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Surviving the storm

BY HBSDEALER Staff

In September 2004, Hurricane Ivan devastated the Cayman Islands, damaging 85 percent of its buildings and leaving a quarter of them uninhabitable. Local residents turned to Kirk Home Centre for the lumber and other materials needed to rebuild their lives, but the Cayman mainstay was in desperate need of help itself.

“In a time where everyone needed us the most, we had to repair ourselves and help others at the same time,” said Krissy Kirkconnell, the store’s senior buyer. “It was both tiresome and rewarding. We had to store up in two separate locations, which was very difficult on both our employees and customers. Both were very loyal. It helped to see us through our difficult time.”

For two years the Kirkconnells served customers as best they could out of a portion of their warehouse and another building two blocks away—neither of which were air conditioned—before opening the new Kirk Home Centre in October 2006.

One could say it was worth the wait.

The new store is 40,000 square feet—about 25 percent larger than the old retail space—with an adjacent lumberyard and warehouse. Most departments have been expanded and upgraded, including lawn and garden, housewares, giftware, paint, plumbing, electrical, major appliances, lumber, heavy hardware, outdoor living and hand and power tools.

Kirk Home Centre is located on Grand Cayman, the largest of the three Cayman Islands and home to the Kirkconnell family since 1896. In 1963, brothers Eldon and Charles established Kirkconnell Brothers, a supermarket and wholesale goods company. In 1974, they decided to expand the business to include lumber and hardware and changed the name to Kirk Home Centre. Third generation family members Krissy and Brigitte are the only Kirkconnells still involved in the business.

By the early 2000s, the family was starting to cater more to contractors than homeowners, a trend that has continued with the new store. They pride themselves on having an upscale assortment of building products—“from foundations to finishes,” said Krissy Kirkconnell. “We recognize the importance of that segment of the construction industry. There is an expanded section for contractors with more goods on display, as well as a prominent area for doors and windows, including Jeld-Wen and Andersen.”

Kirk Home Centre also carries a broader, more upscale assortment in areas like power tools, housewares, linens and gifts, and has an impressive display of appliances that includes the GE Monogram series. In addition, the store is the only authorized dealer in Cayman for the American Standard line of bathroom fixtures.

Deborah Reed, True Value’s territory manager, Caribbean, said she enjoys working with the Kirkconnell family and was impressed with their resiliency after Hurricane Ivan. “They worked really hard to keep the business going through the rebuilding process, rallying their associates to keep a positive attitude throughout the very difficult period following the hurricane,” she said. “The end result is magnificent.”

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Mansfield named chairman at Valspar

BY HBSDEALER Staff

Minneapolis-based paint and coatings company Valspar has named current president and CEO William Mansfield as chairman of the company’s board of directors, effective immediately.

Mansfield succeeds Thomas McBurney, who has served as chairman for the past two years. McBurney will remain chair of the board’s governance committee and lead director.

Mansfield, 59, joined Valspar in 1984. After working in lead roles at most of Valspar’s businesses, he was named COO in April 2004. He has served as president and CEO since February 2005.

Mansfield holds a B.S. degree in engineering from Drexel University and an M.B.A. from Lehigh University.

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Top 350 pro dealers cope in a difficult housing market

BY HBSDEALER Staff

When the Chinese Year of the Dog came to an end on Feb. 17, 2007, some pro dealers looked at their 2006 sales figures and saw an apt comparison. Sagging lumber prices and dwindling housing starts had a negative effect on many dealers’ revenues. But overall pro sales for the industry’s top 350 players, according to HCN’s annual survey, grew by 9.0 percent, to $55.98 billion. View the top 350.

Although some dealers posted double-digit declines, others were able to break even or grow their business through the downturn. Of the 350 dealers on the list, 119 reported revenue increases, 77 experienced declines and 154 companies are listed with flat sales.

In terms of rankings, Pro-Build, Stock Building Supply, 84 Lumber, BMHC and ABC Supply still occupy the first five positions among lumber and building material dealers. Several of the Big Five continued making acquisitions through 2006, which helped boost their revenues. Altogether, they accounted for 35 percent of the Top 350 sales.

One of the businesses acquired was Rowley Building Products, a 10-unit chain of lumberyards in New York’s Hudson Valley. Rowley’s owners decided to join Strober, a division of Pro-Build, when they noticed national builders moving into the area. But by the time the deal was finished, in July 2006, single-family permits in the New York, New Jersey region were on track for their weakest year since 1996.

“[Strober] has been around awhile, and they understand the cyclical nature of the business,” co-owner Brian Rivenburgh told HCN at the time.

Most of the pro dealers on the Top 350 list have been through housing downturns before, the last one beginning in 1995 and lasting three years. But this downturn is different, with production builders pulling back on the reins quicker than anyone can remember.

“Literally, in early July, it was just as though somebody turned off the faucet,” said Builders FirstSource CEO Floyd Sherman, speaking to a group of analysts last October.

Builders FirstSource showed a decline of 4.2 percent in sales last year, despite expanded manufacturing capacity in Greenville, S.C.; a new lumberyard in Lake City, Fla.; and an acquisition, Freeport Lumber, in the Florida Panhandle.

Florida dealers listed on HCN’s Top 350 scorecard showed a pattern of similar results, with 14 out of 18 companies reporting sales that were flat or down for the year. But the story behind the numbers is one of robust sales in the first half of 2006 followed by steady declines in the last two quarters.

“By the end of the year, many of our dealers had [experienced] a solid year,” explained Bill Tucker, president of the Florida Building Material Association.

Of course, 2007 is another story. “It continues to fall off the roof,” Tucker said. “I’ve spoken to dealers whose sales are off by 40 to 50 percent.”

One of the bright spots on the building landscape — commercial construction — is doing well in Florida, according to Tucker. Dealers across the country are turning in similar reports. O.C. Cluss, a nine-unit pro dealer based in Uniontown, Pa., acquired an Ohio truss manufacturer last year that makes, among other products, steel trusses used in commercial construction. Other Cluss acquisitions in the past two years include a glazing operation and a wholesale plumbing supply company, both of which serve the light commercial market.

O.C. Cluss reported a 30 percent rise in sales in 2006, from $85 million to $110 million.

Even the big guys, the ones who grew more muscle during the production home cycle boom, are turning toward commercial work now that times are lean. BMHC’s construction services division is “pursuing limited commercial construction work where it makes good business sense to do so,” according to SelectBuild president and CEO Mike Mahre.

Although the first half of 2006 was a busy time for acquisitions, M&A activity tapered off toward the end of the year as the outlook grew dim. Stock Building Supply announced employee layoffs in June and November, and the other major LBM players quietly reduced their work forces. Pro dealers who had relied on tract home builders for revenue began looking at multi-family housing, the remodeling contractor, and in some cases, the consumer.

Chip Mortimer, president of Mortimer Lumber in Port Huron, Mich., served home builders from his four locations in southeastern Michigan during the boom days. But with single-family building permits in the Detroit metropolitan area down by 44 percent this year, Mortimer calls his housing market “the worst place to be right now.”

Yet business is holding steady at this $25 million chain, which has shifted its customer mix by redirecting advertising dollars and beefing up its kitchen cabinet and decking division. “We never abandoned our remodelers and our consumers, so business is still strong,” Mortimer said. “The customer count and the transactions are just different.”

Dealers also turned to multi-family housing as single-family starts dried up. Although the condo market has weakened considerably, there are still pockets of intense multi-family building activity in some urban centers. Condo and apartment projects are going up all over downtown Seattle and Bellevue, Wash., some with commercial mixed in, all fed by the job growth in those cities.

In San Jose, Calif., ORCO Construction Supply store manager Mark Tabaldi said his sales figures are running 12 percent to 15 percent higher than last year’s. He attributes the growth to commercial and multi-family construction in the Bay Area.

“Everybody is going up,” Tabaldi said, referring to high-rise residential projects like those being built next to a Bart station near ORCO’s corporate headquarters in Livermore, Calif. “There’s a lot more hardware in these kind of projects, and the order is always pretty big,” he explained. Threaded rods that go between the floors of an apartment building — commonly known as a “hold down system” — can add up to $50,000 for a large project, according to Tabaldi, who isn’t mourning the slowdown in single-family construction.

For more on the Top 350 pro dealers, read the Aug. 27 issue of Home Channel News. 

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