SHELTER

March  2004

In The News

Battle of the Trade Shows

TRADE SHOWS
Trade show war has broken out between the National Hardware Show and the American Hardware Manufacturers Association (AHMA) Hardware Show.

AHMA was a longtime sponsor of the National Hardware Show, but this year for the first time, AHMA will be sponsoring a different show. 

Reed Exhibitions, owner of the National Hardware Show, will be hosting its show in Las Vegas, May 10-12, 2004, at the Sands Expo & Convention Center. The AHMA Hardware Show will be April 18-20, 2004, at McCormick Place in Chicago.

AHMA and Reed made the split last year because they couldn’t agree on how to revitalize the show, which was once one of the five largest trade shows in the United States. 

AHMA recently took Reed Exhibitions to court, accusing the show’s owner of inflating costs to exhibitors, which led to a decline in attendance, according to a lawsuit filed at the end of December 2003. The association seeks $10 million in damages.

COMPANY NEWS

Mill Worker Dies in Conveyor Belt Accident
A worker at Moose River Lumber in Moose River, Maine, died shortly before Christmas in an accident during which he got tangled in the conveyor belt on which he was working, the Kennebec Journal reported on December 26, 2003. Robert R. Robichaud, 34, of Cornville, was pronounced dead at the scene, according to Somerset County Sheriff’s Deputy Paul A. York. 

According to the article, Jeff Desjardins, Moose River Lumber general manager, said Robichaud was a maintenance millwright with the company for 2˝ years and was working maintenance on the night shift. He was found on a slasher, a machine that removes bark from logs. Desjardins indicated uncertainty in the newspaper report as to Robichaud’s purpose of working the machine, saying the deceased may have been troubleshooting or simply checking his work.

“His arm was sucked into the conveyor belt, maybe his clothing got stuck,” said York. “From there, we really don’t know what happened. It appears he most likely asphyxiated.”


An article in the January 3, 2004, addition of the Chicago Tribune states that “Reed Exhibitions denies the allegation and said that the suit brought by the [Schaumburg, Ill.-based] American Hardware Manufacturers Association is meant to disparage the company as it organizes a competing hardware show in Las Vegas.”

“They are trying to hurt us in the marketplace with this meritless lawsuit,” said Rob Cappiello, Reed’s spokesperson for the hardware show, in the article. “I believe it’s more of a [public relations] move than a serious lawsuit.”

“Timothy Farrell, chief executive of the 103-year-old trade group, which has 869 members, declined to comment on the suit. He took over [recently] from his father, William P. Farrell, who ran the AHMA for 20 years and remains vice chairperson. The suit was filed by another son, William P. Farrell Jr., who is a partner at Gardner, Carton & Douglas and outside general counsel for the AHMA,” said the article.

Besides making news with the lawsuit, the two organizations have sent out various press releases touting the merits of their show.

Reed Exhibitions distributed a press release about the National Hardware Show that said “What started as a choice between two trade shows has become a landslide vote for the one show that has demonstrated it offers what the industry wants and needs.”

AHMA sent out a press release that stated, “A campaign has been launched attacking AHMA and spreading misinformation about the 2004 AHMA Hardware Show in Chicago. Don’t be misled.” 

The press release also included quotes from various vendors in support of AHMA and its show.

SHELTER called exhibitors to find out their exhibition choices. 

L.E. Johnson Products of Elkhart, Ind., will be exhibiting at the AHMA Hardware Show. Mike Myers, marketing director for L.E. Johnson, said there are two reasons why his company decided to exhibit at the AHMA show.
 Logistically, it makes sense because the company is 100 miles from Chicago, it’s easy to get to and from McCormick Place and the company is familiar with the area. The other reason is because the company is a member of the AHMA and thought it was incumbent upon the company to show its support of that show.

“Whether or not both these shows are going to be in existence for years, we don’t know. Quite frankly, I don’t think there’s a market for both of these shows, and there will probably end up being [just] one. I’m not saying that we are betting on this one or betting on the other, but we had two primary reasons and I would have to say the biggest reason is because we are a member of the AHMA,” Myers said.

Myers added that it is possible representatives from his company will attend the National Hardware Show “to look around and make a comparison.”

A number of National Hardware Show exhibitors were contacted, but said they did not want to comment.

MERGERS AND ACQUISITIONS
Builders FirstSource Adds New Locations
Builders FirstSource, headquartered in Dallas, acquired several building supply companies at the end of last year.
Builders FirstSource acquired Davidson Lumber Co. and Space Concepts, both of Indianapolis, at the beginning of October 2003. The two Davidson companies represent $60 million in annual revenue and will become part of Builders FirstSource’s central division.

The company also entered into a letter of intent to acquire Adams Building Supply of North Augusta, S.C., on October 13, 2003. Terms of the transaction were not disclosed, but the acquisition was scheduled to close prior to 
the end of last year. Post acquisition, the operation was to become part of the company’s southeast division.

On November 11, 2003, Builders FirstSource announced it had entered into a letter of intent to acquire Bond Builders Supply Inc. of Cashiers, N.C. Terms of the acquisition were not disclosed. The transaction was expected to close prior to the end of last year.
Info circle card #130. 

ASSOCIATIONS
WDMA and AAMA Clarify Talks of a Merger 
The Window and Door Manufacturers Association (WDMA) and the American Architectural Manufacturers Association (AAMA) have each issued letters to their membership clarifying talks of a merger between the two associations. The two entities held talks in 2000 about combining the organizations but ultimately decided against a merger. 

In a letter from AAMA president Richard Walker dated January 23, 2004, he said that in June 2003 the AAMA board decided to approach the WDMA board again concerning consolidation. Several letters were exchanged and negotiating teams were formed to explore the possibility.

“Note the use of the word ‘explore’,” said Walker. “Both groups understand that these discussions are in the preliminary stage and that one of the first decisions is to determine whether and how to proceed.”

The first meeting of the two teams was held in Chicago on December 17, 2003. 

“As in the past, many areas of agreement and several key philosophical differences were discussed. In some cases the differences can be attributed to a lack of understanding or familiarity with operations and concepts,” said Walker. 
Following the December meeting, a task group was established to clarify the differences and expectations of the negotiations. The board will discuss a future course of action in its upcoming meeting in Palm Springs, according to Walker. 

Jerry Manigel, WDMA chairperson, issued a letter to WDMA members on January 23, 2004, to “put this matter into a better perspective.” He stated that in August 2003, prior to the WDMA’s summer meeting, there were several phone calls from AAMA board members to members of the WDMA’s board asking if there was any interest in resuming merger discussions. Manigel said there was a lengthy discussion at the WDMA’s board meeting that August. 

“At that time, both boards agreed to prepare their vision statements and key issues that would frame any possible merger/consolidation of the two organizations,” he said. “It was agreed that those documents would represent the fundamental beliefs and core operating principles that each organization felt were non-negotiable.” 

This exchange occurred in September and as questions arose on both sides the WDMA board authorized a sub group to meet with AAMA representatives. A conference call was to occur in February regarding this matter, according to Manigel. 

“There was not any commitment on the part of the WDMA board to enter into merger discussions at that time; only to seek clarification on certain key issues prior to ultimately deciding our future direction,” he clarified.

Manigel added that if the board decides to purse discussions there would be an open and honest discussion at the WDMA’s annual meeting in February.

FORESTRY & LUMBER
WTO Reverses Opinion on Soft Lumber
The battle over United States duties on Canadian lumber continues, as an appeals council at the World Trade Organization (WTO) reversed a December 2003 ruling that found the tariffs illegal. The United States appealed the ruling, citing that the previous decision did not take into account Canadian government aid or control of provincial lumber suppliers when assessing fair market value.

The argument for the duties, at least in part, comes from a concern that government subsidies help introduce cheaper lumber to the market, creating an imbalance of prices and skewing the fair market value.

The WTO committee reviewing the case ruled that the previous panel was too restrictive in its interpretation of the articles under which it was basing part of its judgment. Additionally, the appeals council felt that for the previous panel to compare situations wherein the government is the sole supplier of certain goods as opposed to the predominant supplier of those goods was done in error. The appeals committee stated that the two situations are nearly identical.

This dispute over duties has been ongoing since the trade agreement between the two countries expired and the United States sought to raise the duties on imported lumber.


SHELTER

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