Companies, professional groups urge Congress to pass rescue plan
The National Lumber and Building Material Dealers Association (NLBMDA) today called on the leaders of Congress to resume work on a bipartisan financial rescue plan to address the severe credit crunch that threatens the stability of the economy and the housing market in particular.
“The failure to pass a bipartisan rescue plan yesterday sent Wall Street into a tailspin that will reach all the way to Main Street,” said NLBMDA president and CEO Michael O’Brien. “We are calling on Congress to get back to work and to not adjourn until a plan is put in place.”
Liquidity in the market and access to credit are essential to reviving the housing market and strengthening small businesses. Failure to enact a rescue plan will lead to further destabilization of the markets and the housing economy.
“Resuming negotiations is the only responsible course of action, and we call on our Congressional leaders to act swiftly,” O’Brien said.
Federal Way, Wash.-based Weyerhaeuser joined the chorus of professional voices urging Congress to take action on the issue.
In a statement, Weyerhaeuser president and CEO Dan Fulton said: “Weyerhaeuser urges members of the U.S. Senate and House of Representatives to support legislation that will re-instill confidence and stability in the financial markets. The current tight credit market is a significant barrier to functioning capital markets, new home construction and capital-intensive businesses,” he said.
“This further aggravates the impacts of the already depressed housing market, which is a significant market for Weyerhaeuser — from timberlands and residential wood products businesses to our home-building companies. The ability to grow all of our businesses, including cellulose fibers, requires access to a healthy banking system in order to promote economic growth. Passage of legislation is vital to the health and preservation of jobs in all sectors of the economy of the states in which we operate and the nation. We urge Congress to act swiftly.”
The National Association of Home Builders, a group that has been pushing for a number of housing and mortgage market legislative issues over the past year, also chimed in.
During its board of directors meeting in San Diego, the leadership of the National Association of Home Builders (NAHB) unanimously “called on Congress to act now before conditions deteriorate to a point that could trigger a global financial meltdown,” according to a statement.
“We agree with Fed Chairman Bernanke and Treasury Secretary Paulson that immediate steps need to be taken to stem the financial crisis. The financial markets are in turmoil, and the flow of credit has been severely curtailed for housing and other sectors of the economy,” said NAHB president Sandy Dunn. “There’s no time to waste. Congress must pass legislation as soon as possible.”
Do it Best – Looking ahead for LBM growth
Do it Best’s LBM members are spread out all over the country, and they’re feeling the downturn like everyone else. But there is a shakeout going on in the building materials industry, and players at either end of the spectrum are either dropping out or cutting their losses. Somewhere in the middle are a number of Do it Best lumberyards, and they’re more than willing to pick up the slack.
Quent Ondricek, vp-lumber and building materials for Do it Best, can recite a list of members who have opened new locations, bought up competitors, or opened/upgraded truss plants and door shops this year. They are all repositioning themselves for the recovery, he said — the 2010 recovery.
“Most of our members are not expecting a sustainable recovery until the first quarter of 2010,” Ondricek said. In the meantime, he said, “People are repositioning themselves in the marketplace.”
“Repositioning” can mean anything from doing more commercial work to expanding their product offerings and services to residential builders. Best Lumber and Building Center of Mesquite, Nev., one of the worst housing markets of the country right now, opened a new door shop this year. So did Husky Lumber, a three-unit pro dealer in the Nashville, Tenn., area.
Husky Lumber already sells lumber packages and trusses to builders (production and custom) in central Tennessee. But the downturn prompted the business to “reach out a little further,” according to owner Jim Husky.
“We want a bigger piece of that builder’s wallet,” he explained.
Three months ago, Husky Lumber opened a new door manufacturing facility at its Franklin location. Word has gotten out, and business is just starting to pick up. “Quality is always an issue in the manufacture of doors. You have to do it right the first time,” said Husky, who strives to find “just a few degrees of separation” from his competitors.
Do it Best, which operates a door shop program, advised the business on what equipment to buy. Husky orders Masonite door slabs through the Fort Wayne, Ind., co-op, which also sells an assortment of jambs, hinges, window lights and security hardware. Husky’s new truss plant, which also gets supplies from Do it Best, opened this year on 22 acres in Murfreesboro, Tenn. Twice the size of Husky’s component plant in Franklin, the new facility can make wall panels, stair parts and custom millwork. Husky is in the process of installing a Hundegger saw so he can provide builders with pre-cut iLevel flooring systems.
Builders Warehouse of Kearney, Neb., another Do it Best member, upgraded its truss plant this year with $1.5 million worth of equipment and software. The immediate goal was to produce wall panels for the commercial market in eastern Nebraska. But owner Myron Andersen is also looking toward Colorado, where the three-unit dealer opened a Denver lumberyard in January. Andersen says he’s laying the groundwork for when the area’s production builders kick into gear again.
Do it Best dealers have watched competitors pull out of many of these markets. BMHC sold three of its BMC West lumberyards in western Colorado last year, and 84 Lumber consolidated in the Denver market. In Ohio, 84 Lumber closed five stores; only one had a larger “hub” location nearby.
“There’s a huge opportunity for our members because everybody is downsizing and [reducing] services,” said Ondricek. “They’re also finding new business in light commercial. They’ve been able to take some market share because their customers are moving over to these projects.”
Hartville Hardware, located halfway between Akron and Canton, Ohio, has sold building materials for a number of years. Scott Sommers, Hartville’s general manager of building materials, has watched more than two dozen lumberyards go out of business in these cities and the surrounding communities since the downturn began. One of them, Schumacher Lumber, was only two miles away and operated a full-line millwork shop.
“They were still doing $3 million in business,” Sommers said. “We were able to purchase them and pick up their sales, which also gained us some new customers.”
The acquisition, completed in June, also expanded Hartville Hardware’s offerings of interior trim and custom moldings. “It completed us for remodelers,” Sommers observed. But none of these reasons were the primary motivation for the purchase, he said. “We’re not looking at what it’s going to do for us now,” Sommers said. “We’re investing not for this year, or next year, but for two or three years from now.”
Further north, in Cleveland, Nisbet Brower bought a roof truss plant when the owner decided to retire. “It’s a business we’ve never been in before but wanted to be,” said president Mark Rippe. The purchase was in late August, and two weeks later, a wall panel plant belonging to a larger competitor went on the market. Rippe bought the assets, picked up five salespeople, and moved all the equipment into one facility. Going forward, Nisbet Brower will no longer be outsourcing its roof trusses and wall panels.
“This fulfills our vision of the company,” Rippe said. “It’s the last two pieces of the puzzle.”
The three-unit pro dealer is still selling to production builders, although many of its customers are shifting over to multi-family. “Apartments are back on the build again,” Rippe observed. “There’s also a lot of business in senior housing and assisted living.” Nisbet Browser has even found a way to sell into high-rise projects: the company can supply interior trim packages or make countertops at its fabrication shop.
Cabinets and vanities
Do it Best’s home decor program was originally designed for members who want to sell flooring or kitchen and bath remodels to contractors and homeowners. But a number of co-op members are using the program’s buying power to bring in granite and marble slabs and ready-to-assemble (RTA) kitchen cabinets and bath vanities from overseas.
“We’re doing more and more direct importing to our members’ stores,” said Tom Snyder, division manager, building products. Dealers import anywhere from one to a dozen containers a year, offering a limited selection of cabinets at a competitive price. This works well with multi-family builders, Snyder explained, because they install the same bathroom or kitchen over and over again.
Snyder oversees the home decor department, but he’s considered part of Do it Best’s 80-member LBM department. The division has done some repositioning of its own this year, involving how it handles its own customers. The millwork sales department was converted to building materials sales and received product knowledge training on every sku in the department.
“We were receiving too many calls from members who didn’t know the [breadth] of what we had,” Ondricek explained. “We had a lot of products that were invisible.”
Members might find what they needed in the electronic catalog, or they might not. A call to a merchandise manager would get an answer, but not always a complete or immediate one.
“Now that call goes to a trained sales specialist who [can] help with the size of the order, the purchase options, pricing, and [availability],” Ondricek said.
“A lot of what we do is still over the phone,” he added. “We talk to the membership more than anyone in the company.”
Carter Lumber makes management changes
Carter Lumber, the Kent, Ohio-based pro dealer, has announced three management changes.
Rollie Haring has been named vp-logistics, a newly created position in which he will be responsible for planning and implementing cost effective transportation strategies across the corporation.
Paul Barnaby will take over Haring’s former role as vp-product management, where he will set the direction for Carter component plants and work with field management to ensure an efficient manufacturing process to meet customer needs.
Finally, Michael Hock has been promoted to purchasing manager, a newly created position which will see him manage all operations of the purchasing department, while monitoring the commodity markets, buying cycles and flow of products from vendors into all stores. Hock, who has more than 40 years experience in the lumber and building materials industry, will report to Barnaby.
Carter Lumber, with more than 200 stores in 10 states, was the Home Channel News Pro Dealer of the Year in 2007.