by Craig Webb, President, Webb Analytics
How best to describe the crazy, uncertain, jolting-headline-every-minute, fuzzy-fact world construction supply is living in now? Unlike 2023 and much of 2024, an era in which I described dealers as "positively nervous," no one phrase does justice to these times. Instead, consider four metaphors that I believe summarize what we're going through now.
Start with chain-saw art in Washington. It's noisy, messy craft with a dangerous tool that can as easily lop off something valuable as trim away the unnecessary bits. Donald Trump and his assistant, Elon Musk, are chain-saw artists. America might have commissioned them to cut into the federal state, and they might well produce something admirable. But it's a heart-stopping process, one whose end result is likely to leave some critics calling it a crude waste of good timber even while others applaudi it for its creativity. We don't know which group will be in the majority until the saw gets shut off.
LSD in today's doesn't stand for the drug that launched a thousand psychedelic trips, but rather to the phrase "Low Single Digits." Those are the kinds of numbers many construction supply companies are reporting for how they did last year, particularly when they report on organic sales and volumes year over year. For instance, Ace Hardware Corp. says that the roughly 3,700 Ace retailers who report sales data posted a 1.6% increase in U.S. same-store sales in the fourth quarter. The maker of Simpson Strong-Tie products said its 4Q net sales rose 4.4%. At Stanley Black & Decker, North American organic revenue was up 2%, and SiteOne Landscape Supply's organic daily sales inched up just 1%.
For 2025, Wall Street analysts are full of LSD predictions when they discuss growth prospects. That leads to the next metaphor ...
Paddleboard propulsion. Many of you have heard me describe life in LBM this year as like being on a paddleboard: The only way you'll go forward is because of your own paddling. Unlike past years in which we could move ahead thanks to a wave of COVID money or the tailwind of high lumber prices, there aren't any conditions to promote homebuilding and remodeling beyond the usual human events like births, marriages, new jobs, and divorces. Even the crackdown in immigration makes paddling tough, because fewer people entering the country means there's that much less demand for homes and apartments.
And finally there's artful dodging. You certainly can see lots of it in Washington, where powerful people talk generally about fraud and abuse but rarely cite specifics. Likewise, we see some items get discussed as big deals when, all things considered, they don't deserve that status. The impact on home prices from tariffs on Canadian lumber is one example--how much impact would a 25% tariff on the fiber have at a time when big home builders often are giving deals like mortgage rate buydowns to cut a home's cost? When home builder groups direct people's attention to tariffs, one result is that they avoid talking about the handsome profits they're generating.
How to operate given such conditions? As a reporter, it's hard enough for me just to keep up with the news. Nevertheless, I do believe you'd do well to focus on what you can control: Your operations, your service, and your people. It could be that 2025 is the year we learn who runs the best shop, and not who's benefiting the most from outside factors.