This column was excerpted from the Chairman's speech at Evergreen Marketing Group's 2004 Evergreen Partnership Conference in Dallas held in late April.

It was another tough year for the construction industry in many parts of the country. However, it does appear that in the final months of 2003, many of us began to see activity increasing in our markets. The general perception is that 2004 should be better in most regions. I'm not an economist, so I take more of a wait-and-see approach. I think the great days of the late '90s are long gone, and we all need to come to terms with a much more competitive business climate.

Our industry has faced a tough few years. In many markets, the commercial construction business has been almost nonexistent. Coupled with this has been the advent of new national competitors and renewed initiatives from old competitors. The recession and shaky recovery has made it pretty rocky for most of us. We also have to deal with the unknown, such as the fluctuation of steel prices in the industry. We must try even harder today to work together toward common goals.

As a distributor, this means doing everything possible to support our suppliers in every product category. This is a basic premise, and it fuels everything else we do.

For manufacturers, it means actively working with as many members as you can to grow the business. We all recognize that you can't ignore the volume potential of the large national players, but you must recognize that, in many cases, their stated goal is to crush most of the smaller distributorships. It is crucial that you not turn a blind eye to that fact.

One of the values we should share as distributors and manufacturers is to sustain the existence of independent distribution. It's obviously in our best interest as distributors, but also it is in the long-term interest of most manufacturers. Most of the distributors here are in the business of selling value-added through long-standing relationships built with our customers. We can't and won't compete on price with the deep pockets of the national players—particularly if they've chosen to target us as their next victim.

I would challenge the distributors to think differently about these national players. These guys are the enemy—not your fellow independent distributor. It seems sometimes that we fight one another more than we fight the real enemy. Consider these numbers: [formerly] White Cap, $600 million in revenue; United Rentals, $2 billion; Fastenal, $1 billion; and Hilti, $400 million. This is about $4 billion in market share—much of it in the core products that we all sell every day. And this doesn't even touch on what the "big boxes" are doing.

As we all know, The Home Depot launched a brand new line of power tools in the past year to great fanfare and a huge advertising blitz. Home Depot is also ramping up to once again focus on the pro user—evidenced by the hiring of a new senior VP-level executive to coordinate their effort. Most distributors know that the market needs a new line of power tools like a hole in the head. But Big Orange's strategy seems pretty clear—lock the customer in to a brand that is only available from them.

The action of all the national players presents a renewed opportunity to work with our manufacturers even closer than before. Many manufacturers are becoming weary of the heavy-handed tactics of most national players. Some are beginning to make the tough decision to support independent channels instead of the big players. It is in our interest to support them heavily when they do.

One of the values we should share as distributors and manufacturers is to sustain the existence of independent distribution.