After the storm: Dark clouds, green lining
Long before Hurricane Sandy arrived, hardware stores throughout the Eastern Seaboard found themselves swamped with customers trying to stock up on everything from batteries to rubber gloves. But now that the worst is over — and property damage estimates are in the $50 billion range — the effect on the home improvement industry is coming into focus.
After two full days of darkness, the New York Stock Exchange opened on Wednesday Oct. 31 to a whirlwind of activity. Traders seemed especially interested in Home Depot and Lowe’s, the nation’s two largest home improvement chains. (Menards, No. 3, is a Midwestern retailer.) Home Depot closed at $61.38, a 2% rise in share price, and Lowe’s was also higher, closing at $32.38, up 3%.
Diane Swonk, chief economist of Mesirow Financial, told the Detroit Free Press that grocery stores and home improvement outlets realized net gains as customers stocked up on emergency supplies. Online retail will likely experience an uptick as shut-in consumers shop the Internet instead.
Swonk also said that homeowners forced to repair damage will likely make further renovations that they’ve put off, boosting economic growth. The storm is "unleashing pent-up demand," she said. "It’s the most perverse stimulus to the economy."
The catastrophe, which took at least 72 lives in the United States alone — will also provide a job boost to the construction industry.
“We are likely to see localized spikes in construction employment throughout November and the winter as crews are mobilized to rebuild communities damaged by Hurricane Sandy," said Ken Simonson, chief economist for the Associated General Contractors, in a prepared statement.
Reopening and restocking stores that are located in a hurricane’s path has become like military drills for national retailers; they’ve had lots of practice. But even the small independents, as well as their regional warehouses, have become sophisticated when it comes to distribution. Losing power presented a special challenge to supply chain partners, but many used iPads and other satellite-powered communication devices to place and receive orders.
Despite advanced telecommunications systems and meteorological warnings, it was impossible for supply to keep up with all the demand.
On Oct. 29, the day before the hurricane lay siege to the East Coast, a Home Depot in Poughkeepsie, N.Y., sold 140 generators within three hours. But many left empty-handed. So one customer bought a chainsaw just in case a tree fell down on his house, according to the Poughkeepsie Journal.
An editorial about price gouging during natural catastrophes in the Wall Street Journal interviewed an executive of Generac Power Systems, one of the nation’s largest suppliers of commercial and residential generators. Generac (unlike the writer of the op-ed piece) agreed with laws that prohibit the practice. But waiting to buy a generator when everyone else needs one is not a wise shopping decision, the Generac executive pointed out.
Brian Young, a PRO Group hardware store owner in Catskill, N.Y., tried to get his customers to plan ahead with an email blast on Saturday Oct. 27, three days before the storm. He listed what he already had in stock — generators, disposable propane tanks, sump pumps, kerosene lamps and oil and waterproof boots. After losing his store and two houses to Hurricane Irene, Young doesn’t believe in being too prepared.
In the LBM channel, Weyerhaeuser shut down several of its Northeast distribution facilities, according to a CNBC report. CEO Dan Fulton told the news outlet that the closures would cause a “short-term disruption” in its supply chain. “Supply channels are tight, production channels are strong, and we expect that momentum to continue into the quarter,” Fulton said.
But for now, most households are not quite ready for lumber or engineered wood. All of that will come later, after the insurance money, the FEMA funds and the donations start to trickle in.
Lowe’s announced on Oct. 31 that it will donate $1 million to disaster relief and rebuilding efforts in communities affected by Hurricane Sandy. Lowe’s will work with its national nonprofit partners to provide both immediate and long-term support to local communities across the Northeast. Its stores are also accepting donations through the Red Cross.
Foreclosures continue to decline
CoreLogic, an information and analytics provider, has reported 57,000 completed foreclosures in the United States in September 2012, down from 83,000 in September 2011 and 59,000 in August 2012.
Approximately 1.4 million homes, or 3.3% of all homes with a mortgage, were in the national foreclosure inventory as of September 2012 compared with 1.5 million, or 3.5%, in September 2011. Month-over-month, the national foreclosure inventory was down 1.1% from August 2012 to September 2012. The foreclosure inventory is the share of all mortgaged homes in any stage of the foreclosure process.
"The continuing downward trend in foreclosures, along with a gradual clearing of the shadow inventory, are signs of stabilization and improvement in the housing market," said Anand Nallathambi, president and CEO of CoreLogic. "Increasingly improving market conditions and industry and government policy are allowing distressed homeowners to pursue refinancing, loan modifications or short sales rather than foreclosures."
Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 3.9 million completed foreclosures across the country.
Other highlights of the September 2012 CoreLogic report:
• The five states with the highest number of completed foreclosures for the 12 months ending in September 2012 were: California (108,000), Florida (92,000), Texas (59,000), Georgia (55,000) and Michigan (51,000). These five states account for 47.7% of all completed foreclosures nationally.
• The five states with the lowest number of completed foreclosures for the 12 months ending in September 2012 were: South Dakota (20), District of Columbia (58), Hawaii (436), North Dakota (583) and Maine (625).
• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (11.5%), New Jersey (7.3%), New York (5.3%), Illinois (5.2%) and Nevada (4.9%).
• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.5%), Alaska (0.7%), North Dakota (0.7%), Nebraska (0.9%) and South Dakota (1.1%).
Scotts Miracle-Gro to expand Georgia facility
Scotts Miracle-Gro and the Butts County Development Authority have announced that the Ohio-based company is expanding its operations at its facility in Jackson, Ga.
The expansion will create as many as 10 addition jobs to the existing work force of about 75 associates. The total capital investment to the area by Scotts now totals $6 million.
“Jackson is an ideal location for one of our growing media facilities,” said Dave Swihart, Scotts senior VP global supply chain. “Local community leaders have been very supportive of our company, making the choice to expand in the area an easy decision.”
The company received incentives at the state level to help fund the enhancements to the facility. This expansion and job growth is made possible by productive public-private partnerships with both the Georgia Department of Economic Development and the Development Authority of Butts County.
Construction on the expanded facility began in October, with completion and full production set to begin in early 2013.