According to responses shared in the Cabinet Makers Association 2020 Benchmark Survey, some of us are still standing on the edge, wondering what our next step will be, while others feel that they have successfully weathered the current pandemic environment by being able to quickly adapt to the challenges it presents.
The CMA’s annual survey is conducted in collaboration with Woodworking Network, and the entire industry (not only CMA members) is invited to participate. Less than half of the respondents were CMA members; interestingly, though, the collective profile of the respondents matches that of a typical member.
The first survey question qualifies the respondents by their role in the company. To proceed with the rest of the survey, “owner, officer, or senior management” or “all of the above” (since small shop owners wear many hats) must be selected.
The respondents are primarily in the U.S. but there was also some Canadian representation.
The majority of the shops are less than 5,000 square feet but there were responses from owners of shops occupying up to 50,000 square feet.
Also, similar to the make-up of CMA membership, most of the shops have five employees or fewer, but there was input from larger shops up to 100 employees.
More than 50 percent of the companies have been in business for more than 20 years.
One respondent said that they are strong even with COVID because their reputation over the past 30+ years has kept them busy with a backlog of repeat customers.
Another respondent admitted that they had “morphed several times over 20 years. The business plan was to keep the overhead down or at least manageable because at any moment the markets tank and rise. You just have to be flexible to stretch with it.”
Thriving residential work
The majority of respondents serve customers within a 100-mile radius with a mix of commercial and residential work. Unfortunately due to COVID-19, commercial work has been “handcuffed” as one respondent commented, while residential has thrived mostly likely because of the increase in remodeling projects.
A respondent shared that “despite COVID concerns in 2020, we are set to more than double our revenue from last year. I think the future of the custom cabinet industry will focus more on ultra-custom work.”
For residential projects, the work is no longer just kitchens – it’s evenly distributed in every room in the house, plus the garage and outdoor living spaces too.
As in previous years, nearly all respondents market their products and services via word of mouth and referrals. According to one respondent, “Our business is very healthy and have enough business that we actually turn down jobs. Since 2004 all we have been doing is from word of mouth.”
However, an increasing number (48 percent) of small shops are using digital marketing as an effective strategy in addition to referrals.
Automation in small shops
More than half of those who participated in the survey have CNC equipment in their shops, while another 12 percent are considering upgrading or purchasing an additional machine. Some 10 percent of those who do not currently have CNC are considering investing in the technology.
Of those who use CNC, 75 percent say they have added significant manufacturing capacity as a result. A small percentage are still learning how to harness their CNC and secure jobs that require it. CNC manufacturing has also increased profits for the large majority of the respondents.
Pricing and compensation
The billable hourly shop rate varied quite a bit among respondents, from $25 to more than $125/hour with 40 percent in the $51-$75 range. As an industry, pricing has been a challenge for most. In other analyses such as FDMC’s Pricing Survey, the fluctuation isn’t predictable due to shop location, material availability, or even customer demand. This is obviously an area that shop owners struggle with and need more education about how to effectively charge for their services.
Compensation is typically the most useful data garnered from the survey results. For each level of experience (entry-level, proficient and advanced), the responses are provided for the typical job types, including designer, estimator, cabinetmaker, finisher, installer and even management positions. The data also contains details about the average annual earnings for the shop owner, which range from $50,000 to over $200,000. The details are available in the full survey results.
As in previous years, one of the biggest challenges for everyone is finding, training, and retaining qualified and motivated employees. When asked further about training employees, the primary obstacle reported was finding qualified people in the first place. This is a known concern for the industry as a whole.
It’s surprising, then, that almost 80 percent of the respondents said they do not use local technical schools as a source of new employees. Many explained that there aren’t any schools nearby that teach woodworking or they haven’t had any luck when they have used them as a resource. One respondent shared that the biggest difficulty is government regulation related to this issue of a skilled and trained workforce.
However, the other challenges (such as overhead, material costs, competition, etc.) were fairly evenly ranked as additional struggles in today’s manufacturing environment.
In 2019, business was strong for the overwhelming majority of cabinet shops, with 50 percent who stated that sales were better than 2018, while 36 percent said they were about the same and 12 percent reported they were less. Projections for 2020 sales are fairly evenly distributed in all three categories, primarily due to COVID-19 and the worldwide economic impact.
One respondent summed up the current situation very appropriately: “I have a belief that there will always be a need for a good cabinet maker. The economy will go up and down, and we don’t have control of it so we need to make good business decisions along the way.”
Another asserted, “Small manufacturers can compete with large companies if they are willing to work together in a network and make minor changes to their manufacturing processes.” This is the value of organizations like the Cabinet Makers Association – collectively we can weather the current climate and be prepared for what lies ahead.
The world is changing more rapidly than ever, and the impact on small shops is profound. Those that emerge successfully will have confident, courageous leadership – leadership that is wise enough to take an unflinching look at the past and then make gutsy, difficult decisions about the future based on facts, not fear.
This is only a brief overview of the survey results for the CMA’s 2020 Benchmark Survey. Other topics covered include cabinet assembly methods, construction types (frameless vs. face frame), raw material usage, plus the breakdown of those who finish their cabinets and who installs what they make.
All participants receive a copy of the full survey data. If you did not participate and are interested in diving deeper into the data, you can order the results for $39.99. Visit cabinetmakers.org/benchmark-survey for more information.
The Cabinet Makers Association has been serving the needs of small to medium-size cabinet shops and other woodworking operations since 1998. The organization offers a wide range of networking opportunities and other benefits. For more information, visit cabinetmakers.org or contact Amanda Conger at email@example.com.
Author: Amanda Conger has long been involved in the woodworking industry and is the executive director of the Cabinet Makers Association.
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