Nervous Times Replace Profit Climbs

Optimism can be found among architectural woodwork and store fixture makers, but it has been shaken and stirred a bit.

By Greg Landgraf


For the first time, a majority of respondents to Wood & Wood Products' Annual Survey of Architectural Woodworking & Store Fixture Manufacturers are not predicting a better year ahead.

Only 41% of respondents in the 14th annual survey said their business expectations for 2001 are better than 2000, while 42% anticipate business remaining about the same and 17% have lower business expectations.

This is the only time in the six years that W&WP has asked the question that better business expectations was not the clear winner.

Klein Merriman, executive director of the National Association of Store Fixture Manufacturers, says first-quarter business has proven worrisome for many of the association's members. He says his informal poll of store fixture members indicated a mixed bag of first-quarter business results ranging from -20 percent to +30 percent.

"The most common thing I'm hearing from members is that retailers are not pulling back on projects already in development, but they are also not pulling the trigger on a lot of new projects," Merriman says.

Reasons for Optimism, Reasons for Fear

The woodworkers surveyed are a bit more positive in their predictions of whether or not the industry is on the leading edge of a recession. Only 22% said they believe the industry is entering a recession, while 38% said no. The other 40% said they were unsure.

While optimistic, those figures are less positive than those reported in W&WP's survey of the cabinet industry last month, where 18% of respondents foresaw a recession while 82% did not. ("Unsure" was added for this month's survey.)

Most of those who expected a recession said they based their opinion on their own observations, rather than stock reports or national economic data. "We've already seen a slowdown in orders, and one customer has filed Chapter 11," says Tom Dlugosh, president of Dlugosh Cabinet & Fixtures Inc. of San Leandro, CA.

Those who were more upbeat about the economy had a bigger variety of reasons. Several said they had seen no slowdown in quoting opportunities, while others acknowledged a slowdown but said it was a minor correction rather than a recession.

"Although the retail market may not be what it has been in years past, it is still thriving," says Rich VanDillen, vice president of sales and marketing for MEG of Cambridge City, IN. "Consumers are always changing, and the retail industry will always work to meet the consumers' ever-changing needs and desires. This in turn drives the fixture industry."

"Order activity is on the rise and quote activity is very strong," agrees Monty Ernebel, CEO of Cooper Enterprises Inc. of Shelby, OH.

A few respondents observed that their business cycle typically lags behind the economy as a whole because of the long-term nature of construction projects. As a result, while they feel confident about the immediate future, they are on edge about the road ahead. "We find that construction trails the economy by 1 to 1-1/2 years," says Donald Ramsay, president of Modern Woodcrafts Inc. of Farmington, CT. "We do not feel a slowdown yet; we just hear talk and read reports regarding consumers' mind set."

Merriman says that the latest 12-point interest rate cut by the Federal Reserve "has got to help." What remains to be seen, he says, is how soon that rate cut will stimulate retail store projects and how many will be developed.

Some survey respondents see reason for hope even if the rate cut fails to stimulate the economy as hoped. Tony Kadysewki, communications manager for Trion Industries of Wilkes-Barre, PA, says retailers may react to a slowdown "in a contrarian fashion. If the economy and spending slows, retail may need to remodel more to create destinations that pull customers."

Price Pressures

Attaining a fair profit margin in a segment where most jobs are awarded in competitive bidding is hardly a new challenge. But an economic slowdown could exacerbate the problem

"Retailers are under pressure for cost management as well as generating sales. This affects their purchasing decisions," explains John Schlegel, chairman and CEO of Hamilton Fixture of Hamilton, OH.

Frank Huschitt III, president of Imperial Woodworking Co. of Palatine, IL, agrees. His top concern is "the perception in some areas of the construction industry that there is little or no difference in quality from one woodwork company to the next, and the resulting emphasis on price rather than understanding real quality differences."

Anger against cut-rate competitors was a common sentiment expressed by survey participants. Price competition was mentioned nearly as often as the economy as a top concern. (See sidebar, page 57, for a complete listing of concerns.)

"Price competition is excessive," says Steve Meng, president of Retail Outfitters Inc. of Manchester, KY. "Margins are too low to support investment in new equipment and processes."

Several U.S. manufacturers also expressed dismay at their pricing disadvantage compared to companies in other nations, particularly Canada, due to the strength of the U.S. dollar.

Other Survey Highlights

Repeating trends from earlier year's surveys, store fixtures continued to dominate the sales of the Top 25. Fixtures accounted for 73% of the Top 25's sales, while architectural woodwork made up 27%.

Almost all of the companies surveyed reporting serving multiple markets. Only six - LA Darling, Madix Store Fixtures, Ontario Store Fixtures, MII Inc., Store Kraft Mfg., and TJ Hale - devote their work to a single area. Each of them focuses on retail work.

Rich Christianson and Bernadette Freund contributed to this report.


News at the Top

W&WP takes a look at what some of the top architectural woodwork and store fixture manufacturers have been up to in 2000, and what they have planned for 2001.

Morgan Marshall Industries, Inc. of Chicago Heights, IL, a div. of RHC/Spacemaster Corp., has launched bri*design, a custom furnishings company. Bri*design will operate out of Morgan Marshall's headquarters in Chicago Heights, IL. Bri*design, a customized manufacturer of metal and wood furnishing products, will include tables, chairs and other unique fixture designs. President and Chief Designer Brian Eldridge, and VP/Marketing Jonathan Rosenband will head up the management team for Morgan Marshall's newest division.

L.A. Darling Co. of Paragould, AR, acquired Streater Inc., a Minnesota-based producer of metal fixtures such as gondolas. The acquisition expanded Darling's total size to 2.9 million square feet. As part of the acquisition, Darling's "Advanced Pharmacy Concepts" line of pharmacy products are now sold through the Streater catalog. Best Buy Co. Inc., awarded L.A. Darling its first "Vendor of the Year" award on February 8, 2001, for outstanding performance in 2000. L.A. Darling was evaluated on a five-month process on multiple shipments. The overall award was given based on the complete order process and customer service. The company has also added a tech tool to its Web site called Customer Relationship Management, an online customer service database that allows current customers access to real-time information about the status of their accounts.

Madix Store Fixtures of Terrell, TX, introduced its tubular pharmacy shelving, a modified wire truss shelf and radius shelve this year. The tubular pharmacy shelving features tubular uprights, smaller, two position tilt 16-in. shelves and lock-together structural components. The radius front shelves are available for upper or base shelf applications and may be used inline on gondola/wall shelving or as feature shelves on end caps.

Trion Industries Inc. of Wilkes-Barre, PA, expanded its warehouse by 34,000 square feet to allow increased stocking of popular products. The company launched four new lines of shelf management systems, implemented Oracle computer systems companywide and added new extrusion capabilities.

Ontario Store Fixtures of Toronto, ONT, designed the Vista Classic Merchandising System, available in gondola, half and wall configurations. The components are bolt-free, modular and compatible with most other fixture systems. The system includes the 4-Way Merchandiser, the End Cap and Standard Wire Shelves, Fences and Dividers.

MII Inc. of Lincoln, IL, opened a new facility in Nevada.

T.J. Hale Co. of Menomonee Falls, WI, completed the installation of its ERP system.

Design Fabricators Inc. of Lafayette, CO, a Leggett & Platt Co., added a 123,000-square-foot plant in May 2000. The company also increased warehouse space by 18,000 square feet.

Boden Store Fixtures of Portland, OR, recently produced store fixtures for an innovative new type of grocery store called Nature's Northwest in Oswego, Oregon. The store features elaborate displays, cash registers at opposite sides of the store rather than in front, a gourment deli, juice and tea bar, wellness center and a staircase with a CD listening station.

MEG, Div. of Hirsh Industries, purchased a CNC laser system, which the Cambridge City, IN, company says has increased productivity and allowed it to offer more specialized and custom store fixtures. MEG added many new customers in 2000. The company has and will continue to do work for remodels of Service Merchandise stores.

Hollywood Woodwork of Hollywood, FL, completed projects in Florida and the Bahamas, including the Mayo Clinic in Jacksonville, FL, the Mandarin Oriental Hotel in Miami, FL, the Harborside Resort in Paradise Island, Bahamas, and the Orange County Museum in Orlando, FL.

Greenbriar Architectural Woodwork of Ronceverte, WV, conducted a plant expansion and consolidation.

Modern Woodcrafts of Farmington, CT, purchased Anderson CNC routers with nesting technology, which it expects to have running by April 15.

Wind Mill Woodworking of Sheboygan Falls, WI, expanded its warehouse by 14,000 square feet. The company also installed a new CNC router and a new central dust collector.

Dlugosh Cabinet & Fixtures Inc. of San Leandro, CA, installed a new point-to-point machine.

Have something to say? Share your thoughts with us in the comments below.