We often hear concerns about whether independent LBM dealers are a dying breed. Fresh Census Bureau numbers suggest the answer is more nuanced than the gossip would suggest.
The federal agency's latest Statistics of U.S. Business report shows that, in 2015, there were 7,250 fewer firms classified as "Other Building Material Dealers" and with fewer than 20 employees than there were in 2002. The total count fell to 19,493 in 2015 from 26,763 in 2002.
But the same database also suggests that smaller dealers make up a bigger same share of all LBM firms in 2015 than they did in 2002--86.1% vs. 82.8% over a decade ago. Here's what the data looks like when the firm counts are broken down by number of employees:
And even with the consolidation and roll-ups that have marked LBM life since before the housing bubbles, the percentage of LBM dealers with zero to 19 employees rose to 66.4% of the total for all dealers, up from 63.0%. The chart at the top of this page shows the breakdown for LBM establishments based on the employment counts at the firms that own those establishments.
In effect, what has been happening since 2002 is that the number of firms and establishments have dropped pretty much equally for all the various firm sizes. It appears that dealer concern has focused on the actual numbers of small dealers that have gone out of business without realizing how, proportionately, the changes haven't been all that great. As an example, this table shows how many firms there were in each of the various employer groupings:
| Dealer Counts by Firms Size | |||||||
| 0 to 4 | 5 to 9 | 10 to 19 | 20 to 99 | 100 to 499 | 500+ | sum | |
| 2002 | 13,728 | 7,468 | 5,567 | 4,658 | 700 | 186 | 32,307 |
| 2003 | 13,024 | 6,899 | 4,997 | 3,890 | 640 | 167 | 29,617 |
| 2004 | 12,822 | 6,784 | 5,036 | 3,949 | 673 | 158 | 29,422 |
| 2005 | 12,999 | 6,940 | 4,941 | 3,858 | 653 | 172 | 29,563 |
| 2006 | 12,800 | 6,780 | 4,941 | 4,024 | 703 | 163 | 29,411 |
| 2007 | 12,723 | 6,597 | 4,765 | 3,784 | 633 | 170 | 28,672 |
| 2008 | 13,355 | 7,038 | 4,781 | 3,591 | 618 | 143 | 29,526 |
| 2009 | 13,071 | 6,624 | 4,396 | 3,096 | 512 | 127 | 27,826 |
| 2010 | 12,977 | 6,137 | 4,224 | 2,781 | 442 | 119 | 26,680 |
| 2011 | 12,187 | 6,095 | 3,765 | 2,683 | 421 | 120 | 25,271 |
| 2012 | 11,754 | 5,741 | 3,457 | 2,508 | 405 | 118 | 23,983 |
| 2013 | 11,397 | 5,663 | 3,413 | 2,477 | 420 | 118 | 23,488 |
| 2014 | 11,022 | 5,507 | 3,424 | 2,517 | 446 | 132 | 23,048 |
| 2015 | 10,590 | 5,449 | 3,454 | 2,560 | 453 | 132 | 22,638 |
| '02-'15 change | -3,138 | -2,019 | -2,113 | -2,098 | -247 | -54 | -9,669 |
| % change | -22.9% | -27.0% | -38.0% | -45.0% | -35.3% | -29.0% | -29.9% |
... And this table shows the percentage that each of those groups count for the whole:
| Percentage of Total | ||||||
| 0 to 4 | 5 to 9 | 10 to 19 | 20 to 99 | 100 to 499 | 500+ | |
| 2002 | 42.5% | 23.1% | 17.2% | 14.4% | 2.2% | 0.58% |
| 2003 | 44.0% | 23.3% | 16.9% | 13.1% | 2.2% | 0.56% |
| 2004 | 43.6% | 23.1% | 17.1% | 13.4% | 2.3% | 0.54% |
| 2005 | 44.0% | 23.5% | 16.7% | 13.1% | 2.2% | 0.58% |
| 2006 | 43.5% | 23.1% | 16.8% | 13.7% | 2.4% | 0.55% |
| 2007 | 44.4% | 23.0% | 16.6% | 13.2% | 2.2% | 0.59% |
| 2008 | 45.2% | 23.8% | 16.2% | 12.2% | 2.1% | 0.48% |
| 2009 | 47.0% | 23.8% | 15.8% | 11.1% | 1.8% | 0.46% |
| 2010 | 48.6% | 23.0% | 15.8% | 10.4% | 1.7% | 0.45% |
| 2011 | 48.2% | 24.1% | 14.9% | 10.6% | 1.7% | 0.47% |
| 2012 | 49.0% | 23.9% | 14.4% | 10.5% | 1.7% | 0.49% |
| 2013 | 48.5% | 24.1% | 14.5% | 10.5% | 1.8% | 0.50% |
| 2014 | 47.8% | 23.9% | 14.9% | 10.9% | 1.9% | 0.57% |
| 2015 | 46.8% | 24.1% | 15.3% | 11.3% | 2.0% | 0.58% |
Of course, firm size isn't the same as revenue. And as the ProSales 100 numbers from 2002 to 2016 show, the revenues of the biggest firms have grown dramatically, particularly since the end of the Great Recession:
The differences between the Statistics of U.S. Business numbers and popular opinion also could relate to the fact that the Census Bureau doesn't actually count LBM dealers. Rather, the numbers cited above are in the "Other Building Material Dealers" category, which means that these companies aren't home centers, hardware stores, or paint and wallpaper stores. It's likely that these counts include a lot of dealers that don't cater to residential builders. We think that's the case because the Census Bureau counts 132 firms as having more than 500 employees, while the latest ProSales 100 has only 29 companies with that many workers. More detailed numbers will come from the 2017 Census of Business that's now under way, but data from that census is unlikely to be available for another year at the earliest.
