LBM Retailers Set for Modest Turnaround r SUPPLIER Briefs

from Merchant Magazine - December 2013

Gontagious confidence

After a period of sharp declines resulting fromthe failing housing market and declining economy, the retail lumber and building material industry is set for a modest turnaround, thanks to a series of positive changes that will affect revenue over the nextfive years, according to a new IBISWorld report.

Over the past five years, revenue for LBM dealers has grown at a minimal average annual rate of | .8Vo.

According to IBISWorld industry analyst Kerry Coughlin, "The volatile cost of lumber, which accounts for about 65.4Vo of industry sales, has also burdened industry firms over the period."

The trend has made it difficult for retailers to anticipate future spending and control costs. Furthermore, the industry has experienced intensifying competition, especially from home improvement stores, which offer the added convenience of one-stop shopping and. at times. lower prices.

Such factors have pressured profit margins. IBISWorld estimates that profit declined to industry lows in 2010, only to recover in 2013 with margins reaching 2.6Vo. Falling margins have caused some operators to either exit the industry or consolidate over the five-year period. As a result, the number of enterprises has declined at an average annual rate of l.1vo to 43,692 in 2013.

"After facing stagnant conditions following the recession, the housing and nonresidential construction mar- kets finally began making significant strides in 2O12. and strong gains in both sectors are expected for 2013," said Coughlin. IBISWorld projects industry revenue will jump 10.l%o to $96.3 billion in 2O13, driven by an increase in residential construction investment and higher spending on home improvements. crj@F-OOTOCD rOOF-(OO)cO Cr)@rr=t<O$ C!NO-F-O)(.o C! CD F- $ (O rr) C') l.--cOcDtO$O C!SF-@O)C!C\.1 c\troo<oocD oNocoooo (o$cocD@@ro

Further, as population growth and pent-up demand drive up housing starts, and improved economic conditions boost demand for repairs and renovation projects, sales of industry products will continue to rise. Over the next five years, industry revenue is forecast to increase, albeit not as high as prerecession levels.

The retail LBM industry exhibits very low concentration of ownership. It is highly fragmented, with no single dealer having more than 5.0Vo of market share. The majority of dealers are privately owned, and they successfully supply the local demand in their communities. In recent years, many of these small operators have merged with other players or exited the industry, increasing concentration.

Stores covered in the report consist of dealers that retail building materials, such as lumber, hardwood, stones and brick. Companies may also suPply doors, windows, roofing, cabinets, floor coverings, electrical and plumbing goods. Not included are home improvement centers, paint and wallpaper specialty stores, and hardware stores.

States Industries, Eugene, Or., laid off 35 employees-about 10% of its 331-person workforce-Nov. 11, blaming an inability to secure antidumping tariffs on Chinese plywood imports.

Mary's River Lumb€r, Corvallis, Or., p'urchased Port Gardner Timber's sawmillin Bow, Wa.

Sierra Pacific Industries' sawmill in Lincoln, Ca., sustained an estimated $75,000 of damage in an Oct.27 fire that started above a dry kiln.

Mid Valley Lumber Specialties, Aldergrove, B.C., next month will move to larger offices in downtown Langley, B.C.

Blomberg Windows, Sacramento, Ca., is selling off its remaining assets and real estate and closing after 57 years.

Lonotime TimberTech distributor OrePic Building Products, Wilsonville, Or., is now also distributing sister product AZEK lines throughout the West from its 10 DCs.

Azek distributor Boise Cascade Building Materials Distribution is now also supplying TimberTech products throughout California and Carson City, Nv. lts Lathrop, Ca., branch will serve No. Ca. and Carson City, while Riverside, Ca., will cover So. Ca.

California Redwood Go., Eureka, Ca., signed Russin Lum. ber, Montgomery, N.Y., to distribute its redwood products in the Northeast.

Wahoo Decks, Gainesville, Ga., offers a new AridDek color-artisan clay.

Thermory USAs Thermory decking was selected by lhls Old House magazine as one of the top 100 new home oroducts for 2013.

Simpson Strong-Tie, Pleqsanton, Ca., was named zOtg Do it Best Vendor of the Year in the building materials product category.

Horizon Distribution, Yakima, Wa., was named Farm Mart Distributor of the Year by Pro Group.

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