Building from Brooklyn to Birmingham
Back in November, Brooklyn, N.Y.-based MarJam Supply Co. President Mark Buller told Home Channel News his company was “keeping its eyes open” for acquisitions or expansion opportunities.
He found some.
The 2010 Home Channel News Pro Dealer of the Year and November cover story, MarJam continued its string of acquisitions, taking on the assets of seven yards in Alabama and one in Mississippi.
The locations were previously part of Building Materials Wholesale Inc.
The Alabama locations are in Alexandria, Auburn, Birmingham, Huntsville, Montgomery, Pelham and Tuscaloosa. Additionally, MarJam added a unit in Gulfport, Miss.
The expansion follows on the heels of MarJam’s move into the Florida market in 2010, and brings its unit count to 30, not counting door shops and storage areas.
Before the addition of Alabama and Mississippi, MarJam operated 22 locations in the Northeast and Florida — not counting door shops and storage areas.
Bac in November, MarJam President Mark Buller told HCN the Brooklyn-based was “keeping its” eyes open for expansion opprtunities. new a
Postcards from the Show
As a result of too much good material and not enough space, here is a collection of semi-random notes from the International Builders’ Show in Orlando, Fla.
• Question: Does anybody really pay $99 a day for Internet connection — the asking price at the convention center?
• I told my cab driver what I was doing in Orlando.
“That’s funny,” he said.
“Because I must have taken a dozen people to and from the Builders’ Show, and I haven’t met an actual builder yet.”
There are two kinds of work, I explained to the driver, paraphrasing philosopher/mathematician Bertrand Russell. The first is moving and building heavy objects at or near the surface of the earth. The second is telling other people to do so. The first is hard work. The second is much more pleasant. (Now that’s a tip.)
• The builders I spoke to in Orlando had a near unanimous response to the stock question: “How’s business?” By far the most common was: “We’re doing well.” The emphasis was always on “we’re,” with the insinuation that competitors couldn’t claim the same. The worst report I heard was, “We’re doing OK.”
I explained the findings of my unscientific survey to a builder from Pittsburgh who promptly shredded my experiment as biased and flawed. “All the builders here in Orlando are doing well,” he said. “The ones who aren’t, well they’re back home trying to figure out how to stay in business.”
But maybe there’s another interpretation. The builder who recognizes the value of the kind of networking and education available at events like the International Builders’ Show are the kinds of builders who are going to be in good shape.
Just a thought.
• Credit to NAHB chief economist David Crowe for doing something extraordinary and refreshing. Before delivering his forecast for 2011, he revealed to the audience his forecast for 2010, which was off by a long shot (but closer to reality, he pointed out, than other forecasts). Bravo! Disclosure of past forecasting accuracy (or inaccuracy) is too often neglected. This should be standard operating procedure for all economists standing at a podium and talking about the future.
• Best description of pent-up demand, social trends and residential construction: “It’s only so long that a 30-year-old can live in his mom’s basement,” said NAHB’s Crowe.
• Overheard in the pressroom: “Does America need another manufacturer of faux stone products?” Remembered from Economics 101: “The American market will answer that question.”
There is always room for an innovator. Even in a crowded market, if a company can provide a value proposition to its customers, then it’s in.
• With his prediction for a 20% increase in housing starts, Frank Nothaft, chief economist at Freddie Mac, put the stat in perspective. If a typical builder built 25 houses during the market peak, this same builder produced only five houses in 2010, following form. A 20% increase in 2011 would mean this same builder would increase production to just six houses this year.
• I’ll take it.
— Ken Clark
Foreign flooring accused of price dumping
The issue of anti-dumping has faced the home channel marketplace before, most recently with the import of steel nails. Now it is hardwood flooring’s turn at the epicenter of an anti-dumping and anti-subsidy investigation.
The case involves engineered (also called multilayered) wood floor planks like those sold at Home Depot and Lowe’s. Several leading U.S. wood floor manufacturers, crippled by the protracted slump in domestic new-home construction, want anti-dumping duties on multilayered wood flooring from China. They are also seeking countervailing duties to offset Chinese government subsidies, including what they said was a government policy of keeping the Chinese Yuan undervalued by as much as 25% to 50%.
Imports of engineered wood flooring from China fell to $119.7 million in 2009 from $148 million in 2008, according to U.S. wood flooring statistics. The U.S. manufacturers said the recession caused the decline, while arguing China was positioned to grab a bigger share of the market.
Fed up, a group of hardwood flooring suppliers formed the Coalition for American Hardwood Parity (CAHP) in October and filed an unfair trade petition regarding imported engineered wood flooring from China.
Don Finkell, CEO of Shaw Hardwood, said the group forged the alliance because the suppliers are trying to protect their employees’ jobs and American manufacturing. “This is a legal avenue that is open to all American manufacturers. We are taking it now because the market share of Chinese multilayered hardwood flooring is reaching a point where our business is permanently threatened,” he said. “We think it will cause Chinese wood flooring products to be sold at parity with U.S. wood flooring products. We are hoping that our relationship with our Chinese partners will be unaffected, [and] we hope this allows the U.S. engineered hardwood flooring industry to survive and not go the way of textiles and furniture.”
The petition targets China, “since the unfairly traded imports from that country pose the intrinsic threat to this U.S. manufacturing industry,” said Jeff Levin, lead counsel for the CAHP. While some of the petitioners import product from China, the CAHP defends its case, saying on its website: “All things being equal, we would prefer to make the products in the U.S.”
The U.S. group claims that over the last several years, China’s share of the U.S. engineered flooring market has grown from “single digits to over one-third.” Levin, of the CAHP, said China has dumped products into the U.S. market that are well below fair value. “Chinese manufacturers receive an array of government subsidies, including that country’s manipulation of currency exchange rates. All of these factors equate to an enormous unfair advantage for Chinese manufacturers and injure the entire domestic hardwood flooring industry.”
Levin said these trade practices present a potentially “insurmountable obstacle” to the domestic industry’s ability to “recover its competitive footing,” even when the economy improves.
Industry experts said the dumping hurts manufacturers, as well as distributors and retailers whose profit margins are squeezed. Ultimately, it trickles down to the consumer, Levin said. “Well-styled domestic products that once earned a reasonable profit have been relegated to commodity status, as Chinese companies simply appropriate the costly development and market-testing efforts of domestic manufacturers,” he said. “Service levels have suffered throughout the supply chain. In the end, everyone throughout U.S. commercial channels, up to and including the consumer, suffers.”
The CAHP filed its petition with the U.S. Department of Commerce and the International Trade Commission (ITC). The ITC in December cited a “reasonable indication” that U.S. manufacturers are suffering material injury due to imports of the engineered product because it is being sold in the United States at dumped prices and is unfairly subsidized by the Chinese government.
The investigation moves on to the Department of Commerce, which plans to render a final determination for anti-dumping on July 28, 2011.
The CAHP estimates there are more than 1,000 engineered wood-flooring producers in China today that “threaten the continuing competitive viability” of the domestic manufacturing industry.
They claim that manufacturers and exporters in China gain an unfair competitive advantage through the receipt of subsidies at both national and provincial levels. The Chinese government recently increased the export tax rebate to 9%.
Not everyone on the U.S. side agrees with the CAHP’s position. An American-based president of an organization that has operations in the United States and China contends the facts brought to the ITC’s attention are not accurate.
“There really are no more subsidies. There used to be, and no one denies that,” said the executive who wished to remain anonymous. “This is simply an opportunity to take advantage of the current economic situation. You couldn’t ask for a better time to blame everything on China.”
Those opposed to countervailing and anti-dumping duties contend the following:
1. U.S. manufacturers have been slow to adopt technologies such as click-lock systems, which target the growing DIY segment — a market that U.S. makers have failed to recognize, the opponents claim. While the overall housing market has been deeply depressed, the remodeling and replacement segments have performed better, with DIY the catalyst.
2. Imports have helped to diversify and provide otherwise unavailable product mix for the consumer.
3. Unfinished flooring materials should not play a role in the injury analysis since the products need further manufacturing and finishing in the United States before they are sold, opponents say. They also contend that the petitioners do not represent the majority opinion of domestic multilayered wood flooring manufacturers.
Dennis Mohn, president of U.S. supplier Gentry Hardwood Floors, said China imports increased more because everyone was cutting costs in the chain. “The buyers set the price, not the sellers,” he said. “Everyone wants to sell better goods at higher margins, but 10% of something is better than 40% of nothing.”
Today’s problem, he contends, “was not caused by China. They just filled the requests of the buyers.”
Mohn added that the subsidies from the Chinese government “are no different than what U.S. manufacturers get in tax breaks from the government. The currency control by the Chinese government is beyond the control of the flooring industry, but it makes for good add-on.”
Mohn said the buyers from several of the petition-filing companies have contributed to this pricing issue. “How many buyers do you know of that don’t push for the lowest purchase price possible?” he asked. “Coupled with, ‘I’m a big buyer of many containers, so I deserve the lowest pricing.’ ”
And if China is hit with duties, Indonesia lies lurking in the wings. “The issue might change location, but it won’t go away,” said one distributor.