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Construction outlook positive for health care, public safety

BY HBSDEALER Staff

A newly released report by FMI, a consulting and investment banking firm to the building and construction industry, predicts that worsening economic conditions may forestall the housing recovery until 2009, with this year’s residential building activity declining 10 percent for single-family housing, 7 percent for multi-family and 2 percent for remodeling.

The Construction Outlook report also saw decreases in the commercial, office, religious, amusement and leisure segments, all of which are tied into the economy. But certain publicly funded non-residential sectors — health care, educational, public safety and Homeland Security — will fare better, according to FMI. Health care construction will benefit from facility upgrades across the country; educational institutions will fund new projects with endowments or voter-approved bonds in several states; new police and fire stations, as well as prisons, are in the construction pipeline; Homeland Security improvements to U.S. ports and border areas are underway; and airport delays will necessitate expansion projects.

The full report, available at www.fminet.com, also addresses manufacturing-related construction, which FMI believes will remain flat in 2008 and 2009 based on “several multi-billion dollar projects under construction at the same time.” Increases in cement capacity, refineries and steel manufacturing will contribute to these gains, the research said.

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True Value holds spring market

BY HBSDEALER Staff

True Value president and CEO Lyle Heidemann sent out a proactive message to co-op members at the spring market in Orlando, Fla., urging them to resist scaling back in a down economy and, instead, be aggressive in stocking product and investing in advertising and marketing campaigns.

“This is not the time to stop keeping the store in stock,” Heidemann said during the March 14 opening session. “We need to be ready when the consumer comes through the door that first nice spring weekend, or that customer is going to go somewhere else to shop.”

Recapping 2007, Heidemann said that sales were basically flat, with core hardware comparable-store sales up 1.6 percent and net margin up 1.2 percent after a one-time adjustment. The patronage dividend was up $4 million (or 7.7 percent), and equity increased almost 30 percent — from $102.7 to $132.7

“All in all, not a bad year, but we clearly had some disappointments,” he said. “First, although our core hardware comparable stores were up 1.6 percent, we did not achieve our sales plan. Secondly, we did not achieve our fill rate goal of 96 percent.”

True Value has reduced its sales forecast for 2008 but is still predicting an increase. Heidemann said the co-op has seen a slight softening of sales overall in January and February but that it’s very regional, adding that unusual weather patterns have helped boost sales in northern tier stores.

Steve Mahurin, senior vp and chief merchandising officer, encouraged members to capitalize on trends in plumbing, electrical, seasonal, power tools, outdoor living and decorative hardware. He emphasized that raw materials price increases — coupled with the devaluation of the dollar compared to such currencies as the Euro and Chinese Yuan — has raised wholesale pricing, making it imperative that members adjust their retail prices accordingly.

“We are going to continue to push back, conduct line reviews and negotiate the best we can to help keep you as competitive as possible in this rising marketplace,” Mahurin said. “But you have to maintain your price changes on a weekly basis if you plan on maintaining your profitability.”

Stores were also encouraged to revisit their advertising plans and take advantage of additional TV and radio spots, online ads and public relations opportunities.

“In this tough economy, your competitors are going to be even more aggressive than usual as everyone competes for greater share of reduced consumer spending,” said Carol Wentworth, vp-marketing. “Take a critical look at your plan and make sure it’s doing what you need it to do.”

Brad Gebbie, owner of Lyndonville Home Center in Lyndonville, Vt., appreciated the co-op’s efforts to remain positive, despite the economic downturn. “You can make good inroads by making sure you have the merchandise people need,” he said. “In a down economy, it’s a perfect time for people to remodel, and we can benefit from that.”

True Value’s spring market, being held at the Orange County Convention Center, runs through March 16.

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Interior designers battle over name

BY HBSDEALER Staff

The National Kitchen and Bath Association has decided to allocate $750,000 in funds to oppose “interior design title” legislation in fiscal year 2008. In a prepared statement, the national trade organization said it is attempting to stop a concerted effort “by a handful of interior designers” to restrict consumers’ choices when it comes to choosing kitchen, bath or other type of design services.

“Our members are happy to compete on the merits of their skill or expertise,” said NKBA general counsel Edward Nagsky. “But the state governments should not mandate who a consumer must hire to provide design services, which will limit the free market and increase the cost of design services.”

The Alabama Supreme Court recently struck down that state’s interior design practice regulations, declaring that, “The average citizen is [capable] of choosing a competent interior designer without the State’s help.”

Last October, a bill was introduced in the Ohio state legislature that would regulate the use of the term “interior designer.” Illinois is considering amending its law, which prohibits individuals from calling themselves “interior designers” unless they are licensed.

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