For more than two years, Stock Building Supply LLC offices occupied one of three floors in Colony Corporate Center in north Raleigh. It moved out halfway through its lease but kept paying rent. In early May, its landlord figured that was about to change. “After we read that they were filing for Chapter 11, we expected the lease to be rejected,” says William Barnett, CEO of Henderson-based Center XXXIII LLC.
Within a week, it was, making him one of many affected by recent woes of a company that started in Raleigh 87 years ago, came under British ownership and grew into one of the nation’s largest suppliers of building products. Reading, U.K.-based Wolseley PLC bought and renamed Carolina Builders Corp. in 1985, keeping headquarters in Raleigh. Stock began buying lumberyards and other supply businesses. During the next 20 years, it averaged more than three acquisitions a year.
But the U.S. housing market peaked in 2005, and the company began feeling the effects the following year. That October, it began cutting jobs and closing stores. In its latest fiscal year, which ended in July 2008, Stock lost $744 million on revenue of $3.5 billion. Last October, it began another restructuring. It has cut its work force 42%, leaving about 7,000 — fewer than half of what it had in 2006 — and shed more than 90 outlets. In May, down to about 200 stores in 27 states, it filed for bankruptcy protection as part of a deal in which Wolseley sold 51% to a Los Angeles private-equity firm.
With single-family housing starts in the U.S. down 64% since 2005, lots of construction-related businesses are hurting, but not all have gone into bankruptcy. Why Stock? For one, it focused on the 100 companies that account for about 40% of homes built in the U.S., says Craig Webb, editor of ProSales, a trade magazine. “Because Stock relied on the production builders — and the production builders fell even farther than the remodeling market, the do-it-yourself market, the small builders — it suffered even more.”
Though Stock declined to comment, The News & Observer reported it still employs 850 in the Triangle, down from more than 1,000 earlier this year. More cuts are likely as the company works its way through Chapter 11. Barnett is one of seven landlords in North Carolina — three in the Triangle — left holding leases rejected by Stock. It was a tough financial hit, but there’s not much he can do about it. “We will look for tenants to replace them.”
Raleigh politician Dan Blue is gaining high-profile positions even faster than Bob Steel is losing them. In May, Wake County Democrats picked Blue, then a member of the state House of Representatives, to finish the term of state Sen. Vernon Malone, who died in April. Two days later, Duke University’s board of trustees elected him to succeed Steel as its chairman, the first black to hold the post. In December, Steel ended a five-month stint as CEO of Wachovia Corp. after San Francisco-based Wells Fargo & Co. bought the Charlotte-based bank.