McMunn & Yates Building Supplies and McDiarmid Lumber have a lot in common.
Both companies have stylized Ms in their company logos, the founders of each company were friends (management of both companies passed to the next generation) and McMunn & Yates and McDiarmid Lumber are the only regional building-supply chains in the market since the arrival of the big-box category killers.
So when it was announced last month M&Y was buying six McDiarmid Lumber stores and some of its distribution assets, it made a lot of sense to people in the know.
"It's probably the best thing that could have happened to McDiarmid Lumber," said Ron Hambley, executive vice-president of the Winnipeg Construction Association.
'We don't take anything for granted. We respect our competition. There are some great box-store competitors and great independents. We are aware of both' -- Jason Yates, CEO of McMunn & Yates
Speaking about the acquisition for the first time, Jason Yates, CEO of Dauphin-based M&Y, said the re-branding is underway at the five McDiarmid stores turning into McMunn & Yates Building Supplies locations (a sixth McDiarmid location in Dauphin will be closed with the site re-purposed by M&Y). An integrated computer system has already been deployed and plans are in place to have all the new stores serviced by M&Y's state-of-the-art distribution centre in Headingley.
"It's a nice fit," Yates said. "We both approached the market and our customers the same way. We've been in business side by side for a long time."
Many M&Y stores are smaller than the 30,000-to-35,000 square foot McDiarmid stores but it does have a couple facilities that size. Yates said M&Y management is ready to tweak its ordering accordingly.
McDiarmid Lumber had been on the ropes for some time -- closing stores in Brandon, Portage la Prairie and Prince Albert, Sask., and a distribution centre in Elie -- while McMunn & Yates has been heading in the other direction.
This will be its largest single acquisition by far, but M&Y has been adding locations since the late 1970s when it began expanding outside of Dauphin. Before the McDiarmid deal it had 15 stores across the province and in Kamsack and Yorkton, Sask.
Richard Hutchings, the man brought in to orchestrate the reorganization at McDiarmid, said one of his primary marching orders was to do a deal that would preserve as many jobs as possible.
Yates said there has been great co-operation from the 300 former McDiarmid workers who are now on the M&Y payroll (in addition to the 400 it already had).
"They (the former McDiarmid staff) have been fantastic throughout the process," Yates said.
McDiarmid Lumber continues to operate as a three-store chain with locations on Nairn Avenue and in Yorkton Sask., and Sioux Lookout, Ont. Hutchings said discussions are underway to find buyers for them.
Yates said his company's ability to make a go of it in small-town Manitoba while so many other retailers have abandoned those markets is because of its commitment to support the local community, particularly contractors.
Hambley said M&Y has enjoyed a good reputation with contractors for a long time.
"It's a very service-oriented operation," he said. "They do very well with the commercial industry and are probably more service-oriented than big stores like Home Depot and Rona."
But Stuart Henrickson, director of entrepreneurship at the University of Manitoba's Asper School of Business, said a company like M&Y has to work hard to continue that level of service.
"It's a tough market and they have to continue to connect with the community," Henrickson said. "Now they are in a more competitive market (in Winnipeg) with Home Depot and Rona. They don't have the same economies of scale so they have to provide better customer service."
Yates understands what he's getting into but isn't daunted.
"We don't take anything for granted," he said. "We respect our competition. There are some great box-store competitors and great independents. We are aware of both. We have to compete on both levels -- one-on-one with contractors and also in the retail environment."