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On the Hill with the lumber industry

BY Ken Clark

We knew we weren't going to meet personally with California Congresswoman Janice Hahn. But that's OK. We were knocking on doors in the corridors of power. We were spreading the word of common sense legislation that supports builders and dealers, marching with an industry that churns out 15% of the nation's gross domestic product.

We — that is NLBMDA chairman J.D. Saunders of Economy Lumber in Campbell, California; Sean Fogarty of Newark, California-based Osborne Lumber; his wife Roslyn; and a tag-along editor — were armed with handouts, backgrounds and bullet points.

The meeting started rocky.

"Our conference rooms are taken," explained Jocelyn Rivera-Olivas, legislative assistant to Congresswoman Hahn. "We'll have to meet in the hallway. Is that OK?"

Bummer. A lesser businessman might have cringed visibly at the setback. Not Saunders. He acted as if there was no room in Washington, D.C. — not even the Oval Office — where he would rather meet; and no Washington figure — not Obama — who he would rather meet with. One point for us.

Saunders launched into the wisdom of the Innocent Sellers Act. "Do you know anyone in your family who has a small business," he asked.

"My uncle has rental business."

Bingo! Saunders pushed ahead, skillfully presenting the essential fairness of the Innocent Sellers Act. He conjured an imaginary customer of the uncle's business. The customer rents a table for a party, perhaps has a drink or two, dances on said table — i.e., uses it improperly or recklessly — falls off the table, and sues the innocent uncle.

Rivera-Olivas nodded interestedly. It's a slam dunk. Another point for us.

We move on to reform of the EPA's lead paint rule, onerous for the building trade. The message: if there's no pregnant women or children in the house, why should the industry be subject to expensive training and certification programs. After all, an opt-out for those exact type of households was part of the original plan. And the removal of the opt-out clause was never adequately explained.

But the specter of lead paint poisoning hovers around this issue. "Not sure about his one," says Rivera-Olivas.

Saunders recognizes resistance. "We're against lead paint as much as anybody, but the law is unworkable without an accurate and widely available test kit."

Rivera shows her poker face. No points.

The group moves on to the Marketplace Fairness Act — local businesses feel the burden of sales taxes while internet sellers don't. The message: It's not about a new tax, it's about fairness.

No discernible reaction from the aid. Half a point.

The subject is steered back quickly to Innocent Sellers. It is learned that Hahn works on the transportation committee with the bill's sponsor. Encouraged, Fogarty shares a real-world example of a customer who bought dimensional lumber and tried to use it as a pole. Of course, it broke. The customer then attacked the lumberyard with unrighteous blame and costly litigation. More nods.

Rivera promised to bring the issues to the people's representative of the 44th district, and the meeting was over.

Success? Too early to tell.

The West Coast dealers, and all the dealers in attendance at the NLBMDA Spring Meeting and Legislative Conference are to be commended for their efforts. When this industry is not pressing its message, somebody else is pressing theirs.

Even if it is in the hallway.

 

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Sears forms another joint venture

BY HBSDealer Staff

Sears Holdings Corporation is continuing on its streak of joint venture formation through its new partnership with The Macerich Company.

"Since the filing of the registration statement for Seritage Growth Properties a few weeks ago, we have entered into JV agreements with the leading mall operators in the U.S., demonstrating the value of Sears Holdings' real estate portfolio," said Edward Lampert, chairman and CEO of Sears Holdings. "We are pleased to be in a position to unlock substantial value for Sears Holdings shareholders and further facilitate the company's transformation. Through these transactions, we have additional capital to invest in our membership and integrated retail platforms. We will continue to operate these nine stores and there will be minimal impact on their day-to-day operations or the overall shopping experience for our members."

The new joint venture will include nine properties where Sears currently operates stores at Macerich malls.

Under the terms of the agreement, Sears will lease these back from the joint venture and continue operating its existing stores there.

Macerich contributed $150 million in cash to the JV and is taking a 50% interest. The total purchase price for the nine properties is $300 million.

"This new joint venture with Sears Holdings is in line with our overall strategy of reinvesting capital into our portfolio of proven, highly profitable locations," said Macerich chairman and CEO Arthur Coppola. "The nine properties being contributed to the JV are located at centers with average in-line sales of $680 per square foot and include some of our top centers including Washington Square, Los Cerritos Center, Arrowhead Towne Center, Vintage Faire Mall, Danbury Fair Mall, Chandler Fashion Center, Freehold Raceway, Deptford Mall and South Plains Mall. Through ongoing space optimization, we expect this transaction to create significant value for shoppers, tenants and shareholders alike."

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Armstrong reports weak start to Q1

BY HBSDealer Staff

Armstrong World Industries struggled over the course of the first fiscal quarter, but luckily, it said, conditions seemed to pick up by the end of the three-month period.

Additionally, the company announced that it has named Larry McWilliams as the chairman of new spinoff company Armstrong Flooring. Jim O'Connor will remain in place as chairman of Armstrong World Industries.

Net sales for the quarter were $551.4 million, down 6.5% from $590.0 during the first quarter of 2014.

Net income came in at $3.8 million, down from last year's $18.1 million. Armstrong explained that the decline was impacted by higher non-cash U.S. Pension expense and separation costs related to the spinoff of Armstrong Flooring.

"While the year started slowly, we saw activity accelerate throughout the quarter and our sales and adjusted EBITDA guidance for the year remain unchanged," said Matt Espe, CEO.  "We continue to make progress on the separation and I'm pleased to announce the board has designated Larry McWilliams to serve as the chairman of Armstrong Flooring upon completion of the separation, and Jim O' Connor will remain chairman of Armstrong World Industries.  Larry and Jim have each been tremendous assets to Armstrong over the past several years and will provide both companies with a steady hand through the separation and excellent strategic leadership moving forward."

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