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Cabinet industry on the rebound.

WOOD & WOOD PRODUCTS presents its 5th Annual Top 25 Cabinetmakers survey, at a time when the industry is gearing up for what could be a record year.

After suffering through tough economic times in 1991, cabinet shipments in 1992 are projected to be at their highest in 13 years. While shipment projections have fallen from 49 million units in November to 48.1 million units in March, this projection would still help the industry realize a growth of approximately 3 million units over 1991. This projection would top the 48 million units shipped in 1989.

This growth is a reflection of the rebound in the general economy. According to the Kitchen Cabinet Manufacturers Assn., some of the factors that are contributing to this growth are increased housing starts, low interest rates, increased sales and a stabilizing economy. While it is generally agreed the economy is on the mend, some economists worry about another "false start" as happened a year ago. A couple of factors give rise to this worry: housing starts, which in past recessionary times have led the country back toward economic health, are threatened by record high lumber prices; and consumer confidence in the economy continues to be low.

After surviving 1991, when shipments were the lowest since 1987, a majority of the cabinet manufacturers surveyed for WOOD & WOOD PRODUCTS' Top 25 Cabinet Manufacturers feature, still list the economy as one of their primary concerns. Of the 34 companies who responded to this fifth annual survey, more than half listed economy as one of their top three concerns. Many companies noted other factors that impact the economy such as profit margins, employee benefits, workmen compensation, mergers and acquisitions and foreign competition.

These concerns are dramatically pointed out by comparing last year's chart to this year's (located on page 60). Twelve companies that made both year's lists reported a drop in sales. Eight others reported zero growth. This does not take into account Riviera Cabinets, who for the first time is not included in the Top 25 chart. Riviera, of Pompano Beach, Fla., did not respond to the survey or to repeated phone calls. Nor did the company exhibit at the Kitchen/Bath Industry Show in Atlanta in March, even though the show guide listed the company as an exhibitor.

Of the cabinet companies who made the list both years, only four companies reported increases. Most notably, LesCare Kitchens of Waterbury, Conn., increased from $25 million to $30 million, Wellborn Cabinets of Ashland, Ala., from $22 million to $25 million and Marsh Furniture of High Point, N.C., from $40 million to $45 million.

Remodeling fuels the industry

Since 1986, the number of cabinets sold for use in repairing and remodeling houses has increased approximately 12 million units, while cabinets used in new construction dropped approximately 5 million units. This is not likely to change. The KCMA reports that remodeling will comprise 61 percent of all cabinet sales this year.

Statistics from the National Kitchen and Bath Assn. bear this out. According to the 1992 NKBA Kitchen/Bathroom Industry Business Trends Survey, 69 percent of the projected 1992 sales of more than $1 million will be for residential remodeling. On average, 67 percent of remodeling work occurs after a home owner has owned the building for between five and 15 years.

In W&WP's survey of the Top 25 cabinet companies, 19 stated that remodeling was going to be a greater area of sales growth. Four companies listed new construction as the greater potential for growth over the coming three years. Only one company, Gordon's Cabinet Shop of Riverside, Calif., said it only manufactured cabinets for new construction.

Ten companies that made the list in 1991 and 1992 report greater sales to the remodeling market. Each of these companies expect to see a greater share of its sales going to the remodeling market. Three companies showed a decrease in sales to the remodeling market.

The companies that realized a greater share of their business in providing cabinets for remodeling include:

* WCI Cabinet Group, Richmond, Ind., from 60 percent to 70 percent

* Aristokraft, Jasper, Ind., from 45 to 60 percent

* St. Charles Cos., Chesapeake, Va., from 20 percent to 50 percent

* General Marble Corp., Rancho Cucamonga, Calif., from 90 percent to 95 percent

* Marsh Furniture from 25 percent to 30 percent

* Yorktowne, Red Lion, Pa., from 45 to 55 percent

* Medallion Kitchens, Waconia, Minn., from 60 percent to 80 percent

* Wellborn Cabinets from 60 percent to 70 percent

* Rutt Custom Cabinetry, Goodville, Pa., from 80 percent to 85 percent

* Evans Cabinet Co., Dublin, Ga., from 50 percent to 60 percent.

Changes and sales

Judging from the survey responses, the cabinet industry is in a state of change. It is changing in the way cabinets are sold, the quality and style of the products, the demand of customers for a greater variety of products, accessories, styles and colors, faster delivery times and governmental regulations. These will all play a part in how well the cabinet manufacturers do economically.

"Buyers are becoming extremely value' conscious which I feel will continue through the 90s," said Steve Utsey, executive vice president of Marshall, Texas-based Republic Industries. "You better have a good product at a very good price point to grow."

Not only do manufacturers have to create a high-quality product al a low price, but they must be able to offer the customer a wider variety of items. "The marketplace is demanding a wide variety of styles and colors with shorter lead times," said Gary Bertch of Bertch Cabinets, Waterloo, Iowa.

Mickey Kurzman, vice president of marketing for Dallas, Texas-based Triangle Pacific, stated emphatically that the major change in the industry is the customers' "increasing demand for choice. This includes a wider choice of materials, decorative treatments, mouldings, hardware, accessories, style and color."

To meet these increased consumer demands, many companies are going custom or semi-custom, said John Brunton, vice president of manufacturing for the custom cabinet company, WoodMode. To illustrate this point, custom or semi-custom cabinet manufacturers at the K/BIS show outnumbered stock cabinet manufacturers 25 to 21. In the NKBA survey, 77 percent of kitchen cabinets are manufactured on either a custom or semi-custom basis.

Bill Sullivan, advertising manager for American Woodmark of Winchester, Va., agreed. "Major manufacturers have expanded from just stock cabinets into semi-custom and custom as well as frameless. Almost every company is developing rapid delivery systems and manufacturers are offering more colors and styles. But no more wood species."

The way products are sold is also impacting the industry. The role of home improvement centers and RTA cabinets was singled out as one of the biggest changes in the industry by a number of companies surveyed.

Also cited as causing major changes in the industry were VOC emission and other regulations.

Frameless not shrinking

The sale of frameless cabinetry continues to grow, according to the survey. Seventeen companies in this year's Top 25 survey offer frameless lines including the top nine companies.

George Bashkingy, marketing director for KraftMaid Cabinetry Inc. said, "Consumer awareness of frameless cabinetry will trigger additional interest and selection of this type of product."

Ron Altenhoff, marketing communications manager for HomeCrest, Goshen, Ind., said that frameless will grow faster than face-frame because of "increased product lines and a national trend toward frameless construction."

While five of the top 10 companies say that frameless sales over the next three years will grow at a faster rate than face-frame, not everyone is certain of the continued growth of frameless cabinetry.

One such company is Taylor, Mich.-based Masco Corp. A spokesman for the company said that frameless sales have reached a "plateau." While the company reports frameless sales were 1 1 percent of total sales, up from 7 percent, this increase was attributed to better reporting procedures and not necessarily greater sales, he said.

Wilmer Esbenshade, executive vice president of Heritage Custom Kitchens of New Holland, Pa., (see the Other participants list on page 63) said, "Current design trends favor a frame cabinet permitting a flush inset styling."

Kurzman added, "(There are) stronger demands in the market place for frame cabinets, although there is an increasing demand for concealed hinges."

Other rooms

An untapped market for many cabinet companies is other room cabinetry, an area that the KCMA recently began listing as part of its cabinet coverage. Of the Top 25 companies, 1 1 companies sell some cabinets for use in other rooms.

According to John Troxell, design director for WoodMode, this area of the market will grow. "Don't expect this to be 10 or 15 percent of the market within two years. My guess is that it will grow slowly."

WoodMode, based in Kreamer, Pa., sells 10 percent of its cabinets to be used in other rooms. As a custom cabinet manufacturer, WoodMode does not gear a specific line toward this market area. Instead it builds the product to suit the homeowner's wants and needs.

Rutt is also marketing its products for other rooms. At the recent K/BIS show in Atlanta, the company displayed its "French Quarters" line of cabinetry for the home library/den.

A company that is gearing up to sell to this market is Howard Lake, Minn.-based Dura Supreme. Last year, 5 percent of its $15.3 million in sales came from cabinets for other rooms. This is a small amount of the company's overall business, but by the end of this year the company is looking for other room sales to take off, said company vice president Roy Scherer

"With home computer stations, TV pullout trays and amusement centers, I do think that this will be a big market area for our frameless line of cabinetry," Scherer said. "I call this |living area' type cabinetry. Obviously we have to trim it up with more decorative mouldings and give it more of a furniture look."
COPYRIGHT 1992 Vance Publishing Corp.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:survey of top 25 cabinetmakers
Author:Adams, Larry
Publication:Wood & Wood Products
Article Type:Cover Story
Date:May 1, 1992
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