Builders FirstSource's Peter Jackson on Innovation, Growth, and Technology

In late 2024, Builders FirstSource (BFS) named Peter Jackson as the building products dealer’s next president and CEO.

Jackson takes the reigns at BFS at a pivotal time for the company and for the overall building products industry. Multifamily starts are down significantly, the single-family housing market remains choppy, and material costs and affordability remain top-of-mind for builders, developers, and homeowners.

At the same time, industry players are searching for competitive advantages from technology solutions while deciding where—and if—artificial intelligence (AI) fits into the operating model of the future. For all the intrigue surrounding AI, Jackson says BFS’s focus remains on tangible use cases to incrementally improve systems or processes. While recognizing AI is still in its early days, he says the company is committed to being on the front lines of solving the AI puzzle for the building products industry.

The decisions that Jackson and BFS—projected to generate around $16.5 billion in sales in fiscal 2024—make will have an impact beyond BFS’s 580-store footprint. BFS’s scale, local market expertise, and willingness to adopt innovative solutions have cemented its status as an industry leader.

In addition to BFS’s interest in AI, Jackson spoke with BUILDER about leveraging modern technology and how investment and innovation are pillars of BFS’s strategic roadmap.

What do you view as the next stage of growth for BFS?

It’s really exciting times for BFS. There’s a continuation of who we have been historically. Serving customers, M&A, finding new product categories, value-add. Those are all things we’ve been doing for quite a while. But then you layer the dynamics around digital, what new technology can do in the industry, our ability to leverage those things to add new services and provide new support for the home building community, that is pretty exciting.

We’ll continue to lean in on those opportunities. The world of AI represents a whole other platform for potential improvement, whether the opportunities are growth from an increasing sales perspective or in terms of continuous improvement. Those are important categories for us to learn and invest in alongside our home builder customers over time to grow those relationships. We think if we do that right, we will grow sales.

What role do you see digital initiatives, technology, and AI playing in the building products industry moving forward?

I spend a lot of time thinking about modern technologies and how we can leverage them. I think the answer is a bit of a continuum. If we talk about day-to-day operations, right now, we are in the middle of a big enterprise resource planning (ERP) implementation. Our commitment is to modernizing what our teams have for tools. I think some of the tools we have had over the years have served us well but may be beyond their useful life. If you are running parts of your company on a COBOL system from the 1970s, that’s probably not a good thing. We lean into some of those fundamental technology investments, making sure we have the best tools, that we have a modern version, that we have good data analytics, and the ancillary tools that come with that. We can plug in more modern tools and services: handhelds, scanners, leveraging Wi-Fi in a way that you can’t with some older tools.

Then you get into more modern evolutions, that goes to our paradigm, our digital strategy. The three-dimensional digital twin that is linked into our e-commerce engine. Making it shoppable. That is some really powerful stuff and it is something that the industry is increasingly open to. Change is hard. Getting folks used to using some of those tools, working in a computerized environment where maybe historically it’s easier to work with paper or with a white board, a cell phone, and a nice stack of plans. The power of these new tools, the efficiency, the speed, the interconnectedness [is appealing]. How do you keep everybody linked together on the most current version with the latest information, sharing thoughts, plans, and observations? Those types of things we think are very important and are the core of that digital strategy for us. Supporting our customers as they continue to look for ways to build affordable houses. All those little decisions that add efficiency or take out a conflict, that adds up and hopefully allows us as an industry to have a more affordable, a quicker, a more efficient home.

Then there’s the most cutting-edge stuff around AI. It is early days on [AI]. What we are seeing is a lot of people very excited. Certainly, the promise is very interesting. But we are focused on tangible use cases. How can we make things incrementally better in ways that are obvious and make sense? For all the potential that AI represents, someone described it to me as “a system that often hallucinates and sometimes lies.” Generally, that doesn’t work real well on a building site. You’re not cutting boards on a “sometimes lies” basis. Figuring it out in the world we live in will be challenging, but interesting. There is certainly some promise there, and we are investing in that, too, to try and make sure that we are on the cutting edge of that.

What areas do you feel will define BFS over the next five to 10 years?

There’s no question that in the near term we’ve leaned heavily into core technologies of our digital strategy. It’s offering an end-to-end platform for the smaller production builder to give them the tools they need to compete [with] the larger player. The evolution of getting people within our organization clear and comfortable with what does it [technology] mean, what can it do, how does it help. And then having those folks be the representatives to their customers in each of their individual markets and share that same message and, ultimately, get the home builder customers comfortable with how it is going to help them. That process in the near term is a lot of effort. We think there is a tremendous payoff for ourselves and, more importantly, for the broader industry so it is worth it. I think if players like us are committed to these types of investments over the long haul, it will be something that moves the industry.

If you look back in the history of home building, it’s been pretty cyclical. It’s easy for people to fail in those down markets, but I think the one benefit we have of being BFS: We are stable. We do have that staying power and we are committed to making investments that are going to make the industry better and we think this is going to be a big one over time.

What are the biggest areas you are optimistic about? What are areas that give you cause for concern?

To finish the thought on technology, the thing I’m really excited about is that building a home is hard. There are a lot of components that need to come together. The materials, the people, the design, all the structural aspects. It is a really challenging thing to do, particularly when aligning around a home buyer. There are ways to leverage technology to make that a better experience for everyone and, in doing so, make the home more efficient to build. Which hopefully yields a more affordable, more beneficial outcome for everyone involved. As an American who hears about affordability challenges, to be a part of something that can be a force for good in that, and helping to solve that affordability [equation], it’s pretty exciting stuff. The more we can use technology to do that, the more momentum we will build as an industry.

Broadly, today’s market is challenged by affordability. Certainly, the land development and regulatory component is important and an unfortunate driver of increased costs. The inflation associated with day-to-day life is another piece. It costs more per hour of labor for folks that are on the jobsite. Goodness knows there aren’t enough [workers] in key categories in a lot of markets, particularly as time passes and folks retire. Those challenges around affordability I don’t think are going to go away anytime soon. Pent-up demand is real and I think there is a real opportunity for us to continue to grow as an industry. The gravitational pull is toward a higher number of starts both in single-family and multifamily. We just have to overcome this resistance associated with high costs, both of the materials and of the interest rates.

What role does the building products industry play in the affordability challenge?

We look at it from a bunch of different ways. On one hand, the ability to do value-added products and services are certainly a piece of that. Taking the pressure off where availability is an issue, whether it be labor or materials. Whether you want to increase the pace or decrease your carrying costs in order to make a jobsite move more quickly, we can do that with the value add.

Ultimately, our job is to be a partner. If we are helping builders be successful, we will find a way to be successful. It’s when we wind up at odds and are not responsive enough, that’s where I think we get into trouble. In 2024, we had a pretty significant decline in our dollars per start. That’s not fun from a reporting perspective, but it’s absolutely critical to our success. Because our job is to make sure we are giving the builders what they need. If they want a simpler version, we’ll provide a simpler version. If they want a more complex version, we’ll figure that out, too. Being adaptable and investing alongside our builder customers is the core of what it’s going to take for us to win and what BFS has been successful at.

What is the growth potential of the value-add portion of the business?

It has been steadily increasing in adoption. We continue to invest in it. Those investments have really been a strength of ours in our ability to grow faster than the market over time. It’s generated by this idea of if you build it, they will come. Maybe more accurately, if you build it well, they will come. Making sure that we are standing up facilities that meet customer needs and can be reliable in terms of on-time and in full shipments. That’s been an important part of how we’ve grown. We have seen it increasing in places like Texas, where historically there has been less [adoption]. That take-up is gathering momentum.

The other area value-add is starting to play out differently over time is this idea of installed. The turnkey model is one that historically was a compromise that we made to keep a material customer happy. More frequently today, we are able to apply process and technology and really leverage our relationships in the market to be a reliable partner for the builders. To be a nice avenue for installers to leverage their skills and their businesses in a way that they are more profitable and more productive. It has been an interesting evolution over time as that skilled trade on the installer side in particular gets harder.

What do you see as differentiators for BFS?

Our strategy is one that I was involved in and I am excited about it. It is anchored on our people. We think that we have a differentiated offering in terms of the types of people that we can recruit. But there is more we can do, there is more we can provide to support them. There is more training and development we can invest in. We’ve made some investments internally to support that. I think that will be a powerful thing going forward. We must make sure the next generation of leaders is ready and ramped up to be successful. That is something we are passionate about.

The other key component for us is around innovation. We’ve got some investments we are making behind the scenes, some technologies that we will explore over time to see if there is a way to commercialize and take it larger. As BFS, our scale and our commitment to those types of investment is unlike what others can do and others can sustain. That puts us in an advantageous position.

Those two components are really around the core three aspects: growth, continuous improvement, and the way we invest. We generate a lot of cash; we are a successful business. Finding ways to reinvest that cash. Whether it be in new facilities, in the way we manage working capital and acquisitions or share buybacks. When you think about what we are as a business, it’s neat to see how those pieces come together. When you think about us in a given market, we’ve got the best footprint—580 locations in 43 states—and that gives us really nice coverage in terms of being able to reach our customers where they are. We have got the broadest product portfolio; we have leaned into a variety of areas. Our value-add strength is meaningful and we continue to invest in it. Which puts us in a position to offer our customers more of what they need. To be a better partner. Especially when you combine all that product across all those footprints.

But the most important thing is [our] people. When you have salespeople and subject matter experts who want to monetize their experience, you can’t get better than with BFS. Anything you can do in terms of leveraging your expertise with a customer presents an opportunity for you to have a value stream. I believe that our most powerful differentiation is the combination of locations, products, and people in a way that creates a synergy.

What are some of your biggest lessons learned during your time in the industry?

What I am most grateful for in my time here is the quality of the team. We have a wonderful group of people. It is invigorating; it is a lot of fun to be around. I want to make sure that I am bringing my best when I am surrounded by people like that. That commitment to having the right team members, supporting them, developing them, and empowering them, that is a critical part of what I’ve learned and what I’ve observed from the leaders before me.

We are a business that has a strong muscle memory around M&A. We know how to bring people into the BFS family. We’ve done a good job of making team members feel welcome. We have leadership team members from virtually every acquisition we’ve done over the years. We don’t run people out; we make them part of the family. Our ability to execute like that and to do it on an ongoing basis, that M&A engine will be critical for us. But we are also focused on organic growth. On competing in a market day in and day out, being a partner of choice. I didn’t grow up in the lumber and building materials (LBM) space, I worked for a bunch of businesses over the years. There are some nuances to home building that it took me a while to pick up, but when you work with good people in an environment where we’ve had a lot of success, you can pick up some good things. I’m certainly grateful for that as I step into this role.