Copper theft sparks legislation efforts
As the price of copper has risen dramatically, so has crime associated with the increasingly more precious metal. Home channel retailers have been directly affected, to the tune of millions of dollars in shop lifting thefts. But so have home channel customers.
Builders, contractors and homeowners are being targeted by copper thieves as well. Now some retailers are fighting back, and a federal response may be on the horizon.
Bryan Jacobs, director of government relations for Home Depot, now also serves as executive director of the Coalition Against Copper Theft (www.coppercoalition.com), a lobbying group formed in January and based in Washington, D.C.
“Copper theft is fairly new, and so it’s fairly difficult to put the pieces together and get a lot of statistics,” Jacobs said. He cited a Department of Energy estimate that theft of copper wire alone, particularly at utility companies, costs Americans $1 billion per year. Factor in other large copper items sold by home improvement retailers and pro dealers—pipes, appliances, decorative building materials and so on—and it’s clear the issue is far reaching.
The Copper Coalition has grown to 20 members as of this writing, with a heavy retail presence. Members include the International Council of Shopping Centers, National Association of Chain Drug Stores, Retail Industry Leaders Association and the National Retail Federation, as well as the National Association of Home Builders.
The group hopes to enact federal legislation that puts more responsibility on scrap recyclers, Jacobs explained.
“It’s a crime that’s very inter-state. It involves the transportation systems and power lines,” Jacobs explained. “Also, when someone steals the stuff out of a state that has laws on its sale, they just go to a state that doesn’t have a law, and sell it there. Typically, these transactions are no-questions-asked, cash transactions. There needs to be something in place that at least slows down the thief—we’re talking a very basic request for information, for identification.”
Some states do have laws on the books similar to the federal legislation supported by the Copper Coalition. Jacobs noted that a bill passed in Georgia helped take a bite out of the problem—an estimate by a Georgia state task force said copper theft declined around 42 percent in the state after scrap dealers began requiring more stringent identity information from their sellers.
The coalition hopes to promote legislation that requires sellers to show a legitimate government ID card, and it also would require scrap dealers to pay sellers by check and not cash, creating a further paper trail to track possible thieves.
The goal is to stop thefts such as this one, described by Lt. Robert Fowler of the Garden Grove, Calif., police department:
“Recently, we had an incident at a local Home Depot here, where an individual picked up a ‘Whirlybird’ (a large air conditioner fan), took the Whirlybird out and put a huge roll of copper wire into the empty box ,” Fowler recalled. “He paid $39 for the Whirlybird and just walked out of the store with all the copper.”
Fowler said while this type of “bait and switch” crime is common among a number of high-ticket products, in the past year he estimated it’s doubled for copper items.
“We’re getting hit all the time. People are getting bolder in their thefts of these kinds of things,” he said.
But, aside from legislation, how else can retailers be protected from these crimes? HCN asked several law enforcement officials who have dealt with the crimes across the country, and all had similar advice: for checkout line thefts, inspecting customers’ bags at the exit has been one of the most successful ways of preventing the copper bait-and-switch. As for break-ins, security guards, alarms and a tight perimeter security system are essential.
The importance of those security measures was exemplified by another incident in Garden Grove, Calif. Last year, cops halted a break-in at a local HD Supply store. Five men were caught trying to steal copper at the facility—the thieves were spotted by a security guard who alerted police. That same HD Supply store had been burglarized earlier to the tune of $60,000 worth of copper material, according to local news reports.
Erica Crosling, a spokeswoman for HD Supply, said the issue of copper theft was certainly of great concern, but she declined to comment on the specifics of how the company works to prevent such crimes.
“We won’t comment on what we do to prevent these types of issues, because that really somewhat compromises our security,” she said.
By contrast, at 84 Lumber, spokesman Jeff Nobers contended that the pro dealer has not had a major problem with copper theft, specifically because of those aforementioned security measures.
“We have not had any issues with the copper theft, and certainly our facilities are secure at the perimeter gate, and of course with alarm systems on the building themselves,” he said. “With the hours we keep, guys are there very early and tend to be there late.”
Still, whether a retailer experiences many or few problems with copper theft, the issue has other implications outside the retail sector. Abandoned homes, especially in areas with high foreclosure rates, are being hit. Further complicating the issue, there is not necessarily a profile of the copper thief—individuals looking for drug money or gas money commit thefts on easy targets, such as buildings under construction. And organized groups commit the crimes as well, including men who pose as contractors, complete with trucks and business cards, who rip off homes.
In East Cleveland, Ohio, this particular problem got so bad that in one incident, a man nearly destroyed an entire abandoned house by using a chain attached to a truck bed to rip out the furnace and air conditioner in the basement.
“It became a free-for-all for what we called ‘scrappers,’” recalled Cuyahoga County (Ohio) Det. Sgt. Richard Peters, who added he no longer works the East Cleveland beat. “My experience was they would come in pickup trucks, dressed as demolitionists, and you would see them obviously removing stuff from the house. A lot of times, you couldn’t contact the property owner, or have anyone that would want to press charges.”
Contributing to urban blight and shedding a bad light on legitimate contractors are just two ways copper theft affects home channel customers. Building sites are obvious targets, and schools, churches, businesses and public utilities all have suffered theft.
“We started looking at it and realized that it’s a much bigger issue than just at retail—homeowners are affected, the value of people’s homes. And those that have been fore-closed, if they’re hit, it drives down the value even more,” Jacobs said.
Lobbying efforts will continue, Jacobs said. Expect to hear more about a federal bill to help curb copper theft later this year.
PRO Group makes key promotions
Denver-based PRO Group has promoted Brendan Sullivan to director of merchandising, a new position, according to the company.
Sullivan is a 21-year industry veteran who has served in various merchandising and business development positions for Servistar/Coast To Coast and True Value prior to joining PRO Group in 2005.
“Brendan Sullivan’s experience and work style makes him ideally suited to a merchandising director role,” said Steve Synnott, president and CEO of PRO Group, in a statement. “Brendan has worked as a buyer and merchandise manager, and since he joined our company three years ago he has taken a leading role in providing progressive ideas and programs on the merchandising side.”
In addition, PRO Group managing director for the PRO Hardware and GardenMaster divisions, Shari Kalbach, has been named managing director for the company’s Farm Mart division, which supplies independent farm supply retailers.
Kalbach joined PRO Group in 1997 and is responsible for all of the Group’s distributor relationships.
“Shari Kalbach has a proven track record as a highly effective executive working with PRO Group distributor members,” Synnott said. “Adding Farm Mart to Shari Kalbach’s scope of work is a natural progression of her role. She excels working closely with our distributor members.”
Design Within Reach narrows losses
Design Within Reach, the San Francisco-based specialty home decor retailer with around 70 locations nationwide, saw net losses of $159 million, narrower than the $575 million in losses recorded in the same period last year.
Net sales for the second quarter decreased 3.7 percent to $47.3 million, compared with $49.1 million recorded in the year-ago period.
Still, the retailer saw an improvement in gross margin, a measurement of earnings that takes production and service costs into consideration — gross margin improved to 46.4 percent in the second quarter, compared with 44.3 percent in the same period last year.
In-store sales were $32.6 million, up 2.2 percent from last year. Sales from phone and the dwr.com Web site decreased 17.5 percent to $10.4 million.
DWR also said it predicted that “in light of the challenging economic environment, the company believes revenue will be flat year over year.”