September 12, 2016 Volume xxii, #34

“It is not enough to have a good mind; the main thing is to use it well.”
—René Descartes (French philosopher and scientist, 1596-1650)

IN THIS ISSUE:

• Size of gypsum tariff for Western Canada takes industry by surprise

• Ace brand gets push for independents at RONA show

• Digital retail leaders will share insights at Home Improvement eRetailer Summit

• Lowe’s divides services between Boucherville HQ and GTA support centre

• PLUS: Sexton’s new digs, Castle’s golf for SickKids, Home Hardware openings, Ace’s second quarter, HBC results, Sears’s woes, Task Tool founder passes, CanWel acquisition, Arrow on TV, housing starts, classified ads —and more!
  
  

Size of gypsum tariff for Western Canada takes industry by surprise

SPECIAL REPORT — A ruling on September 6 by the Canadian International Trade Tribunal to impose a tariff on drywall being sold in Western Canada will impact prices as of September 8. The tariff will effectively raise the price of drywall in the West by as much as 60%, which has created a furor among drywall distributors, home builders, and contractors.

The tariff was triggered by a complaint filed with Canada Border Services by CertainTeed Gypsum. That complaint alleged that competitors were dumping gypsum wallboard in Western Canada below market price. In an email to HARDLINES, Matthew Walker, general manager of CertainTeed, laid out his company’s argument for the complaint, saying, in part: “Under Canadian laws, these unfair trade practices are sanctioned through an offsetting duty. Our actions are meant to stop this practice and bring a level playing field to the Western Canadian marketplace by having all manufacturers conform to regulatory and legal requirements as prescribed under Canadian law.” (To read Walker’s letter in its entirety, please click here. —Editor)

Doug Skrepnek at WSB Titan, a major drywall supplier selling across the country, is alarmed by the size of the increase. “This has changed the game for everybody, because there’s no way for us to sell the product without passing the price increase along.”
Walker points out that CertainTeed is the only domestic gypsum board manufacturer in Western Canada, “due to the fact that, unlike other companies, CertainTeed has remained committed to local Canadian manufacturing.” However, Skrepnek says CertainTeed’s facilities in the West simply cannot meet all the demand there.

The effects of the price increase are expected to extend beyond just gypsum sales. “A 40-60% increase overnight is going to be a very big disruptor—even for our business,” says Ken Meinert, executive vice president of Bailey Metal Products, which supplies steel, including studs, to the construction industry. “It’s not just a drywall thing. It’s going to affect the entire industry.” He expects some slowdowns in the construction industry as a result of the price increase.

CGC, one of the companies named in the complaint, has countered through a letter to customers signed by Don Brandt, VP sales, which says in part, “We are vigorously challenging CertainTeed’s complaint.” Other companies accused of dumping are: Continental Building Products out of Virginia; Georgia-Pacific Gypsum in Atlanta;
California-based Pabco Gypsum; and American Gypsum headquartered in Dallas, Tex.

At the dealer level, the Building Supply Dealers Association of British Columbia is bracing for a reaction from its members. BSIA President Thomas Foreman says, “We’ve been working with our members to get clarity and see if we can get assistance to deal with these new, imposed tariffs.”

He adds that he’s also been in discussions with the board of the Canadian Retail Building Supply Council, of which BSIA is a member, and with HARDLINES, to ensure that communications provincially and nationally are accurate and understood.

Ace brand gets push for independents at RONA show

MONTREAL — This year’s RONA show featured more than just RONA. It also put the Ace banner, which RONA licensed for Canada two years ago, front and centre.

The annual show, held September 1 at the Palais de congrès in Montreal, was the first one under RONA’s ownership by Lowe’s. Dealers in attendance included 16 brand-new prospects interested in the Ace banner.

Morrison stresses that Lowe’s commitment to Ace comes right from the top: Lowe’s President and CEO Sylvain Prud’homme told the dealers in a meeting before the show that Lowe’s will support the Ace brand for independent hardware stores. Morrison clarifies further: “Ace is more focused on the dealer. It’s focused on hardware, seasonal, and even LBM where it suits that dealer.” The RONA name, he says, will be more likely to appear atop stores that are home centres or contractor focused.

Morrison is confident that Lowe’s is bringing the Ace brand to market properly, as his team is focused on delivering more than a wide product range. Ace has a strong culture of customer service and retail best practices, which Lowe’s is working hard to introduce to dealers along with the products and pricing. That program is based on four pillars: differentiated product, investment in store modernization, commitment to training and education for staff, and leadership best practices for owners.

Morrison believes the Ace program gives them the tools to succeed. “The independent retailer that’s focused on their community and has the right tools can be very successful. We believe those tools lay with Ace.”

Digital retail leaders will share insights at Home Improvement eRetailer Summit

TRUMBULL, Conn. — The fastest growth in retail today is happening online. That is why some of North America’s top online eRetailers will share their stories at the first-ever Home Improvement eRetailer Summit, October 26 to 28, 2016 in Fort Lauderdale, Fla.

The event, which is geared to sellers of hardware and tools, storage and organization, home décor, home environment, building materials, outdoor living, and decorative hardware, will learn from the thought leaders in digital selling—and from each other—in a unique, curated environment.

It’s been developed by Sonya Ruff Jarvis of Jarvis Consultants, who is producing the event in partnership with Hardlines Inc. (yup, that’s us! —Editor).  

David Goldsholle, is the founder of HardwareandTools.com, a giant online hardware store that has more than 150,000 brand-name hardware products and tools. Goldsholle will focus on maximizing the customer experience through interesting and “real” content that resonates with the online shopper and elevates sales.
 
Adam Sinoway, Senior Director of Wayfair.com, represents a US$2.25 billion company that had 71% sales growth in 2015. Sinoway will share “A Business Model for Reinvention,” the fascinating—and sometimes harrowing—story of his company’s tremendous rise as an online retailer. He will talk about the opportunities that abound for e-retailing of home improvement products.

Lifestyle bloggers are the internet’s “front line” influencers, who can set the direction for maximum consumer response. Our panel of high-profile bloggers, led by blogger Lauren Kelp of LaurenKelp.com, will share tips to help you develop genuine content that is the lifeblood of successful online shopping sites.

Mag Ruffman, a well-known home improvement personality and video content expert, will provide one of the eRetailer Summit’s most compelling presentations. In her session, “How to crush your content marketing with inexpensive social video,” this popular celebrity, actress, and television host will offers a road map to creating engaging, shareable video.

The Home Improvement eRetailer Summit has been developed to connect home improvement manufacturers and distributors with pre-qualified online retailers who are interested in increasing online sales of home improvement products through collaboration and partnerships. It is an invitation-only event that will be held at the Hilton Fort Lauderdale Beach Resort, October 26 to 28 2016 in Fort Lauderdale, Fla.

Lowe’s divides services between Boucherville HQ and GTA support centre

NEWS UPDATE — HARDLINES continues to report on the changes taking place at Lowe’s Canada, including this important clarification of previously reported news. 

The Toronto-area office will remain the focus for the Lowe’s business, acting as a regional support centre overseeing the big boxes operating under the Lowe’s banner. It is led by Jim Caldwell, who formerly headed up furniture retailer The Brick. That office will maintain its own merchandising team. The Milton, Ont., distribution centre that Lowe’s purchased last year from Target will continue to serve the Lowe’s stores nationally.

The Lowe’s regional support centre in the Toronto area will also house some departments for the company nationally, namely real estate and HR support for retail.

The Boucherville site is the head office for Lowe’s Canada. It is also the wholesale distribution centre for sales to independents. Lowe’s will maintain a procurement team there for hardware and commodities, and a merchandising team for affiliate dealers, led by Head of Marketing and Merchandising Igor Halencak, who now reports to Alain Brisebois, executive vice president, affiliate dealers and shared services.

DID YOU KNOW…?

... that suppliers who want to increase their online business can get face-to-face with some of North America’s top eRetailers? Senior buyers from HardwareandTools.com, Wayfair, BuildDirect, Supply Hog, Sears.com, Kmart.com, and other online home sellers will join us October 26 to 28 in Fort Lauderdale. There, we’re presenting the first-ever Home Improvement eRetailer Summit, along with our amazing partner Sonya Ruff Jarvis (many of you will remember her from the National Hardware Show.) Suppliers and vendors who’d like to participate, and retailers who’d like to join us, please contact Beverly Allen: bev@hardlines.ca or 1-647-880-4589.

RETAILER NEWS

WINNIPEG — Sexton Group has a new address. Here it is: 1345 Kenaston Blvd., Winnipeg, Man., R3P 2P2. The new office is an open concept with no private offices. “We are a collaborative group and the open office will enhance communication,” said Steve Buckle, president of Sexton Group. “For some of us it’s a big change, but after a couple of weeks, everyone seems to be settling in well.” The move started on August 12 and was completed over a weekend. Proud of their new digs, the Sexton Group team extends an invitation to any visitors who may be traveling through Winnipeg to stop by and visit!

MISSISSAUGA, Ont. — Castle staff and their vendor partners gathered recently at the Club at North Halton in Georgetown, Ont., for the annual Castle Vendor Appreciation Golf Tournament. For the past seven years, Castle’s charity golf event raised money for the SickKids Foundation, and this year’s tournament raised $25,000 in charitable donations thanks to the generosity of Castle Vendor Partners and a corporate match by Castle Building Centres Group. Castle has raised in excess of $175,000 for the foundation.

OAK BROOK, Ill. — Ace Hardware posted Q2 revenues of $1.4 billion, an increase of 0.6% from the second quarter of 2015. Net income was $63.4 million, up $3.5 million, and the second highest in company history. “New store growth was the primary driver of our record revenue,” said John Venhuizen, president and CEO.

TORONTO — Sears Canada’s Q2 results indicate that the company is still on a slide. Revenue was $648.5 million in the second quarter, a decline of 15.6% compared to the same quarter last year. Same-store sales decreased by 5.5%, while core retail same-store sales decreased by 6.2%. Some of the loss in same-store sales was due to a decrease in big-ticket transactions such as major appliances, and lower-than-expected sales of new merchandise programs that were launched this spring.

TORONTO — Hudson’s Bay Co. reported a $142 million net loss for the third quarter, a sharp contrast with the $59 million profit it turned during the same period last year. The retailer’s European expansion and the addition of the online Gilt banner helped to boost consolidated sales by almost 60%, reaching $3.25 billion.

SUPPLIER NEWS
VANCOUVER — CanWel Building Materials has completed the previously announced acquisition of the business of Total Forest Industries, a pressure-treating plant in Hagersville, Ont. The acquisition solidifies CanWel’s presence in Ontario, where it also has treating facilities in Cambridge and Combermere. The takeover also advances the company’s ambitions to become more vertically integrated. CanWel now owns 10 treating plants in North America, several post and pole peeling facilities, two planer facilities, and 16 distribution centres across Canada and near San Francisco, Calif. In addition, it owns about 136,000 acres of private timberlands in Western Canada.

Malvern, PA — Three North American contractors travelled to Prague in early June to be recognized for exemplary craftsmanship using CertainTeed drywall products. Saint-Gobain, CertainTeed’s parent company, hosted its 10th international Trophy Awards ceremony, celebrating 89 projects from 35 countries. North American winners included Aaron Ensley of Oregon Interiors in Clackamas, Ore., and Timothy Vaughan of Paric Corporation in St. Louis. Chris Chisholm of Halifax-based Tartan Interiors represented Canada.

SADDLE BROOK, N.J. — Arrow Fastener’s pneumatic tools will appear on TV. They are being used on the FYI television series, Tiny House Nation, in two episodes. The program, which celebrates the trend of extreme downsizing, airs on Saturdays at 9 p.m. Arrow pneumatic tools are used to put specialty siding on the two tiny homes. “We are pleased to have been selected to help build these special homes,” said Bill Sokol, VP marketing for Arrow Fastener.

PEOPLE ON THE MOVE
At Goodfellow Inc., Sylvain Vachon has been named vice president, sales and marketing, effective September 19. Vachon will lead the Merchant, Manufacturer and Industrial Sales Team based in Delson, Que., and will be responsible for the co-ordination of the sales and marketing activities for all regions. His focus will be sales development and in particular new and emerging product development.

Jeremy Dawson has joined Rust-Oleum Consumer Brands Canada as national account manager. He was formerly with SodaStream Canada. (jeremy.dawson@rustoleum.ca; 416-524-0022)

IN MEMORIAM: MICHAEL CAPLAN
Task Tools founder Michael Caplan died September 6. He is survived by his wife Bearl, son Craig, daughter Hilary, and four grandchildren. Born in Hull, England, in 1931, Caplan arrived in Canada in 1955 and worked as a pilot and radio operator in the Northwest Territories. He married Bearl in 1962 and returned to England with her to take a management position there. Their two children were born during their five-year stay and the family returned to Canada in 1968. That year, Caplan bought a small company from his father-in-law that would become Task Tools. He was still working full-time in 2007, at the age of 76, when he was inducted into the Industry Hall of Fame of the Canadian Hardware & Housewares Manufacturers Association. He retired as chairman of Task Tools the following year. (In the early days of this publication, Mr. Caplan would call from time to time, simply to chat and discuss the latest news. His concern for our Hardlines business and his insights into the industry were always welcomed and valued. —Michael)

ECONOMIC INDICATORS
The standalone monthly rate of housing starts was 182,703 units in August seasonally adjusted, down from 194,663 units in July. The SAAR of urban starts decreased by 6.1% to 167,879 units. Multiple-urban starts decreased by 7.3% to 111,378 units and single-detached urban starts decreased by 3.7% to 56,501 units. Urban starts decreased in the Prairies, British Columbia, Ontario, and in Atlantic Canada, but increased in Quebec. Rural starts were estimated at a seasonally adjusted annual rate of 14,824 units. (CMHC)

OVERHEARD…
“Castle recognizes the importance of acknowledging the contribution of our supplier network to the success of Castle and understands the importance of strengthening these relationships. It is important to show gratitude to our suppliers for their dedication and their commitment to Castle.”
—Ken Jenkins, president, Castle Building Centres Group Ltd., on the success of Castle’s latest Vendor Appreciation Golf Tournament.

NOTED
Yeow! Early Bird Pricing has ended for the 21st Annual Hardlines Conference, but we can still offer you special pricing for being a Faithful HARDLINES Subscriber. So take advantage of the deals and join us for two incredible days of learning and networking—and our Outstanding Retailer Awards Gala Dinner! Click here now for more info and to sign up today!

OUT AND ABOUT
It’s been a very busy summer! The Team was in Las Vegas last month for the Orgill Fall Market, in Georgetown for the Castle Vendor Golf Tournament, and then to Montreal last week to attend the RONA show. This coming weekend, we’re heading to the Home Hardware Fall Market. Got a news tip or a new product? Let us know! Text Michael at 1-647-209-5663.

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