The economy, after further review
“Right now it looks like I was too conservative in my prediction. (HCN, Readers Respond, January 2012) We are internally adjusting our expectation higher. Hail and windstorm activity has certainly had a positive influence. Housing starts in DFW, Austin, San Antonio and Houston have reached double-digit increases over last year, but construction does appear to be starting to back off a little and level off. Overall, we now believe Texas may achieve an 8% to 10% rise due to the increase in multi-family construction, about three to five points higher than I originally thought. Nationally things appear to be better due to the tremendous rise in multi-family construction, not all of which is true demand-based. There is a very favorable investment climate right now to build and sell rental property.
“An economic service I trust and follow predicts 10% to 12% gains annually, but I still see things more in the +6% to +8% range. All of this is without federal stimulus. If the Feds stimulate, we will do better — for a while.”
— Byron Potter
Vice-chairman & CEO
Dallas Wholesale Builders Supply, Inc.
The future of the penny at POS
“Like the horse-drawn carriages, Dodo birds and lots of other bygone things, the penny has outlived its usefulness and reason for being. It’s about time to eliminate it!”
— Paul Siegel
“[Banning the penny is] not a good idea. The larger the increment, the larger the cost. At retail, sales tax payments, income tax payments all would round up so the end consumer pays the price.
“It’s like the 3.99.9 cost on gasoline. Leave the 10th of a cent there; or in the transaction sense, leave the pennies there.”
— Charles “Chaz” Mott
“My father received a personal citation from President Franklin Roosevelt for his idea to mint pennies out of zinc, instead of copper; thus diverting the copper to ammunition for our troops. Bus and streetcar drivers hated those zinc pennies, as riders often mistook them for dimes and they jammed the fare boxes. Several weeks after my father passed away, I received a letter from a former infantryman from WWII who read of my dad’s passing, who wanted to thank my father for probably saving his life. It seems that infantryman was saved by the fact his foe ran out of ammo, and he still had about 150 shells left to fight on. No one can be sure, but I thought about your articles on the passing of the penny and it’s meaning to my family and that soldier.”
— William A. Keller,
Keller Mfg. Co. dba Gardex,
Taxes and the Internet
“We are both a storefront retailer and an e-tailer. Several years ago, Kansas (where we are located) passed a streamlined sales tax that was supposed to simplify the sales tax so that Internet sellers could easily collect sales taxes. I can tell you that the simplified tax based on shipped-to-location is absolutely impossible to work with. We have very few Internet purchases made where the buyer lives in Kansas, so we don’t want to spend thousands of dollars to buy a program to figure the sales tax due on those Kansas sales. The four to five Kansas sales we do have adds about 45 minutes to an hour of time to look up the rate on the computer every month. I do not have a good solution to the sales tax mess, but I understand how it hurts my store when another retailer can offer the exact same goods I’m offering without the Kansas sales tax, because they don’t have a Kansas location.
“I understand that, because I sell the same goods in their state without collecting their state sales tax. I hope we can come up with a solution that keeps both of my operations in business.”
— Gary Fry
“No one wants to pay more taxes. But, in this case it’s not more — it’s the fair and right way to level the playing field. I have a brick-and-mortar store, and the Internet is stealing my customers with the lure of ‘no tax and free shipping.’
“What is this? If there is no tax for one, then no tax for all.
“I can compete with anyone, but no tax is not an option. Make it right. Make it fair for all retailers.”
— David Wood
Owner, Smitty’s Lawn & Garden Equipment
Look who’s in charge
The Pro Dealer Industry Scoreboard command center here at 425 Park Ave. was humming with the sound of survey submissions when the editors noticed something interesting.
Several respondents were answering a simple question about corporate structure as if it were a profound inquiry into corporate culture.
The simple question was: “Who’s in charge?”
And the unexpected — but in retrospect — perfectly reasonable answer we saw again and again was: “The customer.”
Maybe there’s a connection between the enthusiasm or discipline or salesmanship in that answer and the ability of the Top 200 to generate a combined 6.4% increase in sales compared with the previous year.
The first 100 companies — from ABC Supply to Barr Lumber — are listed on pages 16 and 17. The full list of the 200 leading lumberyards and building material dealers is available at Homechannelnews.com. It’s free. All you have to do is register.
In addition to a combined sales gain, companies on the Pro Dealer Industry Scoreboard showed a strong ratio of sales gainers over sales decliners. Using data based on actual reported 2011 sales figures (as opposed to HCN estimates), 70% showed growth compared with only 8% that did so two short years ago.
You’ve probably been trying to forget this, but remember that 2011 was the weakest year on record for single-family housing starts, which for years have been the bread and butter of the typical pro dealer. Construction of new homes was the lowest since the government began keeping track in 1959, and yet, the Top 200 as a group moved in the right direction.
How did this happen? Many reasons. During downturns, a strong-get-stronger principle takes effect. Weaker players exit markets, expanding opportunities for former competitors. And consolidation or acquisitions boosts the top line of the top 200. Pricing, of course, is a factor, lifting all boats. For instance, the NAICS 4441 category of retailer — building material and supplies dealers — saw a 3.0% sales increase in 2011. Even at the big box, the building materials category at Lowe’s in 2011 showed the biggest percentage increase of all the retailer’s 17 merchandise categories.
All this tells you something else: Somebody is doing a lot of remodeling.
As builders changed gears throughout the downturn, the best suppliers were right there with them, supporting them and anticipating their needs. In that spirit, Home Channel News invited five forward-thinking lumberyard and building material executives to share their thoughts in a kind of remodeling roundtable.
Listening to the customer drives success on the Industry Scoreboard. And we believe it is crucial to our success as a media company. Home Channel News recently undertook a reader survey, the results of which have already sent us down the road to improvement. (More on that later.) You can still take the survey at HCN.com. Or just tell us how we’re doing. You’re in charge.
Looking ahead to the ProDealer Industry Summit
This year is turning out to be just a little better for the housing industry than the past few years. As this column is being written, Home Channel News is reporting new-home sales coming in at the highest level in more than two years. Inventory of existing homes is down 20% from last year also. Granted, these past few years have been historically low years, forcing our readers, advertisers and all of their customers (builders and us, the general public) to baseline, streamline and work for real sunshine in our markets.
Yet opportunity surrounds us — that is the nature and blessing of open markets: the chance to move your business INTO the sunlight. That is what Home Channel News and our partner the National Lumber and Building Material Dealers Association (NLBMDA) will be doing this Oct. 24 to 26 in Savannah, Ga., at the annual ProDealer Industry Summit.
The ProDealer Industry Summit offers three days of opportunity with leading executives from hundreds of dealers, wholesalers, distributors and manufacturers of building products, all in one place. It is a one-of-a-kind meeting that offers networking settings to share ideas and compare best practices, confide in peers, and decide with partners what steps your company can take to make 2013 and beyond better for your company.
Those positive numbers mentioned above? They are the starting gun for a new contest, a challenge that when met will mean growth and profitability for your organization. There are already parts of the United States market where existing homes are being sold within a week of listing, and signs that our temporary “rental nation” is ready to return to one of the bedrocks of our economy: the ownership and upkeep of a home.
In 2008, Ivy Zelman of Zelman Associates was a speaker at the ProDealer Industry Summit and reviewed with our attendees how we got into this mess, and how long it would take to get us out. (Her forecasts have been leading-edge for years). It’s only fitting that she returns this year to the summit to review her predictions for 2013-14 and offer you the opportunity to talk to her about them.
Dr. George Lucas, author of “The One Minute Negotiator,” will also be at the Savannah Westin for the ProDealer Industry Summit and will be a part of our team put in place to help our industry create its own revival.
But you have to be there too. The opportunity to meet with the best, to network with the most competitive, to share ideas with the most aggressive and the most inclined to succeed in our industry awaits you.
We look forward to being with you in October!