Juggernaut. Powerhouse. The clear leader in construction services. ProSales and other industry observers used those phrases less than two years ago in praise of Building Materials Holding Corp. (BMHC) and its two-pronged strategy of selling materials through BMC West and providing turnkey construction services through SelectBuild. Now, the housing recession is sweeping away that dream.

BMHC announced May 12 that it will merge its BMC West and SelectBuild units in an attempt to streamline services. It estimates the move will save $20 million to $25 million annually. That same day, the San Francisco-based company–the fifth-largest on the 2008 ProSales 100–reported that its loss deepened to $33.9 million in the first quarter vs. $5 million in the same year ago, while first-quarter sales sank 37% to $355 million from a year-earlier $559 million.

BMHC telegraphed in February that changes were under way when it announced that BMC West chief Stanley Wilson would take over operating responsibility for both BMC West and SelectBuild. Two months later, the company revealed April 30 that SelectBuild president and CEO Michael Mahre had resigned.

Wilson was one of the Boise Cascade executives who started BMHC in 1987 after Boise got out of the distribution business. Mahre joined BMHC in 1999 and was described by ProSales in July 2006 as the "ambitious son" of the BMHC family.

Wilson said BMC West and SelectBuild will operate out of seven regions (down from 13) and combine back-office support functions, most of which appear likely to come from the SelectBuild side. Some business units will be closed; for instance, BMHC will cease residential framing and concrete operations in Tucson, Ariz., effective July 18. On May 16, the company also said it was closing millwork and building materials distribution facilities in Merced and Bakersfield, Calif. BMHC's employee count–which it reported to the ProSales 100 as 14,000 as of the end of 2007–was cut 20% in the first quarter of 2008.

BMC West sales decreased 24% to $211 million from $279 million in the same quarter of 2007. Operating income shrank 83% to $1.8 million from $10.7 million, sales shrank 49% to $144 million from $281 million, and the loss on operations in the first quarter widened to $17.3 million from $2.8 million in the year-earlier period.

–Craig Webb