Post election reaction

It’s the housing market, stupid.

That could be the mantra of home improvement industry executives as they put forth their wish list of items that they hope President-elect Barack Obama and the new Congress will address when the new administration takes office Jan. 20.

There is no shortage of issues concerning home improvement leaders these days, according to Michael O’Brien, president and CEO of the National Lumber and Building Material Dealers Association (NLBMDA).

But housing trumps all of them. “Housing has always been first into recession and has always led the economy out of recession,” O’Brien said. “Until this is dealt with, the economy will suffer.”

Organizations like the NLBMDA didn’t wait long to reach out to Washington. Just days after the November elections, O’Brien’s group called on the lame-duck session of Congress to pass housing stimulus measures. However, that effort quickly got derailed when the CEOs of the three U.S. automakers came to Washington looking for a financial bailout. “It ate up all the lame-duck time,” O’Brien said. “[Congress] may come back in December, but it would only be to deal with the auto industry bailout.”

In the meantime, the NLBMDA is in the final stages of crafting its 2009 government agenda, which will be the most comprehensive in organization history and will encompass housing, energy, transportation, product delivery and other issues. “We will be specific but broad as well,” O’Brien said, adding, “A lot of people in Washington expect November and December to be quiet around here, but it certainly hasn’t been that way for us.”

While housing may be the biggest issue facing the home improvement industry, it is not the only one on the radar. Here is a snapshot of other pertinent issues that could affect the industry in 2009 and beyond:

The Employee Free Choice Act (it passed in the House in the last session of Congress but died in the Senate, killed by a Republican filibuster):

The bill would allow workers to skip the lengthy process of a National Labor Relations Board election and unionize if a simple majority sign authorization cards, a process called “card check.” Those in favor say the legislation would enable working people to bargain for better wages, benefits and working conditions by restoring workers’ freedom to choose for themselves whether to join a union.

Those opposed—which includes most, if not all, of the home improvement industry’s leaders—say it would hurt U.S. competitiveness and lead to fewer jobs.

As senator, Barack Obama co-sponsored and voted for the Employee Free Choice Act and said he would sign the bill when he becomes president. “If the majority of workers in a company want a union, they should get a union. That’s not complicated. That’s the right thing to do,” he said during the campaign. His speech about the EFCA can still be found on YouTube and other outlets.

With the Democrats gaining more seats in the Senate (although not filibuster-proof), the chances of EFCA becoming law are stronger than ever. That would be disastrous, according to executives like Home Depot founder Bernie Marcus who likened the EFCA to a “planned hostile takeover.” In an opinion piece he wrote for Business-Week.com, Marcus said labor unions and their supporters in Congress want to change federal labor laws to virtually guarantee that every company, large or small, becomes unionized.

“I’m not opposed to unions, but I am opposed to this act because it will make American companies uncompetitive in the global marketplace and ultimately send jobs offshore,” Marcus wrote. “I’m also opposed to the dishonesty of some EFCA supporters who claim that worker coercion by employers in union elections is ‘the norm.’”

Home Depot CEO Frank Blake said the card check legislation was the most pressing issue facing his company and one that “just doesn’t make sense.” He added that the bill “would not be a positive thing for our industry or, in my opinion, for our country. Pretty devastating.”

In 2009, the NLBMDA said it would reintroduce the Innocent Sellers Fairness Act (H.R. 989), which provides product liability protection for product sellers. The NLBMDA says that unfounded and unfair lawsuits are increasingly having a negative impact on the ability of lumber and building material dealers to run their business. A winter 2005 survey of NLBMDA members found that more than one in four has been the subject of product liability lawsuits within the past five years; 65 percent of those have been involved in more than one. The high costs of defending such lawsuits ($50,000 to $100,000 according to the Small Business Administration) typically force building material dealers to settle, regardless of the merits of the case. “We don’t think it is fair to hold someone liable who had nothing to do with the manufacturing of the product,” O’Brien said.

Other issues of concern for building material dealers include health care, immigration reform, affordable energy/green initiatives and transportation. But heading that list is housing.

The National Association of Home Builders (NAHB) has joined with a coalition of home builders, manufacturers, suppliers and other housing-related business to start Fix Housing First (FHF). This proposal calls for a 10 percent true tax credit up to $22,000 for the purchase of new or existing homes between April 9 and Dec. 31, 2009, and a mortgage buy-down that would set fixed rates at 2.99 percent between now and June 30, 2009, and 3.99 percent from July 1, 2009, to Dec. 31, 2009.

Jerry Howard, president and CEO of the NAHB, said the goal is to get a package through Congress in time for the spring selling season. “That would give us the most bang for the buck,” he said.

Howard said the lobbying efforts—which will include some home builder CEOs—will be aimed at the senators and representatives most concerned with housing issues. Howard said he expects home builders will get a more favorable reception in Congress given the magnitude of the housing crisis, which suggests that until housing prices stabilize, the financial markets will be in a state of flux.

“Anything that is going to stimulate the housing economy is going to be a top priority,” O’Brien said. “There’s definitely going to be various forms of stimulus packages that will come forward in January, and what we are encouraging is to educate members of Congress about the need of the housing stimulus proposal.”

The NLBMDA is also urging Congress to stimulate the economy by extending the so-called Section 179 bill for another year. Section 179 allows small businesses to deduct from income as much as $112,000 for one year through 2010 and increases the maximum deduction to $125,000, indexed for inflation after 2010. Moreover, the NLBMDA is asking Congress to extend net operating loss carry-back provisions from two years to five to allow building material dealers to discount current losses against past profits.

O’Brien said that while it is great that industry groups want to help the people who are losing their homes, the housing issue is more expansive than that. “We need to look at the broader picture,” he said.

Beginning Jan. 20, that picture will come into sharper focus.