The cabinet market will recover, but not in 2008.
"We hope to see the recovery begin, but 2008 compared to previous years will likely be a soft year," says Dick Titus, executive director of Kitchen Cabinet Manufacturers Assn.
"In 2008 foreclosures are expected to be a huge drag on the market, creating inventories and other kinds of issues," says Titus. "It's going to climb back, but it will not be until the second or third quarter of 2009 that we see a more positive trend in new housing."
Because of the new housing slump, stock cabinetry is slow right now. Year-to-date stock sales are down 20.4 percent. "Remodeling has helped keep us from being in the 40 to 50 percent down category like new housing," says Titus. "We're in the 12 to 14 percent down category we're still negative, but remodeling is sustaining us more than new housing."
Economy plays a part
Cabinet manufacturers that primarily serve the big builders are really hurting, comments Titus. Year-to-date, custom cabinetry is down 4.4 percent and semi-custom cabinetry is down 5.3 percent. Cabinet companies are anticipating more of a slowdown in the first quarter of 2008 than previously experienced.
Differences in regional strength are also a factor. "Some manufacturers are doing worse than others, but overall the industry is looking forward to working through this challenge," he says.
In November 2006 the cabinet market's 126-month streak of consecutive growth ended. Since the streak ended, the industry has had 12 consecutive months of negative numbers.
According to participating members of the KCMA monthly Trend of Business Survey cabinet sales for September 2007 decreased 12.5 percent compared to September 2006. Stock cabinets decreased 20.7 percent; semi-custom sales decreased 3.6 percent and custom sales decreased 5.5 percent.
"It sounds like a fairly gloomy report, but we've had a long, enviable run of positive economic growth and the demographics are such that once the economy goes through this re-adjustment our industry will be in a good position," says Titus.
The numbers don't tell the whole story. "Most cabinetmakers are making limited product adjustments, which depends on their market and location, because some are impacted more than others," says Titus.
"Everyone recognizes the cyclical nature of the industry," says Titus. "After we get though the slowdown the demographics point to another decade of growth."
Keeping an eye on imports
Imports are not creating a significant impact on the cabinet industry. Most imports come from Canada, which is really a trading partner, comments Titus.
At 2007 KBIS, a large number of exhibits from China created an awareness and concern among cabinet manufacturers. "The cabinet industry is closely monitoring potential future competition from China," says Titus. "China is a major concern and while those numbers are growing, the impact hasn't been nearly as pronounced as for some other sectors."
Right now the industry's relationship with China is manageable. "U.S. cabinet manufacturers are still U.S. based and this slowdown gives them an opportunity to improve procedures and better prepare as we go into recovery mode," says Titus.
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