Innocent Sellers Act returns to the Hill
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The National Lumber and Building Material Dealers Association (NLBMDA) commended Rep. Blake Farenthold (R-Texas) for his reintroduction of the NLBMDA-promoted "Innocent Sellers Fairness Act" (H.R. 2746) that would provide product liability protection to those businesses that only sell products and did not manufacture them.
"NLBMDA applauds Representative Farenthold for his effort to bring balance to our legal system by recognizing that business owners that only sell products, and are not involved in the manufacturing process, should not be held liable for defects that they did not create," said NLBMDA chairman Chuck Bankston, president of Bankston Lumber in Barnesville, Ga. Unfounded and unfair lawsuits are increasingly having a negative effect on the ability of building material dealers and distributors to run their businesses and contribute to their communities. According to a 2010 study by the U.S. Chamber of Commerce Institute for Legal Reform, small businesses bear 81% of business tort liability costs.
The high costs of defending product liability lawsuits have caused many building material dealers to settle, regardless of the merits of the case. Current law imposes liability without wrongdoing on sellers and exposes them to all of the damages allegedly suffered by a plaintiff, even though other defendants may have played the critical role in causing the damages. The "mistake" may have been in the manufacture or design of the product, or in a customer’s improper use of the product, yet the seller is often faced with some or all of the liability.
"No amount of care can free a seller from disproportionate product liability, and plaintiffs’ lawyers know this –they routinely sue anyone in the chain of distribution of a product, often forcing settlements out of otherwise innocent merchants. These abusive product liability cases are part of a growing litigation burden on our nation’s small businesses and our economy," said NLBMDA president and CEO Michael O’Brien. "This legislation will bring some sanity back to our legal system, and we urge Congress to act swiftly on H.R. 2746."
UFP serves up double-digit sales gain
Universal Forest Products (UFP) reported 2013 second-quarter net sales of $738.4 million, a 24.4% increase over 2012 second-quarter net sales of $593.7 million.
The company saw significant double-digit gains in each of its five markets, but net earnings declined 10.8% to $15.8 million in the quarter.
Second-quarter 2013 earnings were $15.8 million compared with net earnings of $17.5 million, or $0.88 per diluted share for the second quarter of 2012. Second-quarter earnings in 2012 were enhanced by gains on the sale of real estate totaling approximately $6.9 million ($4.3 million after taxes, or $0.21 per diluted share). The company’s adjusted net earnings in the second quarter of 2012, excluding these nonrecurring gains, would have been $13.2 million.
After rising for months, lumber prices dropped 28% during the second quarter — and UFP had to work through the math, according to CEO Matthew J. Missad.
“A drop in lumber prices of this magnitude, especially during the second quarter, typically has an adverse impact on the company’s gross margins and profitability," he said. "Through the second quarter, we were able to reduce the impact with strong unit sales in many markets, particularly those tied to new housing and construction.”
Despite the second-quarter decline, lumber prices remained 15% higher than the same period of 2012.
Missad pointed to what he believes is UFP’s competitive advantage: “We are not dependent on a single market, which provides us with a competitive advantage over those companies that do not have the benefit of a diverse customer base or that do not serve multiple industries.”
Retail building material sales were $315.0 million, up 12.9% over the second quarter of 2012. Forecasts call for moderate growth in home improvement projects through the end of the year, including decking and railing projects, and the company sees potential for its ProWood brand of premium lumber for decking, including Dura Color.
UFP said it continues to broaden and deepen the mix of products it offers and to grow its business with big-box and independent retailers, alike.
UFP’s residential construction sales were $94.3 million, up 57.3% over the same period of 2012. Total housing starts for March to May 2013 were up 27.8% over the same period of 2012. Commercial construction and concrete sales were up 56.2% to $37.5 million.
NAHB sees caution in construction stats
The National Association of Home Builders (NAHB) says builders are being careful to avoid getting "ahead of the market."
The builders group made the comment after the Commerce Department reported a 9.9% decline in nationwide housing starts for the month of June.
"While demand for new homes and apartments has grown considerably over the past year, builders are still being very careful not to get ahead of the market, and [the June] report reflects that cautious approach," said Rick Judson, chairman of the NAHB and a home builder from Charlotte, N.C.
June Housing starts declined to a seasonally adjusted annual rate of 836,000, the lowest rate since August of last year. The decline was driven by a dip in multifamily housing.
"The large dip in multifamily production in June follows a boost of activity in May, and is consistent with the volatility that has come to characterize that sector as well as the uneven pace of the housing recovery," said David Crowe, NAHB chief economist. He added that single-family starts and permits rose in three out of of four regions in June — "a positive sign," he said.