HD Supply cuts jobs, closes branches in Georgia, Tennessee

By Industrial Distribution staff -- Industrial Distribution, 1/23/2008 10:29:00 AM

HD Supply confirmed it has been closing branches and laying off employees due to the ongoing decline in the residential housing market.

A spokeswoman for HD Supply declined to say how many employees were affected.

Eight branches which had been part of Apex Supply Co. were shuttered—five in Tennessee and three in Georgia, explains Erica Crosling, HD Supply’s director of public relations and community affairs.

Apex Supply was an HVAC/plumbing business The Home Depot acquired during the 1990’s. Apex remained with HD Supply’s plumbing/HVAC division after HD Supply was sold to three private equity firms for $8.5 billion in August, 2007.

Crosling says the eight locations were distribution centers for Trane Inc., a HVAC product manufacturer, which was bought by American Standards Cos. Inc. in the mid-1980s.

Late last year, American Standard Cos. Inc. finalized plans to streamline operations and separate its three main businesses into separate companies. At that time, the company also changed its corporate name to Trane Inc.

''Trane [decided] to terminate their distribution agreement with us. As a result of that decision, HD Supply [closed] some of the [Georgia and Tennessee] distribution operations,'' Crosling tells ID. ''Many companies are reevaluating staffing and resources in this down market, so … I suspect it has a lot to do with the housing environment right now.''

On Jan. 22, HD Supply announced it would close a plumbing and HVAC branch in Tucson, Ariz. The company’s HD Supply Waterworks location in Tucson will remain open.

Earlier this month, HD Supply closed its HVAC and plumbing supply division in Mobile, Ala.  The division had about 12 employees. Another Mobile HVAC branch will remain open, however.

The decline in residential housing and related markets hit many companies other than HD Supply and observers see few reasons to be optimistic about a turnaround any time soon.

''It’s happening across the industries, not just the housing market,'' Crosling says. ''Businesses across the board … are making similar decisions, based on what the housing market is doing.''

Last year, HD Supply’s new owners implied they would continue to pursue acquisitions, but the downturn in residential construction resulted in a change of plans.

HD Supply has also sold other business units. In mid-December, it agreed to sell its HVAC operations to Watsco Inc., www.watsco.com a Coconut Grove, Fla.-based HVAC distributor. The deal will enable Watsco to acquire the HD Supply branches that sell the Rheem line of HVAC products, primarily in the Southeast.

And in November, HD Supply agreed to sell its lumber and building materials division to Denver-based building materials distributor Pro-Build Holdings. 

Neither deal has closed, Crosling explains, but the Pro-Build agreement is expected to be consummated on or about Feb. 3. While Crosling says there are no plans or negotiations to sell off other units, she did not rule out other such agreements in the future.

''We as a business will continually look for ways to streamline our business and, where it makes sense, these activities will occur,'' Crosling explains. ''We can’t predict what the market will do, but I think it makes smart business sense, especially in today’s environment, to take a look at all of your different lines of businesses and focus on the bottom line without jeopardizing customer service …. [And] where it makes sense to the business, we will make [other] staffing adjustments from time to time.''

HD Supply is not the only large distributor hurt by the housing construction slump. On Jan. 22, Wolseley plc said its North American revenues as of Dec. 31, 2007, declined by roughly 10 percent and overall pre-tax profits were down nearly 33 percent.