HARDLINES™ Five years serving Canada's home improvement industry July 4, 2000 - Volume vi, #26 Michael McLarney, Editor & Publisher Ph: 416-489-3396 Fx: 416-489-6154 E-mail: buzz@hardlinesfax.com  
Check out our incredible Classifieds section!
* * * * * * * IN THIS ISSUE: * Rona will launch B2B industrial portal * Shuffle at Home Depot Canada HQ * Canadian Tire announces western distribution centre * Mills await strike action in BC interior * * * * * * HOTEL ROOMS AT OUR 5th ANNUAL HARDLINES MARKETING CONFERENCE: September 14, 2000. We have a limited number of rooms set aside for this incredible one-day symposium featuring some of North America's leaders in retail! To make your reservation, call the Eaton Centre Marriott Hotel: 1-800-905-0667; refer to the Hardlines Marketing Conference and/or McLarney Communications. * * * * * * Anybody out there ever a Bonzo Dog Band fan? If so, give me a call or send me a note! - Michael * * * * * * B.C. MILL STRIKE NOT EXPECTED TO AFFECT SUPPLY A strike by workers in British Columbia's coastal mills last Tuesday came as a surprise to an industry that is already plagued by oversupply and low prices. Some 12,000 BC forest workers went on strike, members of the Industrial Wood and Allied Workers representing the coastal operations at 70 companies. Another 20,000 workers in the province's interior can go on strike as of Wednesday. Canfor, bargaining separately, reached a settlement with its 1,700 workers in the interior on Friday, quelling fears the action might spread to the 20,000 other forestry workers in the province's interior. Canfor forestry workers got a three-year deal that included pay increases of 2% per year and a base rate of $21.94 an hour by the end of the contract. The agreement also includes pension and benefit increases. The strike action comes on the heels of extensive shut downs announced for the summer, an attempt by the mills to rationalize the glut of product in their inventories. Two or three mills are even expected to shut down altogether before summer is out, suggests one industry insider. "Nobody has any idea why they went on strike," says Doug Butterworth, vice-president of Taiga Forest Products in Burnaby, BC. He doubts the interior mills will follow suit, especially after the settlement by Canfor. Because the strike will help rationalize oversupply, it's actually good news for the mills. The coastal industry is seriously oversupplied because it doesn't have the allowable annual cut enjoyed by other regions, and the Asian market for green hemlock has dried up considerably. The strike may also boost the rock-bottom prices for lumber that were further depressed by a poor selling season in the rainy first quarter. During that time, lumber prices fell as low as US$255 per 1,000 board ft. from a high of US$410 a year ago. They have since bumped up about US$10 per board foot following the news of the strike. "There's North American oversupply of product," Butterworth says. "The best thing in the world for this industry is if they did go on strike for three or four weeks." Prices of other wood products are also expected to be affected. "In the past 8-9 weeks we've seen prices of sheet goods go up 30-33%, which is uprecedented," says Alan Jack, a trader at AFA Forest Products in Bolton, Ont. "And even if the strike ends quickly, we'll have containment on both lumber and sheet goods." But, he adds, because of alternative sources in Alberta and elsewhere, even a protracted strike will not affect supply dramatically. HOME DEPOT CANADA ANNOUNCES SENIOR MANAGEMENT CHANGES Since the arrival of a new vice-president from the U.S., Home Depot Canada has made further changes to its management team in Toronto. Pat Bennett, formerly vice-president of operations, left last week and has been replaced by Mike Roy. Born in Ottawa, Roy is a 23-year veteran of retail, and has been with Home Depot for eight years, most recently as a district manager in the company's Northwest Division, where he had worked with Eric Petersen. Petersen came up recently from that division to assume the role of vice-president of merchandising in Canada. Bennett's departure follows the exit of Jack Hayes in mid-June. Hayes was first moved over to a position as vice-president of marketing and logistics, making way for Petersen's arrival. He left the company soon after that. He will not be replaced; instead, his duties will be covered by Petersen. RONA TO DEVELOP ONLINE MAINTENANCE AND REPAIR MARKETPLACE A new partnership forged by Rona Inc. will enable it to develop an e-commerce platform for the industrial market. The deal is with Mediagrif Interactive Technologies Inc., a developer of vertical business-to-business e-commerce marketplaces. The two companies will join to create "Virtual Maintenance Repair Operations" &endash; www.vmro.com &endash; which, it claims, will be Canada's first portal exclusively for trading among industrial and institutional maintenance companies. Besides simple buying and selling, the concept will offer users a highly customized vertical marketplace for their maintenance/repair/operations (MRO) needs. The site will feature an integrated database of industrial and institutional MRO products. It will also offer research, analysis and comparison tools, as well as extensive customization options specific to each buyer's profile. It is expected to be up and running by September 2000. Under the agreement, Rona will be responsible for getting various integrated product databases up and running and ensuring service and delivery of MRO products through its dealer network of about 500 store locations in eastern Canada. Mediagrif will supply all the information technology applications needed to operate the new next-generation online supply. CANADIAN TIRE TO ERECT DISTRIBUTION CENTRE IN WEST Canadian Tire Corp. says it will open a new distribution centre in Calgary's southeast end. The agreement involves the purchase of approximately 63 acres of land from the City of Calgary, an agreement conditional upon city council approval and corporate approvals. If approved, the 500,000-sq.ft. facility will include trailer parking and storage, and employ up to 180. Canadian Tire is currently negotiating with an external firm to operate the facility. "A new distribution hub in Calgary allows us to cost-effectively add the required capacity to support our continued growth, which has increased nearly $1.5 billion in the past five years alone," says Stephen Bachand, CTC's president and CEO. Subject to approvals, construction of the new facility will begin in the fall of 2000, and is scheduled to start operations in the spring of 2002. It is expected to serve the company's 125 stores in Western Canada with increased capacity, better in-stock positions for customers and reduced product handling and transportation costs.  
COMPANIES IN THE NEWS Canadian Tire will begin offering its customers Canadian Tire money electronically on their Canadian Tire credit cards starting this fall. Customers who pay by cash, debit card or cheque will continue to receive paper Canadian Tire money, which has been a tradition since it was conceived by CTC co-founder A.J. Billes in 1958 to attract shoppers to CTC gas bars. Users can also earn the money on their Options MasterCard. Wal-Mart Canada has entered into an agreement with Canada Post to be the exclusive retailer for a range of commemorative keepsakes that celebrate Canada's heritage. The Canadian collectible items, developed and supplied by Canada Post, include a Canada Day Millennium keepsake containing commemorative and postage stamps, and a medallion from the Royal Canadian Mint. Selkirk Canada has moved to new offices: Selkirk Canadian Operations, 375 Green Rd., Stoney Creek, ON L8E 4A5; phone: 905-662-6600; fax: 905-662-5352. For the third quarter ended May 31, Richelieu Hardware Ltd. recorded sales of $51.9 million, up from $43.4 million for the same period a year earlier, an increase of 20%. This marks the company's 19th consecutive quarter of continuous growth. Earnings before income taxes, interest, depreciation and amortization (EBITDA) rose 26% to $6.9 million, compared with $5.5 million a year earlier. Net earnings grew by 32% to reach $3.4 million, up from $2.8 million. Sales for the first half of the year reached $92.1 million, up 20% from $77.0 million for the first six months of fiscal 1999. EBITDA totalled $10.9 million, up 24%. Net earnings reached $5.3 million, up 31% from $4.0 million.
CANADIAN STOCK WATCH
COMPANY 52-WEEK HIGH 52-WEEK LOW CLOSE (FRI.)
       
Canadian Tire 43.40 18.40 22.30
Canfor 19.80 10.10 13.50
Goodfellow 12.55 8.75 10.00
Home Depot 70.00 35.75 49 11/16
Hudsons Bay 23.85 12.50 15.70
Lowe's Cos. 67.25 40.40 41 1/4
Sears Canada 42.50 29.00 34.25
Taiga Forest 14.75 8.90 8.05
West Fraser 41.00 28.00 29.50
(Note: We've taken Cameron Ashley Building Products off the list since trading has stopped following its takeover by Guardian Industries.) "If I had all the money I'd spent on drink, I'd spend it on drink." - Sir Henry Rawlinson (From"Rawlinson End," a creation of Vivian Stanshall of the Bonzo Dog Band*) * If there are any Bonzo Dog fans out there, CALL ME!
PEOPLE ON THE MOVE At GE Silicones, Ed Pchola has been appointed national accounts manager for the Canadian market. He was formerly marketing product manager for the consumer business at GE Silicones. He is serving the Canadian market from GE's office in Chicago. (518-233-3809)  
NOTED According to a new study out of the U.S., e-commerce revenues worldwide will reach almost US$2 trillion, up from an estimated US$132 billion today. The increase, expected by 2005, will represent just over 5% of the world's US$39 trillion global economy by then. The research is part of an annual study ActivMedia, and part of a five-year examination of online commerce across the entire spectrum of web businesses.  
MARKET INDICATORS Nearly two thirds of Canadian households own their homes, and more than half are mortgage free, according to CMHC's latest issue of "Mortgage Market Trends." Mortgage payments account for about one fifth of a household's disposable income for those who have a mortgage, ranging from a low of 18% in Saskatchewan to a high of 25% in British Columbia. Sales in the U.S. of existing homes rose 4.3% in May to a seasonally adjusted annual rate of 5.09 million units, up from 4.88 million units in April, according to the latest report of the National Association of Realtors. Last month's sales rate was 1% higher than the rate of 5.04 million units in May 1999. The rise was due largely to unmet demand following dips in January and February that left many prospective buyers competing for few homes on the market in recent months. This in turn pushed prices higher. However, sales are expected to slow in the second half of the year. Sales of existing homes constitute about 80% of the overall housing market in the U.S.  
HARDLINES WHO'S WHO: Directory of Canadian Hardware & Home Improvement Retailers, Wholesalers, Buying Groups and Mass Merchants. This has become an industry standard. With more than 100 listings of the key companies in the country, including executives, buyers, sales and more. No salesperson should be without this little beauty in their briefcase. Third edition available in July. HARDLINES INDUSTRY REPORT: HOME IMPROVEMENT RETAILING IN CANADA: Back by popular demand! This incredible report is a soup-to-nuts on how the home improvement business works in Canada. It tells who the players are, what the trends are, how the industry is responding to the big boxes, etc. It also updates home improvement and renovation spending and figures out just how big this business is! FIFTH ANNUAL HARDLINES MARKETING CONFERENCE: September 14, 2000. An incredible one-day symposium featuring some of North America's leaders in retail, including Home Depot, McMillan/Doolittle, Gardener's Supply, J&H Builder's Warehouse and much more! Expect about 200 retail and vendor executives to attend! THE WOMEN'S CONSUMER PRODUCTS NETWORK June 27: WCPN Golf Tournament (Sorry - sold out!). August 15: Breakfast meeting during the CGTA Show. Featuring the proven communication methods of Robin Kennedy, vice-president of Communicare. For more information about these events, please phone: (905) 212-3826; fax: (905) 274-7646; email:wcpn99@yahoo.com, or check out their website: www.wcpncanada.org  
Hardlines Classifieds Got new products? Looking for new staff or lines? Hardlines Classifieds are read each week by North America's key decision makers in home improvement retailing and manufacturing. If you want to build your sales team or find new agents or new lines, this is the place! Only $16 per line. Call Beverly at 416-489-3396, ext. 2, for more details. * * * * * * * HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: bev@hardlinesfax.com © 2000 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.  
    HARDLINES™ Five years serving Canada's home improvement industry July 4, 2000 - Volume vi, #26 Michael McLarney, Editor & Publisher Ph: 416-489-3396 Fx: 416-489-6154 E-mail: buzz@hardlinesfax.com  
Check out our incredible Classifieds section!
* * * * * * * IN THIS ISSUE: * Rona will launch B2B industrial portal * Shuffle at Home Depot Canada HQ * Canadian Tire announces western distribution centre * Mills await strike action in BC interior * * * * * * HOTEL ROOMS AT OUR 5th ANNUAL HARDLINES MARKETING CONFERENCE: September 14, 2000. We have a limited number of rooms set aside for this incredible one-day symposium featuring some of North America's leaders in retail! To make your reservation, call the Eaton Centre Marriott Hotel: 1-800-905-0667; refer to the Hardlines Marketing Conference and/or McLarney Communications. * * * * * * Anybody out there ever a Bonzo Dog Band fan? If so, give me a call or send me a note! - Michael * * * * * * B.C. MILL STRIKE NOT EXPECTED TO AFFECT SUPPLY A strike by workers in British Columbia's coastal mills last Tuesday came as a surprise to an industry that is already plagued by oversupply and low prices. Some 12,000 BC forest workers went on strike, members of the Industrial Wood and Allied Workers representing the coastal operations at 70 companies. Another 20,000 workers in the province's interior can go on strike as of Wednesday. Canfor, bargaining separately, reached a settlement with its 1,700 workers in the interior on Friday, quelling fears the action might spread to the 20,000 other forestry workers in the province's interior. Canfor forestry workers got a three-year deal that included pay increases of 2% per year and a base rate of $21.94 an hour by the end of the contract. The agreement also includes pension and benefit increases. The strike action comes on the heels of extensive shut downs announced for the summer, an attempt by the mills to rationalize the glut of product in their inventories. Two or three mills are even expected to shut down altogether before summer is out, suggests one industry insider. "Nobody has any idea why they went on strike," says Doug Butterworth, vice-president of Taiga Forest Products in Burnaby, BC. He doubts the interior mills will follow suit, especially after the settlement by Canfor. Because the strike will help rationalize oversupply, it's actually good news for the mills. The coastal industry is seriously oversupplied because it doesn't have the allowable annual cut enjoyed by other regions, and the Asian market for green hemlock has dried up considerably. The strike may also boost the rock-bottom prices for lumber that were further depressed by a poor selling season in the rainy first quarter. During that time, lumber prices fell as low as US$255 per 1,000 board ft. from a high of US$410 a year ago. They have since bumped up about US$10 per board foot following the news of the strike. "There's North American oversupply of product," Butterworth says. "The best thing in the world for this industry is if they did go on strike for three or four weeks." Prices of other wood products are also expected to be affected. "In the past 8-9 weeks we've seen prices of sheet goods go up 30-33%, which is uprecedented," says Alan Jack, a trader at AFA Forest Products in Bolton, Ont. "And even if the strike ends quickly, we'll have containment on both lumber and sheet goods." But, he adds, because of alternative sources in Alberta and elsewhere, even a protracted strike will not affect supply dramatically. HOME DEPOT CANADA ANNOUNCES SENIOR MANAGEMENT CHANGES Since the arrival of a new vice-president from the U.S., Home Depot Canada has made further changes to its management team in Toronto. Pat Bennett, formerly vice-president of operations, left last week and has been replaced by Mike Roy. Born in Ottawa, Roy is a 23-year veteran of retail, and has been with Home Depot for eight years, most recently as a district manager in the company's Northwest Division, where he had worked with Eric Petersen. Petersen came up recently from that division to assume the role of vice-president of merchandising in Canada. Bennett's departure follows the exit of Jack Hayes in mid-June. Hayes was first moved over to a position as vice-president of marketing and logistics, making way for Petersen's arrival. He left the company soon after that. He will not be replaced; instead, his duties will be covered by Petersen. RONA TO DEVELOP ONLINE MAINTENANCE AND REPAIR MARKETPLACE A new partnership forged by Rona Inc. will enable it to develop an e-commerce platform for the industrial market. The deal is with Mediagrif Interactive Technologies Inc., a developer of vertical business-to-business e-commerce marketplaces. The two companies will join to create "Virtual Maintenance Repair Operations" &endash; www.vmro.com &endash; which, it claims, will be Canada's first portal exclusively for trading among industrial and institutional maintenance companies. Besides simple buying and selling, the concept will offer users a highly customized vertical marketplace for their maintenance/repair/operations (MRO) needs. The site will feature an integrated database of industrial and institutional MRO products. It will also offer research, analysis and comparison tools, as well as extensive customization options specific to each buyer's profile. It is expected to be up and running by September 2000. Under the agreement, Rona will be responsible for getting various integrated product databases up and running and ensuring service and delivery of MRO products through its dealer network of about 500 store locations in eastern Canada. Mediagrif will supply all the information technology applications needed to operate the new next-generation online supply. CANADIAN TIRE TO ERECT DISTRIBUTION CENTRE IN WEST Canadian Tire Corp. says it will open a new distribution centre in Calgary's southeast end. The agreement involves the purchase of approximately 63 acres of land from the City of Calgary, an agreement conditional upon city council approval and corporate approvals. If approved, the 500,000-sq.ft. facility will include trailer parking and storage, and employ up to 180. Canadian Tire is currently negotiating with an external firm to operate the facility. "A new distribution hub in Calgary allows us to cost-effectively add the required capacity to support our continued growth, which has increased nearly $1.5 billion in the past five years alone," says Stephen Bachand, CTC's president and CEO. Subject to approvals, construction of the new facility will begin in the fall of 2000, and is scheduled to start operations in the spring of 2002. It is expected to serve the company's 125 stores in Western Canada with increased capacity, better in-stock positions for customers and reduced product handling and transportation costs.  
COMPANIES IN THE NEWS Canadian Tire will begin offering its customers Canadian Tire money electronically on their Canadian Tire credit cards starting this fall. Customers who pay by cash, debit card or cheque will continue to receive paper Canadian Tire money, which has been a tradition since it was conceived by CTC co-founder A.J. Billes in 1958 to attract shoppers to CTC gas bars. Users can also earn the money on their Options MasterCard. Wal-Mart Canada has entered into an agreement with Canada Post to be the exclusive retailer for a range of commemorative keepsakes that celebrate Canada's heritage. The Canadian collectible items, developed and supplied by Canada Post, include a Canada Day Millennium keepsake containing commemorative and postage stamps, and a medallion from the Royal Canadian Mint. Selkirk Canada has moved to new offices: Selkirk Canadian Operations, 375 Green Rd., Stoney Creek, ON L8E 4A5; phone: 905-662-6600; fax: 905-662-5352. For the third quarter ended May 31, Richelieu Hardware Ltd. recorded sales of $51.9 million, up from $43.4 million for the same period a year earlier, an increase of 20%. This marks the company's 19th consecutive quarter of continuous growth. Earnings before income taxes, interest, depreciation and amortization (EBITDA) rose 26% to $6.9 million, compared with $5.5 million a year earlier. Net earnings grew by 32% to reach $3.4 million, up from $2.8 million. Sales for the first half of the year reached $92.1 million, up 20% from $77.0 million for the first six months of fiscal 1999. EBITDA totalled $10.9 million, up 24%. Net earnings reached $5.3 million, up 31% from $4.0 million.
CANADIAN STOCK WATCH
COMPANY 52-WEEK HIGH 52-WEEK LOW CLOSE (FRI.)
       
Canadian Tire 43.40 18.40 22.30
Canfor 19.80 10.10 13.50
Goodfellow 12.55 8.75 10.00
Home Depot 70.00 35.75 49 11/16
Hudsons Bay 23.85 12.50 15.70
Lowe's Cos. 67.25 40.40 41 1/4
Sears Canada 42.50 29.00 34.25
Taiga Forest 14.75 8.90 8.05
West Fraser 41.00 28.00 29.50
(Note: We've taken Cameron Ashley Building Products off the list since trading has stopped following its takeover by Guardian Industries.) "If I had all the money I'd spent on drink, I'd spend it on drink." - Sir Henry Rawlinson (From"Rawlinson End," a creation of Vivian Stanshall of the Bonzo Dog Band*) * If there are any Bonzo Dog fans out there, CALL ME!
PEOPLE ON THE MOVE At GE Silicones, Ed Pchola has been appointed national accounts manager for the Canadian market. He was formerly marketing product manager for the consumer business at GE Silicones. He is serving the Canadian market from GE's office in Chicago. (518-233-3809)  
NOTED According to a new study out of the U.S., e-commerce revenues worldwide will reach almost US$2 trillion, up from an estimated US$132 billion today. The increase, expected by 2005, will represent just over 5% of the world's US$39 trillion global economy by then. The research is part of an annual study ActivMedia, and part of a five-year examination of online commerce across the entire spectrum of web businesses.  
MARKET INDICATORS Nearly two thirds of Canadian households own their homes, and more than half are mortgage free, according to CMHC's latest issue of "Mortgage Market Trends." Mortgage payments account for about one fifth of a household's disposable income for those who have a mortgage, ranging from a low of 18% in Saskatchewan to a high of 25% in British Columbia. Sales in the U.S. of existing homes rose 4.3% in May to a seasonally adjusted annual rate of 5.09 million units, up from 4.88 million units in April, according to the latest report of the National Association of Realtors. Last month's sales rate was 1% higher than the rate of 5.04 million units in May 1999. The rise was due largely to unmet demand following dips in January and February that left many prospective buyers competing for few homes on the market in recent months. This in turn pushed prices higher. However, sales are expected to slow in the second half of the year. Sales of existing homes constitute about 80% of the overall housing market in the U.S.  
HARDLINES WHO'S WHO: Directory of Canadian Hardware & Home Improvement Retailers, Wholesalers, Buying Groups and Mass Merchants. This has become an industry standard. With more than 100 listings of the key companies in the country, including executives, buyers, sales and more. No salesperson should be without this little beauty in their briefcase. Third edition available in July. HARDLINES INDUSTRY REPORT: HOME IMPROVEMENT RETAILING IN CANADA: Back by popular demand! This incredible report is a soup-to-nuts on how the home improvement business works in Canada. It tells who the players are, what the trends are, how the industry is responding to the big boxes, etc. It also updates home improvement and renovation spending and figures out just how big this business is! FIFTH ANNUAL HARDLINES MARKETING CONFERENCE: September 14, 2000. An incredible one-day symposium featuring some of North America's leaders in retail, including Home Depot, McMillan/Doolittle, Gardener's Supply, J&H Builder's Warehouse and much more! Expect about 200 retail and vendor executives to attend! THE WOMEN'S CONSUMER PRODUCTS NETWORK June 27: WCPN Golf Tournament (Sorry - sold out!). August 15: Breakfast meeting during the CGTA Show. Featuring the proven communication methods of Robin Kennedy, vice-president of Communicare. For more information about these events, please phone: (905) 212-3826; fax: (905) 274-7646; email:wcpn99@yahoo.com, or check out their website: www.wcpncanada.org  
Hardlines Classifieds Got new products? Looking for new staff or lines? Hardlines Classifieds are read each week by North America's key decision makers in home improvement retailing and manufacturing. If you want to build your sales team or find new agents or new lines, this is the place! Only $16 per line. Call Beverly at 416-489-3396, ext. 2, for more details. * * * * * * * HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: bev@hardlinesfax.com © 2000 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.