SHELTER

June  2002

     In the News . . .    

Lumber
EPA Gives the Axe to Pressure-Treated Wood

On February 12, 2002, the EPA announced a voluntary decision by the building products industry to move consumer use of treated lumber products away from a variety of pressure-treated wood that contains arsenic by December 31, 2003, in favor of new alternative wood preservatives. This transition affects virtually all residential uses of wood treated with chromated copper arsenate (CCA), including wood used in play-ground structures, decks, picnic tables, landscaping timbers, residential fencing, patios and walkways/boardwalks. By January 2004, EPA will not allow CCA products for any of these residential uses. This decision will facilitate the voluntary transition to new alternative wood preservatives that do not contain arsenic in both the manufacturing and retail sectors. Although the EPA has not concluded that there is unreasonable risk to the public from these products, the agency believes that any reduction in exposure to arsenic is desirable. This action comes years ahead of completing the agency’s regulatory and scientific assessment of CCA and will result in substantial reductions in potential exposure to CCA.

Editor’s Note: Look for an article about the deletion of pressure-treated products in the July 2002 issue of SHELTER.

Two Canadian Lumber Mills to Close
Montreal-based Domtar Inc. will close two saw mills indefinitely because the 27 percent duties levied by Washington on imports of Canadian lumber are skewing demand and prices, the company said in a recent article by Charles Grandmont of Reuters News Agency.

The closing of the Sainte-Aurelie and Sainte-Marie mills will cause the lay-off of 140 employees. The two plants had a combined annual production of 160 million board feet, said the article.

The company said the shutdown will begin on June 7; however, it will resume production if the market improves.

The new U.S. duties were to be levied around May 23, after a month of suspension during which Canadian lumber companies shipped intensively to the United States, said the article.

“A number of American buyers took advantage of the current regulatory vacuum and the absence of duties to build up their inventories,” said Monique Martin, Domtar’s senior vice president of the wood products group.

“As a result, we now have to scale back our operations in order to maintain a balance between our production and the needs of the market,” she said.

In Short

Sierra Stair Co. Inc. of Loomis, Calif., is the newest company to join as a partner with Metallon™ Inc. of Parkersburg, W. Va., to offer real metal finishings on building products ... ODL® Inc. of Zeeland, Mich., recently received the Governor’s Service Award in the corporation/business category for the support the company has given to Lakeshore Habitat for Humanity during the past several years ... Minwax recently announced that the Washington, D.C.-organization Woodworkers for Children Charity would be the recipient of the company’s 2001 Community Craftsman Award ... The Rainforest Alliance’s SmartWood Program recently announced that the forest management operations of the Roy O. Martin Lumber Co. and its Martco Limited Partnership divisions, based in Alexandria, La., are being certified by SmartWood under the Forest Stewardship Council for both the responsible management of 482,188 acres and chain-of-custody certification ... Signature Door Co. Inc. of Altoona, Pa., recently passed the hurricane test procedures in the United States for its full line of soft and hardwood entry door systems.

LEGAL
Huttig Building Products Announces Lawsuit Against The Rugby Group Ltd.
Huttig Building Products Inc. of Chesterfield, Mo., recently announced that it has filed a lawsuit against The Rugby Group Ltd., its principal stockholder, and Rugby IPD Corp., a subsidiary of The Rugby Group Ltd., alleging that they have breached their contractual obligations to indemnify and defend Huttig against liabilities and claims arising out of a business that was acquired by Rugby Building Products Inc. in 1994. That business, among others, was excluded when Huttig acquired Rugby USA Inc. and its subsidiary, Rugby Building Products Inc., from the Rugby Group in December of 1999. The complaint seeks damages, including the costs relating to the recent settlement and legal expenses of an asbestos-related products liability lawsuit, and also seeks a declaratory judgment that The Rugby Group and Rugby IPD are obligated to indemnify and defend Huttig for all liabilities and commitments attributable to the businesses that were excluded when it purchased Rugby USA.

JOB CUTS
Louisiana-Pacific Plans to Cut 4,400 Jobs
Louisiana-Pacific of Portland, Ore., announced recently that in order to cut debt it will sell several of its businesses which will result in the loss of 4,400 jobs, reported Reuters.

The company said it would divest 935,000 acres of timberland in three states, along with its lumber and industrial panel operations, in a move to maintain investment-grade credit ratings and focus on profitable businesses.

The restructuring would cut the company’s workforce from 9,700 to 5,300 and leave it with 30 to 35 mills in North America instead of the current 60 mills.

The building products manufacturer said it would retain its more profitable plastic products, oriented strand board (OSB) and composite engineered-wood products operations. Those businesses earned $1.4 billion in revenue last year and had a $46 million operating profit.

Closings
Weyerhaeuser Closes One Packaging Facility and Two Engineered Products Facilities
Weyerhaeuser Company of Federal Way, Wash., recently announced plans to consolidate its packaging operations in the Denver market by permanently closing its Denver packaging facility and transferring some of that business to its facility in Golden, Colo.

Eighty-three Denver positions will be eliminated as a result of the closure. The company is working with Denver employees to find reassignments within Weyerhaeuser and will provide outplacement services for those who wish to leave the company. The Golden operation will add a new third work shift requiring 23 positions. Denver employees will have an opportunity to apply for those positions, if they desire.

Weyerhaeuser also announced it is closing two engineered lumber products operations acquired from Willamette Industries in an effort to reduce costs, improve efficiency and better align production and demand. 

The company said it will close the Glulam plant in Simsboro, La., on June 30 and will gradually reduce production at the engineered-lumber-products plant in Woodburn, Ore., and completely close the facility by the end of the year. The company is providing employees with severance benefits, jobs and outplacement counseling, and priority interviews for jobs in other parts of the country.

Connecticut Attorney General Asks SEC to Investigate Stanley 

Connecticut Attorney General Richard Blumenthal recently urged the Securities and Exchange Commission (SEC) to “investigate all the circumstances” related to the May 9, 2002, shareholder vote on The Stanley Works reincorporation in Bermuda, and to delay any revote until complete.

“In light of extraordinary nature of the misleading statements made to shareholders on such an important question, and the importance of preserving shareholder confidence in the integrity of corporate governance, I request that the commission conduct an immediate investigation on the May 9, 2002 vote,” Blumenthal wrote in his letter to Stephen M. Cutler, director of enforcement for the SEC, and Wayne M. Carlin, director of the Northeast region of the SEC. “If a revote is held, I ask that the commission closely monitor the activities, statements and actions of Stanley as it presents the proposal to reincorporate to its shareholders once again,” wrote Blumenthal.

On May 10, 2002, Blumenthal and State Treasurer Denise L. Nappier successfully sued to prevent the overseas move based on the May 9 vote. The shareholders’ vote came after Stanley provided misleading and confusing information to 401k shareholders that “directly affected the vote,” Blumenthal said. Two letters were sent to shareholders. The first letter told 401k shareholders if they chose not to vote at the meeting, their vote would be counted as a “no” vote. A second letter to 401k shareholders said if they chose not to vote that those votes would be cast by the plan administrator consistent with what the plan provided.

No date has been set by the New Britain, Conn.-based company for the revote, but the company recently filed a new proxy statement with the SEC.

Why is this revote so controversial? In a recent interview between CNN’s Street Sweep anchor Jan Hopkins and Blumenthal, she asked, “Now what would you hope as a best solution?”

“Good question. Congress is already considering legislation to close this loophole and stop companies like Stanley Works from abandoning America…Stanley Works has a tradition of excellence and fairness and commitment to this country. I went to the SEC with Stanley Works at my side seeking to require that companies meet very definite and high standards for the made in the United States label… My hope is that Congress will close this loophole, if Stanley Works will reverse its decision and decide to stay in Connecticut.

The Other Side
In a release distributed by The Stanley Works, the company announced that its board of directors has authorized a revote on the Bermuda incorporation. 

“Stanley’s integrity is the most important asset of our company,” said John M. Trani, chairperson and chief executive officer for the company. “Even the appearance of impropriety is unacceptable. That is why the decision was made to proceed with a revote. However, our strategy has not changed. Enabling our company to better compete by leveling the global playing field is strategically important and highly beneficial for our shareowners, employees, customers and all our other stakeholders… A legislative overhaul of the tax system is preferred, but until that happens we must proceed in the best available manner. Upon the planned reincorporation, Stanley will continue to pay significant amounts of U.S. taxes on U.S. income.”

Under the terms of the agreement between the State of Connecticut and Stanley Works, the company will not make any filings to implement the reincorporation without providing three business days’ written notice to the attorney general and treasurer. If notice is given and the state goes back to court to ask for a temporary restraining order (TRO), Stanley further agrees that it will not make any filings for an additional two-week period or until the court rules on the state’s application for a TRO, whichever is earlier.


Company Expansions 
Scotty’s to Buy Florida Do It Best Hardware Stores
Scotty’s Inc. of Winter Haven, Fla., recently announced it is purchasing 17 Florida Do It Best Hardware stores from an Orlando businessperson, reported the Associated Press.

Scotty’s chief executive officer Tom Morris said the stores are generally in good financial shape, although he may close two or three if they don’t perform. He said he will keep the Florida Do It Best name for the newly acquired stores. “I don’t see any reason in the world to spend a quarter million to change out names when all these stores are doing well,” Morris said.

The new stores are all about 10,000 square feet in size—much smaller than Scotty’s traditional stores, which are the size of supermarkets, Morris said.

The acquisition comes almost simultaneously with Scotty’s exit from the large-store format—a process that began several years ago as the regional company faltered against Home Depot, Lowe’s and other national hardware chains, said the article.

recognition

Vetter Re-Engineers Window; Offers Design Contest
Vetter Windows & Doors of Mosinee, Wis., has re-engineered its ProV™ vinyl casement and vinyl awning windows for enhanced performance and stability, said Jeff Kibler, brand manager.

“As vinyl windows become more popular, architects and custom builders are demanding even higher performing vinyl windows with all the aesthetics of premium wood windows,” says Kibler. “Vetter has re-engineered its vinyl casement and awning windows to make available to custom builders and architects a vinyl window that is superior in both structure and design.”

In other news, Vetter has announced its continuance of its annual national design contest, the Vetter Inspired Project Awards (VIP), for architects and custom builders across the United States.

The VIP awards, which began in 2001, will include two new categories this year: custom home over 5,000 square feet and best log home project. The design contest is open to any project utilizing Vetter windows and doors and is completed between June 2001 and August 2002. The deadline for entering a project is August 12, 2002.

FINANCIAL
Ainsworth Lumber Announces First-Quarter Results
Ainsworth Lumber Co. Ltd. of Toronto, Ontario, recently reported a net loss of $2.0 million or 14 cents per share for the first quarter of 2002. This compares to a net loss from continuing operations of $19.3 million or $1.33 per share in the preceding quarter and a net loss from continuing operations of $14.9 million or $1.02 per share in the first quarter of 2001. According to the company, higher OSB prices and shipment volumes were responsible for the improved results this quarter. Another contributing factor was a reduction in the company’s finance expense due to a lower unrealized foreign exchange loss associated with the company’s U.S. dollar denominated debt, the company said.

Taiga Forest Products Reports Record Profits
Taiga Forest Products Ltd. of Burnaby, British Columbia, recently reported record profits for the year ended March 31, 2002. The company ended the fiscal year with a strong fourth quarter. Sales for the three months that ended March 31, 2002, were $206.5 million, up 20 percent from the $171.5 million for the same period last year. Earnings for the quarter were $719,000 or 19 cents per share, up from $287,000 or 
9 cents per share for the same period in 2001.

Sales for the twelve months ended March 31, 2002, were $854.3 million, compared to $790.2 million in 2001. Earnings for the year were $6.2 million or $1.61 per share and $841,000 or 22 cents per share in the year prior.

KUDOS
GED & 3M Receive Innovation Award
GED Inc. of Twinsburg, Ohio, recently was honored with a 2002 NorTech Innovation Award. GED and 3M were honored for 3M Accentrim™ products and GED’s revolutionary equipment to manufacture windows and doors using Accentrim products. Accentrim products simulate bevel, v-groove and half-round glass with authentic appearance, said GED.

According to GED, the NorTech Innovation Awards recognize good ideas that enhance the value of the business or increase the organization’s ability to carry out its mission. They are awarded by Enterprise Development Inc.—part of Case Western Reserve University’s Weatherhead School of Management. 


SHELTER

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