NLBMDA crafts 2009 agenda
There is no shortage of issues concerning home improvement leaders these days, according to Michael O’Brien, president and CEO of the National Lumber and Building Material Dealers Association (NLBMDA).
But housing trumps all of them. “Housing has always been first into recession and has always led the economy out of recession,” O’Brien said. “Until this is dealt with, the economy will suffer.”
As the Obama administration prepares for the Jan. 20 inauguration, the NLBMDA is in the final stages of crafting its 2009 government agenda, which will be the most comprehensive in organization history and will encompass housing, energy, transportation, product delivery and other issues. “We will be specific but broad as well,” O’Brien said, adding, “A lot of people in Washington expect November and December to be quiet around here, but it certainly hasn’t been that way for us.”
While housing may be the biggest issue facing the home improvement industry, it is not the only one on the radar. Here is a snapshot of other pertinent issues that could affect the industry in 2009 and beyond.
The NLBMDA said it plans in 2009 to reintroduce the Innocent Sellers Fairness Act (H.R. 989), which provides product liability protection for product sellers. The NLBMDA claims that unfounded and unfair lawsuits are increasingly having a negative impact on the ability of lumber and building material dealers to run their business. A winter 2005 survey of NLBMDA members found that more than 1 in 4 has been the subject of product liability lawsuits within the past five years; 65 percent of those have been involved in more than one. The high costs of defending such lawsuits ($50,000 to $100,000, according to the Small Business Administration) typically force building material dealers to settle, regardless of the merits of the case. “We don’t think it is fair to hold someone liable who had nothing to do with the manufacturing of the product,” O’Brien said.
Other issues of concern for building material dealers include health care, immigration reform, affordable energy/green initiatives and transportation. But heading that list is housing.
“Anything that is going to stimulate the housing economy is going to be a top priority,” O’Brien said. “There’s definitely going to be various forms of stimulus packages that will come forward in January, and what we are encouraging is to educate members of Congress about the need of the housing stimulus proposal.”
NLBMDA is also urging Congress to stimulate the economy by extending the so-called Section 179 bill for another year. Section 179 allows small businesses to deduct from income as much as $112,000 for one year through 2010 and increases the maximum deduction to $125,000, indexed for inflation after 2010. Moreover, the NLBMDA is asking Congress to extend net operating loss carry-back provisions from two years to five to allow building material dealers to discount current losses against past profits.
O’Brien said that while it is great that industry groups want to help the people who are losing their homes, the housing issue is more expansive than that. “We need to look at the broader picture,” he said.
Former HD buyer leaves Chrysler
John Campi, the former senior vp–global sourcing and vendor management at Home Depot, is leaving Chrysler after less than a year on the job, the Associated Press reported. Campi, who resigned for health reasons according to an internal company memo, is the second high-ranking executive to quit the car manufacturer in four days, the wire service said.
The Detroit Free Press reported that Chrysler sat down with its key suppliers last week to discuss continued shipments as it appeals to the U.S. Congress for emergency loans. Campi’s resignation was announced at this meeting, the newspaper said.
Campi worked with Chrysler CEO Bob Nardelli at Home Depot, where the latter served as chairman, president and chief executive until Jan. 2, 2007. Both men are former G.E. executives. Home Depot announced Campi’s resignation on Jan. 15, two weeks after Nardelli’s departure.
At Chrysler, where Campi served as senior vp-purchasing, the executive emphasized cost reductions and directed a lot of sourcing toward overseas suppliers, according to a World Markets Research Centre report. He also oversaw “a newly litigious atmosphere that saw Chrysler file suit against several suppliers for issues that would previously have been worked out at a high level between the two companies, at worst,” the analysis said.
November starts fall to 625,000
Housing starts dove 18.9 percent in November, according to data released Tuesday morning by the Commerce Department. New starts fell to a seasonally adjusted annual rate of 625,000, the lowest since the DOC began keeping track in 1959.
Compared to the November 2007 figure of 1.179 million new housing starts, the current figure marks a 47 percent year-over-year decline.
All four regions of the country posted double-digit negative percentage changes in both year-over-year and month-to-month comparisons. The most dramatic percent-change decline came in the Northeast, where November housing starts fell 59.8 percent compared to November of last year.
November stats fell well below consensus estimates, which had predicted starts to come in at about 740,000 units. In October, starts were revised to a record-low annual rate of 771,000 from 791,000 previously.
Building permits also declined in November, falling to 616,000. That’s down 15.6 percent from October’s figure, and down 48.1 percent from a year ago.
“The steep declines in home production that were reported today are in keeping with the extremely poor sales conditions that builders are seeing in their markets, as indicated by our most recent member surveys,” noted National Association of Home Builders (NAHB) Chairman Sandy Dunn, a home builder from Point Pleasant, W.Va. “Builders are doing exactly what they should be doing – they are actively reducing their inventories, virtually to the point of no longer building, in order to avoid adding more product to the marketplace. Congress and the Administration now need to do their part and ‘fix housing first’ in two ways. One is by stimulating demand, which will help put a floor under home values, and the other is by aggressively addressing the foreclosure problem.”
The Commerce Department report this morning follows on the heels of the record low reading of home builders confidence. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) remained unchanged from November’s all-time low reading of 9. A reading above 50 indicates that more builders view sales conditions as good than poor.