CBS Bedrock For Building Trade Businesses
At a time of unprecedented business disruption and financial uncertainty, Combined Building Suppliers Co-operative (CBS) provides bedrock for the residential construction industry.
With a growing membership of more than 350 firms, CBS puts power back in builders’ hands by making supplies cheaper.
The main benefit of being a CBS shareholder is the up-front supplier discounts on building materials. Any co-op member is eligible for the same CBS member discounts, big or small, on the amount of business they transact with each of the co-op’s suppliers.
CBS chairman Carl Taylor says the supply partners can offer co-op members prices that, in many cases, were previously only available to the industry’s biggest players.
“From general merchant supplies, through to direct deals on plumbing, plasterboard, right through to kitchen and other appliances and fuel, we have your residential build covered. We also have discounts available on services - from equipment hire to surveying, QS, accounting and legal,” Taylor says.
Co-op shareholders also receive a profit distribution, based on the value of the business they do with CBS suppliers. CBS member transactions rose by more than 200% in the past financial year.
Shareholders who transact $30,000 or more in total across all CBS suppliers are eligible for this distribution (the minimum spend was $50,000 last year). The minimum amount applies to fairly share the fixed costs of CBS co-op over all shareholders.
Each member is required to buy 1000 shares for the nominal value of $1000. “This is the only cost related to new members investment in the shares and it’s one you should get back in cost savings in a very short timeframe. This is a one-off cost. CBS Co-op is self-funding through supplier rebates. This means that you will not have to pay ongoing annual fees to get the benefit of membership, like other buying groups,” Taylor says.
To maximise the benefits of membership, shareholders can access preferential pricing (up front discount) that CBS has negotiated for members, while also the end-of-year rebate out of the cop-op’s profits.
“It is not mandatory for co-op members to be exclusive to our suppliers in ordering materials, but, in essence, the more you support the suppliers, the greater the benefits you will receive.”
The savings and rebate available from the two-year-old co-operative are as simple as it sounds. The CBS membership price is a one-off $1000.
In March CBS added a second general merchant to its supply team, Placemakers, the country’s largest building supplies merchant. Other New Zealand suppliers to join recently include McKeown Fuel, Hunter Furniture, lawyers: Overend and Associates, Matley Accountants and construction software firm, Trade Worx.
CBS launched in Canterbury in April 2018 and went nationwide later the same year.
Taylor says the co-op has made solid progress and intent on growing membership and improving communication with existing suppliers, while selectively adding new nationwide suppliers in categories such as waste disposal.
“We will only put in place agreements with new suppliers where we are confident much better pricing will be achieved. The faster we grow - the more likely suppliers will be prepared to agree to better terms,” he says.
Summary of CBS financial performance for the year ended 31 March 2020
CBS member numbers increased by 191%
Member transactions with CBS suppliers increased 219%
Profit distributions to shareholders, provided for from 2019/2020 profit, increased by 385%
Financial strength improved with shareholder equity increasing to $54,660 ($13,241 last year). Cash in bank was $77,479 as at 31 March 2020 ($32,728 last year)
The reported net retained profit of $5,319 after tax is after allowing for total profit distributions to shareholders of $40,000). These distributions will be made during August and September, in amounts ranging from $203 to $2,458 per shareholder.