Thursday Feb 21 2008
Housing slump hits home
By: Cheri March The News Messenger
Slowdown hurts Sierra Pacific, Gladding, McBean
The effects of a deepening national housing slump are hitting close to home. Even Gladding, McBean, one of Placer County's oldest businesses and a Lincoln institution since 1875, is feeling the market's pinch. I've been here since 1991, and this is the most significant downturn in our market I've seen in that time, said Bill Padavona, general manager and vice president of Gladding, McBean. Padavona said the clay company has seen a 60 percent to 70 percent decline in products tied to home construction, such as sewer pipes and roof tiles. Though Gladding, McBean provides products throughout the West Coast, the market is especially bad in Northern California, where the market has slowed to a near standstill, Padavona said. Since the downturn began, the company has laid off 100 of its 235 employees. Obviously, we are trying to reduce costs and minimize overhead as much as possible, Padavona said. Recession rumblings aside, another of the company's departments “ terra cotta restoration “ still is going strong. Gladding, McBean is carrying out renovation work for Milwaukee City Hall, the Woolworth Building and several public schools in New York, and a handful of buildings in San Francisco. We have a large backlog of jobs and orders and we've been able to absorb some of the employees from pipe and tile, Padavona said. We suspect at some point in the future, we should be back up to full complement, but a lot depends on residential construction. Padavona estimated the downturn could last another 12 to 18 months, but cautioned that business trends are difficult to predict. Recent numbers show construction still in a downward slide. Housing production statewide fell to the lowest level in 25 years in 2007, according to a January report by the California Building Industry Association. Permits for just 112,300 new housing units were issued in California last year, a 32 percent decline from 2006. That's compared to the slightly smaller 25 percent decrease in permits issued nationally, as reported by the National Association of Home Builders. Construction of single-family units in the state was down 37 percent from a year ago, to 67,993, the lowest number since the 51,160 reported in 1982, the state association said. That's bad news as well for another Lincoln company, lumber supplier Sierra Pacific Industries. It's had a dramatic downward impact on lumber prices, said Mark Pawlicki, a spokesman for the Redding-based business. Prices today go back to about 1992, the last time we had a housing recession. Average industrywide framing lumber prices were $249 per thousand board foot in January “ down from $404 in January 2004, reported Random Lengths, a data source for the wood products industry. Though Sierra Pacific also makes pine windows and millwork at the Nicolaus Road site, framing lumber is the bread and butter of the industry, Pawlicki said. But the company isn't panicking just yet. In fact, Pawlicki said, drastic swings are nothing new. Demand for our product ebbs and flows with housing and remodeling, he said. We're a cyclical industry. We've weathered this in the past and we'll weather this one. For now, the company will stick to a simple game plan. We keep investing in our mills, making sure we're efficient, so when the turnaround comes, we're ready, he said.