OPERAIING OPPORTUNITIES

WALLY LYNCH Paid Associates PO. Box741623 Dallas. fx.75243

HERE has been so much emphasis inour industry in the past few years on price that no one seems to have time or interest in anything else.

The computer has helped most of us to become more productive. Ourtime is spent in those effortswhich allow us to provide lower prices. We negotiate harder, Ionger and, hopefully, more effectively. We advertise more and make public guarantees to have the lowest pnce.

We certainly are reacting to one another and treating the symptoms in a massive way. But what about the cause?

For what purpose are you in business?

To have the lowest price orto make the highest net profit?

It seems a paradox, but can you imaginewhat would have happened to profits if, as an industry, we had spent as much money on people and their productivity as we did on price impression the past few years? Here are a few rocks you can look under.

TRAINING Look inside your operation and ask is our training program conducive to attracting, developing and retaining the best people? Imagine the military without basic training. The employer or employee untrained in the lundamentals of personal selling and customer relations, regardless of his assignment, can't march or shoot effectively in the retail market.

OVERTIME A 50 hour week costs an additional 3l .50/o in dollars for 25%r more hours. Companies should be using part time employees at close to minimum wage without benefits to eliminate overtime and benefit costs.

BUSINESS PLAN A major imperative of any productive company is the setting and agreeing to goals. Would any football coach bring a team to a game without a plan? Can any work force be effective without knowing the rules and objectives?

TURNOVER Studies indicate that nationally, on average, one of everyfour employees in every work force is changed annually. This is a 250/o rate. Recruiters are charging in the area of 300/o of the first year's salary. Add training time costs. relocation. etc. and it's a hugenumber. Personality and aptitude testing are inexpensive preventive medicines. Companies can test not only prehiring, but existing employees as well. Results provide management with a guide to what has been successful to compare with candidates. Costs range nominally between $50 and $150 per test.

COST OF GOODS GONE is another way of saying "cost of goods sold and/or stolen." Theft bugaboo in retailing continues to rise. Various estimates range to 3.80h of sales. The National Retail Merchant's Association (NRMA) identifies it as 4501t employee theft, 350h cuslomer theft and 200/n error and/or bookkeeping fraud.Virtual outlawing of lie detector tests makes written, inexpensive honesty tests a must in coming to grips with the manageable part of the 3.8%r.

A good exercise would be to cost and evaluate the benefit potentials described above against your own P & L at halfthe worth stated. For most, payroll will run about 6006 oftotal operating expenses. If you want more details, write to the address in the column heading or call (2r4) 690-6600.

Wickes Sells Orchard Supply

Wickes Companies, Inc. has agreed to sell its 31-store Orchard Supply Hardware unit to an investor group including management led by Maynard Jenkins, president and chief executive officer, and FS Equity Partners II, a limited partnership organized by Freeman Spogli & Co., a Los Angeles, Ca., investment firm.

Purchase price will be approximately $134 million, including assumed debt and other obligations. The transaction is expected to close by May 31.

Headquartered in San Jose, Ca., the stores had revenues for the fiscal year ended Jan. 28, 1989, ofapproximately $255 million.

Home Center Sales To Thrive

Home improvement centers are among the retail stores expected to achieve above average constant dollar sales volumes over the next five years. While rising mortgage rates may partially choke off housing starts, spenders will shift dollars into purchases to dress up their existing homes, according to James Newton, president of Economic Perspectives, Inc.

Dealers Active ln Seattle Show

Knoll Lumber & Hardware, Seattle, Wa., was among the dealers participating in the 45th Seattle Home Show at the Kingdome.

For the fifth year, the building materials retailer built a 1500 sq. ft. home on the Kingdome floor. The two-story New England colonial, named Centennial House in honor of Washington's l00th birthday, was completely furnished and landscaped. After the Feb. 25-March 6 show, the house was dismantled and reassembled at the Camp River Ranch as a gift to the Totem Council Girl Scouts.

Pay 'n PakHome Centers set up a kitchen and bath display to showcase its new computer kitchen design center. The home center, which is celebrating its 37th anniversary, also gave away free yardsticks.

Posts, poles, pilings, timber, crossarms, grapestakes, dimension lumber.

Pacific Wood Preserving of Bakersfield produces virtually all pressure treated wood products. And, with computerized inventory control, Pacific Wood Preserving of Bakerstield offers accurate and complete service. A single phone call can put this com plete capabi Iity to work for you. Calltoday:

Steve Ryan, General Manager

In California (800) 582-3950

Outside Cal ifornia (805) 833-0429

The Merchant Maqazina

Babbitt Bros. Buys Ray Units

Ray Lumber Co.'s homecenter and yard in Lake Havasu City, Az., are to be acquired by Babbitt Brothers Trading Co., Flagstaff, Az., for about $1.2 million.

Ray Lumber, which is based in Glendale, Az., filed for Chapter 1l reorganization last May. The Lake Havasu City unit and Ray's door division were the only operations that remained open. Funds from the sale will be usedto retire some ofthe company's debt, according to Edward Davis, attorney for Ray Lumber.

Babbitt Brothers will assume operation of the store as soon as the sale is finalized. "We intend to broaden and expand the inventory levels, remerchandise the store, and expand contractor services," said David Chambers. Babbitt Brothers vice president.

With the new acquisition, Babbitt Brothers, which is celebrating its l00th anniversary this year, will have eight home centers in Arizona. Stores are in Prescott, Flagstaff, Cottonwood, Sedona, Page, Winslow and Holbrook. 2

Henry Bacon, BuildersHardware & Supply, Ernest Home & Nursery and Rich's Home Center alsoexhibited.

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YARD €p OFFICE:

(2r3) 773-2292 (213) 867.-670r

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SALES OFFICE:

(774) 686-0440

Alnold NutterW:r'tme Benton 7044 E. La Cadena Dr., Suite 102, Riverside, Ca.92507

Fibreboard Buying

Sequoia Forest lndustries

Fibreboard Corp. has signed a letter of intent with Sequoia Forest Industries to purchase fixed assets, inventories and timber cutting rights related to four sawmills at Northfork, Auberry, Dinuba and Soledad, Ca., and wood-waste fired cogeneration plants adjacent to the mills in Northfork, Auberry and Dinuba. The Dinuba site also includes pallet manufacturing and molding and cutstock operations, as well as bark processing. The purchase price is expected to be between $60 and $70 million.

The acquisition issubject to a definitive agreement between the parties, expected by early July, 1989.

Commented Fibreboard chairman and president Lawrence C. Hart, "These assets are an excellent fit with existing Fibreboard wood products operations in California. The acquisition is a giant step forward in Fibreboard's strategic plan toexpand in the wood products business, not just in lumber production, but more importantly in value-addedproducts such as molding and millwork, pallets and processed bark. Additionally, it pro- vides significant expansion into the cogeneration business in which we already participate on a small scale at Standard, Ca. We feelthis acquisition, like the acquisition of Snider Lumber Products Co., Inc. in 1988, will play an important role in our efforts to improve shareholder value."

O'Malley Buyout Fails

The proposed acquisition of The O'Malley Companies by two employees and United Building Services fell through when UBS, also based in Phoenix, Az., decided not to invest a reported $3-$4 million in the $22 million deal. kee The Merchant, April, p. 32).

Duncan Hossack, executive v.p., and Don Hossack, assistant gen. mgr., retail division, have severed their relationships with the bankers connected with the proposed leveraged buyout. Duncan Hossack said that while they are not actively seeking a new LBO situation, they are continuing to look at acquisition possibilities.

Continuing the restructuring of the O'Malley Companies that began in late 1988, the Sierra Vista operation south of Tucson will be closed May 31.

Earlier the company announced that it would sell units in Yuma and Nogales, Az., to rival Foxworth-Galbraith Lumber Co., Dallas, Tx. As part of that transaction, Matt Smith has been transferred from the Yuma operation to become contractor salesmgr. at the Mesa, Az., facility.

Mercury Hardwood Sold

The owners of Panel-Tex, Inc. have purchased the assets of Mercury Hardwood Lumber Co. and its sister company Accurate Planing Co. for an undisclosed amount from owner Bob King.

The three partners, Jon Dickey, Sam Bass and Skip Motta, have formed a separate company, SJS Lumber, and will operate Mercury and Accurate under its present management.

The companies involved are on adjacent parcels of land in City of Industry, Ca.