Lowe’s moves closer to OSH acquisition
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Lowe’s said it made progress toward acquiring the majority of assets of San Jose, Calif.-based Orchard Supply Hardware, including 72 stores.
With no other bids on the table, Lowe’s offer of $205 million in cash plus the assumption of payables owed to nearly all of Orchard’s supplier partners will be presented to the bankruptcy court for approval on Aug. 20.
Lowe’s said it plans to have Orchard operate as a separate, standalone business, retaining its brand under the leadership of Orchard’s current management team.
Lowe’s plans to acquire the locations most complementary to its current strategy and store footprint.
Once completed, the acquisition will enable Lowe’s to expand its presence in California and reach a new customer base through the addition of Orchard’s smaller-format stores in densely populated areas.
Orchard’s stores measure about 36,000 sq. ft. of selling space, compared with 113,000 sq. ft. of selling space for an average Lowe’s home improvement store. Lowe’s currently operates 110 stores in California.
“We are very pleased to be moving forward with the acquisition process,” said Robert Niblock, Lowe’s president and CEO. “Strategically, the transaction will provide Lowe’s with an attractive opportunity to increase our store footprint in California, where we are currently underpenetrated, through a neighborhood store format that is complementary to our strengths in big-box retail. Orchard’s hardware and garden stores have a loyal customer base and are situated in high-density, prime locations that are difficult for larger format retailers to enter. We see significant potential for Orchard as a standalone business within Lowe’s portfolio, and we look forward to the opportunity to participate more fully in California’s economic recovery.”
Lowe’s reached a deal with Orchard Supply back in June after Orchard Supply filed for Chapter 11 bankruptcy.
Market Recap: RISI Crow’s Construction Materials Cost Index
A price index of lumber and panels used in actual construction for Aug. 9, 2013
*Western – regional species perimeter foundation; Southern – regional species slab construction.
Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.
Lumber: Sales activity in the SPF lumber market was spotty and sluggish, but tight supplies of certain items generated some higher pricing. Having purchased much of their August needs, buyers held out in greater numbers. Prices hit a wall in the Southern Pine lumber market, forcing some to recoil, particularly on the Westside. Approaches by mills in that region varied in respect to pricing, dependent on the level of urgency at a particular mill. Much of the pricing in Coastal species lumber remained stable or found higher levels at which to trade. Dry prices were more likely to rise than those in green Doug Fir. Inland lumber producers continued to struggle with broken inventories of most lumber grades but found that #2&Btr was getting more attention from buyers than were the uppers. Radiata Pine prices are stable, although some South American Mldg&Btr has discounted slightly. Ponderosa Pine industrial lumber is “Weak at both edges,” according to one source. The slowing of millwork has led to softening in lower grades of lumber, and more blanks and blocks are being offered. Ponderosa Pine 4/4 boards remain “hot,” as one source noted. Activity for Idaho White Pine boards is less energetic than Ponderosa, due in part to mills being sold out or lacking good tallies. ESLP boards are firm and moving in both #2 and #3 Common. Eastern White Pine boards are nicely balanced between supply and demand August is not expected to be a great month in regard to Western Red Cedar sales volumes. Fill-in activity continued to provide steady business for mills, as yards replenished items while keeping inventories in line with late summer levels.
Panels: The entire continent shows varying degrees of softness in OSB activity and pricing. The presence of secondary product is forcing that level of the market to take aggressive action, putting downward pressure on prices. Sources at Western Fir plywood mills reported a range of activity. Perhaps most indicative of trading levels were price moves, which were few but modestly upward. The Southern Pine plywood market was flat in respect to both price and demand. Although a few mills reported selling close to a week’s worth of production, mill order files, for the most part, remained in the weeks of August 19 and 26. While Canadian plywood producers say prices are “up a couple more,” distributors are very wary about the length of mill files and the implications of a decaying OSB market. August and the slower seasonal sales it generally brings continued to envelope both particleboard and MDF markets.
For more on RISI, click here.
Employee vacations are good for business
Employees aren’t the only ones who can benefit from taking a vacation. Businesses that urge workers to take time off to relax, recuperate and recharge typically have lower health care, workers’ compensation and turnover costs, and they benefit from higher productivity and employee engagement levels.
The problem is that most U.S. workers don’t take full advantage of their paid-time-off benefits, and the negative effects of overworked and burned-out employees can kick businesses right in their bottom line.
“Everyone agrees that taking vacation time is a good thing, and many business owners understand that rested and happy employees are more productive, healthy and innovative,” said Susan L. Harmansky, SPHR, VP human resources at Southern Graphics Systems in Louisville, Ky. “The reality, however, is the rapid pace of business and the need to have projects finished yesterday is keeping people from taking the time off that they need.”
The real trick is finding a way to fit vacations into busy work schedules. “Following the recession, businesses are much leaner and doing more with less; so having one person from a five-member team take a week off can put pressure on others,” she said.
Pressure to be productive and worries about job security are keeping most U.S. workers from taking full advantage of their paid-time-off benefits. In the fall of 2012, Harris Interactive surveyed more than 2,000 users of the travel website Hotwire.com and found that Americans left an average of 9.2 paid vacation days on the table that year — an increase of three unused days from a 2011 survey.
The reasons typically revolved around job security and workload issues. Other research has revealed that even when U.S. workers take time off, they stay connected to work by responding to e-mails and phone calls.
Although some might commend individuals who are so dedicated to their jobs that they forgo or work through vacation time, employers are finding that the benefits of having employees take time off far outweigh the advantages of keeping them at the office.
“Actively encouraging employees to take the time they need should be an integral part of any paid-time-off program,” said Steve Cyboran, vice president, consulting actuary and healthy enterprise initiative leader for Sibson Consulting in Chicago. “It really should be ingrained into an organization’s corporate culture.”
The paybacks to companies include enhanced innovation, improved productivity and reduced health care costs, Cyboran noted. Research by Sibson has shown that businesses with effective time-off policies tend to have much lower turnover costs and higher employee engagement levels.
“Some research shows that turnover costs can be reduced by as much as a third,” Cyboran said. “And when you factor in other cost reductions from lower incidents of stress-related illnesses and workers’ comp claims, the cost benefit of encouraging employees to take vacations can be fairly significant.”
And because accounting standards require employers to list vacation time owed as a liability on corporate balance sheets, any methods businesses can use to get employees to take paid time off will reduce that liability.
“So you can easily make a business case for encouraging employees to use their vacation time,” Cyboran pointed out. “Another important benefit is that it’s much easier to adjust workloads and plan for scheduled time off, instead of having to deal with all the challenges unscheduled leaves can create.”
Planning for time off
Sibson’s healthy-enterprise research also revealed that companies with policies urging workers to take vacations tend to have a lower number of unscheduled absences. This correlation isn’t lost on some organizations, which are now requiring employees to take a set number of vacation days off every year.
“We require that all employees — no exceptions — take five paid vacation days in a row,” said Connie Rank-Smith, SPHR, assistant vice president of total compensation and rewards at Vantage West Credit Union in Tucson, Ariz. “Our staff really likes the policy, and we take it very seriously here. We’ve seen a lot of benefits from requiring people to take the time off.”
Although planning and workload scheduling are one reason for the policy, Rank-Smith admits that the time-off policy allows her organization to check for errors or fraudulent transactions.
“As a financial institution, we must audit the work of all our associates, and any error or questionable transaction someone is trying to hide will most likely surface within a five-day business cycle,” she explained.
Since the policy has been implemented, her company has had lower turnover rates and improved employee attitudes.
“Feedback from employees has been very positive, and they are very appreciative of the time off,” Rank-Smith said. “And from an anecdotal standpoint, when people return from their vacations they are usually more energetic and engaged.”
A boost to camaraderie
Improvements in teamwork and employee camaraderie are benefits that most employers might not think about when urging workers to take time off. Yet, opportunities for cross-training and building stronger team ties should not be ignored, Cyboran advised.
“Some employers are building training and leadership development into their time-off policies,” he said. “It gives workers a chance to step into new roles and take on job duties that they normally wouldn’t.”
Southern Graphics’ Harmansky agrees. She said that pitching in and helping to lighten the load when co-workers take time off builds a stronger sense of community among employees. In addition, workers who take on new roles can bring new perspectives to the job. Harmansky recalled an individual who suggested a change to a work process that improved efficiency and reduced costs.
“It’s not that the employee who took the vacation was doing a bad job; the person who offered to fill in recognized that there was a different way to do it and remove a step that had become unnecessary,” she said.
Ways to encourage
Good communication is key when encouraging employees to use their paid-time-off benefits. Often, businesses can send mixed signals — encouraging time off but supporting a culture that makes employees feel guilty about leaving supervisors and colleagues in the lurch.
“Support from upper-level management is crucial,” said Cyboran. “Business leaders have to demonstrate they are fully on board with taking time off.” He recommends training supervisors about an organization’s paid-time-off policies and how to manage and plan for scheduled absences.
“Often, supervisors just aren’t prepared on the best ways to manage and work around vacation schedules, and that can end up sending the wrong message and actually discourage workers from taking time off,” he said.
Limiting the balance of vacation time that employees can carry over from year to year (often called use-it-or-lose-it plans) is another way to encourage people to schedule days off. Some companies have policies that allow workers to cash out unused vacation time at the end of the year — but only after they take a certain number of days (typically, one or two full weeks).
“Encouraging workers to take the time they need should be at the core of any time-off policy,” Cyboran said. “Employers that build this into their culture will make a tremendous leap toward becoming a healthy enterprise.”
Bill Leonard is a senior writer for SHRM.
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