WEBBLog Archive, by Craig Webb, Editor, PROSALES
2006
2007
1/07 1/25 2/1 2/8 2/15 2/22 3/1 3/8 3/15 3/22 4/05 4/12 4/19 4/26 5/03 5/10 5/17 5/24 5/31 6/07 6/14 6/21 6/28 7/11 7/18 7/25 8/01 8/08
Window and Door Makers' Group Sees the Green Light, Hits Accelerator
Green issues got prominent play Tuesday during the Window & Door Manufacturers Association's summer conference in Cambridge, Md. Two of the day's five sessions were devoted to sustainable materials and environmental stewardship, and even the political update touched on energy policies. The association also officially rolled out "GreenZone," a sustainability resources section on its Web site. The green movement looks to be both an opportunity and a threat for the WDMA's members. Window and door makers can rightfully claim their products go a long way toward helping a household cut its energy bills. But members also fear that despite these efforts, they could be tarred as bad guys because of the ways they build their products or manage their properties. "It's a perception we have to address," E.L. "Pete" Walker Jr., OEM business manager for Huber Engineered Woods and chairman of WDMA's Environmental Stewardship Committee, told the group. He also noted that standards such as LEED for Homes "are evolving quite rapidly. WDMA must be the voice of the industry [when green standards are set]."
Regional LBM Associations' Salary Survey Expands To Cover More of U.S.
Many regional LBM associations have long had local salary surveys, but the one announced Sunday at the Southern Building Material Association's summer conference takes a big step toward creating a nationwide tool. The SBMA-coordinated effort includes data not just from SBMA's four states but also from 15 others stretching from Florida to Washington. It's still missing data from such big states as California, Texas, and New York, however. All told, the survey reflects reports from 378 dealers in 19 states who together employ 12,258 employs in 66 different job types and generate $4.66 billion in sales. The survey shows huge disparities between the absolute highest- and lowest-paid employees in many jobs but also what SBMA President Larry Adams and survey compiler Deborah Hayden view as remarkable similarities among dealers. For instance, of the 378 truck drivers' salaries reported by dealers, the absolute range was $7 to $27.42 per hour. But most dealers paid between $11.46 and $16.16 per hour, with the average being $13.71. The survey costs $199. To get it, contact the SBMA's Kathy Wooley.
SBMA Roundup: Great Weather, Dire Forecasts
Sunny skies, friendly waves and scores of rambunctious kids provided a great antidote to the downbeat message that dealers heard from the experts during this past weekend's Southern Building Material Association summer meeting in Virginia Beach, Va. At the shore, less than 200 yards from the meeting rooms, life was great. Inside, conditions were much darker. Edward Seifried of the Lafayette College Department of Economics and Business said the problems we're experiencing with late and defaulting subprime mortgages "will be three times worse next spring," thus slowing down prospects for recovery. Investment banker Rob Slee was even more dire, calling the subprime market's shakes "the first shot across the bow leading to a broader recession." And several other speakers pointed out the responsibilities dealers face managing their yards' trucking operations, providing for a safe working environment and properly overseeing the administration of company 401(k) plans.
ProSales Readers Issue Strong Opinions Over Spanish-Language Safety Instruction
You definitely had strong views about "Texan Responds to Comments Against Spanish-Language Safety Instruction," the second item in last week's ProSales Business Update. That story featured comments by John Smith, safety manager at Foxworth-Galbraith Lumber Co. in Dallas, noting that federal law requires an employer to train its workers "using both a language and vocabulary that the employees can understand."—in other words, in Spanish for workers who speak only that language. I've posted the letters in full on my blog. Here are excerpts:
- If the Labor Department is going to make it mandatory that companies provide multilingual safety instructions, companies should have the right not to hire non-English-speaking people. Safety is first, but English shouldn't be thrown by the wayside.—David W. Aldridge, Engineered Wood Products Specialist,Oso Lumber Inc., Arlington, WA
- When we boot the illegal immigrants out of the U.S. and take back their Social Security and health care cards then we might find the next step is to re-enforce the idea of English as the national language. Learn it and use it if you come here legally. Are we really going to become a nation of "all things to all people?" Whatever happened to the idea of "One Nation Under God?"—Ted Newman Jr., owner, Lakes Region Remodeling Co., Tuftonboro, NH
- A few years ago we explored converting our safety manual to Spanish to accommodate the growing number of Hispanic workers we were encountering. The safety consultant we were using discouraged it. Why? His explanation made great sense: the overwhelming majority of Hispanic construction workers in our area came from poor rural areas of Mexico and could not read Spanish. They were illiterate in their native tongue.—John Archibald, VP of Operations, Forge Lumber LLC, Cincinnati
- Workers should be federally required to fluently speak and write the official language as a condition of living and employment in this country. Employers should be required to provide proper instruction in the official language. If either chooses to avoid that responsibility, then they should be held accountable. Employers should not be forced to offer training in every potential language out there.—Eric Howes, Store Manager, Magnuson Lumber Inc., Castle Dale, UT
- I don't care what Hillary Clinton or anyone else says; English is the national language of these United States of America. The French, Germans, Japanese, Chinese or any other country will not change their language for me or you. Why should we?—Robert Riggs, Owner, Riggs Sales Service Inc., Lexington, KY
- Employers who hire and keep purely speaking Hispanic workers and provide a completely Spanish environment for them to work and operate in are adding to this communication barrier--and ultimately making the whole problem worse for all AMERICAN citizens, regardless of their original tongue.—R.W. Titchen, Territory Manager, GRK Fasteners
What's your view? Write to me with your thoughts.
Do You Ban Weapons at Your Yard? If Not, Read This
A story this past weekend in a Connecticut newspaper about a man arrested after he allegedly brought a 2-foot sword to the lumberyard where he used to work coincided with a presentation on workplace violence Sunday at the Southern Building Material Association's summer meeting in Virginia Beach, Va. Deborah Hayden, a former human resources director at Tindell's in Knoxville, Tenn., and now a consultant based in Chicago, noted that violence at the job is the No. 2 killer of people at the workplace. Among her tips: Ban workers from bringing weapons to the yard. This is particularly important during hunting season, she said. Also, during a job interview, be sure to ask: "Have you ever had a problem with your supervisor? How did you handle it?" The interviewee's response can tip you off as to whether that person has a propensity toward violence. And third, fire a worker on a Monday, not on a Friday. A person fired on Friday will have the entire weekend to stew about perceived injustices and could return on Monday loaded for bear. A person dismissed on a Monday can start looking for a new job on Tuesday.
Hurry! Just 3 Days Left To Take the Credit Card Policy Survey and Get the Report
With roughly 250 respondents already, it's clear that ProSales' special survey on credit cards will give dealers a great idea about the policies on cards that their peers are using. We will accept responses through Friday night, and plan next week to report the full results back to those dealers who took part and who identified themselves to us. If your company hasn't contributed yet, time is growing short. Click here to take the five-minute, 20-question poll. Individual results will be kept private. Please note this is a survey of pro dealers only. Contact me should you have any questions.
Texan Responds To Comments Against Spanish-Language Safety Instruction
John Smith, safety manager at Foxworth-Galbraith Lumber Co. in Dallas, responded quickly to a comment in last week's ProSales Business Update regarding an article in our July issue on whether some yard safety issues stem from Hispanic workers' problems with English. Walter Wilhelmi, warehouse and buying manager at Dealers Building Supply in Salisbury, Md., said the story took "the wrong direction," adding: "Last I looked, we live in America, an English-speaking country." Smith sent us an April 17 interpretive memorandum issued by Assistant Secretary of Labor Edwin G. Foulke Jr., reiterating federal policy on training The memo says, in part: "an employer must instruct its employees using both a language and vocabulary that the employees can understand. For example, if an employee does not speak or comprehend English, instruction must be provided in a language the employee can understand." Then Smith added, "Our safety training and safety programs are intended to keep our employees safe and free from injury. We owe it to them to make sure they understand how to perform the job safely. We also owe it to them to follow up and ensure that they are actually doing the job safely." Smith's e-mail signature, by the way, includes the words: "Safety is a culture. Not a program." What's your view? Write to me with your comments.
NLBMDA Joins Green Certification Debate With Comments on LEED
The National Lumber and Building Material Dealers Association (NLBMDA) sent the U.S. Green Building Council July 13 three pages of comments regarding the LEED for Homes guidelines to promote green construction. NLBMDA said it was "not at all appropriate" to grant LEED points exclusively to wood products certified by the Forest Stewardship Council, saying: "Providing an exclusive ‘right' to FSC within LEED precludes the use of products that are equally, if not more, environmentally friendly and supportive of sustainable forest management. … [R]ecognizing all ratings systems will greatly enhance the ability of dealers to provide builders with qualifying materials in a timely and cost-effective manner."
With Hayward's Ascension, a Lumber Guy Takes Over FSC's U.S. Board
Today marks the first day of service for Bill Hayward, CEO of Hayward Lumber, Monterey, Calif., as chairman of the board of the Forest Stewardship Council-U.S. Hayward—who also goes by the title of chief sustainability officer—runs what may be the most environmentally conscious LBM operation in the country. (See our ProSales article from last November.) He's not universally loved by his fellow pro dealers, and not all of his ideas are applicable across the nation, but what Hayward is doing does provide plenty of food for thought.
Encouraging New Numbers for Remodeling, Nonresidential Construction
Amid the depressing reports lately on the home construction market comes a pair of relatively upbeat news nuggets. First, Harvard's Joint Center for Housing Studies forecasts that homeowner spending for home improvement "will essentially remain constant through the first quarter of 2008." For this year, it now is expecting the remodeling market to grow 3% to $306 billion. And second, the Census Bureau reported Tuesday that the value of nonresidential construction put in place during June stood 14.1% above the level of a year earlier. In contrast, residential construction put in place was down 16.1% from June 2006.
Trex Numbers, Consultant's Forecast Suggest Decking Market Is Doing Fine
Trex Co.'s report Tuesday that net sales for the second quarter roughly totaled its year-earlier numbers ($118.8 million this year, $121.5 million in '06) might seem strange given how poorly the new-home market is doing. But a new forecast on U.S. demand for decking by The Freedonia Group clarified that when it pointed out that improvement and repair activity generates 85% of all decking sales. Freedonia predicts the decking market will show annual growth of 2.2% through 2011 to reach 3.6 billion lineal feet of decking worth $5.6 billion. Demand for wood decking will drop by 0.3% per year between 2006 and 2011 while demand for wood-plastic composites will go up by to 12.6% per year in 2006-11, Freedonia predicts.
An "Apocalyptic" Time for Home Builders, One Ex-ProSales Editor Says
"The last week has been an apocalyptic one for the home building industry," Boyce Thompson, former editor of ProSales and now editorial director of Builder magazine, said Tuesday in his blog column. "Public companies posted more than $2 billion in combined losses during the most recent quarter. Figuring that they might as well get it over with now, since no one expects the market to get better real soon, these companies took big impairments in land, and they abandoned option contracts. … Land write-downs partly explain how prices in that community of $320,000 homes suddenly dropped in the latest phase to $240,000." Thompson adds that the publicly traded home building companies are seeking to bolster cash flow, typically by making a sale as quickly as possible. He concludes: "This bloody week in July potentially speaks to even bloodier ones in the new home sales marketplace for the remainder of the year."
What's YOUR Credit Card Policy? Take the Survey and Learn From Your Peers
Do you take credit cards at your store? If so, which cards do you accept? For what kind of payments? And with what limits? Lots of dealers want to know what their peers are doing in this regard, so ProSales has created a survey to get a better idea of standard practices and how they've changed. Click here to take the five-minute, 20-question poll. We'll report the results, but your individual info will be kept private. Participants who give us their contact info (on the survey's final page) will get a copy of the full report before any of the aggregate info goes public. Please note that this is a survey of pro dealers only. Contact me should you have any questions. We'll report our findings in about two weeks.
Lots More Opinions Over the Green Movement and Wood
Peter Ganahl's comments last week in ProSales Business Update urging against the politicization of construction as a result of the green movement prompted half a dozen letters from you. I've posted several of them in full on my blog (to see them, look here as well as here). Among the most notable quotes:
- "It's crucial for us to join the dialogue on green building to ensure that real science is at play. While it's very true that we can adapt to sell other types of building products (and have done so successfully), if the market moved significantly to cement, for example, the opportunity for us pro dealers might be significantly less than currently exists." —Paul Hylbert, CEO, Pro-Build, Englewood, Colo.
- "Choosing materials should be a balance of both good environmental stewardship and economics. … Our industry has to take the lead in educating architects, builders, and homeowners on how to choose the best materials for their building projects." —Ron Fragapane, partner/sales rep, RepMark Sales Inc., Cleveland
- "Around here, you can't swing a dead cat without hitting a tree-hugger. I suspect that most of these little green men and women just like the bumper stickers. Tree-huggers don't want to change their lifestyle to save the planet; they want everyone else to change their lifestyle to save the planet. It's cool to be green right now. Kermit the Frog never had it so good. … But when it really comes down to it, where are you going to find a building product that is more environmentally friendly than those made from WOOD?" —Thom Gross, millwork specialist, Marvic Supply Co., Bucks County, Pa.
- "Re: ‘The Weight of Wood' editorial. I appreciate the history angle, but I think it is irrelevant for discussion of what's really green today. It's time to address the ignorance demonstrated by otherwise perceptive observers when it comes to what constitutes a green building product. What needs to be communicated is that, hands down, wood beats plastic, concrete, or steel as a green building product." —Dick Gauthier, vice president of marketing, Universal Forest Products Inc., Grand Rapids, Mich.
- "Truckee-Tahoe Lumber Co. has considered carrying an FSC-certified inventory, but concluded that the increased costs and lack of adequate supply would have too great an impact on our ability to fulfill our customers' needs on a consistent and affordable basis." —Breeze Cross. President, Truckee-Tahoe Lumber Co., Truckee, Calif.
- "The trend toward certified wood is laudable but often misguided. … To suggest that there is a significant environmental difference between a certified and noncertified piece of lumber produced in Canada or the western U.S. is just silly. …If someone develops a better alternative building product than wood, we will happily sell it. We are in the building materials business after all. We just don't want the choices to be driven by misinformation or by government bureaucrats using an emotional rather than scientific basis." —Rick Roberts, CEO, Sunnyvale Lumber Inc., Sunnyvale, Calif., and president, Lumber Association of California and Nevada
- "I have been selling building products for 28 years, and until recently had little understanding of green. While working for a national manufacturer of concrete roof tile, I met a builder that introduced me to a much higher understanding of green building. Conservation, reusable, sustainable, and hybrid are just a few of the green words he is using. This builder uses little to no wood in his structures, but builds to any style or specification. The efficiency of materials and energy usage for the homeowner is second to none. … I will continue to learn more about green each and every day. Hopefully, we all can learn enough not to be scared of what ‘thinking green' can mean to building homes in the future." —Brian Reid, territory manager, MI Windows and Doors, Weaverville, N.C.
What's your view? Send me your thoughts and join the discussion.
Diversity, Language Skills and Plain Hard Work: One Reader's Opinion
ProSales reader Walter Wilhelmi, warehouse and buying manager at Dealers Building Supply in Salisbury, Md., saw reason to comment on articles in our July issue on diversity in the workplace and on whether some yard safety issues stem from Hispanic workers' problems with English. On the first article, he wrote: "We are finding a fairly large number of the younger generation that will not work hard to have a better life. When they finish schooling, if they haven't been promoted to the top with an inflated pay scale, they are not happy. This goes with any nationality. I have always disagreed with changing your standards to satisfy someone that elects not to help themselves. For instance, a local college decided to diversify by allowing minority students to have easier testing and curbed grading. Where is the education earned equally in that scenario? I think Karnell Steel at OrePac explained it fairly well: all we need is people to work hard for what they want and to be compensated in return, whether that be financially or through recognition." As for the second story, he said: "Rich Binsacca's article on a solution for non-English-speaking employees is, in my opinion (and others in the industry), going in the wrong direction. Last I looked, we live in America, an English-speaking country." What's your opinion? Tell me.
Weighty, Indeed: You Respond to Our Editorial on How To View Wood
Several ProSales readers have commented on "The Weight of Wood," my editorial in the July issue of ProSales.
Peter Ganahl, president of Ganahl Lumber, Anaheim, Calif. (and featured in this month's cover story), noted my statement that, "We need to regard wood for what it is: one of the many construction supplies and services that we offer … and not just because it's what our daddy sold." Ganahl agreed, adding that wood and wood-derived products accounted for 80% of his company's sales a generation ago and now figure in 65% of sales.
"But here is my concern going forward," Ganahl continued. "If the policies coming out of the so-called green movement in construction are based on a combination of science and economics, we're ready to move to the best products and building methods that get us there. For example, do they reduce energy usage when in place? Are they energy efficient to produce relative to the alternatives? Are they long lasting? Are they renewable? If, on the other hand, the green movement uses the political arena rather than the scientific and economic arenas to move the process, our industry needs to be a strong and reasoned voice that guides the process toward the best policies over the long run."
Meanwhile, Bruce Currie, president of C.A. Niece Lumber Co., Lambertville, N.J., noted: "I have pondered the subject myself, being that some of our best moving items of the last five years are the likes of AZEK, TimberTech and Hardiplank. … We are in a very liberal town, 75% Democratic, many of whom are 'tree huggers.' Do you suppose they think plastic is better for the environment?"
What's your view? Write to me with your thoughts.
Got Trouble With Drug Users and Drunks? Count Your (Relative) Blessings
I've heard complaints lately from LBM executives regarding the legions of potential employees they've had to reject because of failed drug tests. A new study announced Monday indicates just how serious the problem is—and yet how LBM dealers are in better shape than some of their peers. The voluminous report from the federal government's Substance Abuse and Mental Health Services Administration (SAMHSA) estimates that 9% of the workers at building material and garden equipment and supplies dealers have used illicit drugs in the past month. At the same time, 6.8% are estimated to have used marijuana, and 13.2% engaged in heavy alcohol use. An occasional toke or one-night bender isn't the same as substance abuse, of course. In that darker realm, the report estimates that 2.7% of the workers at LBMs have engaged in illicit drug dependence or abuse in the previous year, while 10% were alcohol-dependent or abusers in the same period. The rates for illicit drug and heavy alcohol use range between 13% and 25.7% for carpenters, flooring installers, electricians, and roofers.
More Resources To Improve Your Yard's Safety Record
John Smith, risk manager at Foxworth-Galbraith Lumber Co., gave ProSales kudos for this month's story on LBM's special challenges overcoming the language barrier to assure the safety of Spanish-speaking workers. At the same time, Smith says we should have cited several other groups besides NAHB as sources of information and training material. His favorites include OSHA, the Wood Truss Council of America, and of course NLBMDA.
UFPI Doesn't See Remodeling Grow as Home Building Slumps
It's the LBM equivalent of the Sherlock Holmes case about the dog that didn't bark. In its announcement Tuesday of financial results for the quarter ended June 30, UFPI noted something important that was missing. "In previous housing downturns, our DIY business picked up as people chose to improve their homes instead of building new," UFPI president and CEO Michael Glenn said. "That hasn't been the case this time." In fact, retail and DIY sales are up only 1.7% this quarter compared with the second quarter of 2006. "We believe that homeowners who took significant equity out of their homes, or whose home values declined due to market conditions, are putting off the larger projects—like room additions and new decks—that would positively impact our business," Glenn said. That's particularly painful, given that UFPI doesn't expect the new-home market to recover until mid to late 2008.
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ProSales Wins Three ASBPE Awards
We're pleased to announce that ProSales magazine won three awards from the American Society of Business Publication Editors' Central-Southeast Region. All awards are for articles published in 2006. ProSales won a Gold Award for best regular staff-written column, honoring Chris Wood's "Viewpoint" column. It won a Silver Award for best original research in honor of "New Era," our report on the ProSales 100 (pictured). And it received a Bronze Award for best regular department, in this case the "House Calls" section written by our compatriots at Hanley Wood Market Intelligence. Naturally, we're quite proud that our peers have seen fit to honor ProSales, as they have 16 other times since 1999. But we're more proud of serving you, the reader.
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This Month in ProSales: Three Faces, Co-Op $$$, Translating Safety Concerns
There's a double trifecta in this month's issue of ProSales magazine. First, our "Three Faces of LBM" compares and contrasts the working days of executives at three vastly different sized LBM operations in three distinct parts of the country. And second, our trio of features offers not just the "Three Faces" story but also revealing reports on the vast changes under way in co-op advertising programs and the alarming rash of accidents that some pro dealers have encountered as predominately Spanish-speaking workers arrive on the yard. Note as well our chart in the ProWatch section, which reveals how far behind the national norm LBM is in employing African- and Asian-Americans.
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My Latest Favorite License Plate Slogan
I snapped this photo moments before taking a ride with Peter Ganahl, president of Ganahl Lumber in Anaheim, Calif., and one of the three execs profiled in this month's ProSales cover story. As the story will reveal, the three executives all may be responsible for their companies, but they operate in vastly different ways. In fact, I noticed just one thing they had in common: All three parked their cars at the very end of their lots, thus making certain their customers got the closer-in spots.
The Home Depot Remains Schizophrenic Over Serving Pros
Tuesday's presentation to analysts by The Home Depot didn't clarify the company's apparently contradictory attitude toward professional builders and remodelers. Early on, chairman and CEO Frank Blake reiterated that the fifth of HD's five priorities is to "own the pro." "We think this is an area where there's share for us to take," Blake said, noting that HD is doing so in part by dedicating sales staff just to this segment. But this talk came as the company revealed more details regarding the sale of the HD Supply unit that was most dedicated to serving the pro. That $10.325 billion deal is expected to close Aug. 16 and will help fund HD's stock buyback. "With the sale of HD Supply, we now have a laser focus on our retail business," CFO Carol Tome said. Blake also said HD Supply's sale reflects The Home Depot's refocus as a retail business. As things now stand, "own the pro" might become as humorous as those HD ads showing friendly, experienced consumers how to accomplish DIY tasks.
FBMA To Honor Florida Man's 70-year Career in LBM
John Riley will turn 90 on Wednesday, Aug. 22. No doubt it'll be just another workday for a man who has worked in LBM for 70 years. Two days later, on Aug. 24, the Florida Building Material Association will honor Riley at its annual Old Timer's Luncheon. Riley told WebbLog this week that the way he views it, he's been with the same LBM company in Largo, Fla., "but we have had eight different owners." Now it's part of Tulsa, Okla.-based Hope Lumber & Supply. He's done just about everything you can do in LBM, from running the company to running a steam locomotive. Now he just calls himself a salesman. If you'd like to join the group honoring Riley, go to www.fbmamainevent.com or call FBMA at 352-383-0366. And here's a related question: Do any of you know of anyone older or who has worked more years in LBM? If so, tell me.
Webb Blogs Worth Noting
If you haven't visited my new blog yet, here are some items that you missed:
- One price fits all? Wrong! Our Web columnist speaks
- Slowdown in household formation rate could affect future construction
- Arizona gets tough on companies hiring undocumented workers
- With crackdown on subprime, it's time to rethink hopes of business revival
Meek's Lumber Outlet Feels the Tahoe Fire's
Heat
The Meek's Lumber & Hardware store
in South Lake Tahoe, Calif., is seeing a 70% drop in business this week
as a result of the fire ravaging nearby, Scott Kassahn, Meek's vice president
for sales and marketing, told ProSales intern Anna Hernandez late Wednesday.
Press reports said the blaze has charred 3,100 acres since it began Sunday.
Residents of hundreds of homes in the area have been evacuated. "It's
a very, very sad situation up there,” Kassahn said from Meek's Sacramento
headquarters. South Lake Tahoe lies just east of the fire and hasn't suffered
any damage. However, Kassahn said business has been greatly affected,
in part because U.S. 50, the main road through the area, has been closed.
A blog maintained by the Sacramento Bee describes the business area as
"a ghost town.” The fact that the fire is occurring near the July 4 holiday
is particularly hard on Meek's, because the summer months provide much
of the South Lake Tahoe store's annual business.
Some Stories Behind 84 Lumber's Job Cuts
Given that they represent just 3.25% of headquarters staff and a paltry
0.3% of a 9,000-person workforce, we're inclined to not make too big a
deal of 84 Lumber's decision to
lay off 26 people at its corporate headquarters in Eighty-Four, Pa. But
the news did give ProSales senior editor Andy Carlo an opportunity to
check in with 84 spokesman Jeff Nobers about how business is going. In
one sense, the answer is poorly; Nobers noted that the dealer's yard in
Tavares, Fla., has seen sales fall from $68 million two years ago to roughly
$38 million this year. "The big builders are sitting on their hands,"
he said. On the other hand, 84 Lumber is on track to open 20 new stores
this year and continues to expand its installed sales program. And as
for those laid-off workers, Nobers said some of the people cut were involved
in marketing 84's golf outings, including its 84 Classic PGA event, which
the company has abandoned.
What Is Green Building? Here’s a Webinar To
Help You Decide
What makes a construction project green? Equally important, what is a
green product? To help answer that question, ProSales’ sister publication
Builder magazine is sponsoring a free Web seminar, “What Is Green Building?”
featuring Mark LaLiberte, a recognized industry trainer, author and consultant
with more than two decades of experience.
Click here to learn more and to sign up for the free, 30-minute event
or download a podcast.
This Yard Pet Goes Nuts for LBM Customers
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Webb Blogs Worth Noting
If you haven’t checked out my new
blog, here are some items from the past week that you might have missed:
- Boone County Lumber and the Immigration Bill
- A USGBC Member Urges an End to Green Building’s Alphabet Soup
- How Many People Does It Take to Make a Window Installation Crew? Here's Some Advice
- Remodeling magazine: Dealers Are Waking Up to the Remodeling Market
Time Is Running Out! Enter the Excellence Awards
Today!
Don't miss your opportunity to honor the great work of your company and
staff via the ProSales Excellence Awards, recognizing dealers whose initiatives,
projects, and facilities demonstrate innovation and business savvy. If
you've recently launched a whiz-bang Web site or are directing hoards
of traffic at your showroom, consider sharing your accomplishments with
your peers. The rewards are plentiful: Winners receive a feature article
in ProSales, recognition at a special breakfast during the 2008 International
Builders' Show, and a $1,000 donation to the charity of their choice.
This year's awards will recognize yards in six categories: Showroom Design,
Overall Yard or Manufacturing Facility Design, Marketing/Customer Service,
Best Advertising, Best Use of Technology, and Best Web Site. Click
here for entry instructions or contact managing editor Katy Tomasulo
at ktomasulo@hanleywood.com
or 202.736.3303. Hurry! Completed entry binders are due soon!
WebbLog Adds a True Webb Blog
First monthly, then weekly, now virtually daily: ProSales proudly announces
that we have added an online blog to our family of publications. Click
here to see the latest entries (you also can find the link on the
ProSalesOnline home
page). I hope to add at least one valuable news nugget each business day
and then summarize the best of them, along with other news, in this WebbLog
section of the weekly ProSales Business Update.
What's Next for The Home Depot and HD Supply?
We Handicap the Possibilities
ProSales' crystal ball is too chipped from past use for us to feel good
forecasting what exactly will happen now that The Home Depot has announced
it's selling its HD Supply unit. But we are willing to suggest the most
likely of many possible outcomes:
- HD Supply's buyers conclude that the LBM operations get little if any synergy from the rest of HD Supply (except, perhaps, for White Cap Construction Supply), so it tries to spin off or sell that section. A spun-off LBM division would be a Florida-Georgia powerhouse but nothing to fear nationally. An LBM division put up for sale would be too big a company for any other LBM operation but a giant—Pro-Build Holdings, maybe?—to swallow, unless the LBM operation doing the buying found an investor or was willing to leverage itself to the stars.
- HD Supply's buyers decide the company is worth the investment. If so, look for it to move quickly, as private equity firms generally only wait about five years before looking to turn their investment public or sell it to someone else.
- The Home Depot continues to make "Own the Pro" one of its five operating objectives. HD executives have said several times that 3% of the customers at its retail stores account for 30% of all goods purchased. The company has just begun investing in people to manage those accounts in hopes of increasing HD’s share of those customers' total LBM purchases. Given the value of those customers today—roughly $24 billion—it stands to reason that HD will want to keep pursuing them.
One clear lesson from all this: Wall Street lacks the patience to invest in the residential construction industry. The Street wants consistent, reliable, constantly rising earnings from "pure play" companies that specialize in just one thing. Lots of companies have bent over backward (and beyond; see Fannie Mae and Freddie Mac) to deliver consistent results, and only a few conglomerates (most notably GE and, for a while, Tyco) could explore multiple business lines. It may be getting more stable, but residential construction and the building supply industry that serves it remain too fickle, too diverse, and too long-term for the likes of most itchy-fingered investment managers.
Conch'd Out: Dazed Florida Dealers See Property
Tax Relief in Sight
Senior editor Andy Carlo traveled through South Florida last week, stopping
in Miami and at various points along the Florida Keys. He reports that
dealers at the Florida Building Material Association summer conference
in Key Largo singled out high property taxes as one of their top challenges.
Florida homeowners are living in two different worlds with regard to property
taxes, Carlo reports. The state's homestead exemption plan limits existing
owners' property tax increases to around 3% a year. But if you choose
to buy a new home down the street, you’d face mammoth increases. On June
14, the Florida Senate passed a bill that exempts the first $25,000 of
tangible personal property tax a homeowner might pay and creates a "super
homestead" exemption for all Florida homeowners that would cut most owners'
tax bills by 44%. Voters will be asked to ratify the change on Jan. 29.
Your Opinions Vary Widely on the Value of Gate
Guards
An impressive number of you commented on my June 14 WebbLog item asking
whether gate guards are a good idea. You'll recall the question was inspired
by a recent visit to Ashby Lumber in Concord, Calif., which—unlike
lots of other yards—doesn't have a gate. Mark Mei, operations manager
at Hayward Lumber, Monterey, Calif. says gate guards are a positive for
customers when—as happens close to 40% of the time—it turns
out the buyer didn't take away all that he actually bought. But Dana Heal,
a veteran manager of yards in the Midwest, says a guarded gate "sends
the wrong message to the contractor picking up supplies." Meanwhile, Andrew
Senn, operations support supervisor for Stock Building Supply in Green
Bay, Wis., notes that his yard crews do all the loading for customers
(as Ashby does) but still retains a gate guard "because it ensures that
the customer is getting the right amount of product and exactly what they
came for." I have posted
all the letters in full on my blog.
A Creative Way To Pave Your Yard
Got a muddy yard and no money to pave it? Rick Roberts of Sunnyvale (Calif.)
Lumber, president of the Lumber Association of California and Nevada (LACN),
found a creative way to overcome that problem. In his President's
Message in the June LACN newsletter, Roberts says he couldn't figure
out how to afford to pave his company's 6-acre yard in Fremont, until
he noticed some trucks from a nearby concrete company passing out front.
He visited that company and learned that extra concrete brought back to
the yard can't be reused—it typically had to be hauled to a dump,
where the concrete company paid a fee to get rid of the load. Roberts
suggested that, instead of going to the dump, the company pour its unused
concrete in his lumberyard. "That was five years ago," Roberts wrote.
"Today we are about 400 square feet from being completely paved. We used
2x6 for our forms so the minimum thickness is 5 1/2 inches. It looks a
little like a patchwork quilt, but it's beautiful compared to mud."
Update on Miami's Anti-Gouging Initiative
Last week’s ProSales Business Update reported that the Miami-Dade County
Consumer Protection Division’s survey
of prices of products and services likely to be in demand during hurricane
season revealed enormous disparities in what stores were charging. The
survey was based on price checks at Wal-Mart, The Home Depot, Lowe's,
and seven independent LBM operations in the county. Since then, John Ruark,
general manager of Shell Lumber in Miami, wrote in to note that his was
one of the stores where the survey took place. "During their visit to
our store, the inspector did not seek any assistance or clarification
on quality, grade, or features of the products listed," Ruark wrote. "This
wide disparity in pricing may be attributed in part to comparing apples
to oranges. The report is a good tool to assist consumers; however, a
little more information and detail could have gone a long way in helping
people understand what they actually get for these prices."
They Sure Grow Yard Pets Big in Texas
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Click here to view full image
Time Is Running Out! Enter the Excellence Awards
Today!
Don't miss your opportunity to honor the great work of your company and
staff via the ProSales Excellence Awards, recognizing dealers whose initiatives,
projects, and facilities demonstrate innovation and business savvy. If
you've recently launched a whiz-bang Web site or are directing hoards
of traffic at your showroom, consider sharing your accomplishments with
your peers. The rewards are plentiful: Winners receive a feature article
in ProSales, recognition at a special breakfast during the 2008 International
Builders' Show, and a $1,000 donation to the charity of their choice.
This year's awards will recognize yards in six categories: Showroom Design,
Overall Yard or Manufacturing Facility Design, Marketing/Customer Service,
Best Advertising, Best Use of Technology, and Best Web Site. Click
here for entry instructions or contact managing editor Katy Tomasulo
at ktomasulo@hanleywood.com
or 202.736.3303. Hurry! Completed entry binders are due soon!
Meet ProSales' New Product Editor
Victoria Markovitz has joined the ProSales staff as our new product editor.
Vicky may officially be new to the magazine, but she’s an old hand in
the office, having served as an intern on our sister publication Building
Products while earning her journalism degree from the University of Maryland.
Write to her at vmarkovitz@hanleywood.com.
The
June Issue Is Served; Distributors, Inventory, and Moving Are on the Menu
The changing role of two-step distributors gets cover-story treatment
in the June issue of ProSales, now
available online. In that lead
story, we report how two-steppers are recasting themselves to reinforce
their role as indispensable connections between buyers and sellers. The
June issue also examines strategies for improving
inventory management and gives tips for relocating
your LBM operation.
California Roll: Environmental Concerns Soon
Could Affect Left-Coast Dealers
While most dealers I met during my California trip still report scant
sales of green products, it’s clear from recent initiatives by state and
local government officials that the state’s LBM dealers will at least
have to become more environmentally aware. In Berkeley, for instance,
Truitt & White Lumber Co. is awaiting City Hall’s release of an action
plan prompted by last November’s passage of an initiative calling for
the city to cut its greenhouse gas emissions by 80% by 2050. Among the
city’s
ideas that Truitt & White eventually might have to implement are proposals
to increase the use of biodiesel fuels and hybrid electric vehicles, require
greener buildings, provide free or subsidized transit passes to all Berkeley
residents, and use less electricity to pump and treat water. Meanwhile,
over in Sacramento, attorney general Jerry Brown has
petitioned to block San Bernardino County’s long-range land-use plan
on grounds the plan doesn’t take into account its effect on global warming.
Today's Question: Is a Gate Guard Worthwhile?
My recent visit to yards in California's East Bay region included a stop
at Ashby Lumber in Concord. The bulk of Ashby's pro customers are small
to medium-sized contractors, so it follows that 30% of the goods that
Ashby sells to pros leave in the beds of contractors' pickup trucks via
“will-call” sales. Talk about that robust will-call business
led me to notice something missing from Ashby that I've seen at most other
yards I've visited—a guard post at the exit. Dan Easley, general
manager of the Concord facility, says Ashby believes the presence of a
gate “sets a taste [with customers] that we think is a bit negative.”
So instead, Ashby loads every customer’s truck. Easley says this
might cost more than permitting self-service, but Ashby believes it promotes
good feelings among customers as well as helps control shrinkage. Is Easley
on to something, or is his yard an exception to the rule? Tell
me your views.
Miami Anti-Gouging Initiative Reveals Wide Disparity
in Product Prices
In South Florida, hurricane season also is the season when people file
complaints about businesses that inflate prices for storm-related items
like plywood. As a result, the Miami-Dade County Consumer Protection Division
recently compiled a survey of prices of essential products and services
so that people can get a sense of whether they’re being gouged,
the Miami Herald reports.
But the actual
report—based on price checks at Wal-Mart, The Home Depot, Lowe’s,
and seven independent LBM operations in the county—revealed more
variation than consistency in prices. For instance, a ¾-inch sheet
of plywood sold for anywhere between $8.99 and $35.97, while the retail
price for 30 feet of roofing felt ranged from $10.97 to $56.00. The report
didn’t list the prices on a store-by-store basis.
Latest “Rader’s Edge” Tackles Pricing Accuracy
Our exclusive Web columnist, Chris Rader, examines the profit implications
of pricing errors in his latest "Rader's
Edge" column, now online at ProSalesOnline.com.
Check it out.
What’s It Take To Deliver Top-Value Customer
Service? Ask This Limo Exec
I have heard lots of LBM executives say they care about customer service,
but few have shown anywhere near the fervor displayed by Dawson Rutter,
president and founder of Commonwealth
Worldwide Chauffeured Transportation, in an article
in this month’s Inc. magazine. The story reveals the obsessive
detail Rutter’s company invests in dealing with customers. For instance:
drivers don’t just show up early; they also bring the client’s
favorite coffee drink or cold beverage, preset the radio to the client’s
favorite station, and stock a first-aid kit in the chauffeur’s standard-issue
briefcase. “Other companies are metal-centric—mostly about
the cars,” Rutter is quoted as saying. “We are flesh-centric.
We are about people.” It’s an eye-opening article.
FSC Sets Meetings To Consider Revising Regional
Standards
The Forest Stewardship Council (FSC) will hold five meetings across the
country to discuss revising regional standards and talk about emerging
issues. The daylong sessions will take place June 26 in Concord, N.H.;
June 29 in Minneapolis; July 12 in Atlanta; July 24 in Sacramento, Calif.;
and July 27 in Portland, Ore. Click
here for meeting and registration details or call the FSC’s Katie
Miller at 202.342.0414.
June 7, 2007
In LBM Veritas: ProSales Makes a Special Wine
Country Tour
You know you're an LBM person—or a fellow who covers LBM—when
you can travel to Northern California wine nirvanas like Healdsburg and
St. Helena and ignore the tasting rooms so you can visit lumberyards.
That's the case for yours truly when I stopped last Friday at Healdsburg
Lumber in Sonoma County and at Central Valley Builders Supply in Napa
County's St. Helena. Healdsburg Lumber is the kind of relaxed place where
the bulletin board out front lists community events, the inside sales
staff wears Hawaiian shirts, and you can buy a single drywall screw if
that's all you need. It also has a month-old program, the brainchild of
staffer Jackie Danielson, in which employees are invited to nominate fellow
workers for a "Pat-on-the-Back Award" for meritorious service. Winners
get prizes ranging from a package of candy to tickets to a Major League
Baseball game. Meanwhile, at Central Valley Builders Supply (CVBS) the
wine trade is so important that president Steve Patterson's senior team
includes a title I haven't seen before: a vineyard manager responsible
for supplying the wineries with irrigation equipment, fencing, and fermenting
bins. But while grape might be Napa Valley's favorite color, at the CVBS
yard it's orange. Patterson has made safety such a priority that his yard
crews wear screamingly orange T-shirts with the company logo on the front
and "SAFETY ALWAYS" in big letters across the back. The safety culture
is so strong now that one manager chided Patterson when he and I started
strolling through the yard without donning orange mesh safety vests.
HD Supply Continues to Expand LBM Operations
As The Home Depot weighs what to do with its $12 billion HD Supply pro
business, the HD Supply Lumber and Building Materials division does not
appear to be slowing down, or waiting for an answer. ProSales has learned
that HD Supply LBM will open a new location in Charleston, S.C., this
summer. With up to 50 employees, the full-line lumberyard will offer doors,
windows, trim, trusses, siding, engineered wood products, and installed
services. Steve LeClair, president of HD Supply Lumber and Building Materials,
told ProSales “it’s business as usual” for the division, despite that
The Home Depot is trying to determine whether it will spin off, consolidate,
or sell its HD Supply business. "The opening of the Charleston facility
demonstrates that HD Supply LBM is following a trajectory for efficient
growth," LeClair said. The division already operates 45 lumberyards among
the more than 1,000 locations that make up HD Supply.
Market Didn’t Force Dunn Sale
Pro-Build Holdings announced
Monday it will purchase seven-unit Dunn Lumber, based in Daytona Beach,
Fla., a deal that was not forced by the market's downturn, according to
outgoing Dunn Lumber president and former owner Sam Dunn, who told ProSales
the move has been in the works for more than a year. "We are not bailing
out. We made a special effort to build our business over the past 15 years
as a company that could stand on its own and grow," he said. After discussing
options in a "well-thought-out process" with his cousin Barry Dunn, it
was determined that a sale to Pro-Build was in the best interest of the
shareholders and of employees of the company who held a 14% interest share
and cashed in their stake prior to the sale. Terms of the deal were not
disclosed. The 103-year-old business will continue to operate under its
own banners. In the meantime, Sam Dunn is remaining on board as a consultant
while Dunn executives Gary Farber and Ron Cannon will continue with the
company, overseeing the transition. Englewood, Colo.-based Pro-Build,
a subsidiary of Boston-based Fidelity Capital, operates more than 500
locations nationwide and has sales of $6 billion.
Tech Savvy? Show Us!
If your salespeople feel lost without their tablet PCs or your A/R department
hasn't seen a paper invoice in years, you could be the perfect candidate
for two new technology categories in this year's ProSales Excellence Awards:
Best Use of Technology and Best Web Site. Winners of our sixth annual
contest will be showcased in a feature article, will be honored at a special
breakfast during the International Builders' Show, and will receive a
$1,000 donation to the charity of their choice. This year's awards also
will recognize yards in four other categories: Showroom Design, Overall
Yard or Manufacturing Facility Design, Marketing/Customer Service, and
Best Advertising. Click
here for entry instructions or contact managing editor Katy Tomasulo
at ktomasulo@hanleywood.com
or 202.736.3303.
Hue and Cry: Green Predominates at PCBC Amid
Fears Over Wood’s Future
It’s hard to walk past more than a couple booths anywhere at this week’s
Pacific Coast Builders Conference in San Francisco without coming across
a sign promoting a vendor’s green attributes. It’s a far stronger, more
pervasive marketing message than one we saw just a few months ago at the
International Builders’ Show, and it indicates that manufacturers have
decided being green matters to their future, even if actual demand for
green goods remains minuscule. But it doesn’t take much reportorial digging
to reveal profound disagreements between these companies over what’s the
right way to act green. Case in point: the Roy O. Martin Lumber Co., Alexandria,
La., made its certification by the Forest Stewardship Council a key part
of its marketing message by putting the FSC trademark on its shirts and
handing out water bottles that said “Got FSC? We do”, while business cards
handed out by employees of Boise, Idaho-based iLevel by Weyerhaeuser feature
the Sustainable Forestry Initiative logo. On a related front, the California
Forest Products Commission is raising alarms over what it views as a false
green image touted by non-solid-wood products like composite decking as
well as over legislative initiatives that it views as anti-wood. The California
Redwood Association is so worried about wood’s future in a green age that
it brought in a retired professor from Minnesota to argue that building
with wood is better for the environment than using concrete, steel, or
plastic composites.
Stock Clarifies, and We Correct, Reports on
the Management Change
Stock Building Supply issued a news
release yesterday following up on last week’s announcement
from Stock’s parent, Wolseley, that Fenton Hord will retire as Stock’s
president on July 31 and be succeeded by current SVP of operations Joe
Appelmann. Unlike the report from Wolseley headquarters in England, the
announcement from Stock’s headquarters in Raleigh, N.C., said the 60-year-old
Hord is retiring due to health reasons. Stock has struggled during this
recent housing slump, and Hord alluded to that when he said in his announcement:
“We operate in a cyclical industry and have seen a lot of changes, but
Stock and its associates have proved themselves as the class act of our
sector.” This editor regrettably was much less of a class act last week
when, at various points in the WebbLog, he misspelled both Hord’s and
Appelmann’s names—his first such double error in 30 years of journalism.
ProSales regrets the error and will use it in the future as a reminder
that quality service demands an unrelenting focus on getting the basic
details right.
Don’t Expect BMHC to Budge Despite Shareholder’s
Push To Divest
Building Materials Holding Corp. (BMHC)
may have received its first major taste of shareholder ire, including
a call for the company to explore the possibility of selling some of its
assets, but don’t expect the San Francisco-based dealer to be hasty and
divest any of its divisions, ProSales senior editor Andy Carlo reports.
James Wilson, director of research and a senior analyst with JMP Securities,
told ProSales that selling anything at this point does not make sense
given the industry’s move through a cyclical downturn. BMHC would be likely
to receive a lesser value if it were to sell a division, including its
SelectBuild construction services company. “They have made good acquisitions
and have grown a good company,” Wilson says. “I like what they are doing
and other players in the industry are making the same moves.” Namely,
BMHC’s rivals are pushing more and more into construction services, despite
a down market. While Robert Chapman (the managing member of Chapman Capital,
which owns 7.4% of the BMHC shares and issued a scrutinizing letter
to BMHC on May 25) might not hold enough of the company to force a move,
his equity firm does hold more shares than the company’s management team
and board of directors, including chairman and CEO Robert Mellor.
Power Your People
We often hear that LBM supply is “all about the people.” If this is true
at your yard, consider rewarding your staff’s hard work with recognition
via the ProSales Excellence Awards. Winners of our annual contest will
be showcased in a feature article and will be honored at a special breakfast
during the International Builders’ Show. Winners also receive a $1,000
donation to the charity of their choice. This year’s awards will recognize
yards in six categories: Showroom Design, Overall Yard or Manufacturing
Facility Design, Marketing/Customer Service, Best Advertising, Best Use
of Technology, and Best Web Site. Check out the feats of last year’s honorees
here.
Click
here for entry instructions or contact managing editor Katy Tomasulo
via ktomasulo@hanleywood.com
or 202.736.3303.
Hard Times Mark Hord’s Departure from Stock
Farmers will tell you that you can’t fight Mother Nature. Fenton Hord
might say the same about market forces. Hord, CEO of the nation’s No.
2 pro dealer, Stock Building Supply, will retire on July 31, Stock’s British
parent, Wolseley, announced
Tuesday. Hord will be replaced by Joe Appelman, an 18-year veteran of
Raleigh, N.C.-based Stock. Wolseley noted that during Hord’s 20-year tenure
with Stock, sales grew from $113 million in 1987 to $5.3 billion in 2006.
It didn’t note the hard times Stock has gone through lately. Over the
past eight months, the dealer cut as many as 4,500 jobs—more than
25% of its workforce—and set plans to close 22 of its 320 locations.
Revenue from Stock’s continuing operations fell 20.4% in the first half
of Stock’s fiscal year, ended Jan. 31, from the year-earlier period. You
can blame those woes in large part on the slump in new-home construction,
which has accounted for 80% of Stock’s business, and in part on the plunge
in lumber prices. On top of that, Stock’s numbers are looking even more
anemic than usual because dollar’s value against the British pound has
dropped close to 8% since last July, and it’s in pounds that parent Wolseley
ultimately counts its money.
April Home Sales Suggest Brightening Skies,
But at Toll Bros. It’s Still Gloomy
Given the recent bad times, today’s report
on new home sales in April was comparatively cheery. The Census Bureau
said the seasonally adjusted annual sales rate of 981,000 was 16.2% above
March’s revised rate. And while it was still 10.6% below the April 2006
sales rate, that’s not as big a gap as we’ve seen lately. With the increased
sales, we now have a 6.5-month supply of homes outstanding, down sharply
from 8.1 months in March. Don’t break out the champagne yet, however;
Toll Brothers (No. 14 on the Builder 100) announced
today its net income for the quarter ended April 30 sank 79% to $36.7
million on an 18.8% drop in revenue, to $1.17 billion.
Hurricane Season Arrives: One in Eight Americans
Threatened
Two rather sober news releases regarding hurricanes blew over the transom
this week. The first was a forecast
by the National Oceanographic and Atmospheric Administration that hurricane
season will be more active than usual this year. The second was a set
of factoids
from the Census Bureau related to hurricane season. Among those Census
Bureau numbers: 12% of the nation’s population now live in the coastal
areas between North Carolina and Texas that are most threatened by Atlantic
hurricanes.
California Lumbermen Protest State Plan for
Off-Road Diesel Equipment
The Lumber Association of California
and Nevada (LACN) went on record Monday opposing
proposed off-road diesel regulations that it said would hurt the lumber,
building materials, and wood products industries. According to LACN, the
proposed
regulations from the California Air Resources Board would require
the retrofit, re-powering, or replacement of more than 160,000 pieces
of equipment—including forklifts and other loading equipment—statewide
over the next 12 years. “To require replacement or retrofitting of this
equipment in a relatively short timeframe is unreasonable, especially
considering that some equipment of this type has a life span of more than
20 years,” wrote Ken Dunham, LACN’s executive director. “Additionally,
the addition of regulation of NOx [nitrogen oxide] emissions to the proposed
regulations requires equipment technology that is not general utilized
today.”
This Road Dog Knows No Borders
If you see Mike Hurlburt on the road, chances are you’ll also see Roscoe,
pictured here, a rottweiler-German shepherd who rides with Hurlburt as
he logs a couple hundred miles a day picking up and delivering materials
for Nielson’s Building Center in Point Roberts, Wash. Because of Nielson’s
unique location—Point Roberts sits on a peninsula attached to the
Canadian province of British Columbia but is officially part of the U.S.—Hurlburt
and Roscoe make border crossings a couple times a day (with documentation
for both) to reach suppliers in Canada and to go into “mainland” United
States for pickups. Getting 28 miles away to Blaine, Wash., which is where
managing editor Katy Tomasulo caught up with them yesterday, and to other
points south, requires four passes through border crossings round trip.
Hurlburt says he doesn’t mind the miles—a radio and a dog are all
he needs. And not only is Roscoe a good companion, “He doesn’t complain
when I sing.”
Show Off Your Showrooms
We’ve received some announcements lately regarding new showrooms opening
up around the country. No doubt you’re proud of them, so here’s a chance
to show what you’ve done—by entering the ProSales Excellence Awards.
This year’s awards recognize yards that excel in the categories of Showroom
Design, Overall Yard or Manufacturing Facility Design, Marketing/Customer
Service, Best Advertising, Best Use of Technology, and Best Web Site.
Winners receive a feature article in ProSales, recognition during a special
breakfast ceremony at the 2008 International Builders’ Show, and a $1,000
donation to the local or national charity of their choice. Click
here for entry instructions or contact managing editor Katy Tomasulo
via ktomasulo@hanleywood.com
or 202.736.3303.
Andy Carlo Joins ProSales as Senior Editor
It’s a special pleasure to introduce you to ProSales’ new senior editor:
Andy Carlo. Many of you know him already because he has worked since 2001
for Home Channel News, covering pro dealers, distributors, and
manufacturers. Before that, Andy served for two years as managing editor
of two weekly newspapers in upstate New York and worked four years as
a custom builder and carpenter in the same region. He’ll be working from
his home office in Poughkeepsie, N.Y. Feel free to write
to him and welcome him aboard. Better yet, give him a story idea.
Home Depot Trumpets Two New Ways It’s Pursuing
the Pro …
The Home Depot’s financial
report and Webcast for the first quarter of 2007 cited success in
two relatively low-profile programs it has launched to win builders’ business.
HD said it tripled the volume of business (but didn’t give numbers) in
its “pro bid room.” That’s sort of a misnomer, because the bid room actually
is a direct-ship program that lets pro customers have large orders delivered
directly from the vendor to the jobsite. HD also said that the account
managers it has assigned to many of its “super premium” accounts—the
2% of HD customers who account for 30% of all sales—are getting their
customers to spend 50% more at HD than are super premium customers who
don’t have account managers.
… But Its Sales Remain Weak, and No HD Supply
Buyer Is in Sight
While The Home Depot’s news release noted that acquired businesses helped
HD Supply’s total sales grow 46% quarter over quarter, it wasn’t until
the Webcast
that you could learn that sales from continuing HD Supply operations were
down 6.5% in that period. Retail sales declined 4.3%, and it was only
the $1 billion in new sales from HD Supply acquisitions that made it possible
for the company to report that total sales were up 0.6% in the quarter.
Meanwhile, the $12 billion question of what to do with HD Supply remains
unanswered. Home Depot CEO Frank Blake said the company has received “strong
interest” in HD Supply’s assets from possible buyers. Still, more than
90 days after it began analyzing strategic alternatives for the business,
no conclusions have been reached and none may be reached for several more
months.
At Capitol Hill Hearing, NLBMDA’s Chair Decries
‘Predatory Lawsuits’
The Innocent Sellers Fairness Act (ISFA) got its first serious look by
a congressional panel today when the chairman of the National Lumber and
Building Material Dealers Association (NLBMDA) testified at a House Small
Business Committee hearing on the legislation. NLBMDA’s Steve Kelly said
unfounded and unfair “predatory lawsuits” are hurting pro dealers. “Our
current legal system holds each party in the product supply chain liable
for any defects or harm caused by the product without any finding of fault,”
Kelly said in prepared remarks. “While I agree that the consumer should
be protected from harm or inconvenience caused by defective products,
I do not believe the legal system assigns liability in a fair and consistent
way. … [I]nnocent sellers are forced to spend time and money defending
themselves for actions outside of their control.” ISFA (H.R. 989) would
protect dealers by removing liability if they merely supplied the product.
Rep. Steve Chabot of Ohio, the ranking Republican on the Small Business
Committee, is a co-sponsor.
The Long-Term—and Depressing—News
About 2007 Housing Starts
The government constantly reminds us in its new
residential construction report that you need to take the long view
with these numbers and not focus on the seasonally adjusted ones. So I
ignored the headlines and focused on the page showing actual starts of
single-family homes for the first four months of this year—373,600
homes. That’s not only 27.9% less than the total for starts in January
through April 2006, it’s the worst such number in a decade. The last time
it was lower was in 1997, when there were 347,300 starts in the opening
four months.
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One notable factoid tucked into the back of our ProSales 100 report in this month’s issue is this: The share of PS100 dealers that planned to spend more than 1% of overall sales on information technology (IT) and e-commerce shot from 3% in 2006 to 11% in 2007. “We’re all getting a taste for it, and we want more,” we quote Tom Rainwater, secretary and treasurer for E.C. Barton & Co., Jonesboro, Ark., as saying. The PS100 numbers jibe with what I’m finding in my travels around the country—namely, that while IT may still be a relatively new arrival at lumberyards, it’s being embraced much more heartily than ever before.
Calling All Forward Thinkers
Speaking of technology, if your yard is on the leading edge when it comes
to IT, don’t miss the opportunity to earn recognition via the ProSales
Excellence Awards. This year’s awards include two new categories in the
IT arena: Best Use of Technology and Best Web Site. We also will recognize
yards that excel in the categories of Showroom Design, Overall Yard or
Manufacturing Facility Design, Marketing/Customer Service, and Best Advertising.
Winners receive a feature article in ProSales, recognition during a special
breakfast ceremony at the 2008 International Builders’ Show, and a $1,000
donation to the local or national charity of their choice. Click
here for entry instructions or contact managing editor Katy Tomasulo
at ktomasulo@hanleywood.com
or 202.736.3303.
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Now Online: A 2007 ProSales 100 Report That
Shows Big Changes
Our just-published ranking
of the top 100 residential construction suppliers looks much different
than
last year’s list. Pro-Build tops the chart, followed by Stock Building
Supply, The Home Depot’s HD Supply division, 84 Lumber Co., and BMHC.
Roughly one-seventh of the list’s members are new, the result of both
consolidation within the industry and a desire by some past survey participants
to stay mum this time regarding their performance. Just 16 dealers on
the 2007 list grew 10% or more compared with 55 on the 2006 list. At the
other end of the top 100, you might recall my speculation as to whether
company No. 100 would be bigger or smaller than 2006’s, which had pro
sales of $69.3 million. The answer is: Much smaller. This year’s No. 100
is Arlington (Mass.) Coal & Lumber Co., with pro sales of $51.4 million.
How Dominant Are the Top 10 LBM Dealers? Not
as Much as Builders
The report
accompanying the 2007 ProSales 100 list quotes Pro-Build CEO Paul Hylbert’s
estimate of his company’s target market at $180 billion. Other experts
have much different numbers, but let’s accept his. What share, then, of
the LBM market is held by the top 10 ProSales 100 dealers? In 2006, their
sales to pros totaled $31.64 billion, giving the top 10 a 17.6% share.
In contrast, this month’s Builder magazine, a sister publication
of ProSales, reports
that the 10 biggest home builders in 2006 accounted for 25.7% of all new
homes constructed last year.
NLBMDA Chair To Testify on Capitol Hill
Any member of Congress can file a bill, and thousands of ideas get introduced
each year. But a relatively tiny number of proposals actually get discussed
at a hearing. The National Lumber and Building Material Dealers Association
(NLBMDA) reports that its lead cause, H.R. 989, the Innocent Sellers Fairness
Act, will join that select group on May 17 when the House Small Business
Committee holds a hearing on small business liability concerns. NLBMDA
chair Steve Kelly has been invited to testify. H.R. 989 now has
41 co-sponsors. Significantly, one of those 41—Rep. Steve Chabot
(R-Ohio) —is the ranking Republican on the Small Business Committee.
ProSales Readers Respond: Yes, We Do Fuel Surcharges
We received several letters responding to last week’s query regarding
whether you impose fuel surcharges. Chuck Bankston, president of Bankston
Lumber, Barnesville, Ga., said his company started imposing a $5 fuel
surcharge about three years ago and now the surcharge totals $9 per delivery.
“We only had a couple of complaints when we first started,” he wrote.
“I think it has helped our customers plan ahead by combining orders.”
In Rapid City, S.D., Wallace D. Bork, general manager of Knecht Home Center,
said his company’s fuel surcharge ranges from $3 to $9 per delivery based
on the mileage involved. “Customers fully understand and we have received
very few negative comments,” Bork said. And John Johnson, VP of corporate
purchasing for Erie Materials, Syracuse, N.Y., said his company put in
a $10-per-delivery surcharge several months ago. To help you track how
prices are changing, one decent guide is AAA’s
Daily Fuel Gauge Report. Note that while it also reveals a big jump
in prices for regular gasoline in recent months, the price of diesel fuel
has remained fairly constant.
Introducing a ProSales Web Exclusive: "Rader’s
Edge"
ProSales Online
has a new, Web-only feature containing ideas and tips to help your LBM
operation increase its profit margin. It’s called "Rader’s Edge" in honor
of its author, Chris Rader. He’s a Lafayette, La.-based construction supply
consultant who specializes in management and technology issues.
Check out his first article, entitled “How To Add Two Points to the
Bottom Line Without Tipping Off Your Customers.” Then tell
me what you think.
Deadline Nearing for You To Submit Nominations
for ProSales’ Public Service Leaders Award
Do you know a dealer who’s doing great work for his or her community and
profession? Several folks already have replied to my request for nominations
for the 2007 ProSales Public Service Leaders Award, but there’s still
a little time left for you to offer your own names. Tell
me about dealers who tirelessly commit themselves to the support and
advancement of the communities where they live as well as to the LBM industry
as a whole. Winners will be featured in ProSales’ August cover story.
Market Your Marketing
With all of the discussion lately about a down market being a great time
to boost marketing programs and reinvigorate sales strategies, we expect
that there are some clever marketing campaigns under way now. Is that
the case with you? Then consider getting some extra fame by entering our
ProSales Excellence Awards in the “Marketing/Customer Service” and “Best
Advertising” categories. Winners receive recognition in the November issue
of ProSales and at the 2008 International Builders’ Show, plus receive
a $1,000 donation to the charity of their choice. We’re also accepting
entries in the categories of Showroom Design, Facility Design, Technology,
and Web Site. Don’t miss this opportunity to showcase the great work of
your staff and your company. Click
here for the official entry form or contact managing editor Katy
Tomasulo for more information.
May 3, 2007
This Week’s Maine Event:
News From Way, Way North
Drive just about as far east and as far north as you can in the U.S. and
you’ll find where I am today: Caribou, Maine, home of the S.W. Collins
Co. This LBM dealer might be 163 years old and on its fifth generation
of Collins as owners, but it’s certainly not standing still. Just this
week, company president Sam Collins announced the purchase of the Almon
H. Fogg Co. of nearby Houlton, Maine. Compared with Collins, Fogg is a
newbie—it was founded in 1859. The addition of the Houlton store
will give Collins its third retail lumberyard (the other is in Presque
Isle) plus a custom millwork shop and a kitchen and bath center.
Gas Prices Are Rising. Do You Impose Fuel Surcharges?
The 80-cent rise in gasoline prices nationwide between Christmas and last
week, (see Energy
Department stats) could renew interest among dealers in imposing fuel
surcharges. In Portsmouth, N.H., Ricci
Lumber has been doing this for several years. Ricci CEO Edward Hayes
and general manager Pat Moretti told me on Monday that the surcharge usually
amounts to several dollars per shipment and rises or falls with the price
of gas. But in Augusta, Maine, LaPointe Lumber Co.’s Dick Tarr said he
used to impose a $2 delivery charge but dropped it because of customer
complaints, and he doesn’t intend to revive the surcharge now. “It’s a
cost of doing business,” said Tarr, LaPointe’s VP and general manager.
“I don’t put on a health care surcharge.” Do you have surcharges now?
Will you soon? Tell me.
North Carolina City Climbs Onto the Green Bandwagon
Even as regional LBM associations lobby their state legislatures to ensure
that green building requirements for public projects aren’t tied solely
to the U.S. Green Building Council’s (USGBC) LEED standards, more local
governments are embracing LEED. One of the most recent examples is in
Asheville, N.C., where a local press
report said the city council voted to require that all new city buildings
meet energy-efficiency standards set by the USGBC. LEED recognizes only
FSC certification.
 |
This LBM Pet Lies Practically Non-Stop
Jon Whorley, sales manager of Cedar Valley Mfg. in Hollister, Calif.,
introduced us to this week’s yard pet. D.J.—short for David Jr.—was
named after the worker who rescued the stab-wounded cat off the street.
“He is a lap cat, or, more appropriately, a paperwork pile cat,” Whorley
writes. “He loves to climb up on your desk, walk across your keyboard,
and lie right on top of whatever paperwork you have on your desk. Then
he will meow until you scratch his head. He sleeps 20 hours a day, wakes
up at break time to go out into the plant and beg for food from the workers,
then go back to the office to sleep on somebody’s paperwork pile. We put
him out every Friday night and he comes back every Monday morning at 5:30
a.m.” D.J. is photographed above at Christmastime, where he saw some decorations
being put up and naturally had to lie on the tinsel. Want some national
fame for your yard pet? Write to
me with an electronic photo of the pet along with its name and habits.
 |
Move Over IBM—There’s a New “Big Blue”
The rush of events in April almost caused us to forget one of the most
distinctive new names for an LBM company to come along in quite a while:
the Blue Ox Lumber Co. Blue
Ox—named for Babe, Paul Bunyan’s sidekick—is the new name for
the Harry T. Williams Lumber Co. of Los Angeles. The change comes in the
wake of Harry T. Williams’ acquisition by Matt Ogden and an investor group
in May 2005. Blue Ox also announced
that Lonnie Schield, former president of Terry Lumber, will be chairman
of the board of the company, which will be based in Torrance.
April 26, 2007
Second-Half Market Turnaround
Increasingly Likely To Be Delayed
Forecasts earlier this year that the housing market will turn around in
the second half of this year are looking increasingly suspect. At the
very least, the latest hard numbers and informed prognostications don’t
call for any revival by the Fourth of July. The biggest dealers continue
to suffer the most, and suffer most publicly; Builders FirstSource reported
late Wednesday that its sales slumped 30.2% in the first quarter from
the year-earlier period. “The company expects the difficult market conditions
to negatively affect its operating results at least through the end of
2007 and possibly into 2008,” BFS said in a statement. Also yesterday,
Louisiana-Pacific Corp. CEO Rick Frost said
flatly: “I do not see this market improving substantially for the rest
of 2007.” LP’s first-quarter earnings swung from a net profit of $84 million
in the first quarter of 2006 to a loss of $37 million in the opening three
months of this year. According to the Census
Bureau, the annual rate in March for new single-family homes was 23.5%
below the same rate for March 2006. There is now a seven-month backlog
of homes on the market.
ISFA Co-Sponsor Count Grows to 30; Florence
Corp.’s Perenza Honored
National Lumber and Building Material Dealers Association (NLBMDA) members
have now recruited 30 co-sponsors to their key legislative initiative:
H.R. 989, the Innocent Sellers Fairness Act (ISFA). That’s up from 24
House members last Wednesday, April 17, when NLBMDA concluded its Legislative
Conference with visits to nearly 200 congressional offices. ISFA has yet
to be introduced in the Senate. Also last week, the association recognized
Diana Perenza, vice president of Florence Corp., Huntington, N.Y., as
its 2006 Grassroots Dealer of the Year. NLBMDA cited in particular Perenza’s
creation of a Team Captain program to push ISFA as well as her collecting
200 signatures and raising $5,000 for ISFA at a buying show this spring.
Going to PCBC? Let Me Know
If you’re an LBM dealer and plan to attend the Pacific Coast Builders
Conference in San Francisco May 29-June 1, let
me know so we can set up a time to chat. I’ll be attending PCBC and
am eager to hear your stories about business conditions, opportunities,
and challenges.
We’re Getting Nominees for ProSales’ Public
Service Leaders Award. Who Are Yours?
Do you know a dealer who’s doing great work for his or her community and
profession? Several folks already have replied to my request for nominations
for the 2007 ProSales Public Service Leaders Award, but there’s still
time for you to offer your own names. Tell
me about dealers who tirelessly commit themselves to the support and
advancement of the communities where they live as well as to the LBM industry
as a whole. Winners will be featured in ProSales’ August cover story.
Meet Moffit, Our Latest Yard Pet
 |
From Old Fort Supply Co. in Fort Wayne, Ind., comes this yard pet named Moffit. “We named him this because of the way he ran around the warehouse—it reminded us of the Moffett [forklift] that rides on the back of the delivery trucks,” says Susan Bailey Sonner, inside sales manager at Old Fort. “He can go anywhere.” Moffit showed up at the yard’s front door a year ago, nearly dead. But within a few days he had been nursed back to health. He lives mainly with Sonner now but still makes frequent visits to the warehouse and his fellow Moffetts. Got a pet at your yard? Send me an electronic photo along with info on the pet’s name, age, and habits.
April 19, 2007
LBM Leaders Ascend Capitol
Hill, Return With a Dozen ISFA Commitments…
At least 12 more members of Congress said they will co-sponsor the Innocent
Sellers Fairness Act, the National Lumber and Building Material Dealers
Association (NLBMDA) told me yesterday afternoon, shortly after the conclusion
of its annual Legislative Conference. That comes on top of the current
dozen co-sponsors for the measure, which is filed as H.R. 989 in the House
and has yet to be introduced in the Senate. One disturbing note: Just
two of the 12 new signees, and only three of the 24 co-sponsors to date,
are from the majority Democratic Party. Pursuing commitments from traditionally
friendly Republicans may be a fine way to launch an effort that NLBMDA
chairman Steve Kelly frequently refers to as a marathon, but LBM execs
will have to travel far beyond that core audience if it hopes to win the
race.
…Even as They Learn That Political Waters Have
Subtle Undercurrents
Washington politicos have a magical ability to deliver strong and understated
messages simultaneously. Rep. Lincoln Davis, the breakfast keynoter at
NLBMDA’s Legislative Conference, showed he’s no slouch in this art. The
Tennessee Democrat opened by stressing his independent voting streak,
but within minutes followed that by criticizing Republicans for not passing
key NLBMDA initiatives when the GOP ruled Congress. He even pointed out
that Bill Clinton’s administration spent a smaller share of the gross
domestic product than George W. Bush’s. Regardless of whether that minor
stumping for the Democratic Party got through, Davis’ major point was
that he is on the LBM industry’s side in favoring ISFA, hating the “death
tax,” and seeking more affordable health care. And given that Democrats
now hold narrow control of Congress, it didn’t hurt for this member of
the ruling party to remind lumber execs that they have to talk to members
from both sides of the aisle if they hope to see their initiatives become
law.
Does Green Go Well With Orange? The Home Depot
Thinks So
Managing editor Katy Tomasulo views with significance this week's announcement
by The Home Depot that it has launched Eco
Options, a product classification program that will brand all of the
green products the retailer sells. “Though The Home Depot’s move opens
up a slew of questions—my first being whether HD employees on the
floor will be knowledgeable about green building—it appears to be
an ambitious and bold step,” Katy writes. “Sure, it’s also a great marketing
opportunity for a company that's been dogged in the press lately, but
by making it easier for consumers to go green, The Home Depot is lowering
one of the bigger obstacles to a lifestyle shift that is proving to be
more popular—and more necessary—with each passing day and each
scientific finding. And if Hayward Lumber is any indication, the formula
could work. Sales for products in Hayward’s own green product branding
program, called EnviroSmart, jumped 40% in its first full year, the Monterey,
Calif.-based dealer told us last fall in "Green
Machine." For those still convinced that green is a mere fad, consider
Thomas Friedman's essay
in The New York Times promoting the idea that ‘Green is the new
red, white and blue.’” What do you think? E-mail Katy
with your views.
Wanted: Nominees for ProSales’ Public Service
Leaders Award
Do you know a dealer who’s doing great work for his or her community and
profession? Tell me and we’ll
consider that person for the 2007 ProSales Public Service Leaders Award.
Last
year’s winners, Rand Thomas of Sequim, Wash., and Steve Kelly of Covington,
Ky., are great examples of the kind of people who deserve this honor:
folks who tirelessly commit themselves to the support and advancement
of the communities where they live as well as to the LBM industry as a
whole. Such do-gooders frequently don’t seek out the limelight, so we
need your help in identifying them. The winners will be honored in ProSales’
August cover story.
Do You Have Teenagers at Home? Ask ’Em How Much
They’ll Get Paid
Teenagers expect to earn an average annual salary of $145,000 in the career
of their choice, according to a survey
conducted for Charles Schwab. The online poll of 1,000 Americans aged
13 to 18 found boys expected to earn $173,000 a year while girls figured
they’d make $114,200. Schwab’s announcement
notes, no doubt with raised eyebrows, that the average American wage is
$40,000 and only 5% of Americans earn a six-figure income. The survey
also found that the percentage of teens who prefer using a credit card
in place of cash or check grew by three-fifths to total 29% of those surveyed.
Ruth Kellick-Grubbs Joins ProSales’ Editorial
Advisory Board
It’s a special pleasure to announce that Ruth Kellick-Grubbs has agreed
to join ProSales’ Editorial Advisory Board. That means she’ll be helping
us shape our stories for maximum benefit to you and also will write for
us from time to time. Many of you know Ruth from her 14 years of consulting,
training, speaking, and roundtable work in the building supply industry.
I’ve quoted her frequently during meetings with LBM dealers and found
her ideas carried weight. Ruth has lived in six countries and says she
speaks six languages, though she’s probably not counting her native Southern.
Read the Fine Print on Recent Housing Reports
While the markets focused on the government’s announcement of a 0.8% rise
in housing starts and building permits in March from February, they ignored
fine print at the bottom of the announcement
that says it can take many months to smooth out the variations in the
numbers caused by weather and holidays, not to mention regional differences.
So let’s look at the actual housing start numbers for the first three
months of this year. They reveal a total of 325,800 starts, nearly 30%
fewer than what we had in the opening quarter of 2006. And don’t forget
the regional differences; the declines so far this year range from 24.2%
in the Northeast to 28.3% in the South, 30.7% in the West, and 38.0% in
the Midwest.
Marketers, Take Note: We’ve Expanded Our Excellence
Awards Categories
This year’s annual ProSales Excellence Awards expands its marketing categories
to honor not just the best overall marketing campaign but also the best
advertising and best Web site. We also will recognize yards that excel
in Showroom Design, Best Use of Technology, and Best Overall Yard or Manufacturing
Facility Design. Winners receive a feature article in ProSales, recognition
during a special breakfast ceremony at the 2008 International Builders’
Show, and a $1,000 donation to the local or national charity of their
choice. Click
here for entry instructions or contact managing editor Katy Tomasulo
at ktomasulo@hanleywood.com
or 202.736.3303.
April 12, 2007
Travels on Tobacco Road
The state of North Carolina used to give its employees Easter Monday as
an official holiday. Legend has it that the holiday was prompted in part
by so many workers playing hooky to see a baseball game, but I think the
real reason is because the weather is just so darn good when April rolls
around. I too got to enjoy the rhododendrons, azaleas, dogwoods, and wisteria
in bloom when I visited this week. My first stop was to the Stephens Supply
Co. in Fuquay-Varina, the kind of small-town place where you’ll find cement
tools, fishing equipment, and filing rasps in a single aisle and where
a model train chugs along on track suspended from the ceiling. Then it
was off to Smithfield and the Independent Builders Supply Association
(IBSA), a distributorship that has grown into a $437 million operation
serving 16 states. There’s more on both below.
A Nifty Form of Feedback
Stephens president Wayne Carver has been in the LBM business for decades
and isn’t afraid to borrow a good idea when he sees it. One that he particularly
likes is a feedback form that all new employees must fill out every two
weeks for their first 90 days on the job. “We want to make sure they are
learning about the job and the company during this period,” Carver says.
“The way they answer often tells us if they truly understand the job they
are here to perform. It also lets the department manager know if the person
assigned to train the new employee is helping them learn.” Employees also
are asked to rate their attitude on a 1-to-10 scale. That helps the supervisor
see if the employee has a much different attitude about his or her performance
than the supervisor does.
IBSA Launches Expansion Bid
IBSA president W. Ray Price is used to success, having helped take the
distributorship from an $80 million business when he took over in 1999
to $437 million last fiscal year and from three states served to 16 today.
But he’s aiming to become a billion-dollar operation, so the Carolinas-based
IBSA recently began recruiting in the Louisiana-Mississippi region and
in the Northeast. Price—whose father was a childhood friend of movie
bombshell Ava Gardner—sells IBSA in large part as a frugal place
that adds just 1% to the price of the goods it acquires and runs its operations
for less than 0.5% of the cost of those goods. Heading outside of his
natural territory means Price’s team has had to get used to such local
traditions as crawfish boils, but it’s more than willing to pay that price.
NLBMDA Sets Its Priorities for Capitol Hill
Meetings
The National Lumber and Building Material
Dealers Association (NLBMDA) is urging its members to stress three
major issues when they meet members of Congress and their staffs during
NLBMDA’s Legislative Conference next week. Topping the list is support
for H.R. 989, the Innocent Sellers Fairness Act, which has a dozen House
sponsors and has yet to be introduced in the Senate. Second is support
for access to affordable health care through passage of legislation that
permits small businesses to band together and set up their own health
plans. Third is repeal or reform of taxes on estates—aka the “death
tax” —before the current repeal expires in 2011. Call 800.634.8645
if you decide at this last minute that you can come to Washington.
Mountain States, Southern Interests Also Speak
Up About LEED
Geri Adams, head of the Mountain States Lumber and Building Material Dealers
Association (MSLBMDA), took note of my WebbLog
item last week on the Texas LBM association’s concern about language in
“green” bills at the Texas statehouse promoting LEED. She notes that MSLBMDA
helped expand the language in a measure in Colorado that would have limited
green rating systems. (See www.mslbmda.org/news.shtml.)
In addition, several bills in Arizona and New Mexico that raised the association’s
ire have died. Meanwhile, Wes Goodroe, former executive director of Georgia’s
Construction Suppliers’ Association, notes several associations in Atlanta
also are defending the LBM industry against green groups. “This is a growing
problem in this country that we do not need,” Goodroe writes.
This Month’s ProSales Salutes the Small Independent
“Less
Is More” is the theme for the cover story in April’s edition of ProSales.
In it, we look at four smaller independents that are capitalizing on creative
thinking, stellar service, and industry alliances to prove bigger isn't
always better. The April issue also examines how a growing number of dealers
are implementing GPS and other fleet technologies (see “Tagged,
You’re It”), while “Consider
the Alternatives” looks at the potential of ICFs and SIPs.
“Never on Sundays,” These Dealers Say
We received several messages from dealers this week telling us that they,
like McCoy’s Building Supply in San Marcos, Texas, (see last week’s WebbLog),
have decided deliberately against operating on Sundays. In Petoskey, Mich.,
Preston Feather Building Centers
not only is closed Sundays but also shuts its doors at 1 p.m. Saturday.
It does this in small part because its customer base is 90% pro builder
and in larger part out of concern for its staff, HR director Kate Courtney
Scollin writes. “We do not feel our customers would be best served with
part-time or temporary employees just to man the store a bit longer,”
she writes. Another dealer that chooses to stay closed on Sunday, Standale
Lumber & Supply Co., Grand Rapids, Mich., does it as part of a corporate
mission that includes “Balance” among its six key values. “I firmly believe
that regardless of one’s religious orientation, a corporate attitude like
ours contributes greatly to employee as well as customer loyalty and retention,
especially in the community in which we are located,” Standale systems
manager Rick Vandenburg says. And down in Fort Lauderdale, Fla., M. Scott
Whiddon, president of Causeway
Lumber, says the decision to look out for its employees’ interests
helped it decide what to do when the big boxes arrived on the scene. “We
stuck to our guns, and I think we are better for it today,” Whiddon says.
An Inside Expert’s Warning—and Advice
I’d like to think Boyce Thompson reached the pinnacle of his journalistic
career when he served as editor of ProSales in the 1990s, but he also
is no slouch as editorial director of Builder magazine and several other
of our sister publications at Hanley Wood. Thompson has his own online
column, and on
Monday his message was a bummer: “The home building industry will
feel the effect of the fallout from the subprime and Alt-A mortgage market
for years,” he wrote. “… Like bad time-release medicine, it will spread
excess inventory throughout the real estate system for years. It will
depress resale prices and make it more difficult for builders to get the
pricing they want, or need.” As a result, Thompson foresees stronger competition
between the new-home and existing-home markets. If you’re mostly interested
in the new-home side of things, his recommendation is to urge builders
to offer features that aren’t available in existing homes.
Remodeling Magazine Examines the Credit Card
Issue
Sister publication Remodeling magazine features Dan Fesler, CEO of Lamperts
in St. Paul, Minn., in an article
this month on remodelers’ increasing use of business credit cards at LBM
dealers. The story quotes a consultant who encourages remodelers to whip
out the plastic. But like many dealers, Lamperts accepts credit cards
only at the time of purchase and seeks to avoid taking them for payment
of an account.
April 5, 2007
I-35 Tales of Los Lumber
Boys and Manly Men
 |
Texas Lumbermen Raise Alarm Over LEED
LAT approved a resolution that reflects the group’s growing concern over
several green initiatives now before the state legislature. In particular,
LAT is worried about measures that would require construction programs
to adhere to the Leadership in Energy and Environmental Design (LEED)
green building rating systems. LAT notes that LEED recognizes only timber
certified by the Forest Stewardship Council and thus discriminates against
the Sustainable Forestry Initiative (SFI) and the American Tree Farm system.
“Until the several inherent flaws in LEED are fixed, we strongly urge
the Texas Legislature to amend its bills to specifically include other
credible and internationally recognized green building rating systems,
in particular Green Globes, to meet its goals in promoting high-performance
and sustainable design and construction for public buildings,” the resolution
states. Do you know of other groups that are lobbying their local or state
government over LEED, FSC, and SFI? Tell me at cwebb@hanleywood.com
Going to NLBMDA’s Legislative Conference? Check
Your Meeting Agenda
The National Lumber and Building Material
Dealers Association asked me to remind you that if you’re coming to
Washington for NLBMDA’s Legislative Conference in two weeks, you should
double-check with your regional LBM association to ensure your meetings
on Capitol Hill are all set. Topic No. 1 no doubt will be H.R. 989, the
Innocent Sellers Fairness Act, which has been introduced in the House
and now has a dozen co-sponsors but has yet to be introduced in the Senate.
NLBMDA’s goal is to recruit as many dealers as possible to promote the
legislation.
Should You Have Sunday Hours? Two Views
 |
Local tastes do matter, it seems. For more proof, look to Canada, where a press report says local protests prompted The Home Depot to close its outlets in Halifax, Nova Scotia, tomorrow on Good Friday and on Easter Sunday. Do you know of any other LBM dealers that have decided intentionally against opening on Sundays in general? Tell me at cwebb@hanleywood.com
A Pre-Boomer and a Gen-Xer Speak Out About LBM’s
Future Workers
This WebbLog’s series of letters on the quality of LBM’s next-generation
workers prompted two more letters. The first came from Charlie Habegger,
president of Habegger Building Supply in Berne, Ind. He started the business
with his brother in 1956, and now their sons run the company. “We tell
the employees they are as important as the owners,” Charlie writes. “…
They are part of the family. What type of employee will the next generation
be? I don’t know. However, if they have had a good family life at home,
I can’t help but think they will enjoy working in a family-type business.”
We also heard from a much younger person: Jimmy Cissel, vice president for business development at Manning Building Supplies, Jacksonville, Fla. “I agree and disagree with the stereotypes your articles have described,” Cissel wrote. “My father worked from sun up to sun down. I started at the bottom and I am working my way to the top. My friends ask, ‘Why am I always at work?’ It is what I do to achieve my personal goals. My personal joke with them is ‘I only work half days’—12-hour days are not uncommon. I can always be reached by giving our customers the three numbers to find me. … At the start of this year my boss promoted myself and another to vice presidents. Both of us fit into the Generation X bracket. …There is a part of our generation that makes the decision every morning to do just enough to get by. I don’t understand these people. How can anyone not want to be the best?”
Keep sending your thoughts to me at cwebb@hanleywood.com. We plan to run all the recent letters in the May edition of ProSales.
Three Reasons Why You Should Worry About a Housing
Turnaround
Deep into yesterday’s Wall Street Journal story on problems with
exotic mortgages are three chilling items for anyone who expects the housing
market to turn around soon: 1) Moody’s Economy.com estimates that subprime
and so-called Alt-A loans—which include many no-documentation or
low-doc loan types—together account for nearly 40% of the home mortgage
loans originated last year; 2) subprime lending could decline by as much
as 50% this year from 2006 and Alt-A loans also will drop sharply, an
analyst at UBS predicts; and 3) Economy.com’s chief economist says the
reduced number of subprime mortgages combined with the dumping of houses
due to foreclosures will cause median prices for sales of previously occupied
homes to fall nearly 5%, or double the decline he expected in January.
March 30, 2007
Gone to Texas … and Iowa,
Too
I look forward to meeting dealers from Texas and Louisiana
this weekend in San Antonio at the Lumbermen’s
Association of Texas’ 2007 convention and expo. After that, it’s off
to Iowa to visit a yard near Des Moines and get a sense of how LBM operations
are faring in the Heartland.
Next-Generation LBMers, Part 1: Another Viewpoint
My
comments March 15 on the challenges that LBM executives see in dealing
with workers born after 1965 prompted additional letters. Brian Harrington
of Boise Cascade says he has noticed a marked change in attitude over
seven years of visits with college students in the building materials
management program at his alma mater. Harrington paid his dues and worked
his way up the ladder to regional manager and presents himself as a typical
success story. But today, he writes, “the majority of the class had no
interest in the path that I had taken to achieve my success. Long hours,
minimal starting pay, and travel do not interest them.” On top of that,
“their entry compensation expectations for our industry are bizarre,”
he says.
Next-Generation LBMers, Part 2: Advice From
the Pulpit
Your requests for guidance on how to find and engage Generation X and
Echo Boomers has sent me searching far and wide for advice. One of the
stranger resources—the result of Googling my name as a lark one day—came
from another Craig Webb who runs a Web site that helps ministers. His
site recently posted a column
in which a consultant named Ken Gosnell gave advice to preachers on how
to connect with various generations. Here’s his trenchant thumbnail analysis
of the two groups:
Gen X-ers (born between 1965 and 1980): “The key word
that epitomizes this group is ‘community.’ They were raised with both
parents working and often dealt with loneliness and solitude. They crave
relationships although they are independent. They are often impatient
because they grew up with the microwave and the Internet that provided
instant feedback. This group wants to see changes in the church and they
want to see them now.”
Nexters (born between 1981 and 2000): “The key word that
epitomizes this group is ‘kindness.’ They want to make the world a better
place and often choose jobs and churches that enable them to do that.
They are motivated by immediate rewards. They are used to quick responses.”
Do you agree with those observations? Tell me at cwebb@hanleywood.com
Is It Hot Out There, or Is It Just Me?
My Internet searches for LBM news have turned up lately a disturbingly
high number of stories about fires at lumberyards. Just in the past week
I’ve seen news about blazes related to a yard in Naples, Fla. and a recently
closed yard
in the Chicago suburbs, plus a follow-up on a November blaze
in southern Illinois at a yard that will be rebuilt. The U.S. Fire
Administration guesstimated for me that there were 300 fires in 2005 at
businesses where lumber was among the materials inventoried on site.
March 22, 2007
California Dreamin'
The first time I came to Southern California, I discovered
the IHOP in Los Angeles had valet parking. This week, the discovery was
a stand south of San Diego that serves beef tongue tacos. Yeah, it's different
around here in many ways, though not necessarily at the lumberyards. At
Ganahl Lumber in Anaheim, where I spent a day, company president Peter
Ganahl has built an operation that sweats the details—Ganahl has
the cleanest yards I've ever seen, for instance—while he works on
such overarching issues as building a management team that epitomizes
the company's competitive culture. Meanwhile, one county away, Dixieline
Lumber Co. president Joe Lawrence has begun plotting how to reorient his
outfit from one that regards itself as solely a San Diego operation into
one that can pursue business in any big Western city where its parent
company, Pro-Build
Holdings, currently lacks an outpost. In a word, they're thinking
big but seeking to preserve company values. Sound familiar?
Home Depot Watch: More Inklings from Blake on
His Plans
One way to guess The Home Depot's plans is to listen to the minor changes
that HD chairman and CEO Frank Blake makes in his presentations. I heard
a few today during the Webcast of Blake's address at the Merrill Lynch
Retail Leaders Conference in New York. As before, Blake said that the
fifth of HD's five initiatives is to "own the pro." But he added this
time that pro customers—particularly the group of people that make
up 2% of all HD customers but account for 30% of sales—prefer a supplier
that can add efficiency to their operations and also are "looking for
credit to drive their business." I don't recall Blake citing credit availability
so much before. And later, when commenting on HD's exploration of a sale
or spin-off of HD Supply, Blake made a point of stressing that he has
a bias against stand-alone companies. Thus, it's possible that even if
HD Supply's operations stay inside HD, it very well might not survive
as a separate unit with its own line on the financial reports.
A ProSales First: Mike Butts' Free, On-Demand
Webinar on Installed Sales
You asked, and we responded. ProSales is pleased to announce the launch
of a free Web-based seminar on installed sales. The 30-minute program,
"Five Pillars to Installed Success," was created for us by ProSales columnist
Mike Butts, president of LBM Solutions. The program also includes a downloadable
Profit Analysis spreadsheet. To register for the Webinar, visit www.prosalesonline.com
and look for Mike's picture just beneath the main headlines in the middle
column.
Workforce Woes, Part 2: Two More Commenters
Join the Discussion
We received several responses to my rumination last week about whether
our industry is going to have a tough time dealing with the next generation
of workers. One writer, Rick Costello of HD Supply, said that while there
are some people who will give their all, many "think that just by
showing up every day and doing their job they are entitled to raises and
promotions ... I know this sounds cynical, and maybe it is, but after
20 years in the business I have definitely seen a deterioration in the
quality of the workforce." I asked ProSales managing editor, Katy
Tomasulo, who at 29 sits in between the X and Y generations, to comment.
"I don't disagree with these perspectives of my generation —
most of us were raised in an era when life was just plain easier and by
post-WWII parents who wanted more for us than they had," she says.
"But I think part of the issue has to do with differences in my generation's
expectations — reasonable and unreasonable. We'll work hard, but
we want more in return. Chalk it up to the dot-com boom of the late-'90s,
when flashy tech jobs promised recent college grads responsibility, stock
options, pool tables, and flexible work schedules. I'm not suggesting
dealers add foosball to their break rooms, but I do think companies need
to regard workers as more than, well, workers. Almost everyone is clocking
longer hours than those who came before (our parents didn't check e-mail
at home and on vacation), and we don't want to wait until we're 50 to
feel like what we do and think matters. Rick Costello also is right in
writing: '... associates/workers are willing to do what I need them to
do so long as they feel respected and not feel talked down to.'"
For some demographic information, associate editor Stephani Miller, also
29, recommends articles from Wikipedia
and IBM.
Doing Something Excellently? Then We May Have
an Award for You
Hopefully you received an e-mail this week about the sixth annual ProSales
Excellence Awards, which honor outstanding achievements in construction
supply in the categories of Showroom Design, Web Site Design, Marketing,
Best Advertising, Best Use of Technology, and Overall Yard or Manufacturing
Facility Design. Winners receive a feature article in ProSales, recognition
during a special breakfast ceremony at the 2008 International Builders'
Show, and a $1,000 donation to the local or national of their choice.
Click
here for entry instructions or contact managing edit Katy Tomasulo
at ktomasulo@hanleywood.com
or 202.736.3303.
Stock May Be Hurting, But It's Still Buying
If he hadn't invented it already, Charles Dickens might have seen a literary
angle in the best of times, worst of times reports that came from Stock
Building Supply on Monday. The good news — the announcement that
Stock had acquired a $10 million business, Albuquerque
Door — was a sign the company is robust and eager to keep growing
its services, in this case in New Mexico. But that same day, Stock's parent
Wolseley
issued a report indicating that, while these might not be the worst
of times, they are fairly bleak. It said Stock's profit for the first
half of its fiscal year sank 48.6% from the year-earlier period to total
$81 million. The near-halving of profit came despite the fact that revenues
slipped only 3.1%, to $2.42 billion. Stock also has cut its workforce
by 25% since last June and has closed 22 branches.
Jon Davis Joins ProSales Editorial Advisory
Board
We're proud to announce that Jon Davis, who recently retired as senior
vice president of Star Lumber, Wichita, Kan., has joined the ProSales
Editorial Advisory Board. That means we'll call on Davis to help us pick
the stories most likely to matter to you, and then help make certain that
what we write has meaning. Davis has spent 44 years in the building material
industry and now is in demand as a consultant and discussion group facilitator.
Traveler’s Tales: Stormy Economic Weather Leads
Some To Look Inside
Today’s WebbLog comes sandwiched between a week just spent
in Colorado, Louisiana, and Florida and five days to come in Los Angeles,
Orange County, and San Diego. Until recently, I’ve been telling audiences
that surveys and observations during my travels indicate dealers are fighting
the economic downturn by getting into new areas, such as commercial work
and installed sales. But lately I’ve had a growing feeling that there’s
an equal effort under way by those dealers who’ve seen a slowdown (and
not everyone has) to use the slump as a time for internal improvements.
Several dealers have ramped up training programs, particularly with their
sales teams. I’m also hearing of increased emphasis on safety programs,
as well as investments in software that permits more data mining and automated
operations. It appears that even while dealers look to increase—or
at least hold steady—the top line, they’re also working on efficiencies
and programs designed to fatten the bottom line.
Do You Have Unrealistic Expectations of Future
Workers?
Two anecdotes from LBM executives last week lead me to wonder whether
our industry is going to have a tougher time dealing with the next generation
of workers than will other businesses. The first comment was from a dealer
in Arkansas who’s been in the family LBM business for a quarter century
of his nearly 50 years on earth. He has worked so hard for so long that
he thinks it would be heaven simply to be able to take off Saturdays.
The second was from the CEO of a major West Coast distributor whose college-age
son told him flatly that he doesn’t want to work the hours or travel as
much as his dad. Again and again, we hear that folks in their late teens
and 20s want flextime, don’t derive their self-identity from their job,
and are unwilling to work their way slowly up a career ladder. Other industries
appear to be trying to accommodate these demands, but what I hear mainly
from LBM dealers is complaints that young folks aren’t like them. What
are you doing to appeal to the next generation of talent? Tell me at cwebb@hanleywood.com
NLBMDA’s D.C. Conference Attendance Grows; Rep.
Boren To Speak
Despite sour sales conditions in much of the U.S., more dealers are planning
to attend this year’s National Lumber and Building Material Dealers Association
Legislative Conference than went to the 2006 event, NLBMDA president Shawn
Conrad reports. The general session on April 17 will feature Rep. Dan
Boren (D-Okla.). Boren and Rep. Steve Chabot (R-Ohio) are co-sponsors
of H.R. 989, the Innocent Sellers Fairness Act. The measure, NLBMDA’s
top priority, holds sellers responsible in proportion to their wrongdoing
and frees them from liability when they have done nothing wrong. Conrad
is hoping Chabot also will attend along with Sen. Ben Nelson (D-Neb.)
and Rep. Lincoln Davis (D-Tenn.). Visit www.dealer.org
for details.
Pro-Build Sets Up Regional Operations
First the logo, now the organizational chart. Pro-Build Holdings’ announcement
Monday that it is aligning its 10 current divisions under four regions
means that at least the company’s top managers will have to start thinking
more about Pro-Build and less about the company names that have been on
their shirts. For instance, Dixieline president Joe Lawrence—whose
unit is expected to trail many others in incorporating the new Pro-Build
logo into its branding—will also be responsible for growth in large
metro markets where Lumbermens and Spenard now rule. As part of the reorganization,
Pro-Build named four regional presidents: Buddy Ables will be responsible
for The Contractor Yard, Strober Building Supply, and U.S. Components
for Pro-Build East; Dave Dittmer will oversee Spenard, Lumbermens, and
Dixieline for Pro-Build West; Dale Kukowski will keep an eye on F.E. Wheaton
and United Building Centers for Pro-Build North; and Jim Cavanaugh will
manage Hope Lumber and Home Lumber for Pro-Build South. And oh yes: At
long last, Pro-Build announced it will be headquartered in Denver.
WebbThreads
Beacon Roofing Supply has acquired North Coast Commercial Roofing Systems of Twinsburg, Ohio. North Coast is the largest distributor of commercial roofing products in the Midwest and will enable Beacon to begin serving New York, Ohio, and West Virginia. …Clyde Joseph Wilson, who bought a Huntsville, Ala.-area lumberyard in 1949 and lived to see five members of the second and third generation of Wilsons take over Wilson Lumber Co., died last weekend and was buried Monday. He was 92. …Building Materials Holding Corp. announced it intends to purchase up to $25 million of its common stock. …ABC Supply reported full-year sales rose 15% last year to hit $2.99 billion, while profits rose 6.7% to $200 million. Both totals are records. …Failures can teach us as much as successes, and there are several lessons to be drawn from the Tampa Tribune’s tale of the demise of Oxford Lumber in Lakeland, Fla.
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This Month’s Focus: Our 2007 Product Review
Associate editor Stephani Miller reports: “Close to 200 products that dealers should consider stocking or using are profiled in the March issue of ProSales and are now online. Putting together our March issue’s annual Product Review and Editors' Choice Awards is no cakewalk. It’s more like a marathon — if running a marathon also required juggling several pieces of easily bruised fruit. There are past products coverage and press releases to sift through, information to hunt down, and photography to wrangle. We try to include as many of the past year’s product introductions in this issue as possible, and we try to strike a balance between the manufacturers you know well and some you may not have heard about. We single out 15 standouts for our Editors’ Choice honor, but the truth is that every product we print is a winner, as each was selected from literally thousands of excellent introductions we’ve seen throughout the year.”
On the Road Again ... in Denver and Shreveport
Yours truly is writing to you today from Denver, where I’m attending the
Mountain States Lumber and Building Material Dealers Association’s 2007
Expo. Kudos to MSLBMDA for selling out its space at the Denver Merchandise
Mart for the event. If you’re coming, please say hi. And if you’re planning
to attend HDW’s Spring Dealer Market in Shreveport, La., this weekend,
look for me at my Saturday morning presentation on building material industry
trends.
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| Click for Larger Picture |
LBM Flexibility Takes on New Meaning at This
Napa Yard
Check out this San Francisco TV station’s feature
on the yoga program instituted at Central Valley Builders Supply in Napa,
Calif. The feature quotes several employees at the yard touting the weekly
program’s benefits on their health and their stress levels. Central Valley’s
Web site promotes its 50-year
history of being “responsive, flexible and creative.” It’s unlikely the
yard’s founders imagined their yard would ever make this kind of a stretch.
WebbThreads
Special 90th birthday greetings to Berlin G. Myers of Summerville, S.C., who, according to a Charleston Post & Courier article not only continues to work daily at the lumber company that bears his name but also has been mayor of his town since 1972. ...Robert Buck, president & CEO of Beacon Roofing Supply, has become the company’s chairman of the board. Buck succeeds Andrew Logie, who retired as chairman but will remain a director. ...84 Lumber has named Brian Sento its vice president of national sales and Mike McCrobie its vice president of installed sales. ... San Diego's Dixieline Lumber Co., a division of Pro-Build, has purchased Sandstone Brick Co. of Bakersfield, Calif. ...National Lumber Co. of Mansfield, Mass., named Dan Wager and Mike McDole as VPs of sales. ...Building Materials Holding Corp. promoted Hank Fitchett to vice president of infrastructure services. ...Georgia-Pacific has purchased the Thorsby, Ala., engineered lumber plant from International Paper. That’s the first of seven IP facilities that Georgia-Pacific plans to acquire this month.84’s Myrick Moves To Pro-Build
Bill Myrick, who until Friday was 84 Lumber’s COO, was named today as
senior vice president of strategic initiatives at Pro-Build. “He brings
a unique and impressive skill set that directly supports Pro-Build’s aggressive
growth plan,” Paul W. Hylbert, Pro-Build CEO, said in a statement from
the Denver-based company. The statement also quoted Myrick as saying Pro-Build
“is poised for tremendous growth over the next several years despite the
current market conditions. I look forward to working with the Pro-Build
team to build upon the success they have achieved thus far, and to help
them maximize the opportunities that lie ahead.”
HD To Target Small Custom Builders, Larger Remodeling
Firms
The Home Depot clarified Wednesday how it will go after the pro market
and which subgroups it will target, but it said nothing new about a key
part of this strategy: whether it will keep or sell HD Supply. The retailer’s
report at its Analyst and Investor Conference was notable in part
for the emergence of the man who will lead HD’s “Own the Pro” initiative:
Joe Izganics, senior vice president, Pro & Tool Rental. Izganics said
The Home Depot already does a good job serving small trades and small
repair and remodeling businesses. Its next target includes builders who
construct up to 10 custom homes a year, larger repair and remodeling businesses,
maintenance and repair specialists, and large trades. It will do so largely
by enhancing what it already has, such as the pro desks at HD retail stores,
and by increasing loyalty programs, such as its branded MasterCard. Izganics
said 90% of the pros who shop The Home Depot give HD only 10% of the money
they spend on supplies.
BFS Slows Down, Shifts Gears in Response to
Housing Slowdown
Depressingly familiar news from Builders FirstSource last week illustrated
anew just how much pain the biggest dealers are feeling because of the
downturn in big builders’ new-home construction. BFS reported
its fourth-quarter sales fell 22.5% from the year-earlier period to $438.6
million while net income plunged 80% to $3.9 million. The Dallas-based
company has responded by trimming its staff (the FTE count was cut 18%
in the fourth quarter) and expanding its service and installation activities,
which now account for 13% to 14% of overall sales. BFS also forecast that
difficult market conditions will linger through at least mid-year, and
if they do, the company might not match in 2007 the $68.9 million net
income it recorded for 2006.
Melee in Michigan Over State Business Tax
Michigan LBM dealers have been issued an invitation to a dogfight—a battle
between myriad business groups over replacing the state’s onerous Single
Business Tax. State LBM association chief Rick Seely, who sent out the
call, warned members this week that lumberyards’ high-sales, high-margin
but low-profit operations make them particularly vulnerable to getting
soaked by some of the tax reform proposals now on the table. And because
business interests are jostling each other to avoid keeping their special
interests from being hurt by any new tax, there’s no united front that
LBM dealers can rely upon to protect them. In fact, Seely warned, unless
dealers speak out for themselves, “we will get sold right down the river
by foes and friends alike.”
Poetry Corner
Who says there’s nothing lyrical about selling fasteners? Check out "Ode
to Hardware Stores" featured last Saturday
on public radio’s “Writer’s Almanac.” Or better yet, listen
as Garrison Keillor recites the poem.
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Blonde Ambition: This Yard Pet Hustles in Minnesota
This week’s yard pet is Emma, a golden retriever who was the first employee
mentioned when the Fergus Falls (Minn.) Daily Journal profiled
Grant County Lumber this week. "A lot of people come in for her," the
newspaper quoted Dan Denardo (pictured here with Emma), manager of the
Elbow Lake, Minn., pro dealer as saying. Denardo also noted in the story
that insulated concrete forms are becoming popular at lake houses in his
community, which is located midway between Fargo, N.D., and Minneapolis.
Got a yard pet of your own you’d like to feature? Send it to cwebb@hanleywood.com
along with the store name, the pet’s name, and any neat pet tricks. (Photo
courtesy of the Fergus Falls Daily Journal.)
WebbThreads
A feature story notes that the Truckee-Tahoe Lumber Co. is preparing to enter its fourth generation of Cross family management. Current company president Breeze Cross announced in late January he will be retiring after 35 years in the business. Meanwhile, son Andrew Cross has begun learning the ropes by working side by side with every employee. Last Friday he shoveled snow all day. …The housing slowdown hasn’t damped Americans’ interests in bigger kitchens and baths with upscale features, the American Institute of Architects’ Home Design Trends Survey for the fourth quarter of 2006 suggests. In general, residential architects report more interest in remodeling projects and less desire for townhouses, second/vacation homes, move-up homes, and first-time homes. …The U.S. residential repair and remodeling products market will grow about 1.6% in 2007 to total $316 billion and will reach $389.7 billion by 2011, Global Insight/HIRI forecasts.
February 22, 2007
Hairball Watch: Home Depot
Struggles To Decide HD Supply’s Fate
Metaphors rarely get more colorful—or more gross—than when The Home Depot’s
CEO, Frank Blake, said Tuesday that the effort to integrate HD Supply
with its retail business is a “hairball” so huge the company must decide
whether (continuing the metaphor to its logical conclusion) to swallow
that hairball through integration or spit it out by selling the entire
HD Supply unit. And while that ruminating occurs, a $12 billion operation
essentially is stuck in neutral. During a Webcast to announce HD’s latest
earnings
report, Blake declared HD will focus its investments in five areas,
the fifth of which is to “own the pro.” But he couldn’t say whether that
pro will be owned by HD Supply or by some souped-up version of the contractor
desk at the orange big box stores. (And professional builders definitely
visit those stores; Blake said that of all HD customers, just 2 percent—most
of them pros—account for 30 percent of all sales.) Don’t expect any resolution
before Wednesday, Feb. 28, when HD hosts an investor and analyst conference.
Small Missouri Dealer Opens Its Doors—A Second
Time
This month’s ProSales tells the tale of two relatively new
start-ups on the East and West coasts. To that duo we should add Salvino
Building Supply, located in the heartland community of Washington, Mo.,
just west of St. Louis. Owner Ron Salvino specializes in windows, siding,
and doors. He started three years ago by serving contractors and developers
exclusively, and earlier this month he opened his doors to the general
public. He calls himself “an exterior design company” that helps “keep
people from turning their homes into something they’d see in the funnies.”
So far, so good, he says; there are so many customers he’s had to enlist
his parents’ help running the store.
Dealers in Texas, Louisiana To Honor Three Special
People
The Lumbermen’s Association of Texas plans on March 30 to recognize Marilyn
Archer of Morton Lumber, Borger, Texas, as LAT’s 2007 Lumber Dealer of
the Year. Archer and her husband Robert purchased Morton Lumber in 1981
when they were 26 years old and had been married just a year. Today, Morton
Lumber is a $6.5 million, 35-employee business that soon will expand to
Amarillo, according to LAT. Also on March 30, the association will present
its Associate Member Representative of the Year award to Bobby Byrd, vice
president of sales and marketing for Martco, and will make a special presentation
to attorney Robert C. Bass Jr. for a quarter-century of service to LAT.
Study Suggests Gen X-ers, Echo Boomers Are Generous
With Remodeling $$$
The doubling in size of the U.S. home improvement market over the last
decade has been largely due to Baby Boomers, particularly those born between
1946 and 1955. But that group is heading toward retirement; will their
successors be just as interested in remodeling and rehabbing projects?
A new study by the Joint Center for Housing Studies at Harvard University
says yes. Download
the study, look for figure 22, and you’ll see forecasts suggesting
that younger baby boomers, Gen X-ers, and the echo boomers each are likely
to spend more on home improvement than the generation preceding them.
JCHS expects total spending on remodeling to grow 21 percent between 2005
and 2010 and 18.8 percent between 2010 and 2015.
Northeastern Retail Lumber Association Chapters
Recognize LBM Leaders
Sixteen dealers and vendors were honored recently at the Northeastern
Retail Lumber Association’s Retail Expo in Boston. The chapters, honorees,
and honors:
- New York & Suburban: Chuck Levitt, Meserole Lumber, Lumber Person of the Year (LPOTY)
- New York & Suburban: Jack O'Neil, Auction Outlet, Lifetime Achievement Award (posthumously)
- Long Island: Tony Adams, Penny Lumber, Lifetime
- Massachusetts: Joe Cusack, Boston Cedar & Millwork, Lifetime
- Rhode Island: Barry Joslyn, JT's Lumber, LPOTY
- New Hampshire: Brad Benson, Benson Lumber & Hardware, LPOTY
- Maine: Brian Thayer, Lavalley Lumber, LPOTY (posthumously)
- Vermont: Scott Vasquezi, Boston Cedar & Millwork, LPOTY
- Vermont: Carl Dirkes, Northeast Treaters, Associate of the Year
- Eastern New York: Steve Roth, Huttig Building Products, LPOTY
- Mid-Hudson: Larry Beckerle, Beckerle Lumber Supply Co., LPOTY
- Connecticut: Adrian Baker, Brockway-Smith Co., LPOTY
- Central New York: Joel Robinson, Robinson Lumber, LPOTY
- Western New York: Joe Lapp, Lapp Lumber, LPOTY
- Western New York: Ron Schopf, Orchard Park, NY, Lifetime
- Northern New York: Tom Boni, North Counties Supplies Corp., LPOTY
WebbThreads
The Lumber Association of California and Nevada has begun a government affairs program in Nevada, hiring the Reno-based firm of J.K. Belz & Associates and registering LACN executive director Ken Dunham as a lobbyist. Dunham should find Carson City a refreshing change from Sacramento; for one thing, he notes he can wear his cowboy boots when he hobnobs with legislators. …U.S. window and door demand will rise 3.3 percent a year through 2010 to reach $36.5 billion, the Freedonia Group forecasts. The share of the market held by plastic (including vinyl, fiberglass, and wood-plastic composites) has risen from 15 percent in 2000 to 20 percent in 2005 and should reach 23 percent by 2010, the group predicts. …Weyerhaeuser Co. intends to sell all of its Canadian distribution centers as well as centers in Louisville, Ky.; Memphis, Tenn.; Nashville, Tenn.; Green Bay, Wis.; Kansas City, Kan.; Oklahoma City; Omaha, Neb.; Newton, Kan.; Boston; and Buffalo, N.Y. It will retain 40 other U.S. distribution facilities. …Citing “today’s market environment,” Huttig Building Products is closing its distribution facility in Hauppauge, N.Y. …As if The Home Depot wasn’t providing enough competition, Lowe’s plans to eventually have 2,000 stores in the U.S., about 50% more than it does now, Lowe’s CEO told the Raleigh News & Observer. If Lowe’s continues its pace of opening one new store every three days, the retailer could hit that milestone in about five years.
February 15, 2007
HD Watch: Stock Gets Tossed
Into Global Deal-Making Game
Investment bankers and LBM bigwigs in both Europe and the U.S. today are
deep into financial intrigues sparked by The Home
Depot's announcement that it might sell its HD Supply subsidiary.
Press
reports in Europe said both England's Wolseley Plc-which owns Stock
Building Supply--and France's Saint-Gobain--which owns US manufacturer
CertainTeed--are interested in HD Supply. There also were published
rumors yesterday that an investment bank would try to buy Wolseley
and then split off its American units. Meanwhile, some analysts on this
side of the pond are trying to figure out whether HD Supply makes financial
sense in its current setup; synergies there can be hard to find, particularly
if there's no Home Depot backing up the business. That could lead either
The Home Depot or HD Supply's eventual buyer to break up HD Supply and
sell its parts.
IBS Recap, Part I: Green Reigns
Managing editor Katy Tomasulo, a longtime reporter on the green movement,
says that at the International Builders' Show, "it seemed everyone had
sustainability on the brain. In addition to sustainable show homes, at
almost every booth vendors were touting the attributes of their products
that make for a greener, more energy efficient, more healthy, or more
durable home. This included overall new product launches, such as an array
of energy-efficient window glass, ultra-low-flow toilets, and an expanding
selection of weather barriers. But it also included awareness. In other
words, those products that already contribute to a greener home were heavily
marketed as such by manufacturers large and small. Based on what I saw
last week, more and more manufacturers are seeing the green in green and
are more willing than ever to fill your shelves with suitable products
and your head with know-how."
 |
IBS Recap, Part II: Stories Worth Noting
Several dozen reporters from ProSales and its sister Hanley Wood publications
crisscrossed Orlando last week during the International Builders' Show.
Out of our extensive collection of stories,
dealers might enjoy most our reports on the forecast for spending
on remodeling, Chris Wood's report
on big pro dealers at the show, comments on how to build homes that
appeal to Hispanics
or women
buyers, and the ongoing debate over immigrant
workers. You also can find heavy dollops of product news and trivia.
One of my favorite moments came when the folks at Jeld-Wen said Dutch
Doors (right) were staging a comeback. But don't expect to see Mr. Ed
on the other side; Jeld-Wen said Dutch Doors are being used on the interior,
in settings like children's rooms and wine storage areas.
NLBMDA-Backed Innocent Sellers Fairness Act
Reintroduced in House
Reps. Dan Boren (D-Okla.) and Steve Chabot (R-Ohio) filed Tuesday H.R.
989, the Innocent Sellers Fairness Act. The measure is the top legislative
priority of the National Lumber and Building Material Dealers Association.
"Simply put, the bill only holds sellers responsible in proportion to
their wrongdoing and frees them from liability when they have done nothing
wrong," NLBMDA told members in a newsletter today. The bill has yet to
be introduced in the Senate. The association wants it to be co-sponsored
by both a Democrat and a Republican. Senate Minority Leader Mitch McConnell
(R-Ky.)--whose constituency includes NLBMDA chair Steve Kelly--is regarded
as a leading potential GOP sponsor.
Ply Mart Looks Far Afield in Finding Key Executive
Ply Mart's contingent at last week's ProSales Excellence Awards breakfast
included a key new employee: executive vice president of manufacturing
Ken Southerland. He was brought on board as part of a succession plan
as Mahaffey family members who founded Ply Mart retire. Southerland's
resume isn't your typical lumberman's--he worked 16 years at a high tech
company, lived nine years in Singapore, and played briefly for the Miami
Dolphins. But his experiences developing people, processes, operations,
and technology (particularly involving supply chain management) for a
$1.2 billion global company dovetail well with a Ply Mart operation that
already extends far beyond its Atlanta home and has a reputation both
for embracing technology and trying new ventures.
Earnings Reports Give a Hint of Big Dealers'
Pain
"This business sucks," the head of a ProSales 100 company once told me.
"It's very cyclical, the business is fragmented and you can't get a good
return." That CEO said those words late last year, and from the looks
of the latest publicly reported earnings statements it's likely he has
company. BMHC said its sales fell 26% in the final three months of 2006
from the fourth quarter a year earlier. Meanwhile, same-store sales at
Beacon Roofing Supply slipped 5.5% in the October-December period from
a year before. Builders FirstSource will give its report on Feb. 23.
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Down East and Down Home: A Maine Dealer's Greatest
Hits
Rankin's Hardware & Building Supplies of Camden, Maine, gets so much praise
for its radio commercials that it has put out a Greatest Hits collection.
The CD features ads from the past 10 years, all voiced by the company's
own Clarence "The Voice" Keller. An outsider might wonder whether Mainers
really talk like that, but I suspect that inside the state Clarence wins
points-and Rankin's wins sales-for sounding like home.
Michigan Honors Top Dealer, Supplier, and Activist
The Michigan Lumber and Building Materials Association named Ken Lehman
of Big L Lumber, Sheridan, Mich., as its Dealer of the Year. It also created
a new award-Activist of the Year-and gave it to Bill Bedard of Mortimer
Lumber, Port Huron, Mich. And MLBMA's Supplier of the Year Award went
to Mark Heyboer of North Pacific Group.
Dealers Gather in Orlando to Honor ProSales
Award Winners
A capacity crowd filled a banquet hall in Orlando's Peabody Hotel this
morning for the annual ProSales Excellence Awards breakfast. Dealers honored
were Columbus (Ohio) Wood Products and Van Millwork, Bellingham, Mass.,
co-winners of the Excellence Award for Showroom Design; Boone County Lumber/Boone
County Millwork, Columbia, Mo., winner of the Excellence Award for Marketing/Customer
Service; and M S International, Orange, Calif., and Curtis Lumber, Ballston
Spa, N.Y., recipients of honorable mention citations for showroom design.
The gathering also provided the opportunity to recognize Ply Mart, Norcross,
Ga., for its 2006 Dealer of the Year award. See ProSales'
November issue for write-ups on the Excellence Awards, sponsored by
OSI Pro Series, and the January
issue for my story on Ply Mart.
IBS Roundup: Exclusive Podcasts, Features, and
Dealer News
ProSales' coverage of the International Builders' Show entered a new dimension
today with the first posting of a podcast
devoted to products showcased at the show. The podcasts are hosted by
ProSales' two product mavens: managing editor Katy Tomasulo and associate
editor Stephani Miller. Along with that, visit ProSales'
special page online devoted to IBS news. Executive editor Chris Wood
met up with several dealers exhibiting at the show, Pro-Build, Stock Building
Supply, Carter Lumber, and Home Depot Supply. Read his report on these
companies' IBS programs and future initiatives here.
Pro-Build Inches Toward a Consistent National
Brand
Pro-Build
borrowed a trick from the first days of the New York Mets in unveiling
its new logo. Just as the Mets sought at their founding to pluck New Yorkers'
heartstrings by choosing as their colors Brooklyn Dodger blue and New
York Giants orange, Pro-Build's logo is taken from three of its component
units. The green comes from Strober Building Supply, the brown is similar
to that of Hope Lumber, and the stylized tree profile harkens to the trees
on Lanoga's logo. (The logo also resembles a silhouette of a house and
an arrow pointing the way forward, the company said.) The logo design
reflects Pro-Build's attempt to balance its desire to forge a nationwide
name with the benefits it continues to reap from having so many well-known
regional brands. Pro-Build CEO Paul Hylbert said the company's divisions
"are now going to figure out for their locations how quickly they're going
to go" and embrace the logo. Look for Strober to embrace the change relatively
quickly, while units such as Dixieline Lumber and Spenard Builders Supply
will take their time.
If Only Your Salespeople Were as Persistent
as This Yard Pet
 |
The third installment of our new feature on yard pets takes us to Denver, where a border collie named Telly has been greeting customers at Alpine Lumber Co.'s 5800 Pecos location for eight years. Says Alpine's Hamid Taha: "Her claim to fame is to drop a short piece of air hose at a customer's foot and paw them until they throw it for her. Once someone throws it, they're trapped into a game of fetch until they leave. Telly is known to follow customers to the door and violently shake the hose from side to side, trying to will the customer into one more throw." Does your yard have a pet? Send an electronic picture, name, and details to cwebb@hanleywood.com.
February's Cover Story Features an Old Dominion
Revival
Virginia
is for lovers, the slogan goes, but executive editor Chris Wood reminds
us in this month's ProSales cover story that it's also a great place for
builder markets. Wood provides the story behind Smitty's Building Supply's
grand re-opening this month of its flagship store in Alexandria, Va. Smitty's
had considered closing the yard as it pursued production builder fever
farther away from Washington, but changes inside the D.C. Beltway gave
the yard a profitable new purpose. Now Smitty's has a custom shop even
as it keeps an eye on the tract builders. "It is certainly our plan to
become the pre-eminent dealer in Northern Virginia," Smitty's CEO Rick
Smith told Wood. "There's some pretty tough competition out here, but
the housing market in Northern Virginia will continue to be very strong.
When you can support the likes of a Smitty's, a Roper Bros., and a TW
Perry all in one market, all of us in the $100 million plus range, that's
a nice place to be."
Harvard Disputes Truism That Building, Remodeling
Have Ying-Yang Relationship
A new study issued today that
examines prospects for the remodeling market concludes, among other things,
that the old notion that remodeling picks up when home building declines
just isn't true. "It's definitely not countercyclical to home building,"
Kermit Baker of Harvard University's Joint Center for Housing Studies
told me earlier this week. What actually is going on, he believes, is
that remodeling activity is more consistent year to year than home building.
Thus, when new construction declines, the remodeling part of the business
becomes more noticeable. The study predicts that total remodeling expenditures
will increase by 21% between 2005 and 2010 and by nearly 19% in 2010-2015.
It also predicts that senior, minority, and non-family households --"groups
that you don't think of as being in your core remodeling audience," Baker
notes --will account for significant shares of the projected growth.
Home Depot Watch: Could New Board Member Sink
HD Supply?
There could be some interesting discussions about the future of HD Supply
now that the Home
Depot agreed to let investor David Batchelder join The Home Depot's
board. With the move, Home Depot CEO Frank Blake no longer has to worry
about a proxy contest from Relational Investors LLC, which Batchelder
co-founded. But Blake's price for this peace is having to listen to Batchelder
and Relational's other co-founder, Ralph Whitworth, dispute company strategy.
Among their pet peeves: previous CEO
Joseph Nardelli's efforts to build HD Supply, which Whitworth has
called "strategic adventurism." There was other news today about Home
Depot in the New York Times. Click
here to read the story.
SBMA Honors Tindell's as Dealer of the Year
Managing editor Katy Tomasulo was on site at the Southern Building Material
Association Building Products Buying Show in High Point, N.C., where yesterday
the association named Tindell's as its Dealer of the Year. Based in Knoxville,
Tenn., Tindell's has several members-including Carl Tindell, Johan van
Tilburg, and Gene McKinney—actively involved in both SBMA and the
National Lumber and Building Material Dealers Association. Tindell's is
known for its forward-thinking business practices, including industry-leading
strides in technology and installed sales. Van Tilburg is a member of
ProSales' Editorial Advisory Board. SBMA also announced its Supplier of
the Year: ECMD, a North Wilkesboro, N.C.-based manufacturer and distributor
of moldings and other building products.
Northeastern LBM Dealers Give a LIFT to the
Needy
The Northeastern Regional Lumber Association kicked off its annual Expo
yesterday with the presentation of $15,500 worth of checks for LIFT-the
Lumber Industry Fund for Today. Created late last year, LIFT is intended
to provide NRLA member employees with up to $2,000 in immediate aid, plus
peer support, following a fire or other natural disasters that result
in a loss of shelter. Contributing to the fund were the Massachusetts
Retail Lumber Dealers Association ($10,000), the Rhode Island Lumber &
Building Material Dealers Association ($2,000), the Western New York Lumber
Dealers Association ($1,500), the Vermont Retail Lumber Dealers Association
($1,000), and NRLA staff ($1,000).
See You in Orlando Next Thursday at the ProSales
Breakfast
Not much remains beyond polishing the silverware in preparation for the
ProSales Excellence Awards breakfast in Orlando, Fla., next Thursday during
the International Builders' Show. It will be a great opportunity for you
to meet fellow dealers, see and honor Excellence Award-winning companies,
and recognize the ProSales Dealer of the Year. Official registration has
closed, but if you're a dealer who's coming to Orlando and hasn't signed
up yet for this free event, contact ProSales' Katey
Collora to see if she can find you a seat.
Yard Pet No. 2 Is a 700-Pound Baby
 |
The second contribution to our new feature on LBM yard pets is Brittony, a 700-pound, 1 1/2-year-old Yorkshire pig who lives at the Britton's lumberyard in Taftsville, Vt. She's pictured here with, from left, yardman/driver Tom Beloin, store owner Lenny Britton, inside salesman/purchasing manager Duncan Brettell, and HR/finance director Lori Rogers. "People love to see Brittony and feed her treats, especially kids," Lenny told ProSales. "As a customer said to us one day, 'That's something you don't see at Home Depot!'" Before Brittony, the dealership had a Rhode Island Red rooster who was so territorial he'd chase customers off the yard. Brittony takes umbrage only when you fail to say hello to her and/or scratch her ears when you pass by. Got a yard pet of your own to highlight? Send an electronic photo and details to cwebb@hanleywood.com.
"We Don't Take Sales Calls," or, An Appeal for
the ProSales 100
Executive editor Chris Wood sent this on Monday: "Cold-calling pro dealer
sales reps of the world, I feel for you. When I entered the office this
morning I was staring at a call list with 168 firms on it—firms that
all have a legitimate shot at being named to the 2007 ProSales 100 listing
but have not yet returned their 2007 ProSales Annual Survey of Leading
Construction Suppliers. The survey—mailed to 230 target companies
on Jan. 5—is used not only to determine the annual rankings but also
to track the vital stats shaping the customer focus, manufacturing efforts,
installed sales programs, and technology developments (among other things)
of the industry's leading pro dealers. Filling out surveys, quite frankly,
sucks. I also get a lot of people saying they don't take sales calls,
that they don't do surveys, that they don't share company information—common
refrains we have all used. Regardless, if your company made more than
$65 million in 2005 gross sales and you have yet to complete a ProSales
100 survey, you'll be getting a phone call over the next week or so. If
for any reason you don't hear from us—ProSales editors are by no
means infallible—be sure to contact me at 415.315.1241 x307 or at
cwood@hanleywood.com and I'll
make sure you receive a survey. Our deadline for this year's ProSales
100 is Feb. 9. Time for me to smile and dial—hopefully this piece
serves to warm up those cold calls, if just a couple degrees."
Dr. Jim Elaborates on the Value of Executive
Pay Cuts
Bruce Latman, CFO at Triangle Building Products in Medford, N.Y., e-mailed
recently to take issue with the January ProSales article "44
Ways To Fight the Downturn" in which we suggested executives consider
taking a pay cut. "I do not think employees will care one iota that uppermost
management is taking a pay cut," the reader wrote. "I think they would
suspect that somehow management will recoup the money somehow (bonuses?).
Additionally, I don't think that they would think beyond their own existence.
All they would know is that there is less money to pay for bills. The
larger view would never be considered." So we asked management consultant
Jim Harris, who came up with the idea, to respond. He wrote: "Indeed,
employees will care and will most often respond very positively if they
know that the 'big guys' are also in the same game with them. I began
running a semi-custom home building company in the late 1970s at 18.5%
interest rates. My crews knew I would pay them before I would pay myself.
When they realized I was in the same situation, they outperformed themselves.
... So will management recoup in bonuses later? Let's hope so, and so
would the employees if you have any performance bonus system in place.
It's all about mutual trust and teamwork."
WebbLog Gets a Permanent Home
When the poet John Keats died in the 19th century, he felt his work was
so fleeting that he arranged for his tombstone to say only that it contained
"one whose name was writ in water." I've felt the same lately about these
WebbLogs, because once they went out in these e-mails they atomized into
cyberspace. But that has changed now. You can find back WebbLogs now at
http://www.prosalesmagazine.com/content/webblog-archive/webblogg.asp.
Keats still is the better writer, but while he had a thing or two to say
about Grecian urns, what did he know about building products?
PSBU Becomes a Weekly Visitor
We're pleased to announce that, from today onward (except for a few holiday
breaks), ProSales Business Update will come to you weekly rather than
biweekly. This will make it possible to bring you stories and insights
quicker than ever before. Keep sending your news and views to us at cwebb@hanleywood.com.
Business Credit Card Update: Data Shows the
Trend Is Real
Some hard data we've uncovered backs up your observations that your customers
are using corporate credit cards-particularly from American Express-more
often. Maryland's First Annapolis Consulting compiled stats from a number
of sources to find that the number of dollars charged to small business
credit cards jumped 107% between 2001 and 2005 to hit $219 billion. American
Express charges accounted for $98 billion of that 2005 total, up from
just $68 billion two years earlier. And the trend only appears to be accelerating;
Chase Card Services announced on Jan. 22 a new Chase
Contractor Cash Rewards Visa Signature Business Card. Chase called
the card the first in a series "offering small business owners compelling
incentives to shift invoice-based check spending to a business credit
card." It does it through a combination of 2% cash back rewards, financial
flexibility and cash-flow management services.
It's True! Lumberyard Animals Really Do Work
Like Dogs
 |
Lithium-Ion Lowdown
According to ProSales managing editor Katy Tomasulo, the biggest buzz
in power tools these days is lithium-ion, the battery technology that
puts more power in smaller, lighter-weight tools, among other benefits.
How do you decide which ones to stock? Check out "Pile
It On" in our sister publication, TOOLS
OF THE TRADE. It's a hands-on test of all 59 professional lithium-ion
tools currently on the market. There's a brief overview of each tool's
performance and features to help you decipher which are worth telling
your customers about and which you can pass up. Check it out, and give
Katy your review at ktomasulo@hanleywood.com.
Emery-Waterhouse CEO Sees Big Changes Ahead
for Pro Dealers
"Home Depot has been a tremendous force for the industry, but all indicators
are that they're at their peak," Emery-Waterhouse CEO Steve Frawley told
pro dealers Jan. 20 at the hardlines distributor's annual meeting in Providence,
R.I. "In the next year or so, we're going to start seeing some new formats
emerge to compete with Home Depot" and win over HD's unhappy customers.
Frawley believes the market that emerges from the current housing downturn
is going to be much different than the one LBM outfits have experienced
lately. Portland, Maine-based Emery-Waterhouse is responding by creating
some new units, such as an Architectural Products Group to help dealers
serve high-end residential customers, and a team to help dealers get into
the light commercial market. "Market corrections provide opportunities,"
he said simply.
Schlage Numbers Show That Nickel Is the Hot
Finish
Schlage's internal share-of-market numbers give a great snapshot of how
nickel has supplanted bright brass as the preferred finish for door handles
and locksets. In 2003, satin nickel finishes accounted just 13.9% of all
Schlage sales while bright brass finishes dominated with 56.9% of the
market, a report by the manufacturer shows. But by 2006, satin nickel
accounted for 28.1% of sales, while bright brass had dropped to 35%. Meanwhile,
aged bronze went from virtually zero in 2003 and 2004 to 7% in 2006.
Stock's Parent Finds American Soccer Players
Import Better Than Dollars
It was a pair of Americans who last year enabled Reading F.C., the home
soccer team for Stock Building Supply's parent company Wolseley PLC, to
reach English soccer's Premier League for the first time in history. So
far this season Reading is holding its own. Would that Stock be performing
as well for Wolseley. The company
announced Monday that sales volumes were down 9% for August through
December 2006 compared with the same period in 2005. Sales profits were
down 45%, due in part to around $11 million in one-time charges to close
22 branches and cut 3,500 people. Like its American cousins in LBM, Wolseley
as a holding company can cite the slowdown in home sales and reduced lumber
prices. But it has a third burden as well: the U.S. dollar. Wolseley measures
its results in pounds sterling, and in the first five months of this year
the dollars revenue from the U.S. converted into 8.1% fewer quid than
it did during the same time in 2005. So even if Stock had generated the
same dollars it still would end up in the red when measured in pounds
sterling. What's worse, the dollar has weakened even further.
Survey Says: Yes, You Fret About Credit-Card
Payments
My Dec. 28 WebbLog generated a flurry of responses regarding whether
you feel any heartburn over the growing use of corporate credit cards
to pay LBM bills. “Credit cards to pay bills are an increasing problem,”
wrote Jim Croome, president of Sandersville (Ga.) Builders Supply. He
lets customers pay that week’s charges with a credit card, but after that
it’s cash or check only. Ted Risser, president of J.H. Brubaker in Lancaster
County, Pa., says he figures that taking credit cards costs his company
about $87,000 a year in revenue lost to discounts. “This total is growing
each year, but the competition offers it so we feel we must, too,” Risser
wrote. “We are encouraging the use of debit cards but to no avail.” And
Eileen Miskell, owner of The Wood Lumber Co. in Falmouth, Mass., said
that when she refuses to take the cards she also explains that otherwise
she’d have to eliminate the jobs of the very office people who assist
customers with information about their accounts. “To date, everyone I
have spoken to understands,” she said. “Most who ask haven’t thought that
WE would be paying for their vacation, not American Express. They would
have to give up the discount we allow for paying by the 10th. and none
have taken me up on that offer.”
Can The Home Depot’s Ingénue Leaders Deliver?
As ProSales contributing editor John Caulfield noted to the New
York Post, departed CEO Bob Nardelli’s greatest legacy to The
Home Depot may be a management staff full of retail rookies. “It’s a bunch
of GE guys who don’t know anything about retailing,” Caulfield said. Indeed,
according to Business
Week, “since 2001, 98 percent of Home Depot’s top 170 executives
are new to their positions, 56 percent of the changes involved bringing
new managers in from outside the company.” That latter number includes
Steve LeClair, who joined HD in 2005—from GE, of course—and on Oct. 24
became head of HD Supply’s lumber and building materials division. HD
Supply overall chief Joe
DeAngelo has just one more year of HD experience (plus some time at
Stanley Works), but he’s likely to be stretched now that he’s become COO
of the whole company.
No Sports Illustrated-Style Jinx for
Ply Mart’s Cover Boys
Call it ProSales karma: We can’t help noting that the Clemson University
basketball team has become the nation’s only undefeated team just as two
of its most famous alumni, Randy and Rich Mahaffey, appear on this month’s
cover. Then again, the Mahaffeys got the honor not because of what they
did for the Tigers back in the 1960s but because of the way since then
that they’ve guided their company, Ply Mart, to become ProSales’
2006 Dealer of the Year . We’ll be honoring Ply Mart along with the
winners of the ProSales Excellence Awards during a special breakfast next
month at the International Builders’ Show. Planning to attend? Be sure
to sign up at http://www.psexcellenceawards.com
.
Natural, Sustainable, and Green All Over
ProSales associate editor Stephani Miller says she’s been noticing more
and more coverage of green home building in the mainstream media. “Take,
for example, the January 2007 Money Magazine article ‘It’s
Easy Being Green’, which examines the ways green building and renovation
can pay off for homeowners,” she writes, “and a September 2006 article
in BusinessWeek
Online that details the features of a passive solar and geothermally
heated and cooled house outside of Boston. This Old House magazine
also now regularly features eco-friendly homes and design and runs special
sections on how DIYers can go green. In fact, This Old House’s
50th
project, which will be featured on PBS TV stations, will be an eco-friendly
renovation. The New
York Times and Washington
Post as well as Metropolitan
Home and Elle Décor
magazines have all run green-centric articles. The question now is whether
consumers are following through on that interest. Have articles like these
spurred homeowners to pressure your customers for greener homes? And have
you been getting more questions about green products as a result? Tell
me at smiller@hanleywood.com."
84 Candles, and Much Much More, for Mister 84
84 Lumber founder Joe Hardy got more than just a birthday cake at a luncheon
Saturday marking his 84th birthday. According to the Pittsburgh
Post-Gazette, Bette Midler and a full orchestra provided the main
entertainment, Christina Aguilera sang the birthday wishes, a Broadway
company of “A Chorus Line” upped the entertainment quotient, and Robin
Williams provided the nightcap. The event for 500 ran from 2 p.m. to 2
a.m., the newspaper said.
Keep an Eye on Your Legislatures
California Gov. Arnold Schwarzenegger’s proposal for universal
health care in the Golden State serves to remind us that state legislatures
have convened in most of the U.S. And while the media naturally focuses
on the White House and Congress, often it’s the State Capitol building
that produces the most significant laws affecting pro dealers on subjects
like energy codes, health care, and labor relations. Or take liability
laws; a recent
Business Week article says lobbying at the state level has
led to litigation reform in several states, particularly Texas.
On the Road Again-Soon
The holiday break won't keep me out of the skies too long. Next stop:
New England. In mid-January, Craig
Webb, will speak on Friday, Jan. 19, at the Emery-Waterhouse Marketplace
2007 in Providence, R.I. Then two weeks later I'll be in Boston for the
Northeastern Retail Lumber Association's LBM Expo. Let me know if you
plan to attend either meeting. The NRLA gathering, by the way, takes place
the same time as the Southern Building Material Association convention
in High Point, N.C. If you're going there, look for ProSales managing
editor Katy Tomasulo.
Did Your Company Do What It Takes To Make the
ProSales 100?
I've been daydreaming lately about making book on the over-and-under for
the annual revenue figure that'll be needed to qualify for the 2006 ProSales
100. Last year it took $69 million in annual pro sales revenue to crack
the Top
100 list, but that 2005 assemblage includes a handful of companies
that have since merged and thus won't be occupying spaces this year. On
the other hand, so many dealers did so well in 2006 that the threshold
could still top $50 million easily. We'll be sending survey forms out
to about 250 of you next week, asking you to take part in this year's
survey. If you think your company deserves to be on the list but haven't
seen that notice by Jan. 12, tell executive editor Chris
Wood and he'll make certain your company has a chance to make the
list. We'll publish the results in May's issue.
Hello, Neighbor! Wanna Buy Some OSP?
The recent Census
Bureau report on population shifts over the past year arrived about
the same time as I was reading the public
editor's column in the Dec. 17 Raleigh, N.C., News & Observer.
The Census Bureau said Texas gained 579,275 residents between July 1,
2005, and July 1, 2006, while four other states (Florida, California,
Georgia, and Arizona) added between 321,697 and 213,311 new residents.
Meanwhile, the newspaper recounted a meeting with about 20 readers from
some fast-growing Raleigh suburbs. What surprised the public editor most,
he said, was that only two or three were even natives of North Carolina.
All this leads me to ask: What's the possibility that some of those newcomers
are builders? Sure, most potential LBM customers have been in town for
a while, but there have to be at least a few would-be builders who move
to a new town because of a spouse or for a change of scenery. For these
folks, word-of-mouth could be a risky way to count on getting new business.
Lowe's on the March
If you haven't kept track of the announcements, it's worth noting that
between Nov. 17 and Dec. 22 Lowe's announced
it was opening 50 new stores. Yes, it's generally agreed that Lowe's isn't
nearly the threat to pro sales as The Home Depot is, but dealers who get
at least a part of their business from retail customers can't help but
feel some effect from this new competition.
Economists Say: Turnaround in '07
The chief economists from the NAHB, the National Association of Realtors,
and Fannie Mae gave a joint news conference on Dec. 21 on the housing
outlook for 2007, and while they have a vested interest in rosy scenarios
they at least were consistent in their forecasts. All said the housing
downturn that pervaded the second half of 2006 will peter out in 2007
and resume growing in 2008. NAHB's Dave Seiders believes the slide in
housing starts and new-home sales will bottom out this quarter, with a
"modest upswing" to follow. The Realtors' David Lereah said
he thinks the market is "pretty close to bottom" but the nadir
might not be reached until late spring. Expect 25% of the nation to continue
seeing housing price cuts in '07, he said. And Fannie Mae's David Berson
predicts sales will pick up by midyear.
Worried About Getting Carded
During my travels across the country, heretofore placid executives started
showing signs of heartburn when I asked about the rise in builders' use
of corporate credit cards to pay their LBM bills. Some dealers have stopped
extending to card-payers the traditional discount for paying the bill
by the 10th of the month. Others have stopped accepting American Express
but continue to take Visa and MasterCard. I suspect that many others of
you still are trying to weigh how much business you'll lose if you refuse
the small-business cards-particularly if the builder sees the use of that
card as his way to pay for vacation. How much of a problem is this for
you, and what are you doing about it? And while we're at it, do you have
any rules about accepting debit cards? Tell me at cwebb@hanleywood.com.
On the Road: E Pluribus … Pluribus
"Kidnappers release one American, one Texan in Mexican border state,"
the AP
headline declared. If I needed any reminder prior to this week's visit
to the Lone Star State of how Texans are different, that did the job.
The differences I found during my trip to San Antonio, Victoria, and Austin
stood out particularly boldly because just two weeks before I had visited
lumberyards in Holland and Zeeland, Mich. Taken side by side, the contrasts
were stark: tulip bulbs vs. pecan trees, tidy Dutch reformed churches
vs. massive Christian mega churches, Dutch gables vs. ranch sprawlers,
VandenBosch vs. Fuentes. I'd like to say that despite this diversity,
LBM dealers were the same, but-aside from fanaticism over college football-it
just isn't true. In Michigan, housing starts are down 40%, the economy
is suffering, some small dealers are
closing, and dealers are courting business as far away as Mississippi.
Meanwhile, in Texas there's a $2.5
million spec home going up in a town near Austin, a San Antonio dealer
serving custom builders is setting monthly sales records, and construction
cranes are as common as crows along Interstate 35. After 20,000-plus miles
of travels to lumberyards nationwide this fall, my biggest conclusion
is that there's no such thing as a national economy, only a collection
of local ones. A good idea, however, often can work no matter where it
goes. Thus, you can count on ProSales continuing to look for those usable
ideas and report 'em to you.
Chris Wood's Hawaiian Notebook
Speaking of how local conditions can influence a yard, check out this
month's cover story on Honsador Holdings, the undisputed leader in
Hawaii with $165 million in gross sales. Executive editor Chris Wood wrote
the story. "Honsador old-timers emphasize that respect and understanding
of the local culture is paramount above all other factors in the company's
longevity," Chris says in a note to ProSales Business Update. "At
a lunch with Honsador CEO Carl Liliequist and vice president Wayne Lincoln,
it took little prodding for me to embrace that spirit with a huge plate
of chicken katsu--a traditional Hawaiian meal of fried chicken strips,
rice, bread, and macaroni and cheese. If I could process all that starch,
Lincoln said, I'd be halfway to becoming an un-officially adopted Hawaiian.
By my third interview later that afternoon, the macaroni lumps in my stomach
were subsiding, and I was laughing with Honsador sales manager Larry Arraki
and contemplating trading in my mainlander's suit and tie for a Honsador-logo'ed
Hawaiian shirt." Chris adds that Liliequist says the company's culture
may be laid back, but it's also centered on a selfless and determined
work ethic. Look for Honsador to keep growing as it pursues deals for
military housing, production building, and vacation homes. Liliequist
and others also aren't shy about their intent to acquire additional suppliers,
particularly those with a bent toward manufacturing and value-added services.
"Of course we're only looking at acquisitions in Hawaii," Liliequist
says in a suitably laid-back manner. "We're not going to go buy a
truss plant in Illinois."
Deadline Nears for Registering for ProSales
Excellence Awards Breakfast at IBS
Thinking of going to the International Builders' Show in Orlando, Fla.,
Feb. 7-10? Don't forget that, as a dealer/distributor, you can get a free
exhibits-only pass plus a free breakfast at the ProSales Excellence Awards
Breakfast on Feb. 8. To register for the exhibits pass, go to www.buildersshow.com.
And to sign up for the breakfast, visit www.psexcellenceawards.com.
I'm told that registration for the breakfast is up nearly 50% from last
year at this time, so be sure to reserve a place. At the breakfast we'll
honor the winners of the 2006 ProSales Excellence Awards (highlighted
in our November
issue) as well as the 2006 Dealer of the Year (to be revealed in January).
Overcoming Brand Unawareness
Managing editor Katy Tomasulo spent a lot of hours working this fall with
contributor Jim Groff on a Dealer
Marketing and Branding Survey. Among its findings: at least one-third
of the respondents work at companies that plan to spend less than 1% of
2007 revenues on marketing and branding; 33% said their companies have
never engaged in formal research to gather information about their market.
Groff also hosted a special marketing session during this year's Industry
Summit in which he provided a five-step guide to planning and implementing
a marketing program. Click
here to read it.
Still Thinking of Marketing to Hispanics? Manana
May Be Too Late
I went to Austin, Texas, this week in part as a follow-up to an article
in our November issue on marketing
to Hispanic contractors. I did so because I was having trouble imagining
how, in a nation with 212,000 Hispanic contracting businesses and Hispanics
making up 27% of the construction workforce, it was possible that dealers
could tell us they hadn't noticed any increase in Hispanics doing business
with them. Frank Fuentes, chairman of the U.S.
Hispanic Contractors Association, says he thinks one reason why is
that other companies-particularly The Home Depot-are working to get Hispanics'
business. Fuentes' advice to dealers: Hire people who speak Spanish, work
to set up personal relationships with Hispanic contractors, and learn
at least a few words of Spanish yourself. "We don't mind your bad
accent," he said. "Are we assimilating? Yes. But you can either
wait until we're 100% assimilated or you can swim toward us. … If
you want to wait until we all learn English, go on and wait. But in the
meantime, somebody else is going to believe in us first."
The Home Depot Watch: We Control 11% of the
Biz
While most people watching The Home Depot have focused recently on its
admission
of having backdated some executive options payments as far back as 1981,
we noted with interest this line in HD's latest
quarterly report, in its discussion of its HD Supply unit: "Due
to the highly fragmented U.S. home improvement and professional supply
industry in which we estimate our market share is approximately 11%, measuring
the impact on our sales by our competitors is difficult." Since the
sentence came in a section regarding HD Supply, and given that HD Supply
is on track to record roughly $12 billion in sales this year, one can
assume that a claim of 11% of the market means The Home Depot thinks the
entire market is worth about $110 billion. Hmmm … at roughly the
same time, JMP Securities issued a report on the housing supply chain
in which it assumes the pro market is worth $400 billion. Who's right/
What's your estimate? Tell me at cwebb@hanleywood.com.
Michigan Dealers Could Face Painful Choices
Over State Business Tax
Like many other business executives, LBM dealers in Michigan have complained
that the state's Single Business Tax hurts the state. Now Gov. Jennifer
Granholm (D) has proposed a new business tax in which, according to the
Lansing State Journal, "nearly everyone could find something
to like." But LBM dealers could end up being forced to part with
their chamber of commerce buddies on this one, depending on how details
in the plan are interpreted. One big question regards the proposal's reliance
on assets for a big part of the new tax's revenues. The Michigan Lumber
and Building Materials Association noted that state treasurer Bob Kleine
has said that inventory won't be counted among a company's assets, but
nowhere in the governor's
summary of the new tax does it say that. MLBMA is surveying its members
now to determine what stand it should take.
Loonie Thinking About Lumber Prices
In most other parts of the U.S. economy, the dollar's decline against
other currencies is cause for concern. But among LBM dealers, it could
help. That's because some pricing experts tell me they don't see how Canadian
mills can go on selling timber at current prices given the Canadian dollar's
nearly 50% rise against its U.S. counterpart these past few years. According
to the Bank of Canada, the Canadian $1 coin-known as the loonie-was worth
61.8 U.S. cents in January 2002. This summer it was worth more than 90
cents, and as of Tuesday it was worth 88 American pennies. Ultimately,
one cooperative's lumber buyer told me, Canada will have to raise prices
just to cover the exchange-rate changes. And that, in turn, means U.S.
yards will see higher prices that they can pass along to their customers.
IKEA Homes: A Future Swedish Import?
Ask an American to name the store that matters most in his or her life
and the answer probably is Wal-Mart. Ask a person in the rest of the developed
world that same question and the answer is likely to be IKEA.
Each of the Swedish company's 237 stores average 2.1 million visitors
and $98 million in revenue per year, and its line of flat-packed, assemble-it-yourself
home furnishings are honored for both their stylishness and creative deconstruction.
Now IKEA is going a step further by offering entire homes in Great Britain.
These houses, called BoKlok (it's
pronounced "booklook" and translates to "Live Smart.")
are intended for families earning roughly $30,000 to $60,000 per year.
Unlike IKEA's other goods, which the purchaser assembles (one of my greatest
home-improvement achievements ever was to build and install an entire
IKEA kitchen in Belgium), these would be constructed by professionals.
The prices for the homes haven't been announced yet, but an
article in Britain's Guardian newspaper said one-bedroom apartment
flats would cost roughly $150,000 and three-bedroom house-type units would
cost under $300,000. That's not much house for the money compared with
many parts of the U.S., but in England (particularly the London area),
it's a bargain. IKEA has no official plans to ever bring these to the
U.S., but it wouldn't be surprising if some of the ideas that went into
building these units do cross the pond.
Logging Miles and Learning LBM
Since arriving in September, I have racked up close to 20,000 miles traveling
around the country visiting lumberyards. The road show so far has covered
Delaware, Georgia, Nevada, Washington, and Arizona; as you read this I'm
visiting Michigan and Indiana, and soon I'll be flying to Texas. What
have I learned so far? Primarily two things: 1) There's no single way
to succeed in this business; and 2) The best way to learn Lesson No. 1
is to see where and how you work. Expect to see me on the road early and
often in 2007 as well.
Tell Us: Who's New and Independent?
During my North Carolina visit, I stopped by the offices of Professional
Builders Supply, located in the center of the state's booming Research
Triangle Park area. In many ways it's no different than thousands of other
lumberyards, but nevertheless it's quite different-it's new, and it's
independent. Professional Builders Supply was created in 2003 by a team
led by a former Stock Building Supply executive. It's taking in about
$20 million in revenue this year and is looking to get $30 million next
year. I asked company president Van Isley how he succeeded. His reply:
"It takes equity. It takes sweat. It takes balls." So now my
question is: How many other folks like Isley are out there? Who else has
created a stand-alone LBM dealership since 2000 and who appears to be
making a go of it? When I asked one consultant about whether any new pro
dealers are being set up today, he said he doubted there's nary a one
in the country. Well, Professional Builders Supply is one, and we've received
word that there may be another in Boise, Idaho. Are there any more? Tell
me at cwebb@hanleywood.com.
The Home Depot, Part I: Measuring the HD Supply
Threat
Before The Home Depot announced its 3rd
quarter earnings report earlier this month, it was possible to take
at face value the company's claim that, at $12 billion in annual sales,
its HD Supply was several times bigger than any company on the PROSALES
100. Now we know that HD Supply is indeed big-possibly the biggest of
all pro dealers-but it doesn't dwarf the opposition. HD officials noted
that only 20% of HD Supply's myriad
business units service new-home builders, and residential construction-related
sales by the rest of the divisions add perhaps another 20 percentage points.
That adds up to 40% of $12 billion, or $4.8 million. In contrast, Stock
Building Supply posted $4.4 billion in 2005 revenues, and given its acquisitions
this year the number easily could rise. Factor in the new Pro-Build Holdings
(with just over $4 billion in combined 2005 revenues) and you have the
makings of a horse race.
The Home Depot, Part II: A Paler Shade of Orange
The Home Depot executives' prepared and off-the-cuff
comments made during the company's 3rd quarter earnings report show that
HD Supply's executives didn't have any antidote to fend off the housing
industry's slump. While the press
release trumpeted the 159% increase in HD Supply's net sales to $3.53
billion in the 3rd quarter against $1.36 billion a year earlier, it didn't
note that virtually all the growth was via acquisitions; that only came
out in HD executives' earnings report conference call. Count only those
HD Supply units acquired by July 2005 and sales were up only 7%, the execs
said. In addition, gross margins for HD Supply fell to 26.5% from 30%
a year earlier, while net profits shrank to 6.9% in the July-September
period from 8.26% a year before. And the LBM operations recorded a year-over-year
drop of 2%, HD reported. The shrinking home construction market was blamed,
but so was a 24% drop in the price of lumber and a 48% decline in prices
for paneling.
Calling All Canadians!
We'd like to hear your opinions regarding the Canadian Broadcasting Corp.
drama Intelligence, which appears likely to be the only TV series
playing in North America in which the lead character owns a lumberyard.
Of course, it's not your typical yard, even for British Columbia: It's
a front for the owner, slickly coiffed Jimmy Reardon, to launder drug
profits. Like many LBM dealers, he's a 3rd-generation member of the family
business (at least the bad parts of the business), and Reardon's character
bio on the Intelligence
Web site describes him as having "a diligent work ethic, which
has resulted in the family business flourishing." He's also said
to be "gentle and ruthless at the same time." Canadian TV blogger
Diane Kristine says the lumberyard set appears every few episodes, but
usually not as often as another of Reardon's "legitimate" businesses:
a strip club. Kristine runs a blog called TV,
Eh? So to her fellow Canadians, the question is: How good is "Intelligence,"
eh? Let me know at cwebb@hanleywood.com.
Small But Mighty: Award-Winning Pacific Building
Center
LBM success stories are rarely as heart-warming as the tale of Pacific
Building Center in Blaine, Wash., winner this month of the 2006 Distinguished
Dealer of the Year award from the Western Building Material Association.
Bob and Pam Christianson took over on Jan. 1, 1997, what was then a 3,500-square-foot
retail space in a shopping center in the small town near the Canadian-U.S.
border. At the time, there was only a small fenced-off area behind the
store to hold some building materials. Bob traded in his own car to buy
a one-ton flatbed pickup so the center could do deliveries, and he, Pam
and daughters Kimberly and Stephanie proceeded to run the store pretty
much on their own. Three years later, the Christiansons had upgraded to
a 33% bigger space: a former tavern. Dozens of townspeople volunteered
their time and their pickup trucks to help the center move. Just three
years after that, Pacific Building Center had grown so much it needed
to move again. Now it operates out of a 12,400-square-foot store on 3
acres. The family continues to provide one-third of the center’s
staff. They also are active in WBMA affairs--Kimberly Christianson Akre
is president of the association’s Young Westerners Club—as well
as in Blaine’s civic life.
Takeaways From the NLBMDA/ProSales Summit Roundup
Concerns about meaning and money predominated during the NLBMDA/ProSales
Industry Summit in Scottsdale, Ariz., last month. The meaning issues largely
were prompted by the two keynote speakers, who argued that LBM dealers
should have a cause or purpose that goes beyond simply turning a profit
or perpetuating the family name. But as one famous nun who ran her religious
order's hospital chain used to say, "No margin, no mission."
Thus it's not surprising there also was lots of concern over making money,
particularly during the housing market's current downturn.
Here are some of the tidbits that PROSALES' reporters heard at the main events, the breakout sessions, and the cocktail parties:
- Some of the hottest opportunities for growth appear to be in college towns. Studies show that baby boomers often list such communities as their preferred retirement homes, particularly if the town is in the Sunbelt.
- Some dealers are fighting the market slowdown in part by attacking their accounts receivables. One executive is focusing on the top 200 customers through high-touch executive meetings at which lending and service arrangements get lots of attention.
- Many people blamed builders for pricing themselves out of markets, suggesting that demand would rise again as builders constructed smaller homes.
- At the marketing panel, Eileen Newman of Pro-Build says her company is turning to its employees for marketing insights. "Employees are our best source of information, they have been there and are as close to the customer as possible and understand the nuances," she said.
- At the same session, Bob Lucas of Contractor Express said his Long Island-based company makes an effort in its marketing work to include people who aren't current customers, asking them why they are not using the company's products and services, and highlighting them in ad materials once they have come on board long enough to offer a testimonial.
- It's the same old story with IT-rising interest but still not enough people committing to it.
- Dealers seem more and more willing to admit that installed sales is becoming a necessity and, thankfully, they are starting to realize that it needs to be a separate business and be managed by a dedicated staff. More dealers seem willing to accept that builders are becoming developers and dealers general contractors. In the big builder panel, Walter Foxworth of Foxworth-Galbraith called installed sales "the future." Bill Myrick of 84 Lumber indicated that each of their markets has separate window installation training for installers and they have someone at each location in charge of IS, both of which are rare but necessary details.
- As keynoter Jason Jennings put it, everything you sell will eventually
be done cheaper and faster, and even your people you put so much pride
in can eventually be stolen. But no one can steal your company's culture.
No Bull: Big Builders, Market Experts Expect
Slowdown Will Last up to Two Years
Rarely do writers get a better potential metaphor than this: The main
meeting room in Las Vegas for Hanley Wood's Big Builder '06 conference
Nov. 1-3 was placed next to a major exhibition hall for the Pro Bull Riders
championship. But executives for America's biggest tract builders and
the economists who track them didn't spread any manure of their own when
they described the current housing slump. "I am struck by how dumb
we home builders are, and how selective our memories are," Larry
Webb (no relation), CEO of John Laing homes, said during one session.
He noted that two years ago there were people at the Big Builder conference
asserting that the home building industry had stopped going through boom-and-bust
cycles. That wasn't true then, and "we should be ashamed of ourselves
for not preparing" for a downturn, he said. Eric Belsky, executive
director of the Harvard Joint Center for Housing Studies, said the current
downturn is more likely to look like the serious downturn of 1987-1991
than the relatively quick, shallow slowdowns of 1994 and 2001. "This
is going to be a bumpier ride than a soft landing," he said. What
worries Belsky in part is that there are about 200,000 more vacant homes
for sale nationwide now than there were a year ago. "Starts haven't
come down quickly enough to clear the pipeline," he said. Most speakers
said it will take at least until this time next year before we have a
sense of the downturn's impact and duration. Belsky predicted 12 to 24
months' worth of doldrums.
At Big Builder '06: Polite Talk but Real Pressure
on Dealers
Representatives of some of the biggest home construction companies in
America got a lot of advice at the Big Builder conference in Las Vegas
to save on supply costs by working harder at internal communication. But
it also was clear that tract builders expect to pay dealers and subcontractors
less because the builders aren't as rich as before. "We've had good
success in getting our suppliers to share some of the pain," said
Robert Schottenstein, chairman, CEO, and president of M/I Homes. At a
later session, a builder exec said several of his peers are writing to
dealers telling them that builders are taking a hit and asking dealers
to reduce prices. "The ones that had the best quality and the best
margins were those most able to reduce prices," he said. Bruce Karatz,
chairman and CEO of KB Home, said the current housing downturn makes this
a good time to take costs out of the supply chain, such as setting up
regional distribution networks. "It's important to find more effective
ways to have our homes built," he said, adding that "taking
out the middleman … is something worthwhile, even in these times."
Ironically, just before Karatz and Schottenstein spoke, management consultant Clark Ellis of FMI was saying that many builders don't have estimating offices, don't understand material vs. labor costs, and don't have good relations between the purchasing and the operational offices. Ellis said he has seen even adversarial relationships between purchasing and construction operations of top 10 builders. That costs those businesses thousands of dollars in unnecessary added costs, he said. "If you do not understand how your costs behave-at a detailed level-you are not in control of your business," he said.
Cellular Division
Pro Dealers should take note of reports
this week that T-Mobile has begun testing in the Seattle area a mobile
phone that can work over both cellular and Wi-Fi systems. (Watch
T-Mobile's promo.) This is the first time that such a service has
become available in the U.S. (British Telecom has promoted a similar one
since June 2005) and other American carriers are likely to follow suit.
These phones seamlessly shift a person's conversation from Wi-Fi to cellular
systems and back again without dropping the call. This means you can set
up a Wi-Fi network in your lumberyard and enjoy cheap, Vonage- or Skype-style
phone calls on the site and not have to begin paying for cellular minutes
until a worker leaves the site. And given how Philadelphia and a number
of other cities are creating city-wide Wi-Fi networks, if you're in one
of those towns the day may come when you'll never need to use the cellular
part of the phone. In addition, look for other carriers to piggy-back
past T-Mobile by creating new services. One likely advance: competitive
alternatives to Nextel's and other carriers' walkie-talkie systems.
Why You Should Be Interested in Interest-Only
Mortgages
There's both an obvious and a more subtle message to be found in the Mortgage
Bankers Association's latest report
on home-loan originations in the first half of the year. Both relate to
the MBA's finding that a quarter of all mortgage originations nationwide
between January and June were interest-only mortgages, while another eighth
of the originations were "payment option mortgages" that often
come with below-market teaser rates. The obvious message is that the prevalence
of these mortgages show just how stretched millions of Americans are when
they buy homes-and how easily this country's economy could see big trouble
if home prices drop significantly. The subtler message has to do with
the fact that these kinds of mortgages exist at all. Advances in technology,
a lot of creative mathematics, and industry consolidation over the past
20 years have made it possible for lenders to market loans that would
have been foolhardy to offer just a few years before. These things happened
because mortgage lenders invested in their systems and embraced technology.
Meanwhile, many LBM dealers continue to scoff at the idea that IT can
help their business. If lenders had thought that way, it's a safe bet
that millions of people owning homes today would never have gotten that
chance.