Many of the cabinetmakers participating in Wood & Wood Products’ 2001 survey of the cabinet industry acknowledged some softening in their market. But almost all said that talk of an impending recession currently in vogue in the media is more hype than reality. Only 18 percent agreed that the cabinet industry is headed into a recession.

The most common argument given against a recession is the Federal Reserve Bank’s recent interest rate cuts. “The market was softer than expected in early fall, as most durable goods had a decline,” says Mark Walsh of Princeton, MN-based Crystal Cabinet Works. “The demand should stabilize with the current lower interest rates affecting consumers’ confidence.”

		Aristokraft’s new Roman Arch doors for its Westbury cabinets feature raised center panels and concealed hinges.

Remodeling’s share of the market among W&WP’s Top 25 cabinetmakers grew slightly, from 56 percent in 1999 to 57.2 percent in 2000. KCMA estimates that remodeling is an even bigger part of the industy as a whole — 75% of all cabinets — and there is no sign that remodeling’s share will decrease anytime soon.

One interesting phenomenon is that the largest companies (those with more than 100 employees) were more likely to view interest rate cuts as a factor preserving the economy’s health, while smaller companies (with 50 to 99 employees) cited the remodeling market more frequently as a reason for hope.

Still a Strong Base
Several of the cabinetmakers surveyed expressed a high level of faith in the basic strength of the U.S. economy, seeing enough positives to prevent any catastrophic downturn.

“The base economy remains very strong,” says Rodney Suggs, president of Legacy Cabinets LLC of Eastaboga, AL. Suggs says that his company experienced a sales slowdown late last year that is typical of the season, and that sales have as usual come back up again. “As of yet, we’re going in a regular cycle,” he says.

Pent-up demand in the housing market, for example, was frequently cited as a buffer against recession. “There is still a backlog of new homes, and with interest rates down, existing home sales should remain strong,” says Neil Lynch, senior vice-president of marketing for MasterBrand Cabinets Inc. of Jasper, IN.

Another respondent acknowledged the nation’s economic policies and controls as “heading off” recession when it threatens. And strong base demographics, such as low unemployment and a growing population, were cited by several respondents.

Outlook Mixed
While most of those surveyed did not want to use the term “recession,” raw optimism for the year ahead has dropped from previous surveys. More than 72 percent of respondents rated their company’s business in 2000 as good or excellent, but just under two-thirds put their expectations for 2001 in those categories.

Twenty-three of 73 respondents put next year’s expectations in a lower category than this year’s — reporting “very good” business this year but anticipating “OK” sales next year, for example. Only 13 report expectations in a higher category. On the up side, most of those who did anticipate a lower category still project OK or good sales, an indication of steady times, if not the euphoria of recent years.

More quantitative economic news has been mixed as well. In December, KCMA’s monthly Trend of Business Survey reported its first drop in cabinet sales in nearly five years. But housing starts that month improved by 0.3 percent. The U.S. index of leading economic indicators rose by 0.8 percent in January, but the stock market remains unstable as companies continue to warn of declining profits.

“The negative growth recorded by KCMA member companies last December is part of a general economic slowdown that began to manifest itself last fall,” said Dick Titus, executive vice president of the Kitchen Cabinet Manufacturers Assn., in a recent interview with W&WP. “The cabinet market is somewhat resilient in that it serves both new housing and remodeling.... Our outlook is for things to pick up in the spring provided more serious structural economic problems do not appear.” (  Click here for the full text of the interview  )

	Merillat Industries introduced a new line of home-office cabinets and components late last year. While other-room cabinets made up only two percent of the Top 25’s sales, they do form a market with strong growth potential. Shown here are Spring Valley maple cabinets in the Toffee finish.

Among larger companies, easing of environmental regulations was the most commonly requested policy change. The EPA, one respondent suggested, is too fixated on the politics of air pollution, which prevents it from fighting the major causes.

Several of the over-100-employee companies also said that the Fed should continue to reduce interest rates.

The one request common among companies of all sizes was a general reduction of federal regulations and the paperwork associated with them. “I spend more time making sure everything is compliant than I do running my business,” says Robert Nichols, president of Cabinets by Nichols Inc. of Bargersville, IN. “There’s too much government interference.”

“Leave 60% of corporate America alone!” says Gene Ponder of Marshall, TX-based Republic Industries. “Go after the bad companies and recognize the good companies without taking the stance that they all only care about money.”

Because the survey asked an open-ended question about legislation, we received a wide variety of responses. Ergonomics, minimum wage freeze, higher import taxes, improving education, fighting Family and Medical Leave Act abuse, sunset laws, repeal of President Clinton’s logging bans, health care reform and fighting California’s energy crisis were all listed as priorities by respondents.

Other Survey Highlights
The merger mania that has marked the cabinet industry for the past few years seems to have abated. None of last year’s Top 25 cabinetmakers were bought and only a few purchased companies.

Frameless cabinetry lost ground this year among the largest manufacturers. Framed cabinetry continued to dominate sales, making up 82 percent of the Top 25’s output. While one company, Norcraft Cos. of Eagan, MN, entered the frameless cabinetry arena with its purchase of Liberty, NC’s Ultracraft, four companies scaled back production of European-style cabinetry. Marsh Furniture Co. of High Point, NC, reported cutting construction of frameless cabinetry from 20 to 10 percent, and three other companies also reduced their ratio of frameless to framed cabinetry.