Dear Mr. Norcini,

Let me start by sincerely thanking you for your work at JSMineset, it is an integral part of the site and your commentary and charts are impressive.

I often provide "trench" updates to Mr. Sinclair as I run my family business which is an industrial hardware store.  To expand on that somewhat we are what you would consider a mini home-center with about 7,500 square feet of dedicated hardware and paint space and an accompanying 6,000 square foot yard containing lumber, sheet rock and other building materials.

We purchase from two national suppliers, True Value and Orgill (the largest independent distributor of hardware in the country) as well as a number of local and regional suppliers as well as Benjamin Moore for paint.  Without taking up to much of your time I can simply say that business is weak on just about every front except for paint.  A number of competitors have filed for bankruptcy and close sources tell me others are nearing that point.  This industry apparently has quite a reliance on CIT for financing, particularly for accounts receivable.  In support of your thesis noted on JSMineset this evening I can provide a great deal of support for your assumptions.  Our purchases for LBM (our acronym for lumber and building materials) are down close to 50%.  A number of suppliers have told me that this category is suffering more than any other and lumber yards are failing disproportionately to traditional hardware stores.  I attempt to gain a broad perspective of both regional and national trends from contacts that I know are credible and knowledgeable at our vendors and there is absolutely no letup in the downward trend in this category.  Our local lumber supplier has had a number of sales this season with board selling well below quoted exchange prices.  To my knowledge there is substantial supply and continued waning demand.

More recently we have seen a deceleration in the business of the larger companies that purchase from us.  Although we are generally a second tier supplier some of our accounts are large companies that build bridges, museums, schools, etc.  Most have multiple work sites, foreman and generally shop for storage yards.  A number of large projects are winding down and these companies are having difficulty obtaining new business as the number of projects open for bid has declined substantially.  I know of three large companies from a regional perspective who have either laid off employees or are planning to and that is just information I have obtained in the past 2 weeks.  In addition one source informed me that a 4-location lumber and building material company with annual revenues near $100 million may not survive.

In sum I concur with your analysis and just felt that the "trench" info might help in seeing just how spot on your analysis is!

Best Regards,
CIGA Marc