Remodeling activity slows in second quarter
Remodeling activity may be following the pattern set by slowed housing starts, according to the National Association of Home Builders (NAHB). The Washington, D.C., trade group just released its Remodeling Market Index (RMI), a national survey that measures remodelers’ perceptions of market demand for current and future remodeling projects.
Any number over 50 indicates that the majority of remodelers view market conditions as improving. According to the index, only the Northeast has shown some improvement, with RMI readings moving from 43.4 in the first quarter to 49.5 in the second quarter.
Other regions of the country reported declines in their readings, with the Midwest falling from 47.5 to 44.5, the South declining from 45.9 to 42.3 and the West slowing from 48.2 to 46.8.
“Not surprisingly, the remodeling market is following the downswing we are seeing in the overall housing market,” said NAHB chief economist David Seiders. “We expect some further erosion in the second half of this year and in 2008, followed by a gradual recovery in 2009 and beyond.”
On the question of future market conditions, remodelers differed on their expectations. In the Midwest the RMI declined from 44.7 to 43.7, in the South it fell from 50.7 to 45.0, and the West showed a rise from 45.0 to 46.0. Expectations in the Midwest remained flat at 44.1 compared with 44.3.
“While we have experienced some weakening in the remodeling market, activity has remained relatively steady,” said NAHB Remodelers chairman Mike Nagel, a remodeler from Chicago. “We may have seen a decline in the number of major remodeling projects; however the market has been buoyed by an increase in the number of homeowners requesting smaller scale projects and home alterations.”
Nardelli takes top seat at Chrysler
Home Depot’s former CEO Bob Nardelli has been named CEO at Chrysler, effective Aug. 6. Nardelli also earned a seat on the company’s board of directors.
Recently privatized Chrysler said Nardelli was chosen for his background in operations, experience expected to help in a time when the company is trying to turn around its financial situation. Chrysler was recently purchased by Cerebrus Capital Management, a private equity firm.
“We are excited to welcome Bob to the Chrysler family,” said Tom LaSorda, vice chairman of the board and president of Chrysler. “Bob has a proven track record of success and an unwavering focus on performance and brings deep operational experience and a broad industry background to Chrysler.”
“I am very excited to be part of a team focused on re-establishing Chrysler as a standalone industry leader, with a renewed focus on meeting the needs of customers,” Nardelli said. “I am confident that together we can continue the momentum of Chrysler’s recovery.”
Nardelli served as Home Depot’s CEO starting in 2000 and resigned from his position in January of this year. During his tenure, Nardelli sometimes sparred with investors over certain issues, particularly the company’s investment in its pro dealer business. (Read our in-depth coverage here.)
However, Nardelli’s tenure at Home Depot was marked by sales that doubled from $45.7 billion in 2000 to $81.5 billion in 2005. During that same span, profits rose 123 percent to $5.8 billion from $2.6 billion.
In the end, Nardelli was criticized for his pay package of about $38 million per year, which upset some investors. Home Depot’s board of directors also was criticized for awarding Nardelli a severance package of $210 million, including $20 million in cash, after his Jan. 2 resignation.
Frank Blake, one of Nardelli’s former colleagues at General Electric, has since taken on the CEO spot at Home Depot.
“We’re at a turning point for our company,” Blake told the investors at the company’s annual meeting, held in May. “We’re going to invest now so that when the sector turns, we’ll be stronger than ever.”
HD Supply opens new distribution center
Home Depot’s pro unit, HD Supply, has opened a new electrical distribution center in Orlando, Fla.
The 300,000-square-foot center will serve the company’s 25 Florida branches, according to the Orlando Business Journal.
An HD Supply Plumbing/HVAC branch is also located at the same center as the new distribution center.
In a deal expected to close in October, Home Depot is selling its HD Supply wholesale business to Clayton Dubilier & Rice, Bain Capital and Carlyle Group for $10.3 billion.