Market Continues Positive Results

by WOHe

Market Continues Positive Results


The year 2000 may witness a modest slowdown in housing and
shipments of key kitchen/bath-related products but 1999 apparently
ended on such a high note that even a modest decline will translate
to a near-record year this year, according to the latest figures
available from government agencies and industry-related trade
associations.

Appliance Shipments
Domestic shipments of major home appliances, fueled by consumer
confidence and a strong economy, climbed once again in November of
1999, as the U.S. appliance industry closed in on
a record-breaking year of more than 61 million appliances, the
Association of Home Appliance Manufacturers reported. According to
the Chicago-based AHAM, shipments for the first 11 months of 1999
totaled some 56.6 million units, up 9.2% over shipments in 1998,
the previous record year for appliances. All major product
categories posted year-to-date gains through November, AHAM said.
AHAM projected a strong year for appliance shipments in 2000 the
second-best year on record although shipments are being forecast to
decline somewhat, to just above 60 million units (see graph, above
right).

Cabinets & Countertops 
Domestic sources of supply still dominate the U.S. market for
kitchen cabinets and countertops, although imports are capturing a
growing share of the total market, according to a
recently-published study by New York-based Specialists in Business
Information (SBI). According to the SBI report,
domestically-produced cabinets and countertops accounted for an
estimated 94.9% of the total U.S. market supply of kitchen cabinets
and countertops in 1999, down from 97.5% in 1994 and 98.1% in 1989,
with imports capturing a small, but steadily growing market share.
This trend is expected to continue through the year 2004, with
imports increasing their U.S. market share to 6.4% by then (93.6%
for domestically produced cabinetry and tops), note SBI
analysts.

Existing-Home Sales
Existing-home sales were poised at year-end 1999 to top the
5-million mark, and set a new record for the fourth consecutive
year, according to the latest figures available from National
Association of Realtors (NAR). The Washington, DC-based NAR
reported in December that, despite declining sales in the fourth
quarter of 1999, sales for the year were on a pace to reach a
record of nearly 5.2 million units. Resales are being forecast to
decline to close to 5 million units in 2000. “Feeling the pinch of
the sharp rise in mortgage rates since April of 1999, the housing
industry is clearly topping out, but it is far from falling down a
cliff,” noted NAR managing director Orawin Velz, attributing the
industry’s continued strength to “a high-tech economy that is
generating healthy real incomes.”


Investment Heads Toward Cities

Philadelphia, PA Baby boomers dwelling in older suburban homes
will continue to fuel demand for kitchen, bath and other remodeling
projects, but an increasing amount of remodeling attention will be
paid to the cities in the years to come, according to a top
official of the National Association of Home Builders (NAHB).

Speaking at a recent remodeling industry trade show here, NAHB
president-elect Robert Mitchell pointed to “a renewed emphasis on
urban reinvestment and rehabilitation, as strong economic and
housing growth has put heavy pressure on suburban areas, and
prompted governmental efforts to control and redirect growth.”

According to Mitchell, recent moves by the Dept. of Housing and
Urban Development (HUD), and the U.S. Conference of Mayors, are
aimed at upgrading the existing housing stock in urban areas as a
key component in revitalizing them. “Consequently, the remodeling
industry will find lots of opportunities in older urban areas
across the country, as efforts to direct some growth back toward
central cities continue in the years ahead,” Mitchell said.


Market Pulse/Year 2000 Forecast

The economic indicators continuing to define the health of the
kitchen/bath and housing markets are all pointing in one direction,
and it’s a positive one. The good news is business is booming. The
bad news (if you want to call it that) is business is booming. And
the general consensus is that dealers everywhere no matter what
region, economic level or clientele base are shifting into
overdrive in order to keep pace with a climate that has bolted out
of the starting gate.

The following dealers interviewed by Kitchen & Bath Design
News share their thoughts about what they feel is the Year 2000
Forecast:

“The economy for 2000 is very strong, and consumer confidence is
extremely high. Consumers are still looking for creative designs,
and they’re still willing to spend the dollars on high-end
installations to get a unique look. In addition, the labor market
is opening up which is good, for us because finding qualified
people [to do the installations] is always a challenge. 

“The other challenge is going to be to continue providing the
high level of customer service [we’ve been 
providing], and to step up to the plate and team up with
manufacturers and suppliers to provide timely product in order to
pull out our projects with success. “

Lori Jo Krengel, CKD, CBD
Kitchens By Krengel, Inc.
Saint Paul, MN

“The year 2000 is only [a few weeks] old and we’ve
already written 25% of our business so it’s off to an astounding
start. It started before the holidays the Monday after New Year’s,
we had three designers on 
the floor all day, and that’s pretty much unheard of. I think the
reason for this is that the economy still seems to be good.

“What also might be positively influencing business
is that there was a ‘futurist’ from the University of Michigan, who
recently projected a 25-year period of sustained economic growth
for this area.

” The only major challenge will be finding enough
qualified people to do the high-end installations, and they’re very
hard to come by the market is so tight on qualified people. But,
the lack of clients is definitely not a problem, and they seem to
be willing to spend the dollars.”

Stephanie Witt, CKD, CBD, 
Kitchens By Stephanie
Grand Rapids, MI

“The challenge [is always a matter of finding
qualified people for sales and installations, and maintaining these
people and the facility, so you get the best production. And
regardless of the market [whether it’s going up or down], the
remodeling still goes on after the fact, so I expect this year and
next will be very lively years.

“The other challenge is with the market itself, in
general and whether or not you fall into the right crack and get
the right people. You have to find your niche in terms of what you
feel you can do, and what you’re qualified to do whether you’re
focused on high-end projects or a medium-price range, and how you
can get that type of customer in [to your facility]. The challenge
will be how you market yourself to the market which is very
important in any business.”

Robert L. Wieland, CKD, CBD, 
Kitchens By Wieland, Inc.
Allentown, PA

 

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