September 26, 2016 Volume xxii, #36

“Only the mediocre are always at their best.”
—Jean Giraudoux (French diplomat and novelist, 1882-1944)

IN THIS ISSUE:

• Gypsum tariff is creating widespread shortages

• Home Hardware gets serious about the building materials department

• CertainTeed responds to industry concerns about gypsum tariff complaints

• Building materials, lawn and garden all show healthy growth in 2015

• PLUS: Discounted room rate expires soon for Niagara Falls conference, Ace store opens in B.C., RONA locks horns with CRA, Home Hardware driver wins, OC and AFA strengthen deal, Canadian Tire’s Greg Hicks gets new role, Robert Greene joins Jacobs & Thompson, new housing —and more!
  
  

Gypsum tariff is creating widespread shortages

NATIONAL REPORT — Following the imposition of a tariff on gypsum drywall sold in Western Canada, reports of shortages are coming in from as far away as Ontario.

Suppliers in Ontario have confirmed that product is being shipped out west, creating shortages locally. One supplier calls the current state of affairs “complete chaos” as builders and contractors look for new sources of supply.

They are also faced with huge increases in raw materials for jobs that would have been quoted on previous to the imposition of the tariffs. The Canadian International Trade Tribunal found reasonable evidence of gypsum dumping by U.S. suppliers selling into Western Canada and imposed the tariff on drywall imports to that part of the country. This action is increasing drywall costs by as much as 50 to 60%. As the only drywall producer with manufacturing in Western Canada, CertainTeed Gypsum Canada filed the original complaint in opposition to the dumping.

A spokesperson for Georgia Pacific, one of the suppliers required to pay the tariff to the Canadian government, said, “We intend to strongly oppose the imposition of these import measures. GP objects to Canadian government interference in the market,” adding that “we believe in a free market.”

Even though that market spans two borders, with built-in disparities in pricing and availability, the GP spokesperson said the prices paid by U.S. and Canadian customers “are comparable,” and that the tariff was extreme. “The tariff charges do not reflect the disparity in the pricing and regional differences.”

Home Hardware gets serious about the building materials department

ST. JACOBS, Ont. — Twice a year, at Home Hardware's dealer markets, a model store up in the mezzanine of the company's giant distribution centre showcases the latest merchandising. But one setup in particular is entirely new for the Home dealers: a program for lumber and building materials. Home Hardware CEO Terry Davis says the company has always been solidly focused on hardlines, but did not provide its dealers with a plan for setting up LBM in their stores.

Until now, when working with new stores, Home Hardware has typically drawn up a floor plan that has provided detailed planograms for the hardware and housewares departments. But building materials had been left up to the dealers themselves, who would often rely on their vendors to merchandise the sections.

Now that has changed, thanks to a deal struck with Burlington Merchandising & Fixtures Inc. “We said, now we’ve got to merchandise building materials the way we merchandise hardlines,” says Davis. “We’re taking the same kind of merchandising approach to LBM as we do for the rest of our products.”

The model store’s new section includes an eight-foot section with giant vertical “drawers” that have sample doors customers can pull out and examine. Plywood sheets get similar treatment, while moulding and even steel studs are displayed. To make the section as attractive as possible, project-oriented feature ends are used to catch customers’ attention and draw them to the products on the shelves.

According to Greg Thomas, general manager at BMF, two main sets have been developed, a convenience assortment for smaller stores and a dominant assortment. In each case, the LBM department is moved toward the front and centre of the store. As LBM becomes more important for the dealers, the move, he says, just makes sense.

“We used BMF’s experience in LBM to develop merchandised sets of LBM products,” explains Thomas. “In the model store we didn’t have the space to display a full set but we were able to present an example of how the products are best merchandised.  We installed our fixture systems and utilized specific accessories that have been created by BMF to better merchandise LBM products.”

CertainTeed responds to industry concerns about gypsum tariff

SPECIAL REPORT — It may be a case of “don’t shoot the messenger.” CertainTeed Gypsum Canada pointed the spotlight on illegal dumping of gypsum wallboard in Western Canada, but the resulting tariffs are being blamed on CertainTeed.

In a statement issued last week, the company’s leadership says they are “disappointed and surprised at the recent call for boycotts of our drywall products.” The statement maintains that “dumping creates material injury to domestic manufacturers,” and that the company’s actions are “meant to stop this practice and bring a level playing field and fair competition to the Western Canadian marketplace.”

CertainTeed is trying to keep the issue focused on the letter of the law, which did indeed identify the occurrence of U.S. suppliers dumping product, i.e., selling it in Western Canada “at prices materially lower than those at which they are sold in the U.S.” This puts domestic suppliers at a disadvantage and threatens manufacturing jobs in the domestic drywall manufacturing sector.

Building materials, lawn and garden all show healthy growth in 2015

OTTAWA — Sales at building material and garden equipment and supplies dealers rose 7.7% in 2015, the category’s largest sales gain since 2006. According to Statistics Canada’s annual review of retail trade, hardware and  lawn and garden products were up 8.6% in 2015, led by lumber and other building materials (+9.1%), and plumbing, heating, cooling, and electrical equipment and supplies (+13.0%).

According to the Consumer Price Index, the homeowners’ maintenance and repairs index grew by 2.8% in 2015, following a 1.0% increase in 2014.

Building material and garden equipment and supplies dealers increased their market share for hardware and lawn and garden products by 1.3 percentage points in 2015, while general merchandise stores posted a decline of 1.4 percentage points in the market share for the same commodity group.

Increases in home building contributed to stronger sales for the LBM sub-sector, with the number of new residential construction permits rising 1.1% in 2015.

Building material and garden equipment and supplies was also one of the sub-sectors that showed the strongest gains in hiring in 2015. Dealers increased staffing levels overall by 2.6% last year. 

DID YOU KNOW…?

... the 21st Annual Hardlines Conference is just three weeks away? Great speakers, amazing networking, and guaranteed incredible opportunities to get face-to-face with customers and colleagues to build your business. Plus: it’s in Niagara Falls—coolest location ever! Sign up right now, before all the Falls-view hotel rooms are gone! (Seriously, the deal with the hotel for affordable rooms ends this week!)

RETAILER NEWS

WINNIPEG — Ace Hardware has opened another store, this one in Lake Country, B.C. Lake Country Ace Hardware had its grand opening recently, following a soft opening at the end of July. The 5,100-square-foot store has been designed to serve the local community with everyday home maintenance needs, as well as an extensive array of paint, lawn and garden, and lumber and building materials. “We are extremely pleased and proud to welcome this dealer to the dealer family,” said Bill Morrison, divisional vice-president of Ace Canada. “They are focused on the needs of their community and have some great ideas for the future.” The town had been without a building centre since another store closed in 2014.

OTTAWA — RONA has spent the last several months in a legal conflict with the Canada Revenue Agency over the confidentiality of client records from its contractor business. The feds are investigating the underground economy and want a complete list of participants in the company’s contractor program. At RONA, 1,277 contractors who have missed at least one tax return between 2008 and 2012 have come under scrutiny in the government investigation. RONA protests that the investigation amounts to bullying of the industry, but most of its competitors, including Canac, Patrick Morin, and BMR, have already handed over customer data.

BRANTFORD, Ont. ― Home Hardware driver Bryon Winfield clinched the grand championship at the National Truck Driving Championship, held recently at Brantford Municipal Airport. Competitors from Ontario placed in all but one category, with Home Hardware winning the Team Award. Winfield previously placed first in his division in the Ontario finals this summer.

SUPPLIER NEWS
TORONTO —Owens Corning Canada and AFA Forest Products have extended their distribution agreement. AFA will be the exclusive less-than-truckload (LTL) distributor of Owens Corning Foamular extruded polystyrene foam in Canada. The companies have also agreed on two-way exclusive distribution of the OC shingle line. Owens Corning will continue to negotiate and set buying group programs for Foamular, with AFA in charge of billing. All pricing and programs for shingles will be administered by AFA. AFA will continue to act as LTL provider for OC Fiberglas Batt and AttiCat Blown-In Insulation, so that all three products will be available exclusively through AFA in 2017. Taiga Building Products will continue to act as foam LTL distributor for the remainder of 2016.

PEOPLE ON THE MOVE
Canadian Tire has promoted Greg Hicks to the new role of group senior vice president, consumer products and retail experience. In this role he will oversee the company’s general merchandise and automotive businesses and take on the responsibility for its store experience. At the same time, Oliver Horton has been promoted to SVP, general merchandising, and Andrew Davies to SVP, automotive. Both will continue to report to Hicks.

Robert Greene has joined Jacobs & Thompson Canada as vice president consumer products division. Previously, he held vice president roles at RCR International Inc.

Lowe’s Canada has appointed Antonio (Tony) Cioffi as senior vice president for administration and group financial officer. He was previously CFO at ADT Canada. In his new role, he will lead all finance-related activities, as well as analysis and reporting for company-wide operations, loss prevention, internal audit, corporate accounting, and credit treasury. He reports directly to President and CEO Sylvain Prud’homme for day-to-day business and has a direct line to Doug Jennings, group financial officer.

Bélanger-Upt has announced the appointment of Harry Kandilas as CEO. He previously served as CEO of American Standard Brands Canada. Kandilas is also a member of the Canadian Institute of Plumbing & Heating and the Canadian Home Builders’ Association.

ECONOMIC INDICATORS
The value of investment in new housing construction totalled $4.5 billion in July, up 5.9% from the same month in 2015. The advance at the national level was attributable to higher spending on apartment and apartment-condominium building construction (+13.1%), single-family construction (+1.8%), and row house construction (+8.8%). In contrast, investment in semi-detached dwellings declined year over year for the 15th consecutive month, down 3.4% in July. The only provinces to record gains were Ontario (+26.6%) and British Columbia (+36.8%). (StatCan)

U.S. housing starts in August were at a seasonally adjusted annual rate of 1,142,000. That’s down 5.8% from the previous month, but up 0.9% over August 2015. The number of building permits for housing reached 1,139,000 seasonally adjusted, off 0.4% from July, and down 2.3% from August 2015. (U.S. Census Bureau)

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