The material supply business can be tough. To begin with, it’s very cyclical, just like the construction industry overall. If you’re not careful, a sharp economic downturn could leave you sitting on a mountain of difficult-to-sell inventory. Plus, you’ve got to deal with a constantly changing, price-driven marketplace that might include new tariffs, new taxes, as well as any number of other changing regulations.
While we’ve written extensively about material suppliers and their payment issues in the past, we’ve never discussed two-tier distribution in the material supply business. Please read on for a brief discussion of two-tier distribution and how this distribution model might affect lien rights.