84 Lumber builds (and bids) American


Las Vegas — In the not-too-distant future, 84 Lumber sees itself giving its potential customers two bids — one regular bid, and one bid consisting exclusively of American-made products.

When it happens, builders may be surprised at the similarity in total costs, according to Jeff Nobers, VP marketing for the Eighty Four, Pa.-based pro dealer.

The all-American bid system is one of the ideas stemming from 84 Lumber’s new initiative to encourage builders and consumers to buy American when building — called "We Build American."

A group of 84 Lumber executives were joined at the International Builders’ Show by Marnie Oursler, president of Marnie Homes of Bethany Beach, Del., who founded We Build American and recruited 84 Lumber to join her efforts to promote the concept.

"If we get other builders on board, we can make a difference," said Oursler, referring to the creation of more jobs in the United States.

The We Build American website already lists approximately 180 companies that sell American-made building materials and products.

"We know there are [more] vendors out there we may not be aware of," said Nobers. Builders who are willing to construct homes with at least 95% U.S.-made materials are also encouraged to sign up.

Additionally, 84 Lumber is planning a prototype store that will showcase U.S.-made building products. Chief operating officer Frank Cicero toldHCNthat the LBM chain is looking at a location in an area where the company has a high concentration of stores, such as Baltimore; Washington, D.C.; or Virginia.

Nobers stressed that 84 Lumber was taking a "big tent" view of the We Build American initiative. "This just can’t be an 84 Lumber thing," he said. "We think everyone should take a look at this."


Leave a Reply

No comments found



To what extent will your office be impacted by March Madness, which tips off this week?

Orchard strikes back, sues Depot


Back in June, Home Depot said it intended to defend its position as power tool market share leader. Now the giant chain finds itself a defendant in a lawsuit filed by Orchard Supply Hardware.

In a 43-page complaint, San Jose, Calif.-based Orchard said it’s being iced by power tool makers Milwaukee and Makita at the urging of the world’s largest home improvement retailer. "Orchard Supply vs. Home Depot, Milwaukee Electric Tool and Makita USA" was filed in December in U.S. District Court in San Francisco. OSH claims the defendants are running an unlawful group boycott.

"Milwaukee and Makita both unexpectedly cut off all further supplies to Orchard at around the same time in June 2012, doing so very shortly after Home Depot had publicly announced that it planned to lock up the supply of key hardware products in order to counter the competitive threat posed by Amazon and other online retailers," reads the complaint.

Included as Exhibit 4 in the complaint is an article that appeared June 7, "Home Depot will defend its lead in power tools." In the article, Craig Menear, VP merchandising told investors and analysts that Home Depot is developing strategic relationships with suppliers.

According to a Home Depot spokesman, all is fair in the power tool aisle. "We’ll present the specifics of our defense in the proper forum," said Stephen Holmes of Home Depot. "But I can assure you that The Home Depot is committed to fair competition."

Milwaukee and Makita, which declined comment, account for 50% of all sales of 12-volt impact drivers in the United States, the complaint said. They combine for 46% of reciprocating saws and 44% of 12-volt cordless tools and combo kits.

Without Milwaukee and Makita products, Orchard said its ability to remain a viable competitor in the power tool market is threatened, especially when it comes to selling to tradesmen. Orchard estimates its losses attributable to the cutoff at about $2 million per year.

Furthering the controversy, the complaint alleges that Ace Hardware Corp. and other wholesalers are also being denied Milwaukee and Makita products, but an Ace spokeswoman dismissed the idea: "Makita and Milwaukee both enjoy excellent relations with Ace Hardware Corp. and our stores," she said.

It’s going to take the courts to figure it all out.


Leave a Reply

No comments found



To what extent will your office be impacted by March Madness, which tips off this week?

The Forecast Issue

BY Ken Clark

An intelligent analysis of 2013 forecasts for the hardware and building material industries must begin with the recognition of a term that has entered the lexicon of economic forecasting and business predicting.

The term is "head fake."

Referring to economic indicators that point in the wrong direction, or a forecast that misses its mark, the forward-looking head fake has been a fact of life for the home improvement and building material industry in recent years. In the spirit of full disclosure, HCN has facilitated several of these head fakes, including our own headline from a 2007 article anticipating "A Soft Landing" for the housing market, which at the time was experiencing a slight dip.

While hindsight is 20-20, the industry now looks ahead with the principle of "regression to the mean," lifting metrics that have been stuck near record lows. The million-housing-starts mark is almost within reach, and warnings about material scarcity for a growing demand sound increasingly urgent.

Against this backdrop, HCN offers the following pages of forecasts from those who are paid to know best. One of the forecasters is NAHB chief economist David Crowe, who described the challenges facing those who look into the future: "If I’m right, nobody will remember. But if I’m wrong, everybody will remember."

Either way,HCNwill remember, because we have the forecasts written down. We begin with starts.

Housing starts

2013 Forecast: 940,000

Source: NAHB

"If you haven’t already seen it, the builders are feeling better," said Crowe, during a presentation at the International Builders’ Show.

But aren’t these guys at the NAHB the eternal optimists? Hold that thought. In late 2011, the NAHB’s 2012 forecast called for 709,000 housing starts for 2012. They were actually 10% under the actual full-year figure of 780,000 as reported in January 2013 by the U.S. Census Bureau.

The NAHB forecast for 2013 is a 21.5% increase to 940,000 starts. Single-family starts are expected to increase 22% to 535,000.

The NAHB’s optimism is supported by its homegrown metric known as the Improving Markets Index. The association defines an "improving market" as one that shows growth for at least six months in all three of the following: single-family building permits, home prices and employment. By the NAHB’s tally, there were 12 markets that made the list when the measurement was introduced in September 2011. In January 2013, there were 242 markets.

"Nearly every measure of housing market strength — sales, starts, prices, permits and builder confidence — has been trending upward in recent months, and we expect to see gradual but steady growth along these lines in 2013," Crowe said.

But before you bet the house on a 20% increase, there are some wild cards to consider. Crowe and others point to tight mortgage lending conditions, inaccurate appraisals, rising materials prices and a declining inventory of buildable lots as challenges to growth. And that’s not counting unforeseen roadblocks on the federal policy front, among them being possible changes to the mortgage interest deduction.

Builder pain points

2013 Forecast: building material prices

Source: Builders surveyed by NAHB

Looking into 2013, this year’s No. 1 concern among builders is "building material prices."

That’s a big change from the previous year’s NAHB builder survey, when "building material prices" ranked ninth, and the No. 1 problem was "concern about employment/ economic situation."

What will keep builders awake at night? Continuing down the list of anticipated problems for 2013, builders cite: gridlock in Washington, D.C.; concern about economic situation; regulation of banks; inaccurate appraisals; difficulty qualifying buyers for mortgages; attempts to limit the mortgage interest deduction; and bringing up the rear, cost/availability of labor.

Cement consumption

2013 Forecast: 8.1% growth

Source: Portland Cement Association

Improving underlying economic fundamentals, the existence of large pent-up demand balances, and the diminishment of economic fiscal cliff uncertainty will combine to result in strong growth rates in 2013 and an increase in cement consumption, according to the Portland Cement Association (PCA).

The group forecasts an 8.1% growth in cement consumption in 2013, significantly higher than the tepid growth projected in its fall 2012 report. The upward revisions reflect adjustments made in light of the recent fiscal cliff accord, recognition of stronger economic momentum and markedly more optimistic assessments regarding residential construction activity. The January report marked 2012 consumption at 78.5 million metric tons, an 8.9% gain compared with 2011.

"Growth in 2013 cement consumption will be largely driven by gains in residential construction," PCA chief economist Ed Sullivan said. "Housing starts should reach nearly 950,000 units, with single-family construction near 700,000 starts during 2013. We see starts hitting the 1 million mark in 2014 or 2015."

Sullivan did caution, however, that the first quarter of 2013 would actually show declines compared with the same period in 2012. "It is important to point out that this potential decline in first-quarter growth rates does not signal a weakening in market fundamentals, but rather a hangover from favorable 2012 weather conditions. Stronger gains in cement consumption growth are expected during the second quarter."

The accelerated consumption predicted during the second half of 2013 should carry into the following year. PCA projects an increase of 8.3% for 2014.

Home prices

2013 Forecast: 2%-3% increase

Source: Freddie Mac

Nationwide, home prices are expected to rise 2% to 3% in 2013, according to Frank Nothaft, chief economist at Freddie Mac.

Home prices are on something of a roll. The median sales price of new houses sold in December 2012 was $248,900, up from $245,600 in November, according to the U.S. Census Bureau. The average sales price was $304,000, up from $289,900 in November.

Home price stats can be misleading. At the peak, a $300,000 house that lost 66% of its value falls to $100,000. The same house that gains 20%, will sell for $120,000.

Factoring into those sales will be historically low mortgage rates that Nothaft said they will stay below 4% through the end of the year for a 30-year, fixed rate loan.

Gas prices

2013 Forecast: down 0 cents to 20 cents per gallon

Source: U.S. Department of Energy

Gas prices in 2012 were at an all-time high annual average — $3.60 a gallon of regular, according to the American Automobile Association (AAA). In 2013, look for the average price to fall by approximately 18 cents per gallon, according to the U.S. Energy Information Administration in the January 2013 edition of its "Short Term Energy Outlook," with a chance to drop maybe 20 cents given new investments in U.S. crude oil production.

According to the U.S. Energy Information Administration, due to new pipeline projects coming online early in 2013, new sources of lower-priced crude oil produced from tight oil formations in the middle of the United States are becoming increasingly available to refineries along the Gulf Coast. Therefore, expectations are for retail gas prices to dip almost 20 cents compared with 2012.

The latest triple numbers from AAA put gas at $3.33 per gallon.

Retail sales

2013 Forecast: up 3.4%

Source: National Retail Federation

Not counting automobiles, gas stations and restaurants, the National Retail Federation predicts 3.4% growth for store sales in 2013. But the association’s president isn’t celebrating.

That’s because the pace of growth is expected to slow from last year’s 4.2% figure.

"Consumers read troubling economic headlines every day and look at their bottom lines at the end of the month, and they don’t like what they see," said NRF president and CEO Matthew Shay.

E-commerce sales

2013 Forecast: up 9.0% to 12.0%

Lowe’s is plowing ahead with Mylowes and its seamless multi-channel vision.Amazon.comis recognized increasingly as a challenge to home improvement retailers everywhere. And Do it Best has pledged to become world class in the digital arena.

Sometimes it seems the world is going, the digital division of NRF has forecast a 9.0% to 12.0% increase in online sales in 2013. Momentum for growth was established during the 2012 holiday shopping season, which showed an 11.1% gain over the previous year’s digital sales, according

Remodeling activity

2013 Forecast: double-digit growth

Source: JCHS

The Joint Center for Housing Studies at Harvard University uses the businessman’s favorite four-word phrases to describe remodeling in 2013: "accelerating double-digit growth."

Sounding a note of cautious optimism is Kermit Baker, the director of the Remodeling Futures Program at the Joint Center. "There are many external economic and political risks that could derail this remodeling recovery," he said. "However, the solid momentum behind home-building activity, existing-home sales, low financing costs and remodeling contractor sentiment all point to a solid start to the new year for home improvement spending."


Leave a Reply

No comments found



To what extent will your office be impacted by March Madness, which tips off this week?