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New Data Suggests Independent Dealers Might Be in Better Shape Than You Think

Source: Census Bureau's Statistics of U.S. Businesses for 2016

Fresh Census Bureau data suggests that the number of mid-sized building material dealers stabilized in 2016 even as the count for the biggest firms continued to dwindle. The same data also confirms total payrolls in 2016 rose faster than the raises employees got.

These conclusions stem from Webb Analytics' review of numbers from a Statistics of U.S. Business report issued in December. The report doesn't give counts specifically for lumberyards and specialty building material dealers, but it does permit some educated guesses.

According to the report, America had a total of 22,255 businesses that sold building materials but weren't home centers, hardware stores, or paint stores. Along with lumberyards, that group also included roofing suppliers, drywall dealers, and a huge number of kitchen, bath, and flooring specialists. The 22,255 total was 1.7% below the count in 2015.

Those firms ran a total of 29,346 establishments in 2016; that's 2.6% fewer than the year before. But that decline stemmed from two groups: firms with fewer than 20 total employees and those with more than 500 workers. The number of under-20 firms shrank by 2.2%, while the 500+ group dropped by 5.3%.

The situation was much different for firms with 20 to 499 workers--the counts that most likely include the vast majority of building material dealers. The number of firms with 20 to 99 workers rose 1.8% in 2016 from 2015, even if the number of establishments they ran declined 0.9%. And the number of firms with 100 to 499 employees grew 2.2%, while the establishment count slipped 0.5%. This relative strength failed to have much impact on the category as a whole because dealers with 20 to 499 employees account for only 13.8% of all firms and 22.8% of all establishments.

The overall decline in firms and establishments continues a trend that has gone on throughout this century, as small businesses drop out or become part of bigger businesses. The number of firms in this category has declined 31.1% since 2002, when the Census Bureau counted 32,307 firms. And the number of establishments has fallen 32.4% since 2002, when there were 30,144 storefronts.

Drawn from Census Bureau's Statistics of U.S. Business for 2016

Employment and pay numbers are a slightly different story. the total number of workers in this group rose 1.8% in 2016 from 2015, and the payroll increased 3.8%. Looking solely at firms with 20 or more employees--again, the group we regard best represents LBM dealers--the employment count grew 3.5% and payroll went up 5.7%.

Intriguingly, pay per worker varies based on the number of workers in the company. It's relatively high when the employee count is zero to four, and doesn't improve until at least 20 workers come on board. This could be an indicator of growing pains that many small businesses incur as they do their initial expansions. Also intriguingly, pay per worker tops out in the 20-99 worker sector.

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