WEBBLog, by Craig Webb, Editor, PROSALES

WebbLog Adds a True Webb Blog
First monthly, then weekly, now virtually daily: ProSales proudly announces that we have added an online blog to our family of publications. Click here to see the latest entries (you also can find the link on the ProSalesOnline home page). I hope to add at least one valuable news nugget each business day and then summarize the best of them, along with other news, in this WebbLog section of the weekly ProSales Business Update.

What's Next for The Home Depot and HD Supply? We Handicap the Possibilities
ProSales' crystal ball is too chipped from past use for us to feel good forecasting what exactly will happen now that The Home Depot has announced it's selling its HD Supply unit. But we are willing to suggest the most likely of many possible outcomes:

• HD Supply's buyers conclude that the LBM operations get little if any synergy from the rest of HD Supply (except, perhaps, for White Cap Construction Supply), so it tries to spin off or sell that section. A spun-off LBM division would be a Florida-Georgia powerhouse but nothing to fear nationally. An LBM division put up for sale would be too big a company for any other LBM operation but a giant—Pro-Build Holdings, maybe?—to swallow, unless the LBM operation doing the buying found an investor or was willing to leverage itself to the stars.
• HD Supply's buyers decide the company is worth the investment. If so, look for it to move quickly, as private equity firms generally only wait about five years before looking to turn their investment public or sell it to someone else.
• The Home Depot continues to make "Own the Pro" one of its five operating objectives. HD executives have said several times that 3% of the customers at its retail stores account for 30% of all goods purchased. The company has just begun investing in people to manage those accounts in hopes of increasing HD’s share of those customers' total LBM purchases. Given the value of those customers today—roughly $24 billion—it stands to reason that HD will want to keep pursuing them.

One clear lesson from all this: Wall Street lacks the patience to invest in the residential construction industry. The Street wants consistent, reliable, constantly rising earnings from "pure play" companies that specialize in just one thing. Lots of companies have bent over backward (and beyond; see Fannie Mae and Freddie Mac) to deliver consistent results, and only a few conglomerates (most notably GE and, for a while, Tyco) could explore multiple business lines. It may be getting more stable, but residential construction and the building supply industry that serves it remain too fickle, too diverse, and too long-term for the likes of most itchy-fingered investment managers.

Conch'd Out: Dazed Florida Dealers See Property Tax Relief in Sight
Senior editor Andy Carlo traveled through South Florida last week, stopping in Miami and at various points along the Florida Keys. He reports that dealers at the Florida Building Material Association summer conference in Key Largo singled out high property taxes as one of their top challenges. Florida homeowners are living in two different worlds with regard to property taxes, Carlo reports. The state's homestead exemption plan limits existing owners' property tax increases to around 3% a year. But if you choose to buy a new home down the street, you’d face mammoth increases. On June 14, the Florida Senate passed a bill that exempts the first $25,000 of tangible personal property tax a homeowner might pay and creates a "super homestead" exemption for all Florida homeowners that would cut most owners' tax bills by 44%. Voters will be asked to ratify the change on Jan. 29.

Your Opinions Vary Widely on the Value of Gate Guards
An impressive number of you commented on my June 14 WebbLog item asking whether gate guards are a good idea. You'll recall the question was inspired by a recent visit to Ashby Lumber in Concord, Calif., which—unlike lots of other yards—doesn't have a gate. Mark Mei, operations manager at Hayward Lumber, Monterey, Calif. says gate guards are a positive for customers when—as happens close to 40% of the time—it turns out the buyer didn't take away all that he actually bought. But Dana Heal, a veteran manager of yards in the Midwest, says a guarded gate "sends the wrong message to the contractor picking up supplies." Meanwhile, Andrew Senn, operations support supervisor for Stock Building Supply in Green Bay, Wis., notes that his yard crews do all the loading for customers (as Ashby does) but still retains a gate guard "because it ensures that the customer is getting the right amount of product and exactly what they came for." I have posted all the letters in full on my blog.

A Creative Way To Pave Your Yard
Got a muddy yard and no money to pave it? Rick Roberts of Sunnyvale (Calif.) Lumber, president of the Lumber Association of California and Nevada (LACN), found a creative way to overcome that problem. In his President's Message in the June LACN newsletter, Roberts says he couldn't figure out how to afford to pave his company's 6-acre yard in Fremont, until he noticed some trucks from a nearby concrete company passing out front. He visited that company and learned that extra concrete brought back to the yard can't be reused—it typically had to be hauled to a dump, where the concrete company paid a fee to get rid of the load. Roberts suggested that, instead of going to the dump, the company pour its unused concrete in his lumberyard. "That was five years ago," Roberts wrote. "Today we are about 400 square feet from being completely paved. We used 2x6 for our forms so the minimum thickness is 5 1/2 inches. It looks a little like a patchwork quilt, but it's beautiful compared to mud."

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Update on Miami's Anti-Gouging Initiative
Last week’s ProSales Business Update reported that the Miami-Dade County Consumer Protection Division’s survey of prices of products and services likely to be in demand during hurricane season revealed enormous disparities in what stores were charging. The survey was based on price checks at Wal-Mart, The Home Depot, Lowe's, and seven independent LBM operations in the county. Since then, John Ruark, general manager of Shell Lumber in Miami, wrote in to note that his was one of the stores where the survey took place. "During their visit to our store, the inspector did not seek any assistance or clarification on quality, grade, or features of the products listed," Ruark wrote. "This wide disparity in pricing may be attributed in part to comparing apples to oranges. The report is a good tool to assist consumers; however, a little more information and detail could have gone a long way in helping people understand what they actually get for these prices."

They Sure Grow Yard Pets Big in Texas

Time Is Running Out! Enter the Excellence Awards Today!
Don't miss your opportunity to honor the great work of your company and staff via the ProSales Excellence Awards, recognizing dealers whose initiatives, projects, and facilities demonstrate innovation and business savvy. If you've recently launched a whiz-bang Web site or are directing hoards of traffic at your showroom, consider sharing your accomplishments with your peers. The rewards are plentiful: Winners receive a feature article in ProSales, recognition at a special breakfast during the 2008 International Builders' Show, and a $1,000 donation to the charity of their choice. This year's awards will recognize yards in six categories: Showroom Design, Overall Yard or Manufacturing Facility Design, Marketing/Customer Service, Best Advertising, Best Use of Technology, and Best Web Site. Click here for entry instructions or contact managing editor Katy Tomasulo at ktomasulo@hanleywood.com or 202.736.3303. Hurry! Completed entry binders are due soon!

Meet ProSales' New Product Editor
Victoria Markovitz has joined the ProSales staff as our new product editor. Vicky may officially be new to the magazine, but she’s an old hand in the office, having served as an intern on our sister publication Building Products while earning her journalism degree from the University of Maryland. Write to her at vmarkovitz@hanleywood.com.

WebbThreads

Fisher Lumber Co. will open early next month an unexpected new branch in Greensburg, Kan., roughly 90 miles west of its headquarters in Garden Plains. The new location is its way of helping the citizens in the tornado-ravaged town of Greensburg rebuild. Currently, the nearest LBM dealers are located more than 30 miles away. …Wade Jefferson, owner of Beaver Door & Trim in Orlando, Fla., was elected as treasurer of the Florida Building Material Association. Jefferson will assume the chairmanship of the FBMA in 2011. ...ABC Supply Co., Beloit, Wis., has received the Gallup Great Workplace Award 2007. Only 12 companies worldwide were chosen this year to receive the award, which ABC said recognizes companies with the most productive and engaged workforces. …Len-Co Lumber Corp. , Buffalo, N.Y., plans soon to open a second store, to be located in the Buffalo suburb of Clarence. ...Pro-Build Holdings, Englewood, Colo., named John O'Laughlin as senior vice president of human resources. O'Laughlin comes from Corporate Express, a $6 billion subsidiary of a Denver-based Dutch office products supplier. …Wheeler's Building Materials, Rome, Ga., has added a second location in Charlotte, N.C., and is opening a millwork distribution center in Gwinnett County, Ga., just east of Atlanta. ...The Lumber Association of California and Nevada has upgraded its Web site and given it a new address: www.lumberassociation.org. ...Concord Lumber Corp., Littleton, Mass., has acquired Forester Moulding & Lumber, a custom millwork manufacturing company based in Leominster, Mass. ...A group of vendors and manufacturers has organized the American Pre-Hung Door Association. The group seeks to serve as an information portal for the business by organizing roundtables, meetings, shows, and Webinars, as well as engage in charitable activities. LBM dealers that pre-hang doors are invited to join. Contact Georgia Smith, the group's executive director, at gsmith@aphda.org or at 866.704.7147. ...Who are the top 10 builders in each of America's 75 biggest housing markets? Builder magazine, a sister publication of ProSales, has found out. Click here for its report. ...Sid Spear will become vice president of sales at Simonton Windows effective July 1.

Reminders

• Check out the latest edition of our exclusive Web column "Rader’s Edge," in which industry consultant Chris Rader examines the profit implications of pricing errors.

• Take advantage of ProSales’ new, free Webinar on installed sales, "Five Pillars to Installed Success," created for us by ProSales columnist Mike Butts.

Do you have a question, a tip, or a sage piece of wisdom? Feel free to contact PROSALES' editor, Craig Webb, at cwebb@hanleywood.com.

And don't forget you can find previous WebbLogs now online!