Stock Building Supply is making plans to operate in a housing market next year that's about as dour as it is today, the building material dealer's chief financial officer said today. Jim Major made those comments during a group interview by senior Stock executives with ProSales that also touched on the reasons behind Stock's plans to consolidate two eastern Pennsylvania fabrication plants into a third facility as well as on the company's operational changes since it emerged from Chapter 11 on July 1.

"We take a relatively pessimistic view of the housing market for 2010," Major said. "We want to insure we maintain the financial health we achieved. We feel our competitors haven't taken the steps to get through 2010. ... We view 2010 as looking a lot like 2009. We're gearing it to today's activity, roughly a half million starts in total. We're ensuring that we can survive and can continue to make it through a long period. Anything beyond that is upside."

Major also noted that Stock's decision during its Chapter 11 reorganization to focus on just 19 markets nationwide is keeping it out of some of the worst housing areas nationwide, including Florida, Nevada, Arizona, and the upper Midwest. Taken as a whole, the markets Stock is in are stronger in the long term than is the national average for housing, he said.

Major said Stock is operating on a positive cash flow today. He declined to say whether the company is turning a profit.

Also during the interview, chief operating officer Steve Short said a 12-member team of experts from inside the company are about one-fourth of their way through revamping sales and operations in the 19 markets. Among the efforts, he said, is the installation of dispatching software, an emphasis on improving delivery of goods on time and in full, and the purchase of display boards that make it clear to employees how their facility is doing on various key metrics.

Among other changes on the sales side, the company is hiring people in each market whose sole job is to generate leads for reps to pursue. Stock also is looking to increase its installed sales activitiy.

All of this, Short said, "is an executive-level decision to take the oppurtinity to transcend the culture and drive sales as we never have before."

Shortly before the morning interview, Stock announced

it will close two panel, millwork and truss plants in Lancaster County, Pa., and consolidate them into a third facility nearby.

The location that will host the combined activities sprawls across 36 acres, Short told ProSales, so it is more than big enough to accommodate the other operations.

"We are consolidating into one property to streamline our operations and become more efficient," Short said in Stock's news release. "We remain committed to the eastern Pennsylvania market and the surrounding areas that we serve."

Given that Stock has owned these facilities for close to two decades, Major and Short were asked, why choose to do this now?

"Under Wolseley's ownership, we had a much more diversified philosophy," replied Major, referring to Wolseley Plc, the British-based materials giant that sold 51% of Stock in May to the Gores Group, a Los Angeles-based private equity firm. During the Wolseley days, "we were looking at many different things," the CFO said. "What you're seeing now is the benefits of focusing on the new residential and perhaps to a lesser extent the [remodeling and improvements] space. ... We did have a little lack of focus previously. As for why now it's part of the re-energized focus on the residential builders."

Added Short: "Shame on us. We should have done this long ago."

Roughly 100 employees are affected by the consolidation. Stock told the Commonwealth of Pennsylvania that the closure of one of the facilities--in Kinzer, a few miles from the other two facilities in Paradise, Pa.--would affect 36 workers. Stock officials declined to say how many, if any, employees will lose their jobs as a result of the consolidation.

Raleigh, N.C.-based Stock ranks second on this year's ProSales 100. At one point it had more than 350 facilities, close to $5.5 billion in annual revenue and 17,000 employees in roughly 50 markets nationwide. But the housing crash hurt it particularly hard, forcing it to close hundreds of yards and incur crippling rental charges on those shuttered yards.

Consequently, as part of Wolseley's sale of a controlling interest to the Gores Group, on May 6 Stock filed for protection from creditors under Chapter 11 of the federal bankruptcy code. It emerged from Chapter 11 on July 1 with plans to manage 97 branches and 3,500 employees serving 19 markets nationwide. The Paradise-Kinzer operations were one of those 19. (See roundup of recent stories.) Operations in three states that weren't part of the 19 markets--stores in Wisconsin, New York, and Connecticut--finally were sold this week to two equity firms. (See story.)