Stock Building Supply to cut 3,000 jobs, shutter 86 facilities

Posted October 23, 2008 11:24 a.m. EDT
Updated October 23, 2008 10:05 p.m. EDT

— Plunging home construction starts in the U.S. are triggering major layoffs and a corporate restructuring at Raleigh-based Stock Building Supply.

The firm, which is part of Europe-based Wolseley, will lay off 3,000 of its 12,000 workers, close 86 facilities and cease operations in 16 markets, the parent company announced Thursday.

The restructuring will leave Stock with 209 branches in 27 states, down from 33.

How many workers in Raleigh will be affected is not yet known, a company spokesperson told Stock has some 1,100 employees in the Triangle area.

Since it employed 20,000 people in 2006, the latest round of layoffs will bring Stock’s manpower to 45 percent, or some 8,700.

The layoffs are to be completed by January.

“Without a doubt, we are facing unprecedented times in our industry,” Stock President Joe Appelmann said in a statement: “There is over-capacity in an industry geared up to supply 2.3 million new housing starts two years ago; today, the number is less than 1 million. The realities of the current market have changed the capacity of our industry and necessitated these actions.”

Stock currently operates in 33 states. Wolseley noted that 70 percent of its revenues come from residential housing and pointed out that U.S. housing starts have plummeted 64 percent from January 2006.

The cutbacks are only the latest Wolseley has made at Stock. Stock has already shed 40 percent of its employees and shuttered 70 branches in the past 20 months.

“The board believes that for the foreseeable future, there is likely to remain significant over-capacity in the building materials distribution segment, in which Stock operates,” the company said. “Despite this, the board concluded that there remains significant potential to create long-term value in the business.

“Over the last six months, the board has explored four principal options, including outright disposal, a joint venture with another party, complete closure and a significant restructuring of the business,” the firm added.

“Given the current unprecedented conditions in the global financial markets, concluding a transaction with a third party that recognizes this long-term value and that is financeable has not proved possible. In addition, it was decided that closing the operations entirely is not an appropriate strategy, since it would be highly destructive of shareholder value by depriving shareholders of the opportunity to benefit from a market recovery."