Northwestern Lumber Association releases survey results
A recent survey of lumberyard owners in Iowa, Minnesota, Nebraska, North Dakota and South Dakota offered no surprises when it came to declining revenues. The majority of dealers — 51 percent — reported that their 2007 revenues were lower than 2006, although larger dealers were more likely to report decreases than smaller dealers.
But the 2008 Lumber Industry Survey, conducted by the Northwestern Lumber Association in conjunction with QuestGrowth Partners, did find some surprises. Only 7 percent of the dealers surveyed reported doing any merchandising of green building products last year, and the typical dealer reported that green building materials account for approximately 5 percent of his or her current inventory. Three in four dealers, or 75 percent, had no plans to do green product merchandising in 2008.
In the area of commercial sales, 77 percent of the dealers surveyed reported doing business with commercial contractors, although it only contributed 10 percent of their 2007 sales. Slightly less (72 percent) anticipate selling to commercial customers in 2008.
For the second year in a row, the survey found that lumberyards reporting sales increases are more likely to offer installed sales programs than those who report decreases. In 2008, one-third (32 percent) of the dealers offering installed sales reported revenue increases from 2007 compared with only one-fourth (26 percent) of dealers not offering installed services.
Ply Mart to close
Ply Mart, the Norcross, Ga.-based pro dealer, is closing down its operations after struggling with declining housing starts in the Atlanta market. Randy Mahaffey, Ply Mart’s chairman, told Home Channel News that the company is in negotiations to sell its installed sales and stair manufacturing divisions. Its four remaining lumberyards will be closed, Mahaffey said. “We’re selling off our inventory,” he added.
Ply Mart was one of the Southeast’s largest LBM players before the downturn, pulling in $335 million in revenues in 2006, when it operated 14 units in Georgia, North Carolina and South Carolina.
The housing market slowdown hit Atlanta and the Carolinas late, but unfortunately, it still arrived. Housing permits have declined 25 percent in Atlanta, Ply Mart’s primary market, since August of 2007, according to Mahaffey.
“It fell off a cliff in September,” he said. “It was an absolute free fall.”
During the last 18 months, the company’s accounts receivables ballooned to $20 million. Ply Mart began reducing staff and mothballing lumberyards, and members of the Mahaffey family began pumping their own money into the company to keep it afloat. But it wasn’t enough.
“Every time we made a cut, we thought we were where we needed to be,” Mahaffey said. “But we were still bleeding. We just couldn’t cut expenses as fast as our revenues were dropping.”
Mahaffey said he did not consider selling the business to one of the national LBM chains; nor were there any real offers forthcoming. “The market is so bad in Atlanta, everybody is taking a whipping,” he observed. “It is not the time to buy in this segment.”
Earlier this year, Wheeler’s Building Materials, another privately owned pro dealer based in Atlanta, filed for Chapter 11 bankruptcy protection. The company’s owners bought three of the chain’s original 17 lumberyards at auction in April. Last February, ProBuild bought Jasper Lumber, a small independent with three locations in the Atlanta area.
Stanley in deal with RFID company
Stanley Works will purchase Xmark, the Canadian subsidiary of radio frequency identification (RFID) systems maker VeriChip, for $45 million in cash, according to the companies.
Xmark’s products include child security products as well as asset tracking systems for hospitals. Brands include “Halo” infant security systems, wander protection systems for children under the “Hugs” brand and hospital and asset tracking systems under the “RoamAlert” brand.
Xmark had revenues of $30 million last year.
“The combination of Xmark’s capabilities, including its products, associates and dealer channels, with those of our own personal security business enables us to provide our customers a wider array of value-added products and services,” said John Lundgren, chairman and CEO of Stanley Works, “which should help our security business achieve higher growth and enhance its already strong profitability.”