prosper, says its president, John Henning.

Financial figures for the business are not disclosed, but Henning says, "last year was considerably better than the year before. Dollarwise, it was three times as good as 20 years ago. Every year, sales have been up 20 percent over the year before and I expect continued growth this year - maybe 10 percent, if I had to put a figure on it.

"The basics of this business are like any other. You have to keep expenses low, especially in a low-growth market like Western New York. You also have to persevere and outlast the competition. It's like a last-man-standing kind of thing," says Henning, the sixth generation of his family - each named John Henning - to sell lumber. He, two brothers and a sister own the company.

McDermid, whose lumberyard and mill are at 1941 Elmwood Ave., says survivors such as Frontier and Newfane Lumber are partially responsible for some of their competitors' failures.

"Going out 30 or 60 miles is not as difficult as it was. We have branched out into other areas where we had not gone before and that has created more competition for the smaller places," he said.

Frontier Lumber's business has nearly doubled in fewer than 10 years, going from $6.5 million in the mid-1990s to $12.5 million last year, McDermid said.

Schopf retired last year from Babcock Lumber, a distributor with 21 locations in six states, after more than 40 years in the business. Like McDermid, he also serves on the board of the Western New York Lumber Dealers Association. In his job at Babcock, Schopf visited many lumberyards and witnessed four decades of change.

Some of the survivors are able to compete against the large home supply centers like Home Depot because they found a niche with builders -- kitchens, trim, windows, custom milling -- or by catering to do-it-yourselfers with a quality of expertise and personal service that he says big chains can't match.

Among those that Schopf singles out are Mosher Lumber Inc. in Clarence Center, Rucker Lumber Inc. in Boston, Gui's Lumber & Home Center, based in Niagara Falls, and Len-Co Lumber Corp. in Buffalo.

© 2004 The Business Journals