Volume 47, Issue 2 - March 2008
In the News
The Market's Holding Pattern
With a market that can’t seem to figure out which way it wants to turn and constant speculation over yet another federal rate decrease, homebuyers may be locked into a wait-and-see-pattern.
“On the one hand, we have a pent-up demand from the four million jobs added to our economy over the past two years of sales decline,” says Lawrence Yun, the National Association of Realtors (NAR) chief economist. “On the other, consumers continue to wait for additional signs of market stabilization.”
If building permits are any indication, homebuilders may be following suit. According to recent information released by the U.S. Department of Housing and Urban Development (HUD), new housing starts have continued to decrease. HUD reports that single-family building permit authorizations in December were at a rate of 692,000, 10.1 percent lower than November. In total, 2007 saw an estimated 1,376,100 housing units authorized by building permits. That number represents a 25.3-percent decrease from 2006.But Yun says buyers are out there and they’re even more plentiful than in years passed.
“There are more people with financial capacity now than in 2005, but many are trying to market-time their purchase,” he explains. “As a result, the exact timing and the strength of a home sales recovery [are] a bit uncertain.”
Will the Federal Reserve’s recent three-quarter-percent rate cut help bring buyers to the table?
“Consumers also are looking to market-time interest rates, and the expectations of further rate cuts are pushing some homebuyers to delay,” Yun explains.
While homebuilders and homebuyers may be waiting for one another to return to market, NAR suggests the resale market may be first to rebound. The association estimates a “meaningful recovery” in existing-home sales could occur as early as this spring. According to NAR, there’s one more challenging year ahead for the building industry, before relief comes in 2009. The association expects new-home sales to decline further to 669,000 this year, from 773,000 for 2007. It expects the boat to stop rocking and settle at 730,000 in 2009.
ProBuild Finalizes Purchase of HD SupplyProBuild Holdings, the Denver, Colo.-based supplier of building materials to professional contractors, has finalized its purchase of substantially all of the assets of Atlanta-based based HD Supply Lumber and Building Materials. Terms of the sale were not disclosed. “ProBuild is pursuing a strategy of aggressive growth, both organic and via acquisition,” says ProBuild chief executive officer Paul W. Hylbert. “The addition of HD Supply Lumber and Building Materials’ yards and truss plants strengthen our position in very important long-term, high-growth housing markets in the Southeast.”
HD Supply Lumber and Building Materials currently operates 39 lumberyards in Georgia and Florida, 7 truss plants, a construction services division and 10 engineered lumber production facilities. Although operating under the HD Supply portfolio of businesses, some facilities operate under other brand names, including Williams Bros. Lumber, Cox Lumber and Forest Products Building Materials. The HD Supply Lumber and Building Materials acquisition follows on the heels of other acquisitions by ProBuild in the Florida and Georgia markets. In December, ProBuild acquired Fort Lauderdale-based Rosen Building Supplies as well as Granger Lumber in Jacksonville. Over the past year, ProBuild has completed 11 acquisitions, adding to its national network of distribution and manufacturing facilities. www.probuild.com
WoodWare Celebrates 25 Years
WoodWare Systems is celebrating its 25th anniversary. Founded in 1983 as part of a millwork company, the company has developed industry-specific business solutions for companies that pre-hang doors and sell windows, doors and millwork products.
“We appreciate our customers so much, and they give us great ideas and feedback on how we can continue to improve our software and our company,” says Nick Carter, president. “… their input helps us to continue to serve them better each year.”
WoodWare also admits there would be no customers without the company’s loyal and experienced staff.
“Our staff is dedicated to providing outstanding support, training, and software development for our customers,” Carter says.
He says that WoodWare’s employees bring creativity and new ideas in technology and software development, along with experience and millwork industry knowledge. He also says the company’s ownership team is made up of working managers with many years of millwork industry experience. In addition to Carter, who has spent 19 years with the company, other owners include: Dick Reidy, vice president of finance and administration, who has ten years at WoodWare after six years at a WoodWare customer and millwork company in Ohio; Mike Owens, vice president of sales and marketing, who has 16 years with the company; and John Bland, vice president of technology and development, who has been with the company for all of its 25 years.
WoodWare also attributes part of its success to its participation in the Association of Millwork Distributors (AMD). Carter is one of the first three associate members ever elected to the AMD Board last fall. www.woodwaresystems.com
Smith Phillips Builds Good Will in Milestone Year
Smith Phillips Building Supply in Winston-Salem, N.C., recently helped with a Habitat for Humanity project in its community—its seventh project for Habitat to date—the most homes of any contributor in Forsyth County, N.C. For the latest home, a ranch in the Glen Oaks subdivision for the Berkley family, about 25 Smith Phillips employees shared the hammering and nailing.
Mickey Boles, Smith Phillips’ president and chief executive officer, says community involvement always has been part of the Smith Phillips legacy. “Even in this struggling housing market, people still need to help each other,” Boles says. “There are so many needs in our community; local agencies and government can’t handle it all. All of us need to consider giving back as much as we can.” www.smithphillips.net
Home Depot to Layoff 500 Corporate Employees
Home Depot has notified employees at its Store Support Center in Atlanta that the company plans to layoff approximately 500 of its staff members. A company spokesperson says the cutback is a result of a tougher than usual business climate.
The Store Support Center, essentially its corporate operations, includes areas such as: information technology, human resources and marketing.
“This will not have any impact on our stores,” explains Sarah Molinari, a spokesperson for Home Depot. “The stores will continue to operate as is.”
Molinari says the cutback will allow Home Depot to continue investing in its retail presence.
“Anything we can do to streamline the support structure here, while continuing to invest in our stores is what we’re doing into 2008,” she says.
Molinari says investments into the company’s retail sector include improving customers’ overall shopping experiences and rewarding store associates for their efforts. She also says Home Depot is looking to add store hours.
“We’ve been pretty clear with the public and our associates too, that we’re operating in a tough business environment,” Molinari says. “Performing some streamlining here with our support structure allows us to continue investing in the stores—which is our most important goal.”
Molinari says many of the company’s recent moves reflect its retail focus, including letting go of its supply business.
“Frank Blake took over as CEO [chief executive officer] in January of 2007 and right from day one he said, ‘We’re going to focus on improving the core retail business,’” she explains. “We settled on selling HD Supply, because it was no longer part of our focus on the core retail business.”
Molinari wasn’t able to share the company’s outlook, but maintains that Home Depot is focusing on a rebound.
“Once this business climate recovers, we’ll be in a much stronger position,” she says. www.homedepot.com
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