Knives on the shelves
(The following letters are in response to an article about New York City officials cracking down on the sale of what they called “switch blades” and “gravity knives” at sporting goods and home improvement stores.)
“Most people do not know that individual states control the regulation of knives. The interesting thing to learn is that what may be legal in your pocket in one state could have legal ramifications crossing the border. As a manufacturer of knives we leave the regulation control in the hands of each of our customers. To understand each state and city regulation would be overwhelming. We have been manufacturing knives in the U.S. since 1875. The American Knife & Tool Institute (AKTI) is working hard to make sure regulations written by states and even some cities have some common sense behind them. The focus of the organization is to promote reasonable and responsible knife laws that allow this valuable tool to still remain a part of our lives.”—Bob Clemence, Director of sales, Hyde Tools
“I own a Gerber Spring assisted knife; don’t go anywhere without it. Use it on and off the job. It is not a switchblade; it is a tool. Next thing you know baseball bats will be illegal.”—Herb Herther, Buyer/manager, The General Store/Ace Hardware, Spokane, Wash.
“The leading cause of criminal death and injury with a knife is from kitchen cutlery. Will they crack down on the kitchen cutlery block?”—Bruce Pfuhl, Benchmade Knife Co.
Swipe fee relief passed into law
“It’s a start, but not nearly as good as it should be. It would be much better if we were allowed to pass along a credit card charge fee on our invoices, which Visa and MasterCard expressly don’t allow at this time.
“From a business competition standpoint it’s fair—not all businesses would do it, but those of us who wanted to show how much all of the ‘rewards’ are costing could recoup a little expense, and it would automatically encourage the ‘less expensive forms of payment.’ Giving a discount for cash, check or debit cards is more difficult and a manual effort than an automatic credit card charge fee added by our POS system at time of payment.
“A discount off impacts the true sales analysis of the individual products being sold on the order (unless substantial manual effort is employed), while the addition of a 1% or 1.5% credit card fee simply offsets the 1.9% to 2.7% now being charged to us and doesn’t throw off the sales analysis reports!
“Our credit card fees are well above $100K each year, and this is a big issue for us!”—Craig Fritsche Jr., President, Tart Lumber Co.
“Now if only we could get the banking industry to credit customers’ bank accounts with the same speed as they debit their account whenever a customer completes a return to a retailer, many more frustrations and headaches would be averted. Nearly instantaneous deductions on debit card purchases, but five to seven business days for credits to hit a customer’s account just doesn’t seem right.”—Keith Molnar, Northern Tool
EPA delays enforcement of lead paint rule
“This delay effectively does nothing. All players must continue to budget for extraordinary increases in logistical, administrative and job site supervision expenses. Furthermore, there remains no clarity whatsoever on which agency or agencies will be responsible for enforcement after October and whether they will have any funding to enforce the regulations at all.
“In my judgment the whos and hows of enforcement of this rule is the long-term issue, not [the number of] certified trainers, contractors, firms, etc. Without adequate funding and a clear mandate of enforcement, the incentives for those who wish to cheat the rule are irresistible, and properly licensed and certified firms will suffer.
“Furthermore, someone needs to explain to me how our industry, which is still in the throes of recession (or worse), can recover in the face of such onerous regulation.
“Our best hope is that somehow this remains on the front burner for our industry’s Washington representation (NAHB, NLBMDA, AAMA, etc.) and that a more lasting delay or even indefinite suspension will be considered.”—Brad Wanzenberg, Executive VP, Deerfield Builders Supply, Immediate past chairman, Florida Building Material Association, EPA lead-certified, March 2010
Smaller homes for Americans
(Note: A Census Bureau survey reported the average size of the new American home decreased more than 80 sq. ft. in 2009 to 2,438 sq. ft.)
“While it’s true that economics (i.e. tight credit) is forcing home buyers (and thus home builders) to ratchet down the size of new homes, aging baby boomers are a major force contributing to a smaller home footprint as well. Many boomers are living in multilevel, multibedroom homes that are difficult to maneuver and exceed their ability to manage. When home prices start to stabilize, look for even greater reductions in new-home size stats as boomers sell their behemoths to supplement their retirement accounts and move into smaller, more manageable confines.”—Rod MacKenzie, Grandview Consulting
“I think the decline is mainly economic but somewhat social as well. The real driving factor is that a smaller home is less expensive to build and operate. But it also could give the perception to the outsider that the person living there is environmentally and fiscally conscious, as they use less resources for their home, and they are not a contributor to the overindulgence that led to our country’s current economic state.”—Sean Nieves, Builders Alliance
“We are a hardware store and lumberyard and have been around since 1904. Guys sell, deliver lumber, help customers get the right plumbing, electric and so on. We have the experience to get the customer in and out the door with the correct products. Time is money for our customers. We provide a service, and we are proud of it!
“Then comes along an idea to let my wife work a few days a week (she always wanted to), so I took the challenge. She first started out bringing in homemade cookies and muffins to put on the counter by the coffee pot. My thought was: It’s kind of corny, but it will give us something to eat. Well, the customers loved it. Contractors looked forward to it, and we still would sneak some when she wasn’t looking.
“Then came this big burly-looking builder who we just knew did not want to mess around. You know the type, not much conversation, just 10 2×4s, nails and glue. So my wife walks up to this guy and says, ‘Would you like a cookie? They are homemade.’ We just rolled our eyes, but all of a sudden they strike up a conversation and chatted for quite some time. He was like a big teddy bear. They talked about kids and family, and we are asking ourselves: ‘What just happened?’
“So that’s the beginning. Next came her idea of ordering product more for women. Then came the seminars about organic vegetable gardening, weatherizing your home the easy way, Christmas after-hours sale including appetizers, and so on.
“Just the other day I was helping her carry out a bunch of firepots for a customer of hers. I looked outside, and there was my wife giving her customer a hug in the parking lot.”—Brad Zentgrebe, Moore & Carter Lumber
Swipe fees at the point of sale
“The banks have hit a ‘gold mine’ with very deep veins to exploit over the upcoming years.… They continue to entice consumers with travel miles, refunds and shopping vouchers. Everyone wants to utilize their bank card for all of their purchases so they can reap the perceived benefits.
“The bank card fees grow each month, and they now represent 2% or more of our total expenses each month. We encourage every other method of payment, but those free family airline tickets or vouchers for hotels, etc. are more exciting than anything we can offer. It is like fighting the Goliath.”—Bob Jessell, Central Valley Builders Supply
(Note: The following letters refer to a measure in the health reform plan requiring 1099 forms for every expenditure over $600.)
“Wow, are these folks off the rails or what? Every 1099 must have the recipient’s SSN or EIN, or the sender is fined by the IRS. Guess you can’t purchase anything without getting the seller’s ID number. If this actually takes effect in 2011, all businesses should mail copies of these 1099s to their congressperson (if that rep voted for the health care bill). Bury them with the paperwork!”—Seth Arluck, New Hampton Lumber Co., New Hampton, N.Y.
“It is difficult for the federal government to empathize with small business because of the size of government compared with the size of small business. The larger the bureaucracy, the greater the paperwork, and the U.S. federal government has become gargantuan and is still growing at a rapid pace.
“The cost of personnel to process government-required paperwork, accountants, CPAs and lawyers have escalated the cost of doing business at all levels, which in turn is passed on to the buying public in the form of higher costs.
“Small businesses find it more and more difficult to earn a satisfactory return on invested capital as a result of escalating administrative and professional costs that are necessary to comply with government regulations.”—Bill Lee, Consultant, Lee Resources Inc.
Leadership and lumber
“Fleming Lumber Co. in Cleveland, Miss. is a fourth-generation, family-owned building supply business. Before D. M. Fleming Jr. (second generation) died in 1987, he left instructions for the business to be sold or closed at his death. He did not want anyone in the family to be confronted with the headaches, etc., in trying to run a small business in a small town in the Mississippi Delta. His daughter, Marion Fleming Jordan (with a degree in elementary education), had been helping with the bookkeeping for a couple of years when her father died rather suddenly. She reasoned that the business had a solid core of employees with Fred Wilson, the second in command, having worked for Fleming for 30 years, so she decided to continue the business.
“Within six months of her father’s death, Mr. Wilson contracted cancer and died. Again, she made the decision to continue, and the business has grown and prospered every year since, growing from about $700,000 in annual sales to $4.5 million currently. Her son Daniel is active in the business (another son is an attorney in Atlanta), making him the fourth generation. She gives all the credit to the associates who work in the business, but those of us who have observed [the business] over the years recognize her as being the reason for the stability and growth Fleming Lumber Co. has enjoyed!” —Lee Jordan (unbiased husband) Cleveland, Miss.
Lead abatement rules
“The EPA has done a very poor job of getting the word out about these new regulations. As a salesperson, I took it upon myself to help get the word out to my contractors, so they can keep working and buying materials. I had organized classes with one of my window companies, but there still isn’t enough training available in our area before the deadline. I understand the need for the training and certification, but timing is everything. We are just now able to pump up our sales with ‘tax credit’ products like replacement windows, and then they pull this. It’s like a swift kick in the shins after receiving a bonus check.
“Trying to get the correct information out is tough also. It’s a big rumor mill about fines and ‘whistleblower’ rewards. When you start offering the classes they think that you are just trying to make money off them. Then they do a little research, and they are scrambling to get a spot in the class. There is also a certification that they need to apply for through the EPA. For most it’s $300, and EVERYONE has to have this certification along with the training. I still would like to know how they will enforce this.” —Kenny Nett Caron Building Center Berlin, N.H.
Immigration and Arizona
“As a longtime resident of Arizona, I see firsthand what over 400,000 illegals have done to our economy.
“The majority of crime is committed by illegals. The cost to apprehend these people and deport them is borne by the taxpayers.
“Hospitals have to give them care and have to pass the costs on to the government and the taxpayer.
“Arizona has taken the lead in efforts to stop the illegal trafficking of people crossing the border illegally. Many of these people pay to be transported to drop houses where they are transported to other states. The cartels that run these trips also trade in drugs.
“Gov. Jan Brewer, Senators Jon Kyl and John McCain, and Maricopa County Sheriff Joe Arpaio all support the new laws designed to dramatically reduce the number of illegals in Arizona and to eliminate drop houses.
“I support these efforts 100%.” —Don Droesch Chandler, Ariz.
“The southeastern region has experienced a similar upward bounce since March, particularly here in Atlanta. Most of the increase in activity has been due to custom renovations and a few new-home starts. May has begun slowly, and the gathering sense is that business is again headed downward.
“The overriding realization is that the building economy and thus the entire economy will not experience a sustainable recovery until government spending is reined in. Trillion-dollar annual deficits have business leaders wary of economic collapse. It’s hard to justify any growth initiatives from any company in this climate of government expansion and over-reach. There’s a lot of talk about the credit freeze and small business. At this point we don’t need credit as much as we need customers. Homeowners are just as frightened of impending economic meltdown as small business owners and appear to be back to repair and maintenance expenditures only.” —Merritt Huber President Carolina Lumber & Supply Co. Atlanta
“Yes, I think homeowners are spending more on their existing properties and making upgrades and improvements. I also acknowledge the recent uptick in new home sales and home starts in some markets. Unfortunately though, we have a Congress and administration that insist on continuing their out-of-control spending that will lead to out-of-control taxation, and those with the money are becoming more and more afraid of where the economy is headed. My concern is that we’re headed to a double-dip recession, and the second dip will be more devastating than the first.” —Mason Howell Melbourne, Fla.
More on Chinese drywall
“In response to the drywall verdict article, I doubt these victims will see any money. Lesson learned: This is why you buy American-made. Buying American products also keeps Americans working. If Americans can keep more of our dollars from leaving this country, we will be all the better for it.”—Mark Rezek, Millard Lumber, Omaha, Neb.
“I’m tempted to say the lesson is don’t buy from China, or be very careful. They do not play by the same rules and are not accountable as an American manufacturer would be. Look at the long string of quality control issues of products coming from overseas.”—Tom Tamlyn, Tamlyn
Sunday hours and retail
[The following letters were among dozens in response to an article about a religious-freedom lawsuit filed against Lowe’s.]
“As a former 19-year veteran store manager with Lowe’s Home Centers, I completely understand the dilemma companies face concerning Sundays and employees wishing to exercise some religious accommodations. I think that it is important for companies to consider all employees when it comes to any accommodation, as long as it does not become a situation of abuse or where any employee could utilize the time off for anything other than its intended purpose. In the past I had even given religious accommodations to a Seventh-day Adventist who went to worship on Saturdays. I worked it out for him that he would work every Sunday. He agreed. This may not be something smaller companies can do. Whatever the case may be, management and employees have to come to some understanding, in regards to a give-and-take business relationship.
“Fortunately for me as a manager with Lowe’s, I had the ability to swap hours with my management team so that I could go to at least one worship service on Sunday, either in the morning or in the evening. Accommodations can be made as long as the employee understands that with these accommodations come other adjustments to their work schedule.
“I’m thankful that the company I now work for is closed on Sundays. I believe if retailers went back to being closed on Sundays, their employees, customers and business wouldn’t miss a beat, and everyone would be happier. Our country seemed to operate pretty well 50 years ago by not working on Sundays. Our families were closer in our relationships, and our economy operated just fine. Gee, maybe history can repeat itself again.”—John Garlock, Millwork sales manager, Warner Robins Supply Co.
“At Randall Lumber & Hardware we have never been open on Sundays and do not plan to be. Our employees deserve a day to spend with their families.”—Paula Randall Ervin
The art of the steel
[Regarding an article on using lite steel versus lumber in residential construction.]
“[There’s] absolutely nothing new with this news. I was formerly the CEO of a regional (Mountain West) steel warehouse company (up until 2001). We carried so called ‘Junior Beams,’ which were designed for housing and for light trailer manufacturers. The roll formers (fabricators who use light gauge galvanized steel to make different shapes) have made C sections, Z sections and others for building support systems for generations. The real test here is an economic one and not an engineering feat. If steel is less expensive to do the job, then steel will get the work. If wood or wood manufactured light beams are less expensive, then the home builders will use wood.
“When I left that industry, the builders of fabricated light wood floor beams had all but taken the available market.”—Jerry Weissman, National General Supply Inc., Great Falls, Mont.
“There certainly is plenty of blame to go around in the mortgage mess. My own experience as a director on one of the Federal Home Loan Banks gave me a ringside seat to the pressure being put on the banks to make more loans to lower income borrowers when it first started. The bank whose board I served on had to set up a special department to carry out this mission. As my term expired, I fully expected to be reappointed, but it was not to be. Due to pressure from ACORN, among others, my seat was filled by a consumer advocate. I am inclined to agree with Mr. Greenspan that the securitization of these mortgages played a large role in the problem. Remember the TARP was originally set up to deal with these ‘toxic assets.’”—Buddy Klumb, Klumb Lumber
Cash for Caulkers?
“I really disagree with the proposal for the Cash for Caulkers program being changed to burden small businesses with the upfronting of the ‘rebate.’ If you are a box or large chain store maybe you have the cash reserve to wait an undetermined length of time for your reimbursement from the government, but the majority of small businesses cannot do that. Our government needs to think this through from all avenues before slapping another penalty on small businesses. We are otherwise being forced to absorb this ‘rebate’ or refuse to service our customers. Either option is not good for economic recovery in the small business sector.”—Terry Swanson Owner, Deerwood Cabinet & Lumber, Deerwood, Minn.
“There is a need for a level playing field among retailers with regard to collection of state sales tax. The reprieve initially accorded to online merchants served its purpose in getting the channel up and running, but the time has now come where states are paid monies entitled and due. It’s clear states have a profound need for these funds and are in no position to continue to underwrite online merchants.”—Tom Paul, Champion Group, Charlotte, N.C.
“I believe that the costs of supplying services should generally be born by those who use those services. Since an Internet sale does not need the local shopping facilities that require all that infrastructure and government cost to support, an Internet sale should not be asked to subsidize that infrastructure. So, I’m OK with not charging sales taxes on transactions that take place in the home or office.”—Steve Woeste, Louisville, Ky.
When companies fail
“Hundreds of thousand of businesses have failed here, but the end result was that our country was stronger for it. Our government should have let Chrysler and General Motors fail. I can assure you someone else would have stepped up to the plate and started another American car company. If you can’t manage your company, you need to work for someone who can. Look at all the Americans who have failed dozens of times and built stronger companies because of that failure—Henry Ford, Walt Disney and many others.
“We are the smartest, hardest working people in the world. Our country and our form of capitalism reward those who look out for their customers, their employees and then the stockholders. Just look at Southwest Airlines. They have not laid off anyone in decades. I have had a number of failures in my life, but I’m still here and still moving forward. As far as the banks are concerned, I think they need to look out for those companies that have weathered this economic storm so far, that have a viable chance to make it. Other than that, the rest need to be washed through our capitalistic system. No one is too big to fail if the company and its management team have not done what they needed to do to survive—first by cutting the ‘fat,’ starting with the president of the company. No big bonus or anything like that until the company has weathered the storm and is back on its feet.”—John Garlock, WR Supply
Building trend: Smaller homes
“No doubt the short-term future of U.S. home building will be geared toward smaller homes. Tougher credit standards, an aging population and ‘green guilt’ will all contribute to driving the average footprint for single-family homes downward.
“So what does a smaller footprint home mean for building products distributors? Simply this: Don’t project sales/staffing/capital equipment needs based on expected percentage increases in new home starts. With new home construction pointing to a smaller footprint, managers need to realize that there will be less building materials going into a new home. Building product companies that base their sales projections on ‘straight-line’ percent increases in new home starts will fall short and be forced to ‘resize’—again.
“Astute companies will base sales projections on square footage to be built, not simply the number of homes to be built.”—Rod MacKenzie, Green Building Resources
Regulations in California
(The article is a response to “Caution: This editorial may contain substance.”) “Our political machine is totally running amuck. Saw dust, taking the little bit of lead left in faucets out, but leaving the aged infrastructure in place. The politicos are just throwing up anything that makes them sound like they are doing something. All the while all the things that really need to get done, which go beyond their political life expectancies, never get done. System is broken!”—George Polony, Heieck Supply
Good service/Bad service
“I was at the checkout of a Publix grocery store. The cashier was obviously new and struggling to learn the system. Although I don’t recall the exact transaction, I threw her a curveball of some sort, causing her to struggle even more and to finally call her supervisor for help. After she had completed the transaction, I apologized for causing her the additional frustration. She immediately looked at me with a smile and cheerfully said: ‘Oh that’s okay, I needed to learn how to do that anyway, and you helped me.’
“I doubt this was part of the cashier’s training. Instead I suspect that she was just a positive person and truly interested in learning the intricacies of her job. Whichever it was, it was a small gesture on her part that made an unexpected and disproportionately positive impact on her customer.”—Mike Morehouse, Retired industry executive
“I went online to
“I have a saying that all my employees are familiar with: Don’t judge people by the mistakes they make, judge them by how they correct their mistakes. Stories of poor customer service are a great way for us to learn how to rectify our own mistakes.”—Matthew Mazzone, Mazzone True Value, Brooklyn, N.Y.
“I agree about the smaller home futures but also believe more of them will be built. Our builders have trended toward the same acreage but divided into more lots. Being quicker to build and having lower costs will benefit both the buyers and sellers. I have also noticed the buyers tend to spend more money on the amenities after the sale. Larger kitchens, larger decks and nicer doors.
“We have our own door shop, so the trend is very easy for us to track. We also have an excellent deck department that supplies quite a few contractors.”—Les Brown, “The Deck Doctor”, Springfield, Mass.
“No doubt the short-term future of U.S. home building will be geared toward smaller homes. Tougher credit standards, an aging population and ‘green guilt’ will all contribute to driving the average footprint for single-family homes downward. “So what does a smaller footprint home mean for building products distributors? Simply this: Don’t project sales/staffing/capital equipment needs based on expected percentage increases in new-home starts. With new-home construction pointing to a smaller footprint, managers need to realize that there will be less building materials going into a new home. Building product companies that base their sales projections on ‘straight-line’ percent increases in new-home starts will fall short and be forced to ‘resize’—again.
“Astute companies will base sales projections on square footage to be built, not simply the number of homes to be built.”—Rod MacKenzie, Green Building Resources
Cut and dry: Clear cutting
“Forestry is farming on a 30-to-100-year life cycle. No one can deny that a clear cut is ugly, but that is temporary. Science and experience have proven that in some cases, it is the best, most effective way to harvest lumber.
“Mt. St. Helens was a natural example of clear cutting. What happens after the clear cut determines if a clear cut is responsible forestry or an environmental disaster….
“When Mount St. Helens erupted nearly 30 years ago, it flattened more than 150 square miles of forest, spewed millions of tons of mud and debris, filled the sky with ash and left at least 57 people dead. The zone is largely treeless, studded with house-size rocky chunks, called hummocks, that broke off the top of the mountain when it exploded. A few scrubby trees, like red alder, have re-established themselves, and ants, frogs, meadowlarks, beavers and other species have moved in. A few miles away, in land managed by Weyerhaeuser, a timber producer, thick stands of trees laboriously planted by hand immediately after the eruption rise 70 ft. tall.”—John Daingerfield, Jaeger Lumber, Union, N.J.
“Can’t cut here. So we buy from Canada. Lost jobs. More dollars exported from our nation.”—Mark Rezek, Millard Lumber, Omaha, Neb.
Getting the lead out
(The letter refers to “California to switch to lead-free plumbing,” regarding a law to prohibit sale of any lead-containing pipes, fixtures and fittings.)
“As an independent hardware store owner, I must say this is a law that will hurt many small businesses like myself.… We have years of inventory built up in our stores, and to render it [not saleable] on Jan. 1 will hurt us badly. The state has already admitted it has no way to police this law. So, who will? The lawyers will compile lists of law-breakers for the attorney general. If I can use my loss as a tax deduction on my state taxes, that might lessen the sting a little. Do you think they will help us out? No!”—Steve Christensen, Manor True Value Hardware, Bishop, Calif.
Memories of Rickel Brothers
(HCN received several letters in response to a newsletter item about the great home center chains that are no longer with us.)
“The problem with memories is that you prove how old you have become. I remember when if you were a 30,000-sq.-ft. box, then you were the big guy in the business. It didn’t matter if you were East Coast—Channel, Rickels, Grossman’s or even Pergament as you went down the east coast to Florida. Then there were the West Coast chains—Builders Emporium, Handyman, Handy Dan, National Lumber and Pay ‘n Pak. In those days there seemed to be enough business for everyone to overlap, yet find a way of doing profitable business in their regions. How many of you remember the ‘Home Center Council’ that was attended by CEOs and presidents in New York City?
“The best part of memories is all the great people and many ‘real characters’ that grew up in the ‘home center industry’ from both the store side and supplier side. Many of those stories should never be repeated!
“I have gone on too long already (that happens when you get old), but if anyone reads this, thanks to all those who built and grew up in the industry we call home centers. Our history is relatively short compared with all retail, but it has been exciting, and I thank all those that I had the honor of knowing and working with over the many years. Keep up the great work.” —Marty Bocola(The author is a 30-year home center executive and co-founder of Paint Factory. He now runs an auto Web site,
“I can remember as a youngster going with my father to the local Grossman’s lumberyard. The smell of pine sawdust still brings me back to those days, when the orange-and-white-striped storefront would beckon us in for that week’s supply of lumber.
“Dad redid the entire basement of the house I grew up in, studding up walls, adding insulation, drywall and paneling, and even hanging interior doors. Of course, back in those days, they were the pre-hung luan doors that nobody buys anymore. Eventually he added a wet bar, and decked the whole place out with z-brick and cedar shakes to hide the foundation.
“Looking back just now, I’m just realizing how much an influence those experiences were in my chosen career field!”—Chris Kling, New Bern Building Supply
“Growing up in Miami and still residing in Florida, I have fond memories all the way back to the ‘50s and ‘60s, with the lumberyard chain RBC Lumber (merger of Renuart, Bailey Lumber and Cheely Lumber), then of course Lindsley Lumber. And my personal favorite is when Service Merchandise decided to get into the big-box home center business and acquired the HomeOwners Warehouse chain back in the ‘80s, then renamed it Mr. How—complete with an in-store expert by the same name who provided DIY advice.”—Edward Binai, President, Millennium Sourcing Group
Cash for Caulkers
“Leave it to this administration to come up with ever more ways to waste the taxpayer’s money. This idea, along with its costly and wasteful cousin Cash for Clunkers, will do little to eliminate pollution or spark the economy. The usual big government play [President Obama] only spends more money we do not have. If he was truly interested in improving the economy, he would cut income taxes, consider a suspension of payroll taxes, reduce spending, drop the trillion-dollar healthcare reform issue, along with cap-and-trade and, lastly, get out of the way of the small business person and let the free market heal itself.”—Merritt Huber, President, Carolina Lumber & Supply Co., Atlanta
Housing tax credit
“Read about the role of government—it is to stimulate in economic hard times and hold the reins on the horses in periods of high growth. Regretfully they did not, and we ended up with this massive downturn. Even Reagan stimulated the economy in the ’80s to the tune of $750 billion—adjusted for inflation. I like the housing deal because it gives money back to us taxpayers as opposed to the Fat Cats on Wall Street.”—Tim DeHaven, Owner, DeHaven Home & Garden Showplace
“I feel the credit will bring buyers into the market who may end up losing more than the credit value in their first year of ownership. Nationwide, housing prices are expected to fall another 10% to 11%. If a buyer gets an $8,000 tax credit in year one and their $150,000 house depreciates 10% the same year, they are negative $ 7,000. First-time buyers are the most vulnerable to value depreciation and not understanding all the ramifications. Agents and mortgage brokers are likely to knowingly sell a first-time buyer into a depreciating asset without advising the buyer of the local market conditions and expectations. The idea of ‘buyer beware’ is one of the things that helped create the sub prime crisis. The tax credit will encourage the most vulnerable to enter a depreciating market.”—Scott Bruntmyer, CPG Sales & Marketing Professional
“My store is located in Champaign, Ill., and has been in business for 85 years. A few years ago we were asked if we would establish a utility payment center, as the major utilities, in an economic move, decided to close their branch offices. That small section in our 18,000-sq.-ft. selling area is only 150 sq. ft. But it generates 200 to 400 paying customers a day.
“When I started to watch the demographics of the customers coming in, I installed 32 linear feet of $ 1 items that we buy through Do it Best Corp. The merchandise is not cheap in appearance or in quality. Our average gross profit margin on that aisle is 30% to 37%. As people are standing in line waiting to pay their bills, they look at the display. There are approximately 300 items in that 32-ft. run. When they leave, at least 50% or more of them pick up several items from that display.
“They might have paid $2 to $3 to process their bills, but they will spend an extra $4 to $10 on the aisle. It’s been one of the best decisions I’ve made. Not only do our customer purchases increase, but we have reached out to a whole different socio-economic group in our town.”—George S. Edwards Jr., President, Tepper Enterprises of Illinois, d.b.a. Champaign Do it Best Hardware
Chinese drywall: Who’s to blame?
“Definitely the manufacturer of the drywall should share a large portion of the expense, but I think distributors of the product are also guilty for not doing their homework to make sure they are providing a satisfactory product for American consumption. Chinese drywall was probably very inexpensive to purchase initially, but final results have proved different. Shame on those responsible for not buying American products!”—Les Krider, Sales manager, Morsches Builders Mart
“I feel that all parties should be accountable: importer/distributor, dealer, contractor, the manufacturer and the Chinese government. The U.S. market is too important to China. Their government should be totally committed to correcting this problem.
“I also believe our government should get involved and stand behind our U.S. companies.”—Jim Mather
“I think the brokers and drywall suppliers who chose to import drywall from China should bear the financial responsibility for this disaster. Even though I sympathize with the home builders, they as well should be held responsible for purchasing this ‘cheaper’ alternative. I understand that, at the time, the U.S. supplies of drywall were short, but you have to be aw a re of the product you purchase and only need to look at the history to see the track record China has with tainted products. Shame on the suppliers and builders who tried to make the quick buck and chose to install an inferior product. Once again, the responsible people of this nation will bail out the greedy and corrupt.”—Wayne Gibbs, Gillman Home Centers
National agenda: Healthcare reform
“The president himself consistently misrepresents the true picture of the American healthcare system. Some 80% to 85% of the population is satisfied with their insurance and health care in general. Identifying the remaining 15% and addressing their needs should be emphasized. There are three concise elements to our healthcare solution:
Allow insurance companies to compete across state lines,
Tort reform and
Offer income tax reductions to individuals and self-employed people for their health insurance premiums.
“I attended the Sept. 12 march on Washington, and the silent majority was out in full force!”—Merritt Huber, Carolina Lumber
“If the administration were being honest about health care and transparency, it would tackle the issues one at a time, debate them, and leave out the pork and paybacks.
“The issues are, in part: tort reform; Medicare and Medicaid fraud; lack of competition across state lines among insurance companies; identifying exactly who is not presently covered, and why not; and addressing the use of medical facilities by non-citizens. That’s a start.”—Art Trenkle, Fairway Floor
When neighbors lend tools
(HCN received several comments on the topic of neighbors who lend tools to other neighbors, and the resulting impact on tool sales. Here are two.)
“Years ago when I was the executive of the Montana Republican Party, one of my best friends was executive of the Montana Democratic Party. (Really—our wives had been best friends since grade school, and he and I had been friends before I took the position.) We both owned old Victorian homes in Helena about a block apart. My friend was a darn good plumber, and I was a lot better at tiling than he was. So he helped me with plumbing, and I helped him with tiling. I suspect there has to be some political humor in here somewhere, but I can’t think of it. Too bad the parties aren’t as civil as they were years ago. We’d fight against each other hard until about 6 p.m. nearly every day, then we’d enjoy a cool one and a BBQ and not talk about politics much.”—Ken Dunham, executive director, Lumber Association of California & Nevada
“Tool borrowing certainly lends itself to increased project traffic because it lowers the cost of the project. Also consider two other points: A) A borrower inexperienced in how to use a tool properly is more likely to break the tool and have to replace it. B) Someone who borrows a tool for a project may find out that he/she is more capable of doing such projects and will venture out and buy their own tools in the future.”—Patrick O’Neil, area manager, N.Y. outlying stores, Stock Building Supply
Housing crisis? What crisis?
(An article last month questioned the use of the word “crisis” to describe housing, when the typical home is worth nearly 50% more than in 2000.)
“If we focus on housing prices or values, the term ‘crisis’ is certainly overused and over-hyped. If we are talking about the unemployment, business closings and pessimism prevalent in the last year or so, we may not be overusing this term. We can all survive having our home values drop to year 2000 levels, but if people are unemployed in huge numbers and if foreclosures were to continue at the current pace, we are in crisis. I don’t believe that this is the case. I think we are on the verge of a slow recovery that will show a little downturn this winter before climbing again. Unemployment is the key. If we can put people back to work, we will be OK.”—Sterling D. Golder, Britton Lumber
Ban the bulb?
“Thomas Edison would be mortified! I’m not against energy conservation, but I think banning a product like the incandescent bulb is a precurs or to banning chips and Oreos because they’re bad for you…and it costs more to care for you if you’re overweight or in poor health.”—Sharon Albright, Boise Building Solutions
“…The EISA07 law (signed by President Bush) that created the bulb efficiency standards will not ban technology outright, but does set up increasing tiers of efficiency requirements over time.… Efficient lighting is the single most cost-effective energy efficiency retrofit in homes and businesses. If the U.S. is going to have any response at all to global warming, mandating more efficient lighting will have to be part of the solution. To dismiss the most cost-effective solutions without offering alternatives is to end up with far worse (less cost-effective) solutions.…”—David Shiller, MaxLite, Fairfield, N.J.
The scourge of shoplifting
“Shoplifting is and always will be the largest problem in the retail sector and especially the hardware sector where most stores are crammed from floor to ceiling with merchandise. I often threaten to use the store form at used in Mexico, where the customers are stopped at the front door and a clerk picks their selection.
“We have cameras everywhere but never catch any shoplifters in the act. But the cameras come in handy in determining how the product was stolen.… Most of the times it involved two, three or four people using a diversion strategy. We stopped the bleeding by closing the secondary entrance and forcing any future thief to travel through the store. A customer will sometimes ask why we keep the door closed, and they agree they would rather walk more steps than see the price of merchandise escalate.
“One-on-one service goes a long way in alleviating the problem, but you have to understand a lot of the shoplifters are professionals, and they are good at their jobs.”—Joe Alexander, Alexander Hardware & Small Engine, Theodore, Ala.
“[We have had] no bump at all! Our customers are buying based on need, not based on any stimulus pack age. And some customers that do need products, or want them, are not buying because they are afraid of the government’s next mandates—health care, energy, etc. If Washington and the media would just shut up and leave things alone, the economy would fix its own wounds as it has in the past. Don’t they know that they created this mess?”—Clyde Fickes, owner, Fickes Home Center, St. Charles, Iowa
The bulldozer option
A Pro Dealer Digest newsletter article led to comments regarding an economist’s suggestion of demolition of homes as a way to lift the housing market—the bulldozer option.
“Demolition of houses would not be a good long-term answer. It would create a false market by cutting supply. Also, this would contribute to inflation. Owners of existing homes in these areas would have an automatic increase in the value of their homes. In some cases these homes [might] already have an inflated value. This situation needs to work itself out. We have benefited from the situation for years (maybe too much) and now must work through the problems with the market.”—Kevin Sowards, Schmidt Builders Supply, Lawrence, Kan.
“That sounds like a government plan to me; it’s just plain counterproductive in the long haul. Yes, there are a lot of markets that overbuilt, but I know the market will correct itself without destroying real property.”—Andy Lindsey, Madison, Ga.
“I think the ‘bulldozer’ approach would be an excellent idea in distressed markets. Many times these depressed are as become havens for crime, especially when many of the homes are vacant.—Cory Peters, Southern Wholesale Supply, Harrisburg, N.C.
The demise of Smith & Hawken
Responses to the closing of 30-year-old lawn and garden retailer Smith & Hawken:
“What killed Smith & Hawken? Logistics and information technology. We were an S&H retail partner through True Value and experienced their failure firsthand. Scotts must never have taken a look at that side of the business, or did, and realized it was insurmountable, and too far down the proverbial tube.
“Their order entry system was a mess, their billing system was a mess, and their inventory control system was ridiculous. Customer service was abysmal, and when all you needed was a part (which they would generally not ship), they would send a whole new unit. Frankly, I wasn’t surprised when they went out.”—Bob Whelan, CFO/Partner, Washington Supply, Washington Depot, Conn.
“My wife loves the store and would go quite often. Typically, she would only buy a couple of small items since the vast majority of their product seemed to be priced in the stratosphere for what it was. The quality of the product was never an issue, and the store was always a joy to browse, and in my opinion, the major factor was high pricing.”—Mark Gamble, Warren Pipe & Supply, Utica, Mich.
Lead-paint lawsuit shocker
Responses to an article about the June 30 jury decision awarding $7 million to a plaintiff in a Mississippi lead-paint lawsuit against Sherwin-Williams:
“The [lawsuit] is nothing more than legalized extortion, and the plaintiffs’ lawyer(s) should be brought up on RICO statutes. Anybody with any education knows that lead-based paint is toxic, just like tobacco (yet people still smoke—I don’t get it). I don’t know what the circumstances are regarding the lead exposure here, but where it involves kids (lead is more toxic to growing nervous systems in kids than adults), if there was a chance that I would be putting my kids in jeopardy I would at least ask questions. Plus, cheap easy-to-use lead test kits are available and we certainly sell them here.
“Frankly, I would hold the parents responsible for any health effects caused by the lead with all that is known today. If you go into a pediatrician’s office, you will find warning notices available about the toxic effect of lead exposure in kids. Where is the parents’ responsibility? And don’t tell me that their responsibility lies in the fact that they have to live with sick children. They should have done something about this sooner.
“Further, federal law makes it mandatory that landlords deal with old lead paint in older buildings. If this was a rental situation, all the parents would have to do is challenge the landlord to get his butt off the ground and deal with it, or he would have to deal with local health officials.”—Augie Venezia, Fairfax Lumber & Hardware Fairfax, Calif.
“Obviously the award will be appealed. Frequently the award is reversed or reduced as a result of the appeal. I hope everyone who reported this absurd award will be diligent enough to report the results of the appeal.”—Kevin O’Donnell, Central Woodwork, Collierville, Tenn.
Note: In SW’s most recent quarterly earnings conference call, the company said it was laying the groundwork to have the jury decision overturned, and to take its case to the Mississippi Supreme Court, if necessary.
Avoiding Chapter 11
“My experience is that the way to avoid bankruptcy is to grow at the pace you can finance from your own cash flow and a minimum of bank debt. Every bankruptcy that I have seen has been caused by excessive borrowing. This is especially true in these times when banks simply come to the retailer and say they want their loans paid down now. The publicly held companies are focused on growth to satisfy Wall Street. This leads to growth that can outpace the company’s ability to finance, so they borrow sometimes too heavily to maximize ROI.
“This is where the independents have the edge. Generally they have been in business for several generations and have accumulated significant net worth, which they use to finance acquisitions. Having said that, there are a few independents that have filed for court protection. But here again, it is generally due to excessive debt.”—Anthony J. DeCarlo, President and CEO Lumbermens Merchandising Corp.
The rising price of gas
“This is my opinion, a person who has started, owned and operated a ‘family’ building supply business for over 50 years and is now in the hands of the younger generation. Next year, if I live long enough, I will be 80. Therefore, these are the opinions of an older man.
“Yes, the price of gas here this morning is $2.89. Pricing will continue to be a problem unless Congress will allow oil companies to drill here in America where there is all the oil needed to eliminate the import of foreign oil. Yes, we do need alternate energy. However, we need to get the most economical forms, not what puts money in the pocket of politicians. In my opinion, our nation is run by a majority of politicians who are not concerned about the ‘small’ business people and are only concerned about getting re-elected next election.… GM and Chrysler will be forced to produce gas-efficient cars, which will in turn take less fuel, and the oil companies will in turn increase the price of gas. This only makes sense as they are in business to make money.”—Charlie Habegger, Habegger’s Ace Lumber and Building Supply Berne, Ind.
Are glue traps humane?
“There are many mouse control options available, which are effective in capturing and humanely treating these common pests, whether it be by humane release or a swift and non-suffering death.
“In our opinion, buyers and merchandisers either are pressured by their superiors or hold a misconception that their category offering must be dominated by products like poisons, snap traps and glue traps. While these have been traditional methods of mouse control, each has its drawbacks, particularly a potential danger to the consumer.
“I think you will find merchandisers in almost any category resistant to change. Their concern may be losing sales or profits, and this pressure and fear affects the item selection. Unfortunately this lack of pioneering and innovation will quickly stagnate a category.
“If buyers and merchandisers consider the lost revenue and true category growth of adding different products to broaden their consumer base, they will find that consumers who are unsatisfied with the current product category offering will bring their purchases into the category, increasing sales and profits.”—Bryan Muche, Green Bottle USA (The writer represents a company that manufactures alternative mousetraps.)
“Vermin are vermin, and how you get rid of them is your business not the business of PETA. I use them all the time. They are great for mice, and you get a side benefit because they catch all kinds of crawling insects.”—Russel Snow, East Bend Marketing
Cement and sustainability
“From a renewable resource perspective, concrete is not very ‘green.’ Lumber is the only major framing material – building product that is a truly renewable resource. We can plant more trees and harvest them as long as there are sunlight and water to help them grow. Concrete is somewhat green because it can be recycled and re-used, but the earth still has limited mineral resources that can never be replaced once they are used up.”—Carl Hawks, Stock Building Supply
Home Channel Hall of Fame
“I would agree with John Cotter being posthumously inducted. However, if you are going to induct a CEO, either current or former, of a co-op for helping a company through a financial crisis, then how can we overlook True Value’s former CEO Pamela Lieberman? Here is a woman that took a job that NO ONE wanted and most likely saved True Value from going bankrupt. Not only did Pamela have to battle more than $700 million in debt, she had to deal with the banks, the members and the associates who all had a lot invested in True Value. She took a company that was on the brink of disaster and turned it back into a company that True Value members could be proud of. Let’s not forget she did all of this while being the first woman CEO of a major co-op in an industry known for being made up of ‘good old boys.’ How about someone finally giving her the recognition she deserves?”—Matthew Mazzone, Mazzone True Value, Brooklyn, N.Y.
When will the bottom come?
“I prefer to leave the forecasts to the pundits. As wholesale forest products distributors serving markets as diverse as Atlanta, the Florida panhandle, New Orleans and east Texas, we will know when the bottom has been reached when our sales stop declining month over month. May was not as good as April, and the first three days in June, if harbingers of the month’s business, are slower still. Then I have a personal observation that I make going up and down a state highway here in South Alabama on which there are four substantial subdivisions, one of which is a D.R. Horton site. I go up and down this highway three or four times a week, and the day I see bright, fresh framing going up—I’ll say the bottom has been reached.”—Buddy Klumb, Klumb Lumber, Fairhope, Ala.
Famous customer department: Gene Hackman
“Twenty-two years ago I started a True Value Hardware store from scratch. A customer came in and asked if he could put a few items in an open space close to the front of the store. He got a garbage can and began to fill it with power drills, sanders, saws and miscellaneous other items. It totaled more than $500. Back then, $500 was a good Saturday. When he was done he presented a credit card, which we ran through the embosser. He asked if we could deliver it to the nearby airport. On Monday we discussed the transaction, and our receiving clerk asked to look at the slip. It was Gene Hackman’s. A few weeks later he came in at closing and as he left, we locked the door. A few minutes later, while in the office finishing for the day, we hear the front door rattling. We go to investigate and it was Gene Hackman wanting a ride because he had locked the keys inside his car. Needless to say we gave him a ride over to the airport where he was assembling a kit airplane. His car was gone the next morning.”—Dave Belcher, Lake Stevens True Value, Lake Stevens, Wash.
Open letter to the industry
For the past eleven years, I was VP sales and marketing for a manufacturer of high quality forged hand tools. Like many others in this industry today, I am among the unemployed, i.e., ‘in transition’ if you will.
During the past six months, I have had many interviews and, a few times, have been anticipating offers of employment only to hear the prospective employer say that they have decided to postpone filling the position until the economy improves.
Many industry executives have confirmed what I am about to tell you—our industry appears to be retreating into a shell.
Yes, the industry that provided the products that literally built this country is now letting economic fear determine its decision-making. It is an industry that is being reactive, rather than proactive. It is an industry that is trying to weather the economic tsunami by cutting personnel, reducing production putting new product introductions on the back burner, scaling back new advertising and marketing campaigns, and postponing filling existing personnel needs. In short, too many companies are putting the future on hold for the sake of the present.
It is during tough economic times that industry-leading companies and successful industry leaders themselves rise to the occasion and exploit the situation. While companies today must certainly control unnecessary expenses, it is more important than ever before that we continue to introduce new products with new and impactful campaigns that will make the customer and the consumer take notice of those companies that are willing to bet on the future and continue to hire human resource talent to achieve the aforementioned goals.
Be prepared now, because when the economy turns around, it is going to happen fast, and the world economy of the future will not look anything like it did 12 to18 months ago. Nor will it ever again.
When this economy turns around, your customers will be placing larger orders with you and expecting shipment immediately. At the same time, they will be looking to your companies for new products and new promotions. They will be looking for new marketing and new advertising campaigns to help drive their business. It is only by preparing for the future that industry-leading companies will be able to ride the economic rocket when the economy turns around. Remember, companies that are not actively growing, are dying. Don’t be a follower, be a leader
Finally, as my wife and I occasionally have to tell our teenage son when he refuses to accept reality—‘Snap out of it!’—Scott Jonap, Erie, Pa. The writer is a former executive with Channellock
The not-so-complicated house: Value engineering cuts costs for builders, consumers (April 13 issue)
It is a good thing for builders to understand that there IS a place for distribution. Hopefully they can’t pull off the plan of going ‘around’ those of us who play a part in the process of getting products to the field. The pricing visibility they speak of may sound appealing in theory, but I doubt they know how efficiently operated our units are run on very low margins. In these slow economic times, they may be able to pull it off, but when home building gets back to rockin’ and rollin’ they need to stay doing what they do best and let us provide the real ‘value’ of keeping their job site materials on time and on budget. We are worth what we’re paid.—Ken Kraich, manager Swift Supply, Daphne, Ala.
Amillion starts in 2009? Doubtful.
“Couched in all of the hoopla about a 22.2% improvement in housing starts and permits in February were three sentences that most analysts seemed to ignore. Yes, housing starts were up 22.2% from a dismal January 2009 report, but they were still 47.3% below the revised February 2008 figure. A big jump in multi-family construction was credited for most of the increase. From a lumber and panel consumption basis—multi-family construction uses 30% to 40% less material than a single-family dwelling. The final sentence ‘Single-family starts in February were at a SAAR of 357,000 units, 1.1% higher than the January figure.’
“I don’t want to throw water on a rekindling fire, but all of this excitement needs to be put into its real context. We are a long, long, long way from 1 million housing starts. First to be dealt with is the glut of unsold new and previously owned houses, and then all of them that are in foreclosure or already foreclosed on. Have we hit the bottom? Let’s talk again in May.”– Joseph S. Glitman, National Forest & Panel Products Purchasing Manager, Allied Building Products
Employee Free Choice Act must be stopped
“The secret ballot is something that was fought for in this country and is essential to any fair election. For someone to say card check is a good thing is just an outright lie. It would subject employees to possible strong arm tactics by unions as is well documented in our past.”– Gary V. Palmer, Product Manager, BenBilt Building Systems, Mount Pleasant, Pa.
“Everything associated with individual freedom and free market activities is under assault. ‘Card check’ is merely the latest attack.”– Wesley Davis, EWP Design, Builders FirstSource
Taking Stock of the lumber industry
“My how the industry has turned on its head with the recent banking crisis, greed and corruption littered all throughout corporate America. I have worked in the pro dealer environment for the past 16 years, and I’ve seen some awful management and leadership. I look forward to seeing who survives, and I doubt bailouts will be readily available for pro dealers that have, in general, managed the down turn horribly. Cleansing of the system should allow independents; small mom-and-pops; and outfits like Universal, ProBuild and others to thrive in a rebound of the housing industry. There are many good people in the industry who look forward to getting out altogether.”– “Scott,” LBM dealer employee
Texas says no to stimulus money
“It’s about time someone followed their principles and worked to pass on the values that made our country so great—the value and rewards of hard work, self reliance, determination and treating your neighbor as yourself. The only things we are ‘entitled’ to as human beings are to be born and to die.”– Steve Woeste, TraQline
“While it might sound courageous to stand up for your beliefs, it is always easier if you don’t have to worry about your mortgage, food or other bills like the good governor. I suspect your poll will show all those of an affluent nature are backing the governor, while those that are really hurting and could use that money will feel differently.”– Bill Parks, former Ace Hardware employee
Rude awakening for Dream Ace
“I’m a manager of an Ace Store. I don’t see how anyone that was given a fully loaded store could throw in the towel. I guess you have to know the business to make it work.”– Herb Herther, Spokane, Wash.
“You have to be committed 100% to be in the hardware store business. If you think you’re going to be shooting the breeze with the boys, you are in the wrong business.”– Peter Doherty
ISANTA elects 2009 officers
The International Staple, Nail and Tool Association’s (ISANTA’s) board of directors elected new officers, including Guenther Kram as chairman of the board. Kram is the business unit manager at Illinois Tool Works’ Paslode division, located in Vernon Hills, Ill. He has spent 23 years with ITW.
Tom Green was elected ISANTA vice chairman. Green is VP of Pneumatic Products for PrimeSource Building Products, based in Carrollton, Texas. Green has 27 years of experience in the fastening industry, seven with PrimeSource.
ISANTA also elected Chris Miller Secretary/Treasurer. Miller is president and CEO of Master Fasteners International, based in Long Beach, Calif.
ISANTA has 19 member companies: BeA Fasteners USA; BlueLinx; Black & Decker; Bostitch; California Nail & Supply; Dubai Wire; ITW (Duo-Fast and Paslode); Falcon/Specialty Fasteners; Fasco/Beck; Hitachi Koki USA; Jaaco Corp.; Makita USA; Master Fasteners; Max USA; Millennium Steel & Wire; Prebena; PrimeSource; Senco Fastening Systems; and Tectronic Industries.
New Service Center supports iLevel
Easton, Pa., is the site of the new iLevel by Weyerhaeuser Service Center. Built on 30 acres of land, the 100,000-sq.-ft. facility consolidates office, warehouse and distribution operations to optimize efficiency and improve customer service.
The Easton iLevel Service Center replaces the Bridgewater, N.J., Service Center.
“We designed the Easton service center to deliver on the iLevel promise of providing cutting edge structural framing products and services to customers quickly and simply,” says Craig McDonald, iLevel North Atlantic region manager. “It was built from the ground up with the dealer and builder in mind.”
The Easton facility serves iLevel customers in eastern Pennsylvania, central and northern New Jersey, southern New York and Long Island with simpler and more efficient access to home-building solutions, according to the company. An increase in internal and external storage capacity improves docking and loading capabilities and further enhances streamlining of logistics throughout the supply chain.
“We wanted to create a service center where our structural frame expertise is coupled with a passion for service to meet our customer needs,” added McDonald. “Whether it’s answering questions on a unique framing challenge or providing on-time and in-full delivery, we are always looking for ways to simplify the business of home construction.”