It's Not too Late to Tell Your Senators to Pass Small Business Health Plan Legislation!

While small businesses across the building supply industry continue to face drastically higher health insurance premiums each year, the U.S. Senate will finally take up the issue beginning Tuesday, May 9. The House of Representatives has voted numerous times to establish Small Business Health Plans (SBHPs); however the Senate has largely ignored the issue until now.

Senators Mike Enzi (R-WY) and Ben Nelson (D-NE) have introduced S. 1955, “The Health Insurance Marketplace Modernization and Affordability Act.” This new, strengthened compromise bill still enables small businesses to band together to purchase health insurance through trade associations, thus achieving the purchasing power and competitive rates large corporations and labor unions already enjoy. The new bill also addresses many of the concerns raised by past critics and represents a significant opportunity for the Senate to expand small businesses’ ability to offer health insurance to their workers.

The Senate will vote on this NLBMDA Key Vote during “Health Week,” this week. It is crucial that your Senators know how this affects your business; urge them to support S. 1955 to provide affordable health coverage to America’s small businesses.

Already written your Senators? Call 202-224-3121 to be connected to your Senators’ offices and leave a message asking them to act now to provide health care relief to small businesses by voting for cloture and final passage of S. 1955. Or, visit the NLBMDA web site at http://www.buildthevote.com/issue_alert.asp?g=NLBMDA&issue=SBHP&parent=NLBMDA to take action.

National Lumber and Building Material Dealers Association (NLBMDA) President Shawn Conrad today called on the Administration to abandon settlement negotiations that appear to include restrictions on the quantity of softwood lumber that would be imported from Canada, and would add increased costs and volatility to lumber consumers in the United States.

“We are stunned that the Administration would, in closed-door negotiations, seek to curtail lumber supply and raise prices in a time when the homebuilding market is cooling, and nearly 300,000 homes must be rebuilt in the Gulf Coast,” Conrad stated.  “The United States does not produce enough lumber to meet our building needs, and if Canadian lumber supply is curtailed, our dealers would be forced to seek new sources at significantly higher cost to American home buyers and consumers.”

Over the past several years NLBMDA and our lumber consuming allies have garnered the support of nearly 140 members of Congress for ending trade restrictions on Canadian softwood lumber. The current tariffs have been found in violation of NAFTA, and should have been lifted nearly a year ago following the August 2005 final determination by the NAFTA Extraordinary Challenge Committee. The United States’ continued refusal to abide by the dispute resolution system agreed to under NAFTA undermines our credibility with all of our trading partners.

Additionally, NLBMDA questions the Canadians’ apparent willingness to negotiate away the victories they have attained at NAFTA. As the largest collective purchaser of Canadian softwood lumber, our dealers would expect the Canadian industry to reject an agreement that would penalize their customers.

Canada is our nation’s largest trading partner and supplies more than a third of the lumber demanded by our housing industry. Lumber consuming industries in the U.S. provide more than 6.5 million jobs, including those of 400,000 employees in the retail lumber industry. NLBMDA continues to call on the Administration to honor our commitment under NAFTA and lift the current duties on softwood lumber imports that have repeatedly been found illegal under that bilateral trade agreement.  A lasting solution should not include any restrictions on the quantity of lumber that may be imported from Canada, or that would add undue volatility to lumber prices.  Additionally, any realistic solution must provide clear exit ramps to free trade, so that further rounds of litigation can be avoided.

LUMBER NEWS – QUICK GLIMPSES

FCC Amends Fax Rule… The Federal Communications Commission (FCC) released an order on April 6, 2006, amending its rules governing unsolicited fax advertisements that are required under the Junk Fax Prevention Act of 2005. This order restored the “established business relationship” or EBR exemption. EBR no longer must be a signed written statement, it can now be oral or written, and be obtained via Internet, email or fax. Further, the FCC reaffirmed that non-profit organizations must include opt-out information on all faxes, even if EBR has been established.

Source: NLBMDA Advocate, May 2006

Study: Health Insurers Are Near-Monopolies… According to a study released by the American Medical Association, consolidation among health insurers is creating near-monopolies in virtually all reaches of the U.S.  Data shows that in each of 43 states, a handful of top insurers have gained such a stronghold that they far exceed the thresholds that trigger antitrust concerns. In 166 of 294 metropolitan areas (56 percent), a single insurer controls more than half the business in health maintenance organization and preferred provider networks underwriting. The figures released indicate 95 percent of the 294 HMO/PPO metropolitan markets studied were above 1,800.

The AMA study is the most comprehensive to date showing the control of a few companies, and a large number of regional non-profit Blue Cross operations, is formidably large and growing. Critics say that carriers are not only creating monopolies in many regions, they also control the other side of the equation—known as monopsony power; meaning that in addition to having the most enrollees, they’re also the biggest purchasers of health care and can dictate prices and coverage terms. Once pricing has already been set by the dominant carrier, it makes it harder for new carriers to emerge.

The AMA says there have been more than 400 mergers among health-care insurers in the past decade. As they’ve consolidated and presumably eliminated duplicative functions, they’ve not passed the savings in personnel and administrative costs on to consumers. Rate increases continue to grow at a near double-digit pace.

The AMA says it has taken up this antitrust issue with the Department of Justice, but has run into roadblocks with regulators and been unable to generate any interest in pursuing the matter.

Source: The Baltimore Sun, quoted in the NACM E-news Weekly Update, April 25, 2006

New Home Construction Drops in March… Construction of new homes dropped by 7.8 percent in March, marking the fourth decline in the past six months. The Commerce Department report provided further evidence that the nation’s five-year housing boom is quieting down.

The decline pushed the construction of new homes down to a seasonally adjusted annual rate of 1.960 million units, the lowest rate in a year. Housing construction had surged by 16 percent in January, reflecting warm weather, but then fell by 7.8 percent in February.

The big decline in housing activity reflected weakness in single-family construction, which dropped 12 percent to a seasonally adjusted annual rate of 1.591 million units. Construction of apartments and other multi-family housing rose by 15.7 percent to an annual rate of 369,000 units.

Construction was down in all parts of the country, led by a 15.5 percent drop in the West and an 8.2 percent decline in the Midwest. Construction activity fell 4.8 percent in the South and was down 0.5 percent in the Northeast.

Permits for future construction fell by 5.5 percent in March to an annual rate of 2.059 million units following a decline of 1.7 percent in February.

Source: Associated Press/AP Online, Publication date: 2006-04-18, from Builder On-Line Business Update, April 18, 2006.

U.S. and Canada Finally Strike a Deal on Softwood Lumber Tariffs… After years of contention, the United States and Canada mapped out a “framework” under which the bitter softwood dispute is to be settled.

The U.S. agreed to allow Canadian companies access to approximately 34 percent of the U.S. market and to refund a large portion of the $5 billion collected in duties.

Source: LBM Daily, April 27, 2006

New Home Sales Up 13.8%, but Prices Fall… In a sign that the U.S. real estate market “still has some legs,” the number of new homes sold in March rose 13.8 percent vs. February, the biggest monthly increase in 13 years, the Commerce Department said Wednesday.

But the median price fell, and some analysts see other signs that the real estate market is slowing and prices are headed down.

In March, the median new-home price – half sold for more, half for less – was $224,200, down 2.2 percent from a year ago, Commerce said. It was the first time that the median price had fallen over a 12-month period since December 2003.

Source: ProSales Business Update, April 27, 2006, quoting Mindy Fetterman, in USA Today, April 27, 2006.

Softwood Lumber Deal to Close Within 90 Days?… Speculation runs rampant that the new softwood lumber deal between the U.S. and Canada will be finalized in three months. With the successful consummation of the deal, the U.S. will then return close to $4 billion in duty rebates to Canada.

“It may be quicker than that, just depending on the legal difficulties in finalizing the terms of the agreement,” said Trade Minister David Emerson.

Source: LBM Daily, May 2, 2006

The Home Depot Acquires Cox Lumber… Continuing to build mass in the professional construction supply industry, Home Depot Inc. on Monday acquired Cox Lumber Co., which with sales of $396-million in 2005, was one of the largest private companies in the Tampa Bay area.

Home Depot, which did not disclose the price or terms, said Cox’s extensive truss, door and lumber-related products plants and a network of 28 stores across Florida will become a wholly owned subsidiary of the home improvement giant’s recently purchased Williams Bros. Lumber Co., which is based in Suwannee, Ga.

The acquisition becomes the next piece in the puzzle as Atlanta-based Home Depot follows through on a strategy to use acquisitions to substantially bulk up its presence in the $410-billion contractor supply business.

The company recently paid $3.5-billion for Orlando-based Hughes Supply and is figuring out how to integrate the company into its burgeoning Home Depot Supply unit.

Source: By Mark Albright, St. Petersburg Times Staff Writer, Published May 2, 2006

Canadian Government to Make $1 Billion Off Returned Softwood Lumber Duties… When Canadian lumber companies begin to receive refunded duties from the United States, those duties will be subject to a Canadian government tax, which could be as high as 35 percent in some cases. It is estimated that the Canadian government will make approximately $1 billion from all returned duties.

“Most of the eastern producers will pay zero taxes simply because of high losses but ... the main guys in the West are facing a 35 per cent tax rate – that’s standard for the industry,” said Don Roberts, managing director at CIBC World Markets Inc.

Source: LBM Daily, May 5, 2006

Retirement Confidence Survey Results… The 16^th annual Retirement Confidence Survey found that many Americans have accumulated only modest retirement savings, underestimate the share of their pre-retirement income they likely will need in retirement, and have not estimated the amount needed to live comfortably in retirement. The survey, conducted by the Employee Benefit Research Institute and Mathew Greenwald & Associates (and underwritten by Milliman and others), examines the attitudes and behavior of workers and retirees toward all aspects of saving, retirement planning, and long-term financial security. Go to www.ebri.org/

Source: Milliman Monthly Benefit News and Developments, May 2006