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Readers Respond

BY HBSDEALER Staff

The mortgage interest deduction

The following letters were a response to an article about the National Commission on Fiscal Responsibility and Reform’s consideration of the mortgage interest deduction.

“Just one more thing to help pay for all the overspending by Washington that could very well turn into a real knockout punch to an already struggling housing industry and economy. First the government issues a tax credit to help stimulate the housing industry to first-time buyers, then they extend and also expand that to buyers upgrading. Now they come back and say, ‘Now that we have all of you in homes, we would like to change the rules on the mortgage interest tax credit,’ and we now are left with the typical ‘It was too good to be true’ situation. Except now, all of us with mortgages are going to have to pay the price. The question then becomes: Why own a home? Where’s the incentive when most home values have either dropped, are dropping or barely retaining their value as is? Watching government is truly like watching a magician; at first glance you are awed at what you see, until you realize that it is all done with slight-of-hand maneuvers or smoke and mirrors and was really nothing but an illusion from the beginning. Way to go, Washington.”—Brian Bruning, Production manager, Universal Forest Products Western Division

“Not only will this kill any recovery abilities in our industry, it could cause another wave of foreclosures. A lot of people who are still able to pay their mortgages depend a lot on that deduction come tax time. Instead of total elimination of this deduction, they may want to gradually reduce the percentage over a period of 10 years or so. This could allow more people to plan and budget for this loss.”—Paul Silver, Manager, Fullerton TBC

“I’ve thought a lot about this over the years, since it’s not the first time it’s come up. (Remember the flat tax discussions?) As someone whose livelihood depends on the number of housing starts, obviously I should be mad as hell at the very mention of such a thing. On the other hand, if we are to get the deficit under control, we can’t have it both ways. This would clearly affect the affordability of home-ownership, but phased in over a number of years, it might not make that much difference. It would be interesting to see what this amounts to for the average-priced house in average tax brackets. Nothing is going to be easy about significant deficit reduction. There was a U.S. Senator from Louisiana who made the famous statement, ‘Don’t tax you, don’t tax me, tax that fellow behind the tree.’ Some group is not going to like anything that is put on the table.”—Buddy Klumb, Klumb Lumber Co.

Business, in baseball terms

“Regarding our business plan in baseball terms: We are playing national league-style baseball. We are playing for one run at a time by conservatively swinging for singles. Then, once we have a runner on first, we try to move the runner over into scoring position by sacrifice bunting. Once in scoring position at second, if an opportunity comes along to move to third on a ‘passed ball’ by the catcher, we capitalize on the opportunity, then we plate the runner by sacrifice fly.

“In today’s uncertain economy, you will continue to see businesses play the game conservatively and see the word ‘sacrifice’ come up a lot in their game plan. The good news is that this game plan has proven effective, and, after Nov. 2, maybe we can get ahead in the count and take a more aggressive swing.”—Anonymous, by request

Questioning Bernanke

“[Printing more money] is a horrible idea. We’ve already seen prices increase when unanticipated foreign demand put a strain on the supply, forcing us to pay more to get what we need. Now that the supply is readily available—face it, the real estate maintenance and building markets are still underperforming, at least in the Northeast—Bernanke wants to artificially raise the prices on merchandise by weakening the strength of the dollar? That makes no sense. We’re not experiencing deflation, and there is no fear of deflation. And to think that the business news is reporting that the stock indices have risen back to 2008 levels—have they taken into account inflation? The dollar is much weaker now, so the same notional value as then means a LOSS of economic value or purchasing power. Seriously, raise the interest rates. At least let me make some money on my business savings! And if a stronger dollar means I’ll have to lower my selling prices, so be it. At least selling activity will resume.”—Jeffrey Gamss, Greenhill Industrial Supply

Service, over the phone

“Customer service can be hard to provide over the phone, which leads to employee frustration. With face-to-face contact you can actually see or be shown what the person needs. It can also be frustrating if you have customers waiting for in-store assistance but must be interrupted in order to answer the phone. I know I prefer e-mail contact—it helps cut out some of the unnecessary ‘chit-chat’—but I feel telephone customer service skills are a must in any type of business.”—Teri Goldberg, Better Living Inc.

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Kleer Lumber gains distribution through iLevel

BY HBSDEALER Staff

iLevel by Weyerhaeuser is now distributing Kleer Cellular PVC Trimboard, sheet goods and other Kleer cellular PVC building products from its Baltimore, Md., and Easton, Pa., distribution centers.

iLevel is a new partner for Kleer as the company serves the key building markets of New Jersey, metropolitan New York and other Mid-Atlantic regions including Eastern Pennsylvania, Northern Virginia, Maryland and Delaware.

“iLevel is an ideal partner for Kleer Lumber because of its strong brand name, the products it represents in the marketplace and its commitment to outstanding service,” said Walt Valentine, president of Westfield, Mass.-based Kleer Lumber. “iLevel’s renewed commitment to focus on specialty product groups aligns perfectly with the core product development strategy at Kleer Lumber.”

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Construction industry loses more jobs

BY HBSDEALER Staff

The construction unemployment rate rose to 18.8% in November as the sector lost another 5,000 jobs since October, according to the Associated General Contractors of America, which just released an analysis of new federal employment data. The analysis indicates that the construction sector has been the hardest hit of any industry during the economic downturn, association officials said.

The industry’s 18.8% unemployment rate, not seasonally adjusted, was the highest of any industry and roughly double the overall unemployment rate. The construction industry has lost 2.1 million jobs since employment in the sector peaked in August 2006, according to the association. Since November 2009, the industry has lost 117,000 jobs, while the private sector added 1,088,000 jobs.

“The unemployment report shows construction still has not broken free of the recession that has gripped the industry since 2006,” said Ken Simonson, the association’s chief economist. “Other than the stimulus and other temporary federal programs, it has been a pretty bleak four yours for the industry.”

The only construction segment to add jobs in the past years has been heavy and civil engineering construction, which has benefited from federal stimulus, military base realignment and Gulf Coast hurricane-prevention projects, Simonson observed. Meanwhile, residential construction has lost 79,000 jobs over the past 12 months, while nonresidential specialty trade contractors and nonresidential building — the other two segments in the nonresidential category — have lost 62,000 jobs.

Association officials cautioned that the stimulus and other temporary federal programs would begin winding down in 2011, most likely before private, state or local demand for construction picks up. They urged Congress and the Obama Administration to act on a series of long-delayed legislative bills for water, transportation and other infrastructure programs.

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