Volume 46, Issue 7 - September 2007

In the News

Market Talk
Builder Confidence Falls Further in July
A surplus of unsold homes on the market, combined with ongoing concerns in the sub-prime mortgage arena and affordability issues associated with tightened lending standards and higher interest rates, continues to take a significant toll on residential construction confidence, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), release. The HMI declined four points to 24 in July, which is its lowest level since January of 1991.“The bottom line is that the single-family housing market is still in a correction process following the historic and unsustainable highs of the 2003-2005 period,” says NAHB chief economist David Seiders. “Builders are actively trimming prices and offering buyer incentives to work down their inventories, but meanwhile there is a large supply of vacant existing homes on the market, and affordability problems persist despite efforts to attract buyers.

“In spite of these challenges, we expect to see home sales get back on an upward path late this year and we expect housing starts to begin a gradual recovery process by early next year. At that point, this market will be operating well below its long-term potential, providing plenty of room to grow in 2008 and beyond.”

All four regions of the country posted declines in the July HMI. The Northeast and South each saw five-point declines, to 31 and 26, respectively, while the Midwest slipped a single point to 19 and the West declined three points to 25.4 www.nahb.org

See Chart Below

Politics
Wood Industry Responds to Illegal Logging Act 
The International Wood Products Association (IWPA) executive vice president Brent McClendon issued a statement in response to the introduction of the Combat Illegal Logging Act of 2007, by Senator Ron Wyden (D-Ore.). The legislation was introduced to the Senate by Wyden on August 1, 2007, and would amend a long-standing wildlife trafficking statute, the U.S. Lacey Act, to prohibit the import, sale or trade of illegally harvested wood and wood products.

“The IWPA applauds all initiatives that can help eliminate illegal logging overseas,” McClendon states.

“Creating new laws that make U.S. family businesses responsible for law enforcement in foreign countries, while at the same time not giving these companies any way to protect themselves against U.S. government prosecution, does nothing to stop this forest destruction,” McClendon says.

“Sen. Wyden’s legislation holds U.S. businesses and their customers personally responsible and subjects them to civil and criminal punishment for any illegal activity that occurs overseas in forests, sawmills, in transportation and through foreign ports thousands of miles away from their U.S. businesses. All of this burden would come without any way for legal importers to protect themselves from this extended liability,” McClendon says.

“The legislation as introduced also places an undue burden on U.S. Customs officials at a time when security and Customs personnel are already stretched beyond their means dealing with heightened fears of terrorism at our nation’s ports.” www.iwpawood.org

CMI Distributors Adds Four Distributors to Product Mix
CMI in Chicago has added four new suppliers to its national distribution network for MiraTEC^® treated exterior composite trim. The new MiraTEC distributors include Manufacturers Reserve Supply (MRS) in Irvington, N.J.; Boise in Tulsa, Okla.; Boise Distribution in Milton, Fla.; and Cedar Creek Lumber in Oklahoma City.MRS will distribute the product in New Jersey; Eastern Pennsylvania; lower New York, including Long Island; and Connecticut and Northern Delaware. Boise of Tulsa will distribute the line in Oklahoma, Missouri and Kansas, and Boise Distribution will distribute MiraTEC in Florida and Southern Alabama. Cedar Creek will distribute the product in Oklahoma and portions of Texas.

“These new partnerships provide great opportunities to extend our MiraTEC distribution network and offer our dealers access to an increasingly popular exterior trim product line,” says Bob Merrill, CMI president and chief executive officer. “With growing demand for reliable, easy-to-install, low-maintenance exterior trim in both the new construction and remodeling markets, we are excited to have new avenues to supply MiraTEC to more builders and remodelers throughout the United States.” www.cmicompany.com

Plant Closures
Two Major Millwork Plants Shut Down
A slow housing market is cited as the reason Woodgrain Millwork Inc. of Fruitland, Idaho, is closing its plant in White City, Ore., and shifting production to its Prineville, Ore., location. Likewise, Chilean-owned Southwoods-Arauco Lumber and Millwork is shutting down its Manning, S.C., facility.

In the past, Woodgrain’s operation in White City operated three shifts and employed more than 100 people, but presently it only employs 40 workers, according to a recent article in the Mail Tribune in White City, Ore.

“The number has been going down over the years as we’ve shifted production elsewhere because of efficiencies,” said Brooks Dame, Woodgrain spokesman, in the Mail Tribune.

Mike Ball, vice president of millwork, said in a statement that the decision to relocate and consolidate was made after a thorough analysis.

“We have many great, experienced associates that have been with us for many years, which we hope will relocate with us,” Ball said.

“A lot of the decision has to do with overseas competition,” Dame told the Mail Tribune. “It’s hard to compete with China. Part of it is location [along with] the wood supply and type of machinery we have there that can only do certain things. We do some of the work there, send it to Prineville and then send it back. The transportation and equipment weren’t efficient enough to make it work.”

“I don’t know if that would have come into play if it wasn’t for foreign competition,” Dame added in the Mail Tribune. “It’s squeezed us to get leaner, leaner and leaner. It got to the point where we couldn’t do anything more to cut costs.”

Southwoods-Arauco only blames fewer housing starts as the culprit.

“As you are aware, the current housing market situation has been extremely tough for Southwoods-Arauco as well as many other moulding producers in the United States and offshore,” said Diego de la Maza, general manager, of the Manning, S.C., facility, in an undated letter addressed to customers, suppliers and friends, printed in an article in the Manning, S.C.-based Clarendon Today article. “During these last months, we have been seeking more profitable alternatives for our company. Unfortunately, we haven’t been able to reach the sales volumes and returns we need to keep running this operation.” www.woodgrain.com  www.arauco.cl

Mergers & Acquisitions
Southern Staircase Acquires Stair Parts Inc.
Alpharetta, Ga.-based Southern Staircase, a manufacturer of pre-assembled staircase systems, recently announced the purchase of Stair Parts Inc. (SPI) of Adairsville, Ga. SPI manufactures wooden staircase components, such as newels, balusters and stair treads. The sale was announced on May 10.“The purchase of SPI strengthens our company in many ways,” says Paul Miro, chief executive officer of Southern Staircase. “Our product line will expand greatly as we add SPI’s product to our assortment, allowing our customers to have a greater variety of stock wood species and custom parts capabilities.”

“Additionally,” Miro says, “SPI is now able to offer [its] customers complete staircase system solutions, commodity stair parts, in addition to [its] custom stair parts line.”4 www.southernstaircase.com 

DONATIONS
Simpson Pledges Four Years of Support for Habitat
Over the next four years, Simpson Strong-Tie will donate $1 million in cash and products to help support Habitat for Humanity International. The national sponsorship agreement will fund Habitat's housing projects across North America and its national programs, such as the Gulf Coast-recovery program and the Jimmy Carter Work Project. The agreement also includes employee volunteer time to help with building Habitat homes.

“Through its relationship with local Habitat affiliates, Simpson Strong-Tie has been making a difference in the lives of Habitat homeowners for some time,” says Mark Crozet, senior vice president of resource development for Habitat for Humanity International. “Their focus on local communities and the families that live in them is just one of the reasons why Habitat for Humanity International is so excited to announce this national partnership with Simpson Strong-Tie and its employees. Together, we are building more affordable homes and offering more families the opportunity to fulfill their dreams of homeownership.” 

Keim Lumber Completes Expansion
Keim Lumber Co. in Charm, Ohio, has completed a 256,000-square-foot addition to its building supply facility. Located on 40 acres in Holmes County, the heart of Ohio’s Amish country, Keim Lumber is a multi-million-dollar company employing nearly 300 people. Keim offers free delivery within 150 miles of Charm and is located in a rural setting.

Its showroom features a 36-foot-high entry area where customers are greeted with a grand staircase leading to a balcony walkway overlooking the showroom and giving access to the second floor office and conference complex. This complex includes the Carpenter’s Café, which is open to the public. The 120,000-square-foot showroom is decorated with cherry trim and has expansive room to display products. The center of this showroom showcases the sales center with its cherry desks, topped with black granite; a 32-foot-high clock tower; and 30-foot square skylight, 56 feet above the floor. Each of the sales center’s walls display 16-foot in diameter Keim Lumber Logos, crafted in Keim’s own shop from solid woods, both domestic and exotic.

Nearly 8,000 customers came during the four-day Grand Opening Sale May 2-5, 2007. www.keimlumber.com

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