BART HARRIS

“We are a nation of builders,” President Donald Trump emphasized in Jan. 30’s State of the Union address, making one of several points germane to the LBM Industry. His address ran roughly 80 minutes and covered policies he will emphasize in 2018. We’ll leave it to others to debate whether these changes should take place and we’ll focus, instead, on the impact on our industry if they do take place.

Employment. The president began by celebrating the creation of 2.4 million new jobs since the election. Strong employment helps our industry by leading to the construction of office and other commercial buildings and in driving new home construction. The president touted the positive effects of recent tax cuts and reforms. No one can ignore the collective economic benefit of returning thousands of dollars to a typical household. At that level, though, the tax cuts would be more likely to help LBM distributors that serve the DIY and remodeling segments, rather than boost home building.

Repatriated Profits. Trump also mentioned the nascent repatriation of profits held overseas and multi-billion-dollar investments in the U.S. by companies like Apple and Exxon Mobil. These investments drive growth, from the construction of corporate facilities to homes purchased by workers and businesses built to serve these growing communities.

Infrastructure. The president called for Congress to pass $1.5 trillion in spending for “roads, bridges, highways, railways, and waterways.” Most LBM distributors do not carry products that are used directly in such projects, but they would benefit from the many second-wave projects that would be driven by such massive improvements.

Drug Prices. Trump named among his top priorities for 2018 reducing the cost of drugs, particularly those which are sold at lower prices elsewhere in the world. Such a move would decrease upward pressure on already soaring health insurance costs, reducing the operating expenses of LBM distributors.

Immigration. Another topic that received a great deal of attention was immigration, the only area where Trump outlined specific pillars in a plan. Again, setting aside the right and wrong of immigration reform, most of the proposed policies seem likely to decrease the supply of documented and undocumented foreign workers, many of whom seek jobs in construction. The net effect of such changes would be to increase labor costs and, most likely, to sharpen the already acute shortage of labor in the building industry.

Many other policies were discussed that have important implications for our country but not specifically for the LBM industry. Most of the specific policies mentioned in the State of the Union address, taken at face value, appear likely to be greatly beneficial for the LBM distribution segment if they are enacted.