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Top 25 hinge growth on remodeling, home center market.

Top 25 cabinetmakers are finding success with diverse distribution methods as a way to increase sales.

It seems the recession may finally be over -- at least for the cabinet industry. The 11.7 percent increase in March sales over last year's figures bring to 15 the number of consecutive months for kitchen cabinet and bathroom vanity sales increases, said Dick Titus, executive vice president of the Kitchen Cabinet Manufacturers Assn.

"Since new housing starts have slipped during the first two months of 1993, this increase indicates that the remodeling/repair market continues to bolster cabinet sales," Titus said.

Out of a projected 1993 total demand of 50.7 million units, 60.7 percent will be sold for repair/remodeling, with the remaining 39.3 percent for new construction, according to a survey by KCMA/F.W. Dodge. Remodeling's share decreased slightly, by 2 percent over 1992 figures, and is down roughly 9 percent from 1991's high of 66.9 percent.

But despite the slight decreases, remodeling was still cited by roughly 67 percent of those surveyed by WOOD & WOOD PRODUCTS as the future growth area for the industry.

Medallion Kitchens of Minnesota, for example, foresees a 10 percent increase in remodeling over the next few years, said Cindy Wilson, sales manager. This view concurs with reports from the number one cabinet source Masco, which sees a larger increase in the remodeling market in the near future. The opportunity for remodeling growth, according to Masco vice president of marketing TABULAR DATA OMITTED Duane Bingel, and others, is largely tied to the increased sales of cabinets through home improvement centers.

Honing in on the home improvement center industry

More than 70 percent of those surveyed for the Top 25 story either sell through home improvement centers or have plans to distribute there in the near future.

Much of the home improvement center distribution growth is coming at the expense of contractors or wholesale distributors. Brammer, for example, has almost doubled its sales through home centers in the last five years. Fifty percent of last year's $25 million in cabinet sales was through home improvement centers, compared to 30 percent, or $7.2 million, five years ago, said Roger Butler, vice president of sales and marketing.

"Statistics have shown that home center growth has really accelerated at the expense of two-step distribution. Five years ago, home centers were certainly much less popular," said John Zvolensky, president of WCI Cabinet Group. Zvolensky likened the growth to the same phenomenon that occurred in the appliance industry with the startup of power retailers, i.e., Silos and Fretter's Appliance stores.

Other cabinet companies are also citing major distribution changes. Five years ago, St. Charles Cos. sold 95 percent of its products through contractors. Today, 10 percent of those sales have transferred to kitchen and bath retailers, with the remaining 5 percent to home centers. "We plan for more of our volume to shift to the home center channel," said John Chamberlain, vice president of sales and marketing. He added that he foresees "mass merchants continuing to erode the market share of the traditional kitchen and bath dealer."

Republic Industries' executive vice president Steve Utsey noted that distributing the contractors, wholesalers and home centers, helps "to keep a diverse customer base to try to avoid peaks and valleys in production."

Even Gordon's Cabinet Shop, which sells 100 percent of its cabinets to home builders/contractors, "will be implementing a program to sell to local home centers and distributors," said John Leach, sales manager.

Other companies with plans for increased home center distribution include: Texwood, General Marble, Bertch, Norcraft, Grandview and DeWils. McConnell Cabinets, which currently sells strictly to contractors and kitchen and bath retailers, foresees more sales through home centers. According to William McConnell, company president, selling through home improvement centers is a way to reach the cost-conscious DIY consumers.

Wood-Mode Inc., which currently has no plans to sell through home centers, noted the trend. "The cabinet industry is maturing with more aggressive competition and broader distribution channels," said Larry Arbogast, vice president of sales.

Changing face for cabinets?

The debate continues over consumer preference for frameless or face frame cabinets. Although Top 25 manufacturers cited minimal, if any, increase in frameless manufacturing, many were still optimistic about future frameless growth. Manufacturers based this on a variety of factors, ranging from a lower pricing base for frameless, as cited by Mickey Kurzman, vice president of Triangle Pacific, to hardwood availability shortages and the lesser amount of lumber needed for manufacturing frameless styles, cited by Eddie Poplawski, general manager of Cascade Cabinet Corp.

"Frameless cabinets are more popular (than ever)," said Timothy Bates, CKD, director of operations at LesCare Kitchens Inc. "The major (frame) manufacturers scoff at this, claiming frameless is only 10 percent of the market. These are the same kind of people who said the Japanese would never have more than 10 percent of the auto market -- and they'll be wrong again."

Of those manufacturing frameless, only a few mentioned the introduction of new frameless lines last year. "We have totally redesigned our frameless offerings and included a new product version, Impulse. These changes give our dealers much more product to sell," said Glen Peterson, CKD, vice president of sales and marketing at Dura Supreme.

Yet despite the positive notes, the overall consensus is that the face of the cabinet industry is not really changing. According to a KCMA/F.W. Dodge survey, face frame continues to be the popular choice among builders for newly constructed homes. "Traditional framed cabinets, rather than frameless, were once again more likely to be installed by contractors....88 percent were traditionally framed and the other 12 percent were frameless," the survey states.

Many of those interviewed for the Top 25 concurred with the results. Ease of installation was the top reason cited by many of the Top 25 cabinetmakers for the continued popularity of face-frame cabinetry. "Installers still find framed cabinets easier to install," said Zvolensky. "In the Central/Midwest regions, the shift to frameless is a lot slower than originally anticipated. On the East and West Coasts, and Florida, frameless is still very big. But the economics in those areas is still down, despite rebuilding. We have a dedicated components plant for frameless lines, so we definitely think that there's growth potential. Plus, we are struggling with the rising cost of hardwood, and frameless construction and material certainly use less lumber."

Hardwood availability's effect on industry

Rapid escalation of lumber prices, combined with anticipated shortages in supply have already had an effect on the industry, with manufacturers reporting increased material costs, which are then passed on to the consumer.

Gary Bertch, president of Bertch Cabinet Mfg., said, "We're still using the same percentages (of wood). It's just been much more difficult to get and prices are crazy!" Concurred Gary Haynes, national sales manager for Grandview Products Inc., "Although it hasn't affected our usage yet, we will be raising our prices slightly." Wellborn Cabinet Inc. also anticipates a price increase of at least 10 percent, due to rising lumber costs, said Angela Wellborn, advertising director. "We're seeing a demand for solid wood drawers," she said, "but there may be a problem with our wood supply and the future of political decisions that may affect it."

"Lumber supply was relatively stable until late last year....But shortages are rearing their ugly head," Zvolensky said.

The shortages have already affected manufacturing procedures at a number of facilities. "Instead of veneered plywood ends, we are converting to veneer over particleboard core," said Joan Urbaniak, director of marketing for General Marble Co.

"The rising prices of lumber and in particular plywood have caused us to begin exploring alternative materials for the long term production of our cabinetry," added Brian Loveland, director of international marketing for DeWils Ind. Inc.

In addition to plywood, particleboard components have also been affected, said Chamberlain. "So far, it has not had a significant impact on our door, drawer and framestock prices. However, we expect our particleboard costs to rise this summer."

The top 10 home centers are (as ranked by sales in the Kwik Index to Leading Companies):

* The Home Depot Inc., Atlanta, Ga.

* Lowe's Companies Inc., North Wilkesboro, N.C.

* Payless Cashways Inc., Kansas City, Mo.

* Builders Square, San Antonio, Texas

* Hechinger Co., Landover, Md.

* HomeBase Inc., Fullerton, Calif.

* Menard Inc., Eau Claire, Wis.

* Grossman's Inc., Braintree, Mass.

* 84 Lumber Co., Eighty Four, Pa.

* Sutherland Lumber Co., Kansas City, Mo.
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Title Annotation:cabinetmakers
Author:Koenig, Karen Malamud
Publication:Wood & Wood Products
Date:May 1, 1993
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