John Caulfield, Contributing Editor
 vol. ix, #31 August 18, 2003

· Giant blackout keeps retailers hopping · Urquhart to succeed Barrie Sali at Tim-BR-Marts · Buyers find innovations at NHS · New hardware shows battle for support in 2004 · Housing remains strong in second quarter · Canucks congregate at CHHMA's Canadian reception · Home Depot faces more woes in California

"Money is a good servant, but a bad master." — Henry George Bohn (English publisher, 1796-1884)
Please note that Hardlines will not publish next week, August 25, but we'll resume our normal weekly schedule commencing September 2. During this time, we'll be busy preparing for the Hardlines Conference Series, September 3-4. By the way, have you registered yet? Michael
TORONTO It's the little things you don't think about. Like cell phones kicking out. Internet breaking down. Or like gas pumps not working. The power went out at 4:10 p.m. EST, affecting some 50 million people from Boston to Thunder Bay. Within an hour, people were buying up emergency supplies. At Grey's Hardware, a Sodisco-Howden customer in mid-town Toronto, Steve stood in darkness as a steady stream of people came in for batteries, flashlights, matches and candles. But it was the lineups at a few gas stations through the night in Toronto that were crazy, as word got out of pumps that were working. Even by noon the following day lineups remained fierce. At the Canadian Tire store in mid-town Toronto, I couldn't see the end of the lineup of cars and didn't want to hike down in the blazing 30 degree-plus heat (so much for that investigative journalism award Editor) but drivers I spoke with reported waiting up to half an hour as they wound their way slowly up Church Street. Local station City TV came earlier in the day to get a news piece, and Bill from City TV was still there hours later helping with traffic in and out of the gas pumps. Inside the store, people were buying up emergency supplies. James, in a black suit and flower boutonnière, was in line with the store's last six portable gas containers. He needed them to fill with diesel fuel to keep the generators going at the hotel he works for. Someone in the line behind him pleaded unsuccessfully with him to give up one of the canisters. At the Rona Home and Garden in Scarborough, in Toronto's east end, the air conditioning was left off on Friday morning, in deference to government requests to ease up on electricity usage. But when the manager discovered that the nearby Wal-Mart and Home Depot both had the air conditioning on, he went back and threw it on too. Meanwhile, Hardlines worked indefatigably from the back yard, writing the news, barbecuing everything that had been salvaged from the freezer and making coffee for the troops on the Coleman stove. Hardlines never sleeps!
CHICAGO My first clue as to the state of this year's National Hardware Show was when I rode the shuttle bus into McCormick Place. It, and the others rolling in, were no more than one-third full. But I hadn't seen nothin' yet. Confined to just one floor of the North building, and to the South building, at McCormick Place, even these were tough to fill, as empty spaces abounded at the back of the former and wide aisles characterized the latter. About one-third of exhibitors, or 700 booths, were international, including a large contingent of Asian companies. But with smaller size comes different expectations, and the most successful attendees were those who modified those expectations. Buyers didn't come in droves, but they came nonetheless, representing most major retailers from both North and South America, and from Europe, as well. The ones most conspicuous by their absence were representatives from Wal-Mart U.S., as the giant retailer was reportedly holding a managers' conference during the same time. (Both Wal-Mart Canada and Wal-Mart Mexico were there.) Just some of the buyers from Canada included Réno-Dépôt's Joseph Piro, Luc Nantel, Patrice Duguay and Jean Lamarche. Home Hardware, represented by Ken Friedmann and John Dyksterhuis. Sodisco-Howden sent a team headed by Al Lynn, national director of merchandising. Ken Sexton and Brian McGillivray from Sexton Group were there; Federated Co-op's Garry Fairbrother and Dave Dwyer were there, too. Did even these retailers come up short, though? Probably not, as the show was only strong in hardware, tools and lawn and garden. The lack of plumbing and electrical suppliers obviated the need for buyers in these ranges. Unfettered by the demands of the big vendors, those buyers who did attend had time to look in the booths of small, specialized - and unfamiliar - exhibitors. "It used to be that 90% of the guys knew me," said Home Hardware's Friedmann, who is tools and hardware buyer for the St. Jacobs, ON-based co-op wholesaler. "Now, people are saying, 'who are you,' despite the fact we represent 1,000 stores in Canada." Lynn at Sodisco-Howden, however, was not completely enamoured of the show. "I'm very disappointed with the lack of support by the vendor world; I question the validity of the show," he said. He, like just about everyone at the show, expressed his concern with the fate of the event. The show's owner, Reed Exhibitions, has split from its major partner and sponsor of the show, the American Hardware Manufacturers Association. Both organizations will host shows of their own -only weeks apart - in the spring of 2004. "I'm concerned about next year, with the split. Then you'll have two so-so shows - and I don't want to go to both," Lynn said.

CALGARY, AB Tim Urquhart, currently vice-president Western Canada for Cameron Ashley Building Products, has been chosen to head up Tim-BR-Marts Ltd. Following Barrie Sali's announcement back in January that he would retire as president and CEO of the Vancouver-based buying group at the end of this year, the search for his replacement has garnered endless speculation.

With another week to go before he finishes a special project for Cameron Ashley's parent, Guardian Industries, Urquhart will start at Tim-BR-Marts as vice-president and general manager, effective September 2. For the next four months, he will work alongside Sali, getting settled into his new position. Sali will retire at the end of December; on January 1, Urquhart assumes the title of president. Urquhart beat out more than 100 other people for the job, including some very senior people who reportedly were surprised not to be a shoo-in for the job. But Urquhart's background includes buying, sales and operations - all considered important skills. He owned his own store - a Home Hardware Building Centre in Brampton, ON, and later served as building products manager at Homecare Building Centres (now Tim-BR-Mart Ontario). "That position really gave me insight, not just into Tim-BR-Marts, but into Matreco as well," Urquhart says. Tim-BR-Marts, along with Tim-BR Mart Ontario, Groupe BMR in Quebec and AWARD in Atlantic Canada all belong to the umbrella buying group Matreco. Tim-BR-Marts has been plagued with defections by some of its key members to a rival group, Independent Lumber Dealers Co-operative. At the same time, many younger members of Tim-BR-Marts were questioning Sali's salary arrangement, which pays him a percentage of rebates earned each year for the group. The board of directors has continued to renew Sali's contract at the same percentage rate through the years, despite - or perhaps because of - the fact the company has grown 1,000-fold since Sali took it over in 1970. Even with recent losses, however, under Sali's leadership Tim-BR-Marts remains one of the leading building materials buying groups in Canada, and managed to top $1 billion in dealer sales in 2002. Urquhart is prepared for the challenge. "Regardless of the dealers we've lost, we're still a very large force in building materials retailing in Canada," he says. He intends to keep his home in Calgary, while he spends much of his first year on the road, visiting dealers and listening to their concerns. He will divide his time between Calgary, the Vancouver head office, and the group's second office in Winnipeg. Randy Martin, Tim-BR-Marts' director of merchandising, will work with Urquhart in an expanded role. "It's a good opportunity for Tim-BR-Marts," he says. "Tim's got a varied background and he'll bring a great deal of expertise into this organization."
CHICAGO The two stakeholders of the National Hardware Show, Reed Exhibitions, which owns the show, and the American Hardware Manufacturers Association, which sponsors it, enjoyed a profitable partnership for many years. By 1999, the show had grown to 1.2 million sq.ft. and 70,000 registered visitors. But retail consolidation caused buyers from the key retailers to shop the show less, and buy less. Costs kept rising and everyone, from exhibitors dealing with outrageously priced unions in McCormick Place to cheapskate editors seeking affordable lodging in one of the city's hotels, felt the burn factor increasing yearly. Then, major vendors, led by Black and Decker and Bosch, began an exodus from the show, changing both its size and makeup dramatically. This past week's show filled a took up only 430,000 sq.ft. Add in the fallout from 9/11, a bear stock market and continuing consolidation in the North American home improvement industry and what's an ailing Hardware Show to do? Reed wanted to move the show to Las Vegas, where it already holds a number of its shows. The AHMA, with deep roots in its home town of Chicago, and representing a base of members headquartered in the Midwest, said no. Other proposed changes could not find consensus either, so AHMA tried to buy Reed out. Price was based on the show continuing to dwindle in size, and this time Reed said no. In order to avoid litigation by the AHMA, Reed agreed to sever its agreement. But both sides are determined to mount the definitive industry event. Reed went ahead with some of the initiatives it believed would resuscitate the show. These included moving NHS to Las Vegas, a move, says Reed's Rob Cappiello, which has consistently boosted attendance at other shows, plus offering free drayage (the cost of moving the exhibitor's booth and equipment from the loading dock to the show floor), and reducing the booth rental rate by more than a third. The AHMA, still keen on a Chicago location, launched its own show, the AHMA Hardware Show. It started by matching Reed on pricing. One thing both sides could agree on was moving the date of the show to the spring. The AHMA will hold its new show April 18-20, 2004. NHS will be held just three weeks later, from May 10-12. By the end of the show, Reed had more than 700 signed contracts from vendors. Bill Farrell, president and CEO of the AHMA, is taking another tack, waiting until September 15, the deadline for reserving booth space. Then, Farrell says, he will announce his bullpen. He reportedly has let slip that he has participation in the "triple digits" but will say no more. However, by the end of the show, he was able to announce that The Stanley Works has committed its support and participation in the 2004 AHMA Hardware Show in Chicago. In addition, Stanley's director of corporate marketing services, Scott Bannell, has joined the AHMA Industry Advisory Council.
Chicago The Maple Leaf Night reception held on August 10, during the National Hardware Show, proved once again to be the place to go for the majority of Canadians at the show. The event, held annually at the Drake Hotel, is hosted by the Canadian Hardware and Housewares Manufacturers Association and sponsored by specific CHHMA members. Mirroring the show itself, the event has shrunk in the last couple of years. And, as people continue to shorten their stay in Chicago, Maple Leaf Night was moved from the Monday to the Sunday of the show. But even though its size has dwindled, its importance has not: it remains an key forum for vendors seeking valuable face time with buyers, who came in force to support the night.
CHICAGO Two retailers unveiled major deals with Mexican partners during the National Hardware Show, held here last week. The first was a partnership between Ace Hardware and Practico. The second was Do-it Best's signing with Matusa, an C$83.6 million chain. The Practico Home Center banner was created in 1996 by Hardware Enterprises de Mexico, a wholly owned subsidiary of Commercial Mexicana de Pinturas (COMEX), which also operates 3,000 paint stores. Today, Practico is now one of Mexico's top five home improvement retailers. Ace will retrofit Practico's 30 stores, which range between 6,000 and 16,000 sq.ft., with Ace retail formats, co-branded under Ace and Practico. The first ones will reopen on November 1, 2003. Practico will source U.S. products through Ace for its own outlets. As part of the deal, Practico's distribution facilities will also be able to supply locally manufactured products to Ace 84 other outlets in Mexico. Do-it Best will begin upgrading Matusa's 22 stores and increasing their SKU count from about 5,000 to 12,000-plus. Currently, the stores rely heavily on counter sales, for reasons of both convenience and theft prevention. One of Do-it Best's challenges will be to reformat the stores to more DIY-oriented, self-serve merchandising.
Canadian Tire 37.29 26.80 34.90
Canfor 10.34 6.83 9.95
Costco 39.02 27.00 30.95
Goodfellow 12.50 9.75 10.75
Home Depot 34.90 20.10 33.54
Hudson's Bay 10.50 5.87 9.25
Lowe's Cos. 48.71 33.37 48.90
Rona Inc. 19.40 11.75 17.80
Sears Canada 20.00 13.60 17.26
Sodisco-Howden 2.54 1.15 2.43
Taiga Forest 8.10 5.85 7.95
Wal-Mart 58.80 46.25 58.10
West Fraser 39.05 26.27 33.00
OTTAWA Canada's housing market is expected to stay strong throughout 2003, says the latest forecast from Canada Mortgage and Housing Corp. Housing starts are expected to reach 203,200 units, their second-highest level in 14 years. Renovation spending is also setting a new record. The pace of new construction is expected to ease somewhat by the end of 2003 and have an impact on starts in 2004. Next year, starts are forecast at just over 188,000 units, reflecting greater availability of existing homes for sale on the resale market and slightly higher mortgage rates. Existing home sales are still on the rise this year, however. The Canadian Real Estate Association reports that sales in 25 major markets across the country rose from June to July by 14.5% seasonally adjusted. The average price of resale homes in July stood at $225,122, an 11.7% increase from $201,504 a year earlier.
MONTREAL Sodisco-Howden Group has reported second-quarter revenues of $143.9 million, down 0.3% from the same quarter in 2002. A late spring and a drop in lumber prices contributed to flat sales. EBITDA for the second quarter, however, increased 52.4% to $6.5 million, largely due to improving gross margins and higher volume rebates. Net earnings totaled $3.1 million, up from $1.7 million in the second quarter of 2002. TORONTO Canadian Tire Corp. made $64.4 million in its second quarter, up from $58.6 million a year ago. Total retail sales were $2.16 billion, up 5.5% from $2.05 billion in 2002. KAMLOOPS, BC Weyerhaeuser Co. has pledged $40,000 in cash and product to help families affected by hundreds of fires that have ravaged the Interior of British Columbia over the past several weeks. OTTAWA Mario Giannetti, president of Preston Hardware (seen here at the National Hardware Show) hosted his company's annual customer appreciation event this past weekend. The warehouse was cleared out, and vendors were brought in to provide product demos and info seminars. BARRIE, ON TWI Global Inc. has named Can-Save as distributor for its DeckZone and ELuminate deck and rail lighting in Ontario and the Maritime provinces. Can-Save has also formed a partnership with Shawmark Floors to supply its laminate flooring lines in Ontario. BENTONVILLE, AK Wal-Mart announced 2Q net income of US$2.44 billion, up about 21% from last year's US$2.02 billion. Income from continuing operations totaled US$2.3 billion, up 14.7% from last year's $2 billion. Total sales rose 11.3% to US$62.64-billion, from last year's US$56.27 billion. Total same-store sales were up 3.2%, triggered by a 3.1% increase for Wal-Mart Stores and a 3.6% gain at the retailer's Sam's Club outlets. MISSISSAUGA, ON With the first outlets slated to open this fall, Wal-Mart Canada has launched a membership drive for Sam's Clubs in the Greater Toronto Area. Business memberships will cost $40, while an individual membership will cost $45. KITCHENER, ON Onward Hardware (division of Richelieu Hardware) begins moving its headquarters today into expanded, 40,000-sq.ft. facilities, representing a doubling of both space and inventory. The move should be completed by this time next week. The new address is: 520 Conestoga Road, Waterloo, ON N2L 4E2. The phone number (519-578-3770) and fax numbers stay the same. MONTREAL Richelieu Hardware will acquire a U.S. firm, Pacific Coast Supply, and Canadian group, Teamwood Distribution. Privately held Pacific Coast Supply runs two specialty hardware distribution centres near Seattle, WA and Portland, OR. The acquisitions are expected to add about $8 million in annual sales. OAK BROOK, IL Ace Hardware Corp. saw net earnings for the second quarter increase to US$34.5 million from US$33.5 million in the second quarter of 2002, on sales of US$831.8 million, versus US$834.0 million in 2002. For the first six months of 2003, net earnings increased 16.9% to US$48.8 million on sales of US$1.55 billion, compared with US$41.8 million in 2002 on sales of US$1.54 billion. Highlights of the period included the opening of 26 branch stores by existing Ace dealers and 41 new stores who converted to Ace from other hardware co-op. Ace also purchased a facility to beef up its distribution on the West Coast, which will start shipping in the first quarter of 2004. INDIANAPOLIS Do-it Best Corp. ended its fiscal year with record sales and rebates. Sales by its 4,200 member dealers reached US$2.42 billion. Rebates comprised 13.7% of sales through the Do-it Best warehouse, or US$98.2 million. Wholesale sales were up 3.1%, with paint, plumbing, outdoor and home décor leading the pack, while unit sales of lumber and building materials were up about 12%. CAMPBELL, CA Zircon Corp. has filed suit in United States District Court to enforce the patent for technology found in many of its stud sensors. The "DeepScan" technology allows Zircon's stud finders to find wood and metal studs, joists and rafters up to 1½ inches deep behind walls. However, Zircon attests that The Stanley Works is infringing on the patent with Stanley's IntelliSensor Digiscan stud finder and wants damages. WASHINGTON, DC The U.S. Federal Trade Commission has, for all intents and purposes, approved the sale by Masco of its Baldwin and Weiser Lock security hardware divisions to Black & Decker, which the two companies first disclosed on July 1. The deal still needs approval from regulatory agencies in certain foreign countries, as well as from the companies' respective boards of directors before a definitive agreement can be reached.
Richard Martoccia, formerly vice-president synergy for Réno-Dépôt, is now on his own. He's started his own consulting firm and as soon as I find his card I'll give you the contact info. I-lost-my-luggageMike. Neil Hastie, CIO of TruServ Corp., has resigned from the dealer-owned buying group, which has initiated a search for his replacement. Hastie had been instrumental in developing many of TruServ's information technology tools, including its data warehouse for members and other online ventures.
Low mortgage rates and job creation continued to fuel new home construction in July, according to CMHC. The seasonally adjusted annual rate of housing starts increasing to 223,500 from a revised 205,900 in June. urban single starts increased 4.7% to 103,100 units seasonally adjusted, compared with 98,500 units in June. This increase was reflected in all regions of the country except Atlantic Canada, where urban single starts fell. Canada-wide, year-to-date actual urban single starts are down 3.4% from the same period in 2002. Urban multiple starts were up 9.5% seasonally adjusted to 90,800 units in July, from 82,900 units in June. Starts were up in all regions except Ontario, which suffered a slight setback. Nationally, year-to-date actual urban multiple starts increased 14.2%, compared with the same period in 2002.
COLOGNE, GERMANY – The range of products being presented at Practical World, the International Hardware Fair/DIY’TEC next spring will once again represent three distinct, but related, sections of home improvement: World of Tools, World of Security, Locks and Fittings and World of Home Improvement/DIY. Practical World will be held March 14-17, 2004. For more information, contact Barbara Hills, Canadian Sales Manager, at 416-598-3343 or

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