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PDIS addresses supply chain conflicts, financing woes

BY HBSDEALER Staff

Orlando, Fla. — Some of the LBM industry’s hottest issues topped the agenda here at the 2010 ProDealer Industry Summit (PDIS), with sessions on supply chain collaboration, dealing with reluctant lenders and what the housing industry has in store beyond 2010.

Michael Mahre, senior VP corporate development at ProBuild, and Scott Hearty, VP national purchasing operations at Standard Pacific Homes, discussed how to improve supply chain visibility from a demand perspective, as well as adopting an industry-wide set of standards to identify building products.

“Why is it so hard to standardize the ID of a doorknob in a builder’s plan?” Mahre asked.

The subject of transparent pricing — builders knowing exactly what a dealer’s mark-up is — drew the audience at the Hyatt Regency Grand Cypress into a lively discussion about who gets to determine profits and margins on materials and labor. Hearty said he didn’t want to know the dealers’ costs on every single item. “If I could take the top 10 or 15 spends, I would be really excited about that,” he said.

In another session, Steve LeFever, a former commercial banker, advised the audience to be more proactive with their lenders, who are all under pressure to avoid loans that involve real estate or building projects, he said. Borrow money before you need it, he suggested, and communicate with your bank before your loan comes up for renewal. Above all else, avoid the bankers’ red flags: hurried loan requests, incomplete financial statements, rapid or unusual inventory build-up, and inadequate cash flow.

Chief economist David Crowe of the National Association of Home Builders (NAHB) called “consumer reluctance” the main impediment to the housing recovery, followed by an oversupply of unsold homes. But he pointed out that most of these houses are either resales or foreclosed properties: New home inventory in the United States is now approximately 200,000 single-family units, the lowest it’s been since 1968.

Jointly sponsored by the National Lumber and Building Material Dealers Association (NLBMDA) and Home Channel News, PDIS ends today with a builders panel discussing green building methods, a former U.S. Forest Products economist’s forecast on lumber and panel supply and demand, and a preview of the major legislative issues confronting the LBM industry delivered by NLBMDA president and CEO Mike O’Brien.

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Universal Forest Q3 earnings dip despite sales increase

BY HBSDEALER Staff

Grand Rapids, Mich.-based Universal Forest Products reported third-quarter net income of $2.6 million, down 75.2% from $10.1 million reported for the same period last year.

Sales for the quarter were $480.6 million, up 4.9% from $457.8 million for the same period of 2009.

The company said a 52% spike in lumber products in the spring impeded earnings. Lumber prices have stabilized in the third quarter, however inventories were built earlier in the year, according to Universal.

Sales to industrial and manufactured housing customers increased 19.3% and 18.2%, respectively, during the quarter, while sales to site-built construction customers rose 1.6%. Only do it yourself/retail saw a sales decrease, of 7.7%, due to weak demand that resulted in slow retail sales, the company said.

“This was the most challenging lumber market I’ve seen in my 36 years with the company, and I’m proud of the way our people managed through it,” said CEO Michael B. Glenn. “Frankly, this type of market has the potential to wipe out an entire year’s profits for most companies that operate in our industries. Fortunately, our agility and diverse business model have allowed us to generate more than $17 million in net earnings for the year so far. With more than $58 million in cash and only $53 million in debt, we have the resources to take advantage of opportunities that arise. We remain in an enviable position in our markets.”

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Bellingham council to tighten fertilizer ban

BY HBSDEALER Staff

Bellingham, Wash., council members are looking to expand their phosphorus ban for the Lake Whatcom region, according to the Bellingham Herald.

Aphosphorus ban for residential use has already been in effect in the watershed region since 2005. Now the township is looking to expand that ban to commercial properties, according to the article.

Lake Whatcom supplies all of the drinking water for Bellingham and is on a federal list of impaired water bodies due to low levels of dissolved oxygen.

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