He talks about how being a private company has allowed 84 Lumber to make adjustments for survival that will position it for strength in years to come.

Referring to lumber prices, Joe says they’re very low right now, in sync with the fact that home prices have fallen by as much as 40% or more in some locations. What’s more competition from SOBs, he says, are another source of pressure. He corrects himself later–acknowledging he meant to say OSBs (oriented strand board).

• ProSales senior editor Andy Carlo has this take on Hardy’s remarks.

Among other things, the event in hindsight serves as a bright-line moment that separates a 15-year housing boom from a bust whose duration no expert can confidently predict, and whose ravages are still being felt and dealt with.

Economics aside, Katrina marked first the exodus of investor buyers from residential real estate and, subsequently, the meltdown of mortgage finance’s international house of cards, which seemed to hiccup one moment and contract double-pneumonia the next.

Almost four years later to the month, amid a delicate balance of morale, movement forward, and memory, the wards, parishes, and neighborhoods of the Big Easy may once again serve as a metaphor–but not just a metaphor–for a painfully slow but sure show of irrepressible resiliency–more like obstinacy–that must foreshadow any noteworthy measure of re-stabilization, not to mention recovery.

Click image to access Make It Right Foundation site.

Down in the Lower 9th, the vaunted Make It Right Foundation, backed by a $5 million bump each from Brangelina and Tom Darden of Cherokee Investments as well as contributions from a number of other donors, intrepidly makes progress as it makes headlines. Some 18 homes–of an intended 150–are either done or under construction, with a number of duplexes scheduled to break ground in August. Still, at a cost of $350,000 or more per home, and a selling price at a fraction of that, the Make It Right model, while laudable in its mission, is far too expensive and time-consuming to be scaleable in its execution.

Symbolically, efforts like Brad Pitt’s, and those of Branford Marsalis and Harry Connick Jr.–who’ve teamed up with Habitat for Humanity to create “Musicians’ Village” for musicians who lost their homes to the hurricane–may work to call attention of the world outside New Orleans for the continued need for help.

But they hardly serve as a self-sufficient, organic market-based approach to solving the sorry Jack-O-Lantern look of so many neighborhoods where many homes still sport FEMA search marking system badges, and others are either “scraped” to the slab or a still-standing, termite-ridden, mold hotel awaiting inevitable bull-dozing.

A middle-class, integrated neighborhood called Filmore (in New Orleans’ Gentilly 6th District), up toward Lake Pontchartrain and just east of the huge City Park, may well soon reflect a new stage of the city’s no-quit mentality.

Former JMP Securities investment group director Phil Whitcomb is working with a S.W.A.T. team of real estate development and construction operations folks on a concept that, if it gets buy-in from important neighborhood associations and local influencers, could pump the blood of life into a 52-block area bordered by Bayou St. John to the west, Robert E. Lee Boulevard to the north,the London Avenue Canal to the east, and Filmore Avenue to the south.

Pratt Park would get a Promethean make-over.

The idea–in contrast with the headline-grabbing Make It Right initiative–would be to home-grow a neighborhood transformation. It would be a mash-up of the best advantages of scaled production home building and economic redevelopment at the street-by-street level to create a sustainable extreme community make-over – jobs and affordable, energy-efficient homes where residents adopt a reinvigorated stake in their place.  The neighborhood even has a built-in park, Pratt Park, which would morph into a prized playground and park facility in Whitcomb’s blueprint for Filmore’s renaissance.

The timing? Perhaps within weeks, floor plans that could fly with acceptable local architecture will be developed, even as several public-private partnership dimensions of the plan get traction. Still, it’s not a moment too soon.

With the exception of the higher ground along Gentilly Boulevard (which parallels the Bayou Sauvage Ridge) and the neighborhoods along the Lake that were built upon artificial fill, District 6 experienced some of the worst flooding as a result of Katrina. Many residential structures that were built upon slabs experienced flooding up to their roofs and are uninhabitable for the foreseeable future.

The best term to describe Whitcomb’s plan to build or renovate most of the homes in the neighborhood is “scattered urban.”

It would involve a combination of bidding for New Orleans Redevelopment Authority-owned lots, buying lots from owners who no longer intend to move back to The Big Easy from out of town, and in some cases, acquiring lots from current residents who may want to sell.

On building lots that have already been “scraped” or ones that should be bull-dozed, Whitcomb would work with a development company called Promethean Structures on building homes that would sell in the range of $150,000 to $240,000, a new-home that would comp in an acceptable range that existing homes are selling for in the community.

One of the secret-sauce operational details would be that each of the new homes would go up in 50 days, in part through the use of highly energy efficient and weather resistant structural insulated (polyurethane) panels.

A tighter envelope for air leakage, the ability to withstand high winds, non-combustible, and capable of meeting even the new, higher proposed energy conservation guidelines of the climate act, SIPs would cost about $10,000 more per home.

But, thanks to both builder and home buyer tax credits that could be obtained, the actual cost to home buyers would come down to about a $5,000 premium for a 2,000 sq. ft. home, says Whitcomb. “After the purchase, the electric bill’s going to run about 60% of what it would be for a house of that size,” says Whitcomb. So the cost of ownership winds up coming down over the years.

Whitcomb’s construction concept dives in not just on a box level, but the street and the neighborhood level as well. To start, he’s eyeing a retail site and an elementary school for redevelopment or land reuse to support the revitalization of the community.  There are also several multi-family units near the new Greater Gentilly Technical High School under construction on Paris Avenue that need to be rehabilitated.  Additional ideas will come forward through collaboration with the local homeowner associations.

Whitcomb won his production builder stripes in the Centex Homes academy in six years as vp of corporate development, and before that, in various management positions at Electronic Data Systems and as a corporate attorney specializing in real estate. Of critical importance to Whitcomb is that all the key management talent, community outreach, and labor supervision be homegrown New Orleans. 

Whitcomb

“In various of my incarnations, I had occasion to spend time in New Orleans, and I love this city. But it’s more like a European city in the way business is conducted,” says Whitcomb. ”You work with people here, and you don’t tell them what to do; not if you want to get things done.

“We’re doing this to help, but we are a for-profit organization and want our concept to be scaleable and expandable to other areas of New Orleans and Gulf Coast communities,” says Whitcomb. “Hopefully, we can replicate the revitalization that took place in southern Dade County after Hurricane Andrew–-also called St. Andrew by some locals.”

Click to access Stock site. Now 51% owned by the Gores Group, a private equity firm.

Financially chastened and dramatically cropped, Stock Building Supply beat a fast track–a la the Chrysler 60-days-and-out restructuring model–under new majority ownership toward resuscitation and reincarnation.

ProSales editor Craig Webb reports this morning on Stock’s announced emergence out of Chapter 11 a leaner meaner outfit that will operate 100 locations in 19 markets.

The bullet points on the story:

• Stock has emerged from Chapter 11, saying it had satisfied concerns raised in court during its nearly two months under federal bankruptcy-law protection;
• The company’s new footprint: Washington, D.C., area; Paradise, Pa.; Richmond, Va.; Raleigh-Durham, Charlotte and Winston-Salem/Greensboro, N.C.; Greenville and Columbia, S.C.; Atlanta; Austin, Amarillo, Houston, Lubbock and San Antonio, Texas; Albuquerque, N.M.; Salt Lake City and Southern Utah; Spokane/Northern Idaho, and Los Angeles;
• Stock cut the number of facilities it had on May 6 roughly in half, to 100, and has departed 32 markets;
• Employee headcount peaked at 17,000, and fell to 7,200 in May 2009, on its way toward staffing of about 5,000, per the company.

Stock’s strategic overhaul sounds as if the company wants to leverage its relationships with builders and remodelers toward a deeper, more holistic supply partnership, a plan that makes sense particularly as home builders work to streamline vendor rosters toward measurable cost cuts in their offerings, which translate into lower home prices that can compete with foreclosures.

It said it will do this by seeking to sell a larger number of products to each customer, rather than just one or two core offerings. For example, Stock said it will roll out what it described as a tracking system that will give customers real-time ability to track the location and expected delivery time for their orders.

Any relationship between Stock minority parent Wolseley Plc’s CEO shake-up yesterday, and the timing of Stock’s surfacing from BK today? [see yesterday's post].

Not really, says ProSales Webb. Wolseley removed outgoing CEO Chip Hornsby because the company needed someone to take a fall commensurate with the 75% loss in shareholder value that had occurred on his watch.

ProSales editor Craig Webb reports:

Chip Hornsby stepped down as group chief executive, effective immediately. The move ends a nearly three-year period at the top in which Wolseley struggled to survive the global recession and ultimately ended up selling a majority stake in Stock, America’s second-biggest LBM dealer.

Ian Meakins, former chief executive of Travelex Holdings Ltd., a foreign exchange and payments business, will take over Wolseley on July 13, U.K.-based Wolseley announced.

This takes an 18-year Wolseley veteran Hornsby out of the strategic mix. Look for Gores to flex its muscle operationally as Stock’s reorg plays out, especially as the financial performance comes to light.

The Building Materials Holding Corporation story of a rising star now fallen is more of the same. ProSales senior editor Andy Carlo’s update to his initial report –on BMHC’s filing for Chapter 11 bankruptcy protection–carries tidings that the nation’s 6th largest lumber and building materials player has secured a court thumbs up to fight another day, or month, or year, or more.

BMHC chairman & CEO Robert Mellor, click to access company "restructure" IR site.

Following the court order, the Boise, Idaho dealer and construction services provider can continue to meet its obligations to customers, including the fulfillment of contracts and honoring warranties, while meeting its obligations to suppliers, employees, and subcontractors.

At Wednesday’s hearing, the court granted initial approval for BMHC to access a new $80 million in debtor-in-possession financing facility from Wells Fargo Bank and other lenders. BMHC has been permitted by the court to use $40 million of the credit facility immediately, with the full $80 million available upon final court approval.

In a statement issued by BMHC, the company said that it expects the new financing to “provide ample liquidity to meet its ongoing obligations to employees, customers, and suppliers during the reorganization process.” Altogether, BMHC expects the reorganization process to take about three to four months.

Here, from the company’s Web site, is chairman and CEO Robert Mellor’s statement:

“We are very pleased that the Bankruptcy Court in Delaware has approved our First Day Motions and our DIP financing, which allow us to continue business as usual and to meet our obligations to our customers, suppliers and employees,” said Robert E. Mellor, Chairman and Chief Executive Officer. “All of our operations are open, and we are continuing to serve our customers with the same focus and dedication as always. We appreciate the support we have seen from both our customers and suppliers as we move forward with this process to make BMHC financially stronger for the long term.”

Click to access Stock Web site.

From PROSALES, by Craig Webb–Stock Building Supply’s business is a shadow of what it was about 24 months ago, and so the company’s new private equity majority owner the Gores Group wants to make its costs a shadow of what they once were.

With an assist from a Delaware bankruptcy court decision, Gores will get satisfaction on one of its key conditions in its distress-sale purchase of Stock from UK-based Wolseley Plc. A judge approved termination of more than 200 leases Stock had contracted for during its run-up years, 2005-to-2007, a move tantamount to cramming down what Stock would have had to pay to maintain the leases.

ProSales magazine editor Craig Webb has Stock coverage of the judge’s resolution, as well as analysis of Wolseley financials for Stock operations for the latest reporting period.

ProSalesmagazine.com has been the bleeding edge reporter on the collapse of Stock Building Supply–one of residential constuction’s juggernaut roll-up companies–from the time United Kingdom-based owner Wolseley Plc ran up the white flag of capitulation, to Wednesday’s sale of a 51% stake to private equity players, The Gores Group.

ProSales’ lineup of news and analysis on Stock’s stunning implosion and frantic survival tactics include a number of reports this week: 

Click for expert Stock analysis.

• Stock’s Revival Plan Calls for 2,200 More Job Cuts
• Bankruptcy Court Lets Stock Keep Running During Chapter 11 Story
• Stock’s New Majority Owner Looks to Grow Story
• Stock: Expect More Store Closures Story
• Chapter 11 filings and notices Link
• Information page on Stock’s website Link
• Timeline of Stock’s acquisitions since 1985 Link
• Wolseley Takes $262mln Hit on Stock Deal Story
• 51% of Stock Sold; Dealer Files Ch. 11 Story

So while things may be bad coast-to-coast, there are flickers of cheer here and there.

Like in Boise.

The good news is Boise is that Chinese drywall is, er, not there. On Idahostatesman.com the story is this. “Tainted Drywall from China Likely Not in Valley.”

The Idaho Department of Health and Welfare and the Central District Health said they have received no complaints of illness related to imported drywall from China.

The drywall is being blamed for letting off bad odors, corroding pipes and possibly making people sick in the Southeast.

Home Depot, which has several stores in the Treasure Valley, said it never bought the Chinese material.

“The company has not and does not sell drywall made in China or other overseas sources,” Home Depot said in a statement. “Simply, shipping drywall from such a distance is not cost-effective for us or our customers and is a practice we have not pursued.”

Which proves a journalistic rule: “A slow news day is a terrible thing to waste.”

It’s high-quality, mostly move-up home building businesses are getting battered in some of the nation’s most brutal new-home markets; and on the building supply side, things just ain’t getting any easier. Word is the Seattle-based conglomerate has been nosing around in the financial markets for months now looking for partners or a buyer for its well-regarded home building operations.

Meanwhile, iLevel, a business whose design was practically set up for 2005-06-style capacity and velocity, is a big capability literally in search of a floor in the market. Here’s how ProSales editor Craig Webb queues up their predicament in his news flash about Weyerhaeuser’s shutting two more mills:

“Demand for wood products continues to decline due to a slowdown in the housing market,” Tom Gideon, executive vice president, Forest Products, said of the latest announcement, which will affect 307 employees. “Unfortunately, extraordinarily weak market conditions in the homebuilding industry require that we take decisive action.”

The car business and new residential construction business have two essential similarities these days. One is that nobody knows how many new ones of either we need to meet real demand. The other is that double-digit unemployment is virtually a lock if both industries stay in the tank.

Click on image for access to current Wolseley share information.

Wolseley Plc revealed today that it is in the process of identifying a joint venture partner for Stock Building Supply, the second-largest U.S. pro dealer, or else will exit the business by Aug. 1. “A number” of unnamed companies are interested in acquiring all or part of Stock, the U.K.-based company said in a statement issued by Stock.

In a report released this morning, Wolseley said the decline in housing starts, coupled with a continued decline in lumber prices, have expedited the company’s decision to pursue a sale or joint venture, or to dispose or exit Stock Building Supply, by Aug. 1. Wolseley also announced that it will try to raise 1 billion pounds ($1.42 billion) in a rights issue.

“We are working very closely with Wolseley to identify potential partners that can help Stock Building Supply grow when the market recovers,” Stock Building Supply President Joe Appelmann said in a separate statement. “Our business model has fundamental differences from the remainder of Wolseley’s portfolio, and in these economic times it makes sense to explore other options.” (more)

Here’s Wolseley’s take on its “outlook,” from its statement today:

Outlook

The Board is confident that the measures announced today represent a comprehensive package to strengthen the balance sheet and strongly position the Group for the future.

The Board believes that the downturn in the UK, Irish and Nordic economies is likely to be generally more severe than that experienced in the remainder of Continental Europe.

If markets deteriorate further than anticipated, the Board will ensure further actions will be taken to mitigate the resulting impact.

Whilst actions will continue in our core businesses to reduce costs and generate cash, there will be a clear focus on margin management, serving the customer base and developing market opportunities.

This is a player that seemed to announce the purchase of another point of United States distribution every week, through 2006 and into 2007. The headwinds to Wolseley finding a deal are huge, given the domancy of home building, and horizon for recovery in starts activity that slides farther way by the day.

Capacity at the level Stock provides is a question. For home builders, who might have considered the network a prime way to ensure capacity when volumes were humming along, that type of verticalization is unheard of these days unless it translates into immediate cuts to direct costs on per square footage that can be translated into move-off-the-sideline new home prices.

Wolseley has its work cut out for them on this challenge.

Update: ProSales editor Craig Webb has produced a map of Stock locations as they were listed by the company from Jan. 09, and posted it in his blog.