June 18, 2018 Volume xxiv, #24

“Write it on your heart that every day is the best day in the year.”
—Ralph Waldo Emerson (American essayist, philosopher, and poet, 1803-1882)

IN THIS ISSUE:

• CertainTeed Gypsum Canada’s latest suit targets 54-inch drywall dumping

• Knauf’s $7 billion acquisition of USG promises continued support of North America

• Hardlines’ Publisher Beverly Allen to retire

• When it comes to e-commerce, what do consumers really expect from independents?

  PLUS: B.C. RONA dealer expands, Peavey CEO lost in the woods, Kent Building Supplies seeks roundabout solution, Home Depot to spend $1.2 billion, Bunnings finalizes exit from U.K., Global DIY Summit, CanWel completes acquisition, Tom Bell joins Sexton, McCluskie hits the road at Coast Distributors, changes at Ply Gem, housing starts fall, and more!
  
  

CertainTeed Gypsum Canada’s latest suit targets 54-inch drywall dumping

MISSISSAUGA, Ont. — CertainTeed Gypsum Canada has filed an anti-dumping “retardation” complaint against U.S. importers of 54-inch wide drywall into Western Canada. This is the second drywall case filed with the Canada Border Services Agency in recent years. Last year, the Canadian International Trade Tribunal (CITT) validated CertainTeed’s first anti-dumping complaint against U.S. importers of 48-inch wide board in Western Canada, resulting in duties at levels ranging from 94.6% to 324.1%.

Now CertainTeed contends that the same thing is happening with 54-inch drywall. The suit claims that U.S. manufacturers are selling into the Western market at prices substantially below what they charge to their domestic U.S. customers. This practice “is preventing the company from investing in domestic 54-inch manufacturing capability by suppressing 54-inch prices,” says CertainTeed in a release. “This market suppression is destroying the economic viability of, and thus ‘retarding’, any 54-inch manufacturing investment in Western Canada.” Because 54-inch drywall was not included in the 2016 claim, dumping continued—and even increased, says CertainTeed—since that time.

“U.S. dumping of 54-inch drywall in Western Canada, is distorting the Western Canadian drywall market, and preventing new investments and jobs,” says Matt Walker, CEO of CertainTeed Canada. “We believe we have a very strong case that will restore free and fair trade and create new jobs in Western Canada.”

CertainTeed says the 2016 complaint and resulting duties have had a positive impact on Western Canadian 48-inch wide drywall manufacturing, even though the Minister of Finance has implemented a duty remission of 32.17%. This reduces the calculated dumping duty levels and allows U.S. importers to keep selling 48-inch drywall in Western Canada. CertainTeed Gypsum Canada says this has resulted in a continued price impact from U.S. dumping, although at a lesser level. As a result, the company says it has been able to rehire plant shifts that were cut over recent years due to the dumping injury, and has increased staff at its three Western drywall plants, in Vancouver, Calgary, and Winnipeg.

Knauf’s $7 billion acquisition of USG promises continued support of North America

IPHOFEN, Germany & CHICAGO — Building materials maker Knauf is buying all outstanding shares of drywall and ceiling products maker USG for $44 per share in a deal that will total $7 billion, but promises good news for the Canadian operations. A family-owned business based in Germany, Knauf operates 220 factories worldwide with revenue in excess of $8 billion.

Knauf did not have to arrange any financing for this. The transaction will be financed from existing cash and committed debt financing. It expects the deal to close early in 2019.

USG will continue to be managed locally in the U.S. as Knauf intends to maintain USG’s existing corporate headquarters in Chicago and its facilities in North America. Those facilities include its Canadian operations, CGC, based in Mississauga, Ont. According to a joint release announcing the takeover, Knauf plans to make significant long-term investments in those operations.

Hardlines’ Publisher Beverly Allen to retire

SPECIAL REPORT — Beverly Allen is retiring. A fixture at Hardlines Inc. for more than two decades, Beverly came aboard in the company’s second year to take over managing the company, securing its solid financial footing that ensured the years of growth to come.

Within a few short years, she expanded her talents to manage sales for the HARDLINES newsletter, annual conference, a growing online presence, and a new magazine, Hardlines Home Improvement Quarterly. As publisher, with business partner Michael McLarney, she guided the company to become the trusted voice of the industry for retailers and suppliers alike.

As part of Hardlines’ efforts to get out and be an active part of Canada’ home improvement industry, Beverly became a familiar face at events, stores, and shows across the country. But she also developed many important relationships with industry leaders around the world, from the European retail federation to the French manufacturers’ association and the Lowe’s International buying team. She managed to do all this as a woman in an industry where women were scarce. Her profile as a well-known spokesperson for this industry made her a mentor for many other women entering the industry behind her.

Beverly has always been able to combine her business skills with the vision of a true artist. In fact, she has degrees in both fine arts and in commerce. Not only could she determine the fiscal viability of new projects, she was an integral part of honing and cultivating those projects at the creative level.

Now, she is taking that creative side and investing in it in her retirement. Beverly has been developing a career in the arts as an artist and painter. In her new pursuit, she has quickly demonstrated the same skill and talent she had for steering the ship at Hardlines. She’s already had her work displayed in shows in Toronto, Chicago, Las Vegas, and Berlin.

We’re grateful for all Beverly has done for Hardlines and for the industry, and wish her the best in her next chapter. Her last day will be June 26. You can reach her by email until then or on her cell: 647-880-4589.

When it comes to e-commerce, what do consumers expect from independents?

SPECIAL REPORT — Home improvement dealers say their customers are asking for ways to complete their transactions online. According to a survey by the North American Retail Hardware Association, ship-to-home is something many retailers are working towards offering, but the option to buy online, pick up in store is still important, says Dan Tratensek, EVP of publishing at the NRHA.

Consumers have also expressed that they would like online access to real-time information on product availability in the store. They still want to visit the store, where they can get feedback and advice on their projects, but they don’t want to waste a trip if what they’re looking for isn’t in stock. And the other features they’re looking for are more complete product information and reviews.

Tratensek says your web presence doesn’t have to be the most cutting edge. In fact, some consumers appreciate that their local retailer isn’t as slick or high-tech as the bigger chains or corporate stores. But dealers still need to make that effort to listen to what their customers are looking for and do their best to deliver on that. It’s just part of how customer service has evolved with the internet; the retail experience now begins before customers even walk into the store.

“It’s great to see that 96% of independent retailers have established a web presence, but like when you plant a garden, you can’t just plant the garden and walk away,” says Tratensek. “You have to nurture it and cultivate it if you want it to continue to yield for you.”

Tratensek has been confirmed to present again at this year’s Hardlines Conference. He will report on the latest research by NRHA on the trends and business conditions affecting independent dealers in North America. For more information about the 23rd annual Hardlines Conference, at Queen’s Landing in Niagara-on-the-Lake, Ont., click here.

(NRHA is represented in Canada by Hardlines. One of the key benefits of membership is the product knowledge training programs for employees. Training programs are available in core hardware and building materials categories. For more information on the NRHA, please click here.)

DID YOU KNOW…?

... that the North American Retail Hardware Association is represented in Canada by Hardlines? One of the key benefits of NRHA membership is the product knowledge training programs for retail employees. Training programs are available in core hardware and building materials categories such as customer service, selling skills, increasing transaction size, and decreasing employee turnover. For more information on the NRHA, visit www.nrha.org or www.hardlines.ca/nrha.

RETAILER NEWS

RED DEER, Alta. — Doug Anderson, CEO of Peavey Industries, found himself wandering the wilderness of Alberta beginning on June 15, when he and three other CEOs were airlifted into the Rockies in support of the province’s air rescue program. The only way they can be rescued is to raise $100,000 for STARS (Shock Trauma Air Rescue Society). STARS is a charitable organization that cares for and transports critically ill and injured patients. The fundraiser will help to keep their helicopters flying. “Peavey Industries has chosen to support STARS because of their important work, which serves rural areas, covering every Peavey Mart and MainStreet Hardware store, from B.C. to Manitoba,” Anderson says. You can check out Anderson’s progress or donate by clicking here.

SYDNEY, N.S. — A decision from Cape Breton Regional Municipality on a rezoning application from Kent Building Supplies is expected in August. Kent is seeking a land use by-law amendment that would allow it to purchase a 100-acre tract between the Mayflower Mall and a housing subdivision. The company, a private holding of the Irving family, hopes to build a new store on the lot, with the possibility of further commercial and residential building down the road. Municipal planner Karen Neville told the Cape Breton Post that further development would have to wait for the longer term. The question is complicated by a provision in the Municipal Planning Strategy insisting that new developments be accessible by a traffic light. Kent is pushing a roundabout as an alternative option.

MONTREAL — A report commissioned by the city of Montreal calls for wide-ranging reforms to stimulate retail on the island of Montreal. The 30-page brief, put together by a team of retailers and researchers headed by Mouvement Desjardins CEO and President Guy Cormier, argues the industry has been neglected by provincial and local governments. Mayor Valérie Plante, whose left-leaning Projet Montreal party took over from the business-friendly Denis Coderre administration in December, struck the committee in order to devise a plan to help retailers and boost development. Among the group’s recommendations are better co-ordination of construction projects, tax relief, and simplifying regulations.

ATLANTA — Home Depot plans to spend around $1.2 billion over the next five years to upgrade its online shopping capabilities. Supply chain exec Mark Holifield says the company is making the investment to add 170 distribution facilities so that it can reach 90% of the U.S. population in one day or less. The company also plans to build seven e-commerce fulfillment centres to help speed up deliveries to customers’ homes or job sites. “This is part of an $11 billion overall plan to re-engineer our company to ensure that we are prepared for the future in retail,” says Holifield.

HOPE, B.C. — A RONA affiliate in Hope has opened a new location. Owned since June 2017 by Fraser Valley Building Supplies (FVBS), the store has been relocated to a larger building in order to accommodate an expanded inventory. The new store features a 7,500-square-foot retail area, including a 5,000-square-foot indoor building materials section and a drive-through outdoor lumber yard, and offers 15,000 products. (FVBS President Ray Cyr will share his story at this year’s Hardlines Conference, yet another reason not to miss this crucial event. For more information and registration, click here!)

MELBOURNE — Wesfarmers, the Australian company that owns big box retailer Bunnings, has finalized its exit from the U.K. market. Wesfarmers bought up two dozen Homebase stores in 2016 for AU$705 million ($698 million). It quickly began converting the stores to the Bunnings name. But the conversion just didn’t take off, and the company ended up losing an estimated AU$350 million ($346 million). Wesfarmers turned around and sold off the Homebase business to Hilco Capital. The outcome is somewhat ironic: Bunnings made the move into the U.K. market shortly after successfully standing up to Lowe’s unsuccessful bid to enter its home turf in Australia.

BARCELONA — Industry leaders gathered in Barcelona last week for the Global DIY Summit. Considered Europe’s leading international event for retailers and manufacturers in the home improvement and garden centre industry, it provided an opportunity for those leaders to exchange views on current and future developments within the global market. One of the keynotes was Canada’s own Sylvain Prud’homme, CEO of Lowe’s Canada. The Summit was jointly hosted by EDRA (European DIY-Retail Association) and fediyma (European Federation of DIY Manufacturers). 

SUPPLIER NEWS
VANCOUVER — CanWel Building Materials Group Ltd. announced this week that its wholly owned subsidiary, CanWel Building Materials Ltd., has acquired an Oregon lumber pressure treatment plant. The seller of the Junction City facility was Superior Forest Products, Inc., based in Doreno, Ore. In a release, CanWel Chairman and CEO Amar Doman said the deal “fits right in line with our strategy of adding scale and volume to the U.S. West Coast in pressure treated lumber and specialty wood products.”

PEOPLE ON THE MOVE
Tom Bell has joined the Sexton Group as business development manager, Western Canada. In his new position, he will work to identify and develop strategic partnerships and generate growth opportunities in the Winnipeg-based buying group’s member and vendor communities. Bell brings 30-plus years of experience in wholesale, distribution, buying group, and retail home improvement environments, most recently as an independent retailer with Jeni’s Food and Hardware in LaSalle, Man. Prior to opening his own business, Bell worked at MacMillan Bloedel, North American Lumber, and even had a stint in his early career years with Sexton. He is also an active member of the Western Retail Lumber Association. (bell@sextongroup.com)

Anthony Snell has been named general manager of Coast Distributors (Nanaimo) Ltd. He will assume his new responsibilities on July 9 and will succeed Brad McCluskie, owner and general manager. Snell brings years of experience on the purchasing side, having been employed with Petcetera before coming to Coast two years ago. Since then, he has expanded Coast’s import business and expanded the marketing department. With Snell taking over day-to-day duties, McCluskie will take the opportunity get back on the road, building the business and meeting with customers.

A number of management changes have taken place at Ply Gem, following the $2.4 billion buyout of the window, door, and siding company at the beginning of 2018 by San Francisco-based private equity investment firm Clayton, Dubilier & Rice. Gone are Michael Slapman, SVP finance; Tara Kelly, VP of HR; John Vukanovich, VP marketing; Ron Plant, Ontario sales manager; and Rosemary Fernandes-Walker, national sales manager, retail.

IN MEMORIAM
Robert Clair (Bob) McKerlie died at home last week at the age of 91. A veteran of D.H. Howden & Co. Ltd., McKerlie rose through the company’s buying ranks to become senior vice-president of Sodisco Group Inc. He was inducted into the CHHMA Industry Hall of Fame in 1993. McKerlie was predeceased by his wife Betty (Ardy) in 2011. He is survived by his children and in-laws: Bob and Deborah, Dave and Chris, and Brian and Judy, along with eight grandchildren and two great-grandchildren.

ECONOMIC INDICATORS
Housing starts fell to their lowest level in a year in May, with a drop of 9.8% seasonally adjusted from the previous month. Multi-unit starts dropped 15% to 124,957 units, while the single-detached segment moved up slightly, by 2%, to 70,655.The biggest drop was in Ontario, down 22%, while British Columbia was up 3%, most of that in the Vancouver area. (CMHC)

NOTED
The Canadian Press has reported on the growing number of Canadian online merchants who are expanding into physical store spaces, through pickup locations, pop-ups, and showrooms, as retailers learn not to put their eggs in one basket. Despite dire warnings about the fate of bricks-and-mortar retail, a survey last year by research firm CROP found 68% of Canadian shoppers prefer to buy in store. Brent Barr, who teaches branding at Ryerson University, said that most people aren’t aware that only 8% of sales are made online.

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