84 Lumber sales drop by $1 billion

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If the Pittsburgh region, in general, has escaped the devastation that has crushed the home-building markets in other parts of the country, 84 Lumber Co. has not.

The Washington County building materials supply company that operates in markets around the nation yesterday reported that total sales last year dropped to $2.1 billion, down $1 billion from the previous year.

That continues a downward trend. The private company's $3.1 billion in sales in 2007 had fallen from $3.92 billion in 2006.

About 95 percent of 84 Lumber's business comes from new housing construction, said Jeff Nobers, vice president of marketing and public relations. "Our sales are going to go as that market goes," he said.

Sales of newly built single-family homes dropped 14.7 percent in December, according to the U.S. Commerce Department.

Meanwhile, overall housing starts last year were down more than 30 percent from the previous year, according to the U.S. Census Bureau and the Department of Housing and Urban Development.

The subprime mortgage crisis stalled out hot markets in the southeastern and southwestern states over the past couple of years, and the situation did not improve when the nation's overall economy ran off the road last fall. Rising unemployment and a credit crisis have made people hesitant or unable to buy new homes.

Many companies involved in the industry have been hurt, and the National Association of Home Builders reported that 60,000 people attended the group's annual trade show two weeks ago in Las Vegas, down from more than 90,000 last year.

In the past couple of years 84 Lumber has carried out several rounds of store closings and cut jobs there and at its headquarters in Eighty Four. Mr. Nobers said the company now has 4,900 employees, 319 stores and six component plants in more than 150 markets around the country.

"From a market share standpoint, we feel we've expanded market share in many of these markets," Mr. Nobers said, in part because regional and local competitors have gone out of business. Shifting material prices has cut into profit margins on those sales.

Discussions among those attending the recent home builders show weren't exactly optimistic, he said, but people seemed to agree on one thing. "If we haven't bottomed, we're darn close to it." In 2009, many expect the home-building market to plateau, not getting much better or much worse, he said.

The home builders association said an index that tracks builder confidence hit a record low in January. "Clearly, conditions in the nation's housing market aren't getting any better," said Chairman Sandy Dunn, a home builder from Point Pleasant, W.Va., in a mid-January statement calling for government action.

The association, with support from members such as 84 Lumber, is pressing Congress to slow down the foreclosure rate, help qualified buyers get low-interest loans and extend housing tax credits. The theory is that demand for new homes won't increase until there are fewer existing homes on the block.

A company more than 50 years old, 84 Lumber moved aggressively a few years ago to expand into markets where new home construction was much more in demand than in the slow-growth areas of Pittsburgh and the northeast quadrant of the country.

But slow-growth areas may have their advantages. Mr. Nobers said, "The Pittsburgh market, the northeast market, has continued to perform very well through all of this."

Teresa F. Lindeman can be reached at tlindeman@post-gazette.com or 412-263-2018.


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