Small business hiring increases slowly

Hiring outlook remains solid; price cutting ending

February posted positive numbers in job growth, according to the National Federation of Independent Business, which reports a modest increase of .4 points in its latest Index of Small-Business Optimism, bringing the monthly reading to 94.5. Most notably, hiring and future plans to hire were solid and hopefully presage a string of steady job creation months this year. While historically weak, these relative gains signal good news for a sector still deeply encumbered by weak sales. Still, only a net 9 percent of small-business owners surveyed expect that business
conditions will improve over the next six months.

“This is not a reading that characterizes a strongly rebounding economy,” said NFIB chief economist Bill Dunkelberg. “But it is the third best reading since the fourth quarter of 2009 when the economy was expanding rapidly. So, it gives us cause for some real optimism. Apparently the future is looking brighter for a few more small-business owners, although much will depend on what Congress does this year.”

The other significant change in February’s reading is the end of a long period of price cutting. This signals a return in the months ahead to increases in average prices as supply adjustments restore pricing power. More small businesses reported that their inventories were “too low” as opposed to “too high,” indicating, also, an end to the inventory adjustment cycle which began when consumers started saving and cut consumption spending by nearly half a trillion dollars. Going forward, there will continue to be upward pressure on prices as demand strengthens. As growth improves, price hikes will stick as owners try to restore profitability.

Some other highlights of February’s Optimism Index include:

-Access to credit still appears to be a low priority for small businesses, with only 4 percent reporting financing as their top business problem. Overall, 92 percent reported that all their credit needs were met or that they were not interested in borrowing. Eight percent reported that not all of their credit needs were satisfied, and 51 percent said they did not want a loan (12 percent did not answer the question and might be presumed to be uninterested in borrowing as well).

-Reports of positive earnings trends improved, albeit only one point in February, registering a net negative 27 percent. This slight increase shows that far more owners report that earnings are deteriorating quarter on quarter, instead of rising.

-Although consumer spending appears to have risen at a robust 4 percent rate in the fourth quarter, small businesses did not appear to have benefited much from the spending gains. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months was unchanged at a net negative 11 percent. Unadjusted, 21 percent of all owners reported higher sales (last three months compared to prior three months, unchanged) while 37 percent reported lower sales (up one point).

-Overall, sales trends are not yet supportive of a widespread recovery in the small-business sector. Usually a leader in a recovery, housing starts have remained flat, and can be held accountable for much of the missing new jobs.

The NFIB report is based on the responses of 774 randomly sampled small businesses in NFIB’s membership, surveyed throughout the month of February.

84 Lumber closes 10 more locations

Most locations are in the Southeast

84 Lumber, one of the country’s largest construction supply companies, has closed 10 more facilities today, seven of them in the Southeast, according to Pro Sales magazine.

The company shut these locations:
 Brooksville, Fla.
 Deland, Fla.
 Fort Pierce, Fla.
 Winder, Ga.
 South Haven, Miss.
 Springfield, Mo.
 Farmingdale, N.J.
 Tulsa, Okla.
 Anderson, S.C.
 Karns, Tenn.

"These 10 stores have consistently underperformed for quite some time, and while we do see some positive movement in the housing andconstruction markets overall on a national basis, these markets continue to either lag severely with no sign of a significant rebound that fits ourbusiness model, or we have multiple stores in the region and we can handle the existing store business from other locations," Jeff Nobers, 84's vice president of marketing and public relations, wrote iin an e-mail to ProSales. The company plans to sell the properties.

The closure reports come about two weeks after 84 Lumber closed branches in Winston-Salem, N.C., and Richmond, Va. The company now has 265 locations.

For full story click on to www.prosalesmagazine.com

ProBuild expands its construction reach

Construction supplier is owned by Fidelity Investments

Everyone knows Fidelity Investments as one of the largest financial service companies in the world. But few know that its parent company, FMR LLC, owns a dozen diversified companies, including a tomato farm in Maine, a limousine service, a temporary staffing firm, and the second largest building materials supplier company in the country, ProBuild Holdings.

ProBuild, headquartered in Denver, Colorado, is owned by Fidelity’s investment arm, Devonshire Investors. Until recently it was the largest building supplies company in the U.S. according to ProSales magazine http://www.prosalesmagazine.com/. That changed when ABC Supply, ProBuild’s major competitor, completed its acquisition of Bradco Supply last week.

But ProBuild, despite the downturn in construction spending, continues to grow in selective geographical areas.

Also last week, ProBuild reached an agreement to purchase some of the assets of Chopp Lumber, a building materials supplier based in Waldorf, Md., and also announced the opening of a new millwork facility in San Antonio, Texas.

The transactions give ProBuild an increased presence in two of the top 20 housing markets in the country, both of which analysts predict will see significant growth in the next several years.

The Maryland location will supply trusses, wall panels and lumber to the residential and commercial markets of the greater Washington, D.C market and southern Maryland. The new location follows ProBuild's opening of a components manufacturing facility in Winchester, Va., this past March to serve the western and northern segments of Metro DC.

The new millwork facility in San Antonio enables ProBuild to serve the market more quickly and efficiently than had been the case from its millwork operation in Austin.

"These are two very important markets for us," said ProBuild CEO Paul Hylbert. "Our teams in both areas understand this, and the combination of their local market expertise and ProBuild's national scope will be of tremendous value to our customers in these markets."

The new facilities in Maryland and Texas build upon ProBuild's national presence of more than 470 centers in 42 states and follow its acquisition in May of Oso Lumber in the greater Seattle market. ProBuild has sales of more than $4 billion and employs nearly 12,000.

But ProBuild, like many construction distributors, has been severely impacted by the four-year-old housing downturn. The company has closed more than 60 locations in recent years but continues to grow through acquisitions, expanding its geographical reach.

A recent story in the Boston Globe http://www.boston.com/ pointed out that the deep decline in construction, has caused ProBuild to accrue hundreds of millions of dollars in losses for Fidelity.

The Globe based some of its story on a Standard & Poor's report that said Fidelity spent $345 million over six months in 2009 to cover losses at ProBuild. The Globe article said it could be on the hook for another $105 million through this year under a recapitalization plan for the firm, quoting a recent story from the Reuters news agency, citing a confidential prospectus for a Fidelity debt offering. The report predicted ProBuild will again lose money this year, though not nearly as much as it did in 2009.

Company officials said ProBuild is positioning itself for growth when the housing industry recovers, with an experienced management team in place and the hiring of key sales personnel in its facilities throughout the country.

Meanwhile, ProBuild’s parent company, Fidelity, continues to do extremely well in a challenging economic environment. Its financial services group remains solidly in the black. Fidelity reported operating income of $2.5 billion last year, up from $2.4 billion in 2008, even though its revenue fell 11 percent to $12.9 billion. Standard & Poor’s noted that Fidelity’s operating margins were higher because of both the stock market rebound and significant reductions in headcount. Fidelity cut its worldwide payroll from 46,500 employees at the end of 2007 to about 37,000 today, according to the Globe report.