LUMBER NEWS – QUICK GLIMPSES

Source: LBM Daily, March 4, 2008

U.S. Home Systems, Home Depot decking agreement to end … U.S. Home Systems, a manufacturer of custom home improvement products for Home Depot, has said it is no longer supplying decking products to the retailer in markets including the Midwest, Boston, Connecticut, Virginia Beach and Atlanta. The company noted that revenues from those markets were approximately $6 million in 2007.

U.S. Home Systems will continue to sell and install decking to Home Depot on a “non-exclusive basis” until Aug. 31 in northeastern and mid-Atlantic markets, including northern Virginia, Maryland, Philadelphia, New Jersey and New York.

Source: Home Channel News, ProDealer Digest, March 4, 2008

Court Hands Down Split Decision on U.S./Canada Softwood Debate… The London Court of International Arbitration issued a split decision Tuesday on the long-running trade feud between Canada and the U.S. involving softwood exports to the U.S. Addressing the U.S. allegation that Canada breached a 2006 trade deal by shipping too much lumber, the Court found that Western Canadian provinces didn't, and Eastern Canadian provinces did.

Source: LBM Daily, March 5, 2008

Credit Card Fair Fee Act Introduced… Rep. John Conyers (D-MI), along with 13 Democratic and Republican co-sponsors, introduced the Credit Card Fair Fee Act to address concerns that practices of credit card companies and banks in setting interchange fees are anti-competitive. The bill would allow retailers to negotiate with representatives of credit card companies and banks to agree voluntarily on the amount of interchange fees and other terms and conditions. If agreement could not be reached, a panel of judges would be appointed by the Justice Department and the Federal Trade Commission to impose binding arbitration.

In his introductory remarks, Conyers said, “Merchants are forced to deal with this system because it is simply not an option to refuse to accept Visa or MasterCard from their customers. They are presented with take-it-or-leave-it options and are not part of the process by which the fees are set.” The lead co-sponsor, Rep. Chris Canon (R-UT), added, “The current system of setting fees that merchants pay for credit card transactions is anti-competitive and secretive.”

Source: Last Week in Washington, North America Retail Hardware Association, March 10, 2008

BlueLinx Announces Resignation… BlueLinx Holdings Inc., a leading distributor of building products in North America, today announced Stephen E. Macadam has resigned from his position as chief executive officer and director to accept the chief executive officer position with EnPro Industries, Inc. His resignation is effective March 10, 2008. The board of directors has appointed Howard S. Cohen to serve as interim chief executive officer until the Company identifies a permanent successor to Mr. Macadam. The board also appointed Mr. Cohen to succeed Jeffrey J. Fenton as the Company’s chairman of the board. Mr. Fenton resigned from the board effective March 7, 2008.

Source: BlueLinx Holdings, Inc.., Investor Relations, Russ Zukowski.

Lights Out for Earth Hour… On March 31, 2007, the World Wildlife Federation and The Sydney Morning Herald invited all individuals, companies, organizations, and the government in Sydney, Australia, to turn off their lights for just one hour. More than 2 million residents and businesses participated, resulting in a 10.2% reduction in energy. Word of the success of this experiment has spread, and on March 29, 2008, at 8 p.m., cities across the U.S., Canada, and throughout the world are planning to “turn out the lights.”  Learn more and register as a participant

Source: Remodeling Business Update, March 12, 2008

Tembec To Temporarily Shut Down Quebec Sawmill, While Weyerhaeuser Permanently Closes Hawaii Operation… On Thursday, timber giants Tembec and Weyerhaeuser both announced closures at their companies' facilities. At the end of March, Tembec will stop production at its Béarn, Quebec sawmill for approximately three months. "This shutdown is a reflection of the severe decline in overall market conditions, driven primarily by the dramatic fall in the number of housing starts in the United States and the related impact on lumber pricing. The continued high value of the Canadian dollar against the U.S. dollar further aggravates these conditions," explained Dennis Rounsville, Executive Vice President and President of Tembec's Forest Products Group.

Source: LBM Daily, March 14, 2008

Farm Bill Discussion Rages On; Current Bill Extended Through Mid-April… Negotiations related to the 2008 U.S. Farm Bill, which, when passed, will establish the nation’s agricultural policy for the next five years, have continued behind closed doors with Senators from both sides of the aisle wrangling over the bill’s stated revenue offsets, new programs and subsidies. Senate leaders have recently urged cooperation among colleagues to get the bill passed in the near future.

“Farmers know that it takes everyone working together to bring in the harvest. America’s farmers need their leaders in Congress to work together on the farm bill,” said Senators Max Baucus (D-MT) and Chuck Grassley (R-IA), chairman and ranking member, respectively, of the Senate Finance Committee, whose jurisdiction over matters related to the farm bill has recently been called into question. “They need us all to do our parts and get on with the work of producing our “crop”—in this case, strong legislation that helps our farm families and keeps America’s agricultural system first in the world.”

The Finance Committee’s jurisdiction intersects with a number of farm bill issues having to do with tax and trade problems, such as disaster relief funded by agricultural tariffs and the conversion of some farm payment programs to tax credit programs. The Senators argued that their proper exercise of this jurisdiction should not stand in the way of the farm bill’s completion.

“For the sake of America’s farm families, we in the Senate should acknowledge our shared responsibility to complete this bill and all pull together to get it done,” they added.

Additionally, the Senate recently extended the current farm bill, initially passed in 2002, through April 18, 2008 in an effort to allow for further debate among Congress and the White House and hopefully provide a successful farm bill within the coming weeks.

Source: NACM eNews Weekly Update, Jacob Barron, NACM staff writer, March 18, 2008

International Paper to Purchase Weyerhaeuser's Packaging Business… International Paper (IP) representatives reported Monday that the company has agreed to purchase Weyerhaeuser’s Containerboard, Packaging and Recycling (CBPR) business for $6 billion in cash, subject to post-closing adjustments. The move will make International Paper North America's largest corrugated box maker.

Because IP purchased assets rather than stock, the company will realize a tax benefit of around $1.4 billion, yielding a net purchase price of about $4.6 billion.

Source: LBM Daily, March 18, 2008

Fed Slashes Rates by ¾ Point… In what appears to be a compromise move, the Federal Open Market Committee on Tuesday reduced the federal funds rate (the interest banks charge on short-term loans to each other) by 75 basis points, to 2.25 percent.

With such a significant cut, the Fed hopes to ease economic concerns about liquidity in the financial markets, especially after last week’s collapse of investment bank Bear Stearns Co.

But the rate reduction’s impact on the housing market may be limited, at least for the moment. Once-burned investors are now twice-shy about anything involving real estate. That is putting “upward pressure on yields” and keeping conventional mortgage rates higher than they might be otherwise, says Brian Bethune, U.S. economist for Global Insight in Lexington, Mass. “The whole move towards risk aversion has been a problem. My sense that it has gone overboard, so the spread should start coming in, especially with the liquidity moves that the Fed has made.”

Source: Alison Rice, Builder Business Update, March 18, 2008

Overall Housing Production Down Slightly… Single-family housing starts continued on a downward trajectory in February, posting a 6.7 percent decline to a seasonally adjusted annual rate of 707,000 units, according to figures released today by the U.S. Commerce Department. Meanwhile, production in the more volatile multifamily sector registered a 14.4 percent gain to 358,000 units, limiting the decline in total housing starts to a rate of 1.065 million units -- 0.6 percent below the revised January pace.

“Builders continue to scale back production of single-family homes in an effort to contain inventories amidst ongoing problems in the mortgage finance arena and other challenges that are keeping many potential buyers on the fence,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, W.Va. “We’re doing what we can to restore balance to the supply-demand equation, but we need the Federal Reserve, Congress and the Administration to take immediate action on several fronts if there’s any hope of rebuilding consumer confidence and jump-starting the economy.”

Source: NAHB, March 18, 2008

Dealing with Difficult Employees

"Sending out résumés is not legally the same as saying, 'I quit,'" says Stephen Sonnenberg, an employment lawyer at Paul Hastings Janofsky & Walker in New York City. Yet an employee who reveals that she is job hunting "has surely opened the door to a talk," he adds. "You have a right to ask whether she plans to leave and, if so, when." You don't say you have cause to fire her, but it's fine to call her bluff.

Often employers tiptoe around problem employees because of vague fears of violating the Americans with Disabilities Act (which protects workers with mental illnesses). A staffer may be emotionally unstable or paranoid, but unless she's been diagnosed with a mental disability, the ADA doesn't apply. And, says Sonnenberg, you have a right to set employee rules – such as no calls at home after 7 p.m. unless the office is ablaze – as long as you apply them consistently.

In cases where workers have been let go for being unruly, hostile, or simply awful to work with, Sonnenberg notes, "The courts have held that employers need not tolerate misconduct on the job. Personality traits, such as an inability to work with others, are unprotected by law." 

Source: CNN Money.com, Fortune Small Business, March 10, 2008

Who Knows What Nature Has In Store?

Hope for the best, but prepare

for the worst.

Nature can strike a swift blow sometimes, especially this time of year.

We can’t prevent occurrences of floods, storms, earthquakes and other natural disasters—but we can take steps to manage them to minimize losses. Even the best insurance program possible may not be enough to alleviate the inconvenience and inherent problems following a major loss. However, businesses that prepare for disasters may recover more quickly and see less damage to the bottom line.

How can you better protect your operation?

§    Ask your local fire, police and emergency management department for information to help train employees on emergency actions to be taken for various types of natural disasters.

§    Incorporate this information into a written emergency action plan for your business.

§    Appoint leaders within your company to be responsible for implementing action plans.

§    Train employees on the appropriate actions to take by conducting drills and testing equipment.

§    Hold on–site sessions with local authorities.

Other ideas that may help protect your employees and property:

§    Establish emergency communication and evacuation plans for employees.

§    Establish facility shutdown and security procedures.

§    Establish procedures to move records and inventory. Keep back-up records in a separate location.

§    Work with a structural engineer to improve the strength of buildings.

§    Establish safe shelter areas that can be accessed quickly, particularly for tornadoes and earthquakes.

§    Determine effectiveness of audible warning systems for tornadoes.

§    Determine if your facility is in a flood plain.

§    Monitor weather reports for watches and warnings.

Federated Insurance can provide quality insurance protection and risk management assistance for your business. With some forethought and help from your insurer, you will be better prepared to weather the storm.

Helpful Web Sites: