It's war! Wholesaler rallies troops against

A S THE boundaries of the Home lLDepot Empire continue to expand, the pile of casualties - many independent lumberyards that have served communities for 40 years or more - grows higher. But has the home center giant fought fairly? At least one Northern California wholesaler thinks not and is rallying independents to take a stand.

well as wholesalers who stand between them and manufacturers.

The 25-year industry veteran cofounded Diablo Timber in 1980 and last year became sole owner. Cassinerio now sees his mission as protecting his business, independent retailers and, in fact, the entire industry from Home Depot.

He believes Home Depot is using predatory pricing as its main weapon against the independents. Predatory pricing (selling items below cost or at different price levels at different geographic locations with the express intention of injuring the competition) is blatantly in violation of federal law and state statutes, he says.

"We believe that The Home Depot sells certain price-sensitive items cheaper than they can buy them," Cassinerio alleges. "In fact, the Home Depot often sells retail, on a per piece basis, at a lower price than we as wholesalers can buy or manufacture them, even in truckload quantities. Neither we nor the retail dealers can compete with these practices indefinitely."

As a result. Diablo Timber has secured a renowned anti-trust attorney, Lawrence Alioto, to represent the independent dealers in court. The company will be holding meetings this month throughout Northern California to recruit independent yards to join in the legal action. "We believe the anti-trust violations are very real. The problem is proving it,"

Cassinerio says. "The Home Depot has very deep pockets. They can wear down the opposition with costly litigation; however, a united effort on the part of independent dealers will prevail."

According to Cassinerio, besides suspected illegal practices, other tactics arejust plain nasty: t r F them, at the expense of the 250 strong independent companies we now serve," he explains. "I've always said, never put all your eggs in one basket. They might pull the rug out from under you."

. Corporate management stages skits featuring a hospital patient (portraying a competitor) on life support. The Home Depot doctor takes the patient's pulse, pulls the plug and proclaims, "Another competitor is dead. Get this body out of here."

. At new store openings, competitors' names are placed on tombstones, which are later displayed in the employee break room, with a sign stating, "We will put these people out of business." As competitors close, their markers receive a circle with a slash through it and then are moved to the receiving department wall as a trophy for all to see.

. Home Depot has sent workers to the stores of competitors to randomly approach employees. They inquire about the employees' pay and on the spot offer more money - but only if the individual will report for work the following day with no notice to his current employer.

After viewing a 60 Minutes investigation of allegedly unscrupulous practices at Wal-Mart, Cassinerio wrote to CBS News, hoping the program will focus next on Home Depot.

Unfortunately, he thinks the criticisms being so similar might prevent the program from investigating Home Depot.

But retailers aren't the only ones who may be capsized by The Home Depot's wake, since the chain tries to go around wholesalers and buy directly from manufacturers, says

Northern California wholesaler rallies independents to fight Home Depot ... organizing a legal fight against claimed predatory pricing, unfair practices.

Cassinerio. This can be especially tough for wholesalers who have revamped their businesses to please Home Depot. "They dictate to you," Cassinerio says. "You have to completely retool. They require full bar coding, customized smaller packaging, self-contained inventory, much more equipment, and you always run the risk that your most recent order might be your last."

Diablo Timber has never sold to Home Depot. "We would have had to turn our business upside down for

Home Depot had purchased lumber for its California stores from a small number of wholesalers, but negotiated with western softwood manufacturer Louisiana-Pacific to exclusively supply its redwood and treated lumber to all its Western Division stores (see related story, p. 49). These wholesalers who had made huge capital investments to work with Depot, were suddenly dropped, with little or no notice.

Cassinerio says he is confident that Louisiana-Pacific will be unable to meet Depot's huge demand from its own timberlands and sawmills. "The Home Depot has gotten itself in a corner," he smiles. "They've turned their backs on good suppliers and they are finding themselves out of product. I believe the wave has broken."

While many communities open their arms and checkbooks to welcome the arrival of a proposed Home Depot, others are beginning to count the costs as well as the benefits. The chain is in for an uphill battle in its plan to raze a 161-unit mobile home park in northern Santa Rosa, Ca. The elderly residents in opposition to the project have the support of some city officials, and a local attorney has offered to advise homeowners without charge.

To Cassinerio, the largest concern is Home Depot's goals of expanding at a rate of 25Vo annually, eliminating all levels of competition and monopolizing the building products industry. The entire industry - along with its customers - lose. "I'm not worried about winning a battle. I want to win the war," he says. "I've been in this business for 25 years and I'll be here for many, many more,"