New Census Data Shows LBM's Dealer Diversity--and Its Hollow Core

Fresh Census Bureau data for 2014 indicates on first glance that pro LBM dealers are more common and less concentrated than other suppliers of building materials, but a second look suggests that a big share of LBM operations barely exist--if they exist at all.

The data, released earlier this month as part of its annual survey on business establishments, finds that in 2014 the nation had 23,048 firms that it categorized as Other Building Material Dealers--businesses that sold building materials but weren't home centers, hardware stores, or paint and wallpaper outlets. Lumberyards and specialty building material dealers both go into the "other" category, which also include firms that sell fending, glass, plumbing fixtures, electrical supplies, prefabricated buidlings, and kitchen and bath cabinets and countertops.

Those 23,048 firms account for nearly two-thirds of all businesses that the Census Bureau puts into its "Building Material and Supplies Dealers" bucket, while the "Other Dealers'" 30,476 establishments (i.e. branches) are more than half of the group's total. (See table below.) But the report also shows that 47.8% of the firms and 36.3% of the establishments in the other Other Building Material Dealers category have zero to four employees. It's likely that a good many of those companies aren't pro-oriented dealers, and in past articles we've noted that so many of them have so little income they deserve to be called DINOs, or Dealers in Name Only. Odds are, many of those companies exist only on paper. (Home Centers have their own DINOs, by the way: The Census Bureau says there are 710 home centers with zero to four workers.)

Setting the DINOs aside, the Census Bureau data shows LBM dealers are more varied than their material-supplying cousins, and fewer big companies control the field. For instance, just 32 firms own nearly 25% of all the hardware stores, while a mere seven paint and wallpaper dealers--0.4% of the total--control two-thirds of the entire business. It's nearly as dominant at the home centers, where 19 companies (0.9% of all home centers) own 62.8% of the stores.

In contrast, the 0.6% of firms in the Other Building Material Dealers category with at least 500 employees account for just 10.3% of all locations in that group. There also are proportionately more mid-sized companies in employee terms than in the home center and paint/wallpaper store categories.

This latest Census report didn't report on revenues by group type and size or by what they sell. A previous ProSales story compared the 2014 numbers with 2013's and found that the number of dealers in the zero-to-four employee category had declined while those in the 500+ worker category had risen.

Here's a table showing the relevant numbers. The numbers in the first set, for Building Material and Supplies Dealers represents the sum of the four subgroups below, finishing with the "Other" category that includes lumberyards and speciality dealers. To download all of the Census numbers, go here and download the file marked "U.S., six-digit NAICS."