Home Depot CEO: Stunningly Clueless Regarding Employment
On CNBC just now, Maria Bartiroma is interviewing Home Depot Chairman & CEO Robert Nardelli, who states that we have "a very good employment picture."
I rarely write stuff like this, but: That reflects a lack of grasp of the reality of what is happening in the labor market economy -- at least when it comes to employment and wages; Frighteningly, stunningly, shockingly incorrect.
Perhaps his view is skewed by his perspective as Chairman/CEO; He owns at least 2.4 million shares, and recently sold a block of about $5m (125,000 shares).
Or, maybe there is a shortage of quality people willing to work at Home Depot -- its a tough job, encompassing customer service, retail sales, expertise in your given area (plumbing, painting, etc.) They have had a terrific number of quarters -- but from HD having a hard time hiring (a guess on my part) to the extrapolation that we have a "very good employment picture" is simply not supported by the macro data.
I like Home Depot, and shop there regularly; Its just that I am amazed when I hear stuff like that out of a major corporate CEO . . . he should fire his writers.
>
UPDATE: February 27, 2006 4:58pm
Jeff Matthews is far less sanguine than I about Home Depot's CEO.
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Disclosure: I have no position in HD or LOW
Monday, February 27, 2006 | 04:19 PM | Permalink
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Comments
Hasn't Home Depot been reducing its own labor force over the past half year? Mostly through attrition I believe, as there is enough turnover that they simply do not replace those leaving.
Posted by: ross | Feb 27, 2006 5:07:33 PM
Wait, I'm confused. What /is/ happening in the labor market that makes what the CEO says so wrong? Did he actually say he was having a hard time hiring? If not, who did?
Posted by: Foolish Jordan | Feb 27, 2006 5:14:37 PM
He said (and I barely paraphrase) the economy is presenting "a very good employment picture."
Posted by: Barry Ritholtz | Feb 27, 2006 5:35:58 PM
Which one could take to mean, we find all the people we need, and at good terms too.
Posted by: cm | Feb 27, 2006 6:00:34 PM
"Reducing it's laborforce" is an understatement. Home Depot has been gutting its staff. The only safe jobs are in security and automated checkout.
HD has successfully killed locals nationwide but now, rather than exploit the issue they've retrenched and left the market to the worst survivors.
Posted by: Robert Cote | Feb 27, 2006 6:03:38 PM
Maybe he's aiming for the Treasury Secretary job in the White House....
Posted by: Anonymous | Feb 27, 2006 6:03:50 PM
When the economy is strong, people who have plumbing or carpentry skills are going to be out making real money, not slaving at Home Depot for $9 an hour.
Posted by: Bobby Digital | Feb 27, 2006 6:15:08 PM
I think he probably means that the construction industry is booming and that is what makes HD their money. Go to one of them at 6 A.M. and count the number of trucks carting off the days supplies. In fact if someone wanted to they could use that as a leading indicator. When the number of pickups at 6 A.M decline - watch out below.
Call it the Home Depot Pickemup Truck Index
The trucks you see there on the weekend are Harry and Harriet Happyhomeowner. They don't spend as much but it's quality shopping.
Posted by: John | Feb 27, 2006 6:19:08 PM
I never went to Home Depot to get someone try to sale me anything. I go to HD because the prices are low and if I need advice, I can ask the random person I see on the floor hanging around. Lately, I sometimes also buy the wrong thing and usually return it. So in other word, I agree that this CEO should wake up and smell the coffee. Seeing the lack of good and helpfull service is on the decline at HD. Its been on the down side for quite some times. HD is not about bully sales people but knowledgeable individual that should get paid a bit more then the 10$ hour.
Posted by: Benoit | Feb 27, 2006 9:33:23 PM
HD competes with contractors for a lot of its employees. Its not surprising that the CEO perceives a tight job market (if that's what his rather vague statement means).
HD customer service should start improving again in early fall.
Posted by: Tom DC/VA | Feb 27, 2006 9:38:20 PM
In our part of the country there are plenty of former manufacturing workers to work in Home Depot.
So losing an $18-an-hour and job and replacing it with a $9-an-hour is not a big deal, is it?
Not for the CEO.
Posted by: save_the_rustbelt | Feb 27, 2006 10:27:36 PM
One of our friends is a tree trimmer who just started working at Home Depot after running his own business for years. I suspect it is the benefit of having insurance, as well as the tree trimming business being down, that led him to this.
Bad news for HD, though - we've finished all our home remodels, and have almost nothing left to buy there. Oh, darn.
Posted by: donna | Feb 27, 2006 10:53:08 PM
John: At the HD that I pass every morning, I cannot see how many trucks are on the parking lot because the view is obstructed by the armies of day laborers hanging around waiting for clients to show up. At least that's what I presume those guys are.
Posted by: cm | Feb 28, 2006 1:09:41 AM
Why would you expect a CEO to tell you the whole truth, even making the presumption that he has a knowledgeable viewpoint on the subject?
When has a CEO, with rare exceptions, done anything but spin for his company's benefit?
Posted by: Mike G | Feb 28, 2006 1:37:19 AM
Donna - that just proves my point - the "transit labor force" (TLF) can be part of the index. When those bodies start going somewhere else you can be pretty sure the homies are going down.
Posted by: John | Feb 28, 2006 7:09:48 AM
CNBC is a propaganda machine. You're better off unplugging the cable and leaving it that way.
Posted by: John Navin | Feb 28, 2006 7:40:47 AM
I wish you could have seen our Home Depot today. I call it the Upstate NY Contrarian indicator. We live in a very sparsely populated corner of Upstate NY that is serviced by both Lowe's and Home Depot. Lowe's was the first in town and owns a commanding market share. HD took a less desirable piece of Real Estate and clearly suffers as a result.
At 11:30am I pulled into the front parking space and while walking the store for over an hour I saw 5, 5!!!!, other customers. My old NJ HD had people lined up out the door all day long. When a company scans the entire country and decides that this little corner of the world represents their best available growth opportunity (like Kohls, Best Buy and Bed Bath Beyond have all done in the last 6 mths), it's time to question their expansion plans.
Posted by: Brian | Feb 28, 2006 11:43:45 PM
Any contractor worth their salt, knows HD, LOW or Menards isn't the place to shop for quality goods. Sure, you can buy that Moen faucet set at any of the above, but I bet you the cost of it, that you'll be replacing it within a couple of years, because it will fail. Aside from that, anyone knows you can't make any money installing for them.
They do not sell the same grade of materials, and I could walk you through any store - and point out example after example.
Except for drywall and OSB plywood, light bulbs... stuff like that.
Posted by: Tony | Mar 2, 2006 4:51:25 PM
What's the big deal. First of all HD's bad customer service is not going to be their downfall in the future. Home Depot has had bad customer service for as long as I can remember(95ish). Obviously it isn't something significant to their business seeing as the company has had a decent growth rate over that time.
By the way I think Menards is the best home improvement store by a mile. I feel bad for those not the upper midwest. Menards has a plumbing selection that puts lowes and Home depot to shame.
Posted by: online stock trading | Mar 22, 2006 10:25:28 PM
I am happy to realize it is not my being 80yo that is responsible for my poor Home Depot experience. 10 years ago you could get good advice in any dept. Now the(if one can be found) person reads the label, and not as well as I can. My two contract services for a kitchen and roof were as disaster. The cabinets sat in my family roof from October til February. The dishwasher would not open because it bumped the stove. The counter was 8 inches too short on the sink side which makes it useless. Several doors cracked. I am living with it, I cannot live with a roof that leaked in 8 areas, was repaired after 6months only to leak again the following year. Promised compensation for interior repair, partially compensated. denial of pending claim. NEVER sign a bottom line with Home Depot, the line is a vanishing one.
Posted by: nonna | Aug 14, 2006 4:27:32 PM
Been inside the box for aprox 7 years. What was once a mediocre store to work & shop at now totally sucks! Bob Nardelli has lost his F'ing mind! He is going to ruin this company also. With all the peoples lives he has turned upside down I dont see how he can sleep at night. Talk about screwed in the head! From watching the number of employees & customers dwindle don farther & farther its only matter of time! They can lie to themselves all they want but contrary to what they believe the customers aren't stupid or blind! Even though they try to saturate a market to monopolize a customers shopping options the customer will always have other choices than orange! To the shareholders all I can say is i hope mr. bob was worth it. I'm sure i will read about you in the paper sometime that you followed the same path as builders square! As for you Kansas City market, at least hire some mgt that has some sort of personality & maturity Their is more to running a store than seeing how many of the teeny bopper cashiers you can screw! In a nut shell they are now a screw up company who I feel are going to get theirs - sooner or later!
Posted by: Mr. Curt | Oct 8, 2006 12:31:38 AM
Interesting post about the home depot CEO and their methods of employment.
-Darren
Home Depot Coupons
Posted by: Darren Davis | Aug 9, 2007 9:10:15 AM
