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Political capital

BY Brae Canlen

Chantilly, Va. — When Newt Gingrich strode up to the podium to kick off the ProDealer Industry Summit on Oct. 1, he had fresh news from Capitol Hill: Senate leaders had sweetened the bailout bill with green energy tax credits, help for distressed mortgage holders and other incentives. “[It’s] pathetic and undesirable but better than having the market crash,” Gingrich said.

The bill passed the Senate later that night, after Gingrich treated the audience to his opinions on the average U.S. high school (“a social holding pen with athletic opportunities”); Treasury Secretary Henry Paulson (“He’s a disaster”); and the future of the Republican and Democratic parties (“A sudden surge of energy from the American people will wipe out the current system”).

It was hard to sidestep politics at the three-day conference, sponsored by the National Lumber and Building Material Dealers Association (NLBMDA) and Home Channel News. Held at the Westfields Marriott in Chantilly, Va., the event’s timing and proximity to Washington, D.C., only underscored the effect of the economy on the LBM industry. But while the housing downturn has curtailed business for every builder, lumberyard, wholesaler and supplier, all were well represented at the summit, which drew 240 attendees.

Paul Hylbert, CEO of ProBuild Holdings and the incoming NLBMDA chair, urged the national trade group’s members to get more involved in regulatory and legislative issues. “The future and success of our organization depends on it,” Hylbert said. “This industry [needs] a strong voice.”

Jerry Howard, executive vp and CEO of the National Association of Home Builders, delivered a similar message in his keynote luncheon speech. While he acknowledging that not everyone in the room supported the bailout plan, Howard stressed that the banking rescue plan could stop foreclosures from flooding the market and competing with the sale of overstocked housing inventory.

“It’s an important first step to restoring normalcy to the housing markets,” said Howard. “You have to establish the floor.”

Housing analyst Ivy Zelman also saw foreclosures as “a whole new competitor [that] does not have a floor.” But the former Credit Suisse and Salomon Brothers analyst, now the owner of her own research boutique, predicted a much longer road to recovery. Homeowners can’t get mortgages, builders can’t get financing, and lots are selling for pennies on the dollar. The backlog of unsold houses in some areas will take years to work through, Zelman predicted.

In the meantime, private equity players are circling around cash-strapped builders, who may be ready to choose a partner. By the time the housing downturn is over, “Wall Street may own the residential real estate in this country,” said Zelman, who later moderated a feisty discussion with Paul Jannke of RISI and Joshua Rosenbaum of UBS Securities. (See article on page 16.)  

Conference attendees had their own debates going before, during and after the Joe Biden-Sarah Palin vice presidential debates, held on the last night of the conference and viewed by a highly opinionated crowd in the hotel’s Lincoln Forum. Others chose to watch the two vp candidates spar on television in the hotel bar.

A golf tournament benefiting the City of Hope rounded out the summit, along with two awards banquets. On Oct. 1, the NLBMDA recognized Jesse Brand, president of Brands Inc. in Columbus, Ind., with the outstanding leadership award for his fundraising efforts on behalf of the Lumber Dealers Political Action Committee (LuDPAC). Curtis Lumber in Ballston Spa, N.Y., won an Industry Leader in Safety award for a lumberyard with more than 50 employees. Sanford and Hawley in Unionville, Conn., an operation with less than 50 employees, was also recognized for its safety practices.

The NLBMDA’s Chairman’s Award for Outstanding Manufacturers and Services Council (MSC) member went to John Somerville of Dow Chemical in Marietta, Ga. Somerville was credited for developing new initiatives and programs to bring together NLBMDA dealers and vendors. Dow Chemical, ITW Building Components, and iLevel by Weyerhaeuser were also recognized by the association for their support.

Home Channel News handed out its Pro Dealer of the Year awards at a dinner on Oct. 2. Jay Curtis, a fifth generation lumber dealer and the owner of Curtis Lumber, accepted on behalf of his 635 employees and 22 locations headquartered in Ballston Spa, N.Y. Lavern Schlabach, CFO of Keim Lumber, a single-unit dealer serving a large Amish population, credited the work ethic and culture of the community in Charm, Ohio, for the double-digit growth of the company’s sales last year.

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Around the Web: Obama tackles housing market

BY HBSDEALER Staff

The Barack Obama administration started a temporary program to boost state and local housing finance agencies (HFAs). The purpose of the program is to spur lending and buying in a depressed housing market.

“Through this initiative, the administration aims to help HFAs jumpstart new lending to borrowers who might not otherwise be served and to better support the financing costs of their current programs,” U.S. Treasury Secretary Timothy Geithner said in a prepared statement.

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True Value fall market held in Atlanta

BY HBSDEALER Staff

When True Value president and CEO Lyle Heidemann addressed co-op members at the opening session of the 2008 fall market Oct. 17 in Atlanta, he stressed the importance of Destination True Value — encouraging retailers to adopt the new, more consumer friendly store format in one form or another.

“Much of our future is centered on Destination True Value, both for our existing stores as well as our growth with new ones,” Heidemann told the group assembled at the Georgia World Congress Center. “This year we will open, expand, relocate, convert or remodel more than 100 stores to the new format. In addition, another 75 stores will implement the DTV decor package.”

The point hit home with show attendees Kurt and Kathie Stringham, owners of Stringham’s True Value in Santaquin, Utah, which will undergo a DTV remodel starting next month. “Our sales are down this quarter, but we’re not pessimistic,” Kathie Stringham said. “I’m not sure about the economy, but for hardware stores, if you’re wise you can still do well.”

Carol Wentworth, vp-marketing, also addressed members at the opening session, trying to drive home the importance of national and local advertising in these tough economic times. She said stores that participated in three spring circular programs saw a 7 percent increase in sales and an average of $45,000 more in revenue during the spring season than stores that didn’t use the promotions.

“I think those numbers tell a pretty compelling story about using circulars to help you get ready for the spring selling season,” Wentworth said.

More than 1,000 vendors are introducing new items and offering market-only deals on merchandise from every major product category. Retailers attending the market will also have an opportunity to attend educational classes on everything from merchandising and marketing best practices to the True Value Rewards program and leveraging point-of-sale technology. 

The market is open through Oct. 20.

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