Kitchen Cabinets

INDUSTRIAL CODES

NAICS: 33-7110 Wood Kitchen Cabinets and Counter-top Manufacturing

SIC: 2434 Wood Kitchen Cabinet Manufacturing, 2541 Wood Partitions and Fixtures Manufacturing

NAICS-Based Product Codes: 33-71101 through 33-71101121, 33-71104 through 33-71104121, 33-71107 through 33-71107121, 33-7110A through 33-7110A121, 33-7110E through 33-7110E121, and 33-7110H through 33-7110H100

PRODUCT OVERVIEW

Kitchen cabinets are storage units used to house, organize, and protect anything typically found in the kitchen. This would include dishes, pots and pans, non-perishable food, and other similar items. While usually a permanent fixture in a kitchen, stand-alone hutches and armoires used to be quite common in the kitchens of old. These stand-alone pieces of furniture served the same storage function as wall mounted cabinets do today. Kitchen cabinets are the most prominent feature of the kitchens in most homes and the most costly component of a typical residential kitchen remodel, surpassing even appliances as an investment. Accounting for nearly half of an average remodeling budget, they can be the homeowner's most significant expenditure in the kitchen.

Kitchen cabinets are available in a wide array of styles, sizes, and colors. The least expensive way to purchase cabinets is to buy stock cabinets, or those varieties that are on-hand. They are factory-built in a small selection of pre-finished styles and in standard dimensions. Semi-custom cabinetry is factory-built in standard sizes, but leaves the consumer many choices of style, finish and functionality. Custom cabinetry is built, sometimes on-site, to a particular kitchen's dimensions and the style may be unique.

Wood cabinets are the most popular, compared with other materials from which cabinets are made, primarily laminates and metals. Wood cabinets that are not solid wood or hewn from a single piece of lumber are either plywood, many layers of wood bonded together perpendicularly, or veneers, a thin sheet of real wood bonded to the face of another, less expensive material such as particle-board or multi-density fiberboard (MDF). Thermofoil, a resin that permanently hardens after heat-curing, and melamine resin, formed when melamine reacts to formaldehyde, take a distant second and third of the kitchen cabinet market, with 6.4 and 1.2 percent respectively.

MARKET

The Bigger Picture

The kitchen cabinet industry is generally considered a subset of the furniture industry, so it is somewhat subject to trends in the larger industry. For instance, the availability and cost of raw materials like lumber will influence many areas of the larger furniture market. Kitchen cabinetry is an independent enough segment that it, along with office furniture, are the only two components of the U.S. furniture industry that are growing overall and are predicted to continue to do so. Overall, the cabinet industry in the United States is extremely strong, weathering the downturns in both the housing and furniture markets. While new home construction was expected to drop in 2007 to 1.408 million, down from its high in 2005 of 2.155 million, and major residential furniture makers like Broyhill, Pulaski, and others are battling foreign competition and closing down production lines, cabinetry manufacturing saw an unprecedented 9-year growth streak over the last decade that only began to abate in late 2006.

According to an April 2006 Forest Products Survey, the kitchen cabinet industry is expected to claim $16 billion of the U.S. forest products market by 2008. The Ohio-based Freedonia Group research firm concurred with this assessment with its projection that the repair and remodeling segment of the market will constitute $16.7 billion of the cabinet industry during this same period. By contrast, Kitchen and Bath Business predicted a more modest $14 billion. Industry data on kitchen cabinetry, however, often include information about countertop manufacturing and sometimes bathroom vanity production as well, since the industries are so closely related.

The cabinet industry in late 2006 ended a tremendous growth period of 127 consecutive months of increasing sales. The end of the streak as industry insiders called it, is a necessary economic correction, according to experts, brought on by rising interest rates, record high home costs, and a rising inventory of unsold new homes. It follows that the industry should plateau and stabilize, after this period of dizzying growth rates. January 2007 figures report a decrease in cabinet sales of 12.7 percent and some cabinet manufacturers have resorted to minor, short-lived layoffs. These are comparatively minor disturbances compared to the furniture market as a whole. In fact, some cabinet makers are building new plants, namely American Woodmark in Virginia, Merillat in New Mexico, and Kraftmaid in Utah. On the whole, the industry is very strong and has a reputation for reacting nimbly to changing market forces by adjusting production strategies, investing in technology, responding quickly to customer desires, and reducing lead times.

The Big Picture

Residential applications represent the largest end use of kitchen cabinets, claiming 70 percent of industry sales. Demand for kitchen cabinets was predicted to rise as residential consumers continue to repair and refurbish private homes rather than sell. Once considered an enclave to retreat from the world, one's home is now considered more a gathering place for loved ones, especially in the wake of the post 9/11 cocooning trend—the tendency to stay at home more and go out less. As such, according to Builder magazine, buyers are looking for showcase kitchen and eating areas. One major component, both stylistically and functionally, of the showcase is cabinetry.

Furthermore, even with the addition of nearly 11.4 million new homes over the past decade, the average age of the U.S. home was 31 years in 2005, up from an average 23 years in 1985, and well past the 25 year old milestone generally recognized as a homeowner's initial yen to remodel. Industry forecasters from Harvard University's Joint Center for Housing Studies in Foundations for Future Growth in the Remodeling Industry, predicted a very encouraging 45 percent rise in spending on repair and remodeling between 2005 and 2015, even after adjusting for inflation over the same period.

Kitchen cabinet demand continues to be strong in the new home construction sector, as well, even with the industry waning, because it benefits from the trend toward larger kitchens that rely on greater cabinet space to enhance utility. While the new home sector slowed in the middle of the first decade of the twenty-first century, builders accounted for a slightly smaller than potential portion of the cabinet purchases, but expect their cabinet buying to increase as the new housing market recovers. In the meantime, remodeling is on the rise with homeowners confident that they will recover their investments when the time comes to sell their houses.

KEY PRODUCERS/MANUFACTURERS

Masco Corporation

The leading producer of kitchen cabinets in the United States is Taylor, Michigan-based Masco Corporation, which captured 21 percent of the market in 2006. Although the cabinet industry was expe-riencing a temporary dip in demand, Masco still led the pack with $3.1 billion in sales for the second quarter of 2007 alone, down from $3.4 billion for the same period the year before. This figure was in keeping with an overall industry decline of approximately 10 percent and referred only to cabinet sales, not the total sales of all its holdings.

Masco's acquisitions over the last two decades encompass every brand that leaps to mind: Kraftmaid (1990), Merrilat (1985), and Mill's Pride (1999), among others. Industry experts attribute Masco's success to its ability to choose acquisitions wisely and then allow the new holding to run autonomously, rather than subsuming its assets and liquidating the undesirable remainder. In the instance of Kraftmaid, for example, Masco allowed Kraftmaid to invest some $10 million it would not have had otherwise, in new technologies and leaner manufacturing processes that wildly improved its productivity and ability to capture the market.

Masco's cadre of cabinet manufacturers only adds to its command of the home improvement market. Before it became a cabinet giant, it was already a strong force in the plumbing supply industry with its Delta and Peerless brands. Its cabinet and plumbing brands together make it the largest manufactured goods supplier to Home Depot, a leading national retail outlet in the do-it-yourself market. Masco also holds interests in the installation industry, which serves the new home building market by installing cabinetry, fireplaces, gutters, bath accessories, garage doors, shelving, windows, and paint. Rounding out Masco's product lineup are its Decorative Architectural division, which owns well-known paint brand Behr Process Corporation; hardware interests, including Brainerd and Liberty in the United States, and Avocet in Europe; and its Specialty Products division, which manufacturers windows, doors, power tools, fasteners and many other home supply products. All told, Masco owns nearly fifty companies based all over the globe that serve almost every aspect of homebuilding and remodeling.

Fortune Brands

The second largest producer of cabinets for the kitchen is Deerfield, Illinois-based Fortune Brands, capturing 14 percent of the cabinet market in 2006. Fortune, with $8 billion in sales per year for all of its brands, is an entirely different sort of company than Masco. Where Masco's strength is its breadth of offerings within the homebuilding and home-improvement industries, Fortune is widely diversified across multiple industries including cabinets and furniture, liquor and wine, and golf supplies and apparel. As unlikely a family as this may seem, it provides Fortune with a sort of cushion against downturns in any one of the industries. While the housing market is in a slump, Fortune's other products and brands keep the company's earnings steady.

Fortune's cabinet companies include Aristokraft, Omega, and Diamond, but it also holds interest in some other areas of home supply with Moen plumbing and fixtures, Waterloo tool storage, Therma Tru doors, and Simonton windows. All of Fortune's holdings combined reported net sales of $2.35 billion in the second quarter of 2007, up 4 percent from same quarter the previous year; however, this is due to Fortune's non-cabinet producing entities. Fortune's home improvement holdings brought $232 million in net sales that quarter, down from $248 million the previous year.

American Woodmark Corporation

The next leading producer of cabinets for the U.S. market is American Woodmark Corporation with a 7 percent share of the market. American Woodmark reported fourth-quarter sales of $166.1 million for its 2007 fiscal year ending April 30, a 23 percent decrease compared to the same period in 2006. The company said its core product sales dropped by 15 percent "as remodeling sales were roughly flat and new construction sales accounted for the decline."

American Woodmark's range of products is exclusively kitchen and bath cabinetry. The American Wood-mark brand is sold only through Home Depot, while its Shenandoah brand is available only through Lowe's. One other brand, Timberlake Cabinetry, is available through many builders, building supply companies, dealers, and distributors nationally. It is pitched as a high-quality, budget-minded offering.

The three top manufacturers share 42 percent of the market, with the remaining 58 percent held by companies that command less than three percent of the market each—most less than one percent.

MATERIALS & SUPPLY CHAIN LOGISTICS

Wood Is Everything

Raw material for kitchen cabinetry is almost entirely wood. Some 95 percent of cabinets rely exclusively on wood, irrespective of hardware. Non-wood materials, such as decorative laminates, glass, and metal account for the other 5 percent of the market. Consequently, kitchen cabinetry depends largely on lumber suppliers in the manufacturing process. The cabinet market is subject to the trends associated with reliance on a natural resource like wood.

The largest suppliers of wood are Weyerhaeuser, Can-for, and West Fraser Timber, with 7.2, 5.2, and 4 billion board feet of lumber produced per annum respectively. Canfor and West Fraser are Canadian companies. Lumber production within the United States is concentrated in four states: California, Idaho, Oregon, and Washington from where 83 percent of U.S. lumber originates. In terms of sales Weyerhaeuser was still the largest company with $17.27 billion in the first quarter of 2005 alone. The second largest U.S. lumber company was Louisiana-Pacific with $2.02 billion in sales. Nexfor Inc. rounds out the top three with $1.36 billion in sales for the same period.

Process

According to Wood and Wood Products magazine, completing a cabinet from raw material to ready-to-ship can require some 250 processes. Raw materials are cut, assembled, and finished sometimes all at one plant, sometimes at different locations. Since the advent of lean manufacturing practices, time-to-market has plunged dramatically. Large quantities of inventoried stock demand expensive storage space. New manufacturing practices have reduced these inventories and the costs associated with them. Cabinets that once crossed miles of factory flooring as they were taken through numerous assembly, finishing, and packing tasks, now move smoothly from station to station and onto a waiting truck. By implementing lean manufacturing practices, KraftMaid has reduced its lead time from three weeks to one week and increased production by 250 percent, from 4,000 cabinets to 10,000 cabinets in a single day.

After orders are received and entered into a company's database, they are assigned a place on the production line. Components, once cut from raw lumber, are gathered and assembled. Once assembled, the unfinished product is moved to the finishing phase, after which they are loaded directly for delivery. The same is generally true of thermofoil and melamine cabinets.

Finishing of wood cabinets consists of applying stains, mechanical or manual color consistency procedures, and mechanical spraying of sealer and topcoats. This is followed by air drying, then oven curing, which prevents cracking and lengthens the life of the cabinet. Sometimes, at the end of production, factory-applied wormholes, compression marks, and oversanding are added to meet the demand for a distressed, or slightly aged and worn, look to the cabinet.

Thermofoiling is an alternate technique wherein MDF blanks (doors or drawer fronts) are routed with a given design, then moved to a "clean room" where adhesive is applied and dried. Then the piece is draped with the foil (basically vinyl), heated to reactivate the adhesive, compressed to bond the material to its face, trimmed, inspected, and assembled.

DISTRIBUTION CHANNEL

Imports and Exports

The period 1995 through 2004, on the whole, was a successful time for the foreign and domestic cabinet manufacturing industry. While the U.S. cabinet industry was beginning the largest growth streak in its history, foreign manufacturers, particularly those in Canada, were also expanding their exporting activities in the United States. Over the same 9-year growth streak for U.S. manufacturers, cabinetry imports more than quadrupled, rising 350 percent. U.S. manufacturers were also exporting their goods at higher rates during the same period, tripling the value of cabinets shipped from $19.2 million in 1995 to $58.5 million in 2004. Despite this growth in exports, imports far out number exports and this trade imbalance may foreshadow troubles for the domestic industry in the future.

Finished Cabinets to Consumers

The Kitchen Cabinet Manufacturers Association lists nine points of purchase for consumers: builders, remodelers, retail showrooms, architects/designers, wholesale distributors, home centers such as Lowe's or Home Depot, direct-to-consumer, lumber yards, and via Multi-Family building projects. Among companies that claim more than $25 million in sales annually, retail dealers represented the largest outlet of kitchen cabinets in the market, claiming 44 percent of sales in 2006. Home centers continued to lose market share, falling off 4.4 percent to 16.6 percent in 2006, a drop from 20 percent on 2005 figures. The market share held by distributors was up from 2005 to 2006, from 15 percent to 22 percent. Builders' position in the market slipped somewhat during this period, from 17 percent in 2005 to 15.3 percent in 2006, owing in large degree to the housing slump.

Sales by outlet for smaller companies, those with sales of less than $25 million annually, were dominated by retail dealers, which accounted for 75 percent of sales. Sales made directly to consumers were the next largest category in 2006, representing 7.3 percent of sales as did builders who represented another 7.3 percent of sales. Finally, distributors and home centers accounted for 4 to 5 percent of sales for these smaller cabinet makers.

Customer Control

One growing trend in the distribution of kitchen cabinets is what is known as customer-controlled ordering. The use of sophisticated Web sites by cabinet manufacturers allows customers to log onto the site, make selections, and place orders themselves, directly with the company.

Once only used by designers, kitchen planning software is becoming more available than ever as either downloadable software from a Web site, as is the software available from the retailer IKEA, or purchased directly at a store for home use. Such software allows customers to plan their own kitchens without the necessity or cost of a designer. Some kitchen planning software enables a direct interface with a cabinet company's inventory and ordering systems through which purchases can be made without having to even deal with a salesperson. Planning software is also available increasingly for in-store use in conjunction with a representative at dealers, distributors, and home centers.

KEY USERS

The largest outlet for kitchen cabinetry, consuming more that half of the total production volume, is the residential market. More than 55 percent of all kitchen cabinetry goes to owner-occupied dwellings and single family homes. Commercial and institutional applications, residential additions and alterations, maintenance of existing residential and non-residential structures, and other real estate outlets constitute a combined additional 18 percent of the total output. Homes and other residential dwellings account for nearly three-quarters of total U.S. kitchen cabinet purchases.

Other end users include manufactured and mobile homes (1.8%), the retail trade (1.4%) and multifamily dwellings (1.2%). The remaining consumers of kitchen cabinets are spread across a wide range of applications from recreational vehicles, food service and drinking venues, hotels, hospitals and other health practitioners' offices, the recreation industry, the government, nursing homes, and several other outlets, each capturing less than one percent of total production.

ADJACENT MARKETS

Bathroom Vanities and Related Cabinetwork

Although the same companies that produce kitchen cabinetry often also produce bathroom cabinetry, it represents a minor but notable subset. According to the July 2007 edition of Kitchen and Bath Business, of the more than $10 billion in sales of cabinets by manufacturers, 86 percent was cabinets and just over 10 percent was generated by the sale of bathroom vanities. The remaining market share was spread among countertops, millwork, and other products.

Hardware

Cabinets without hardware, that is drawer pulls and doorknobs, are available, but to complete the look and functionality of most cabinets and cater to individuals' tastes, most users finish their cabinetry choices with a selection of hardware. The choice of hardware gives the end user an opportunity for customization. In some cases, the installation of new hardware on old cabinets is a method used to update the look of a kitchen with little expense. Installing hardware on door and drawer-fronts also saves wear on cabinet and drawer edges by concentrating contact on the pulls themselves rather than on the cabinetry finish.

Popular styles in hardware follow styles in the cabinets themselves. While cabinets are nearly always wood, almost anything goes with drawer pulls and door knobs. Materials used for the hardware include stainless steel, pewter, brass, nickel, and other metals in any size, shape, color or finish; glass and ceramic in every hue; and others. Once cabinet producers offered fewer, simpler selections, but this has been changing as customers are using pulls and knobs as creative outlets and expressions of originality. In fact, novelty and organic shapes were popular in cabinetry hardware in the later part of the first decade of the twenty-first century.

Kitchen Countertops

Often milled by the same lumber companies and assembled by some cabinet manufacturers, kitchen countertops are a tagalong to the kitchen cabinet industry. Many people will replace countertops without replacing cabinets at the same time, however, the opposite is less often true: if a homeowner goes to the trouble of replacing all the cabinetry, the countertop generally gets upgraded at the same time. In fact, since it is a work surface, it will generally need replacing at more frequent intervals than cabinets. While kitchen countertops represent a completely separate industry, especially owing to the fact that while 95 percent of cabinets are wood, countertops are made of many different materials, they are often included along with cabinetry, flooring, vanities, and other items in data sets that track remodeling, repairing, and other home improvement trends.

RESEARCH & DEVELOPMENT

Environmental Impact

The most important area of research and development for the kitchen cabinet industry happens further up the supply chain at the production of raw materials. With the ever-growing concern over deforestation and other environmental issues related to industrial production, the pressure for alternatives and more sustainable hardwoods continues. One major initiative, still in its infancy is the Germany-based Forest Stewardship Council (FSC) program, a global voluntary certification program that is roughly equivalent to organic certification in the food industry. FSC lumber comes from foresters that practice environmentally sound and sustainable agricultural and harvesting methods, treat and pay workers fairly, and charge an ethical amount for their timber. These and other checks and balances are then independently verified by third parties. FSC lumber is enormously popular in Europe and is beginning to make gains in the United States. This is not only due to the public's increasing desire to make environmentally responsible purchasing decisions, but also because FSC compliance is actually profitable, especially since some large American cabinet outlets are onboard: Home Depot, Lowe's, and Office Depot all carry FSC products. One factor undermining the effectiveness of the FSC program is the fact that some U.S. manufacturers, in an attempt to buy the most inexpensive wood possible, purchase foreign hardwoods imported from companies that do not practice sound forest management.

The largest U.S. forest products company, Weyerhaeuser, participates with CERFLOR, Brazil's forest certification program and the European Programme for the Endorsement of Forest Certification (PEFC). It is developing more sustainable hardwoods, such as their Lyptus trademarked brand of lumber grown in Brazil, where sustainability is less of an issue than in colder regions. Lyptus grows quickly and can be ready for reharvest in 14 to 16 years. It is also grown among more traditional hardwoods in forests that replicate more realistic and ecologically diverse environments. Diversity reduces stress on the environment by preserving natural habitats and supporting the most natural complexity of a given ecology. Lyptus and other alternatives are not grown as a one-species orchard, but as single components of a regular forest system. However, sustainability is an issue that affects all timber uses—flooring, countertops, furniture, building materials, paper, and many other outlets, not just cabinetry.

Volatile Organic Compounds (VOCs)

Since the early 1990s cabinet makers have striven to remove harmful VOCs from their production process. VOCs are found in spray finishes and adhesives and affect air quality and worker health and safety. Cabinet manufacturers, much like wood floor manufacturers, are working to use less harmful UV finishing and other techniques that produce fewer toxic off-gassing.

Alternate Applications

Another catalyst expanding the kitchen cabinet industry is the willingness of consumers to choose cabinets for other areas of their homes, such as media and laundry rooms. The concurrent trend of designers repurposing kitchen cabinetry for the specific needs of other rooms in the home, in turn piques consumers' interest in improving the aesthetics and functionality of rooms other than the kitchen. This self-propelling trend of user willingness and designer retooling helps fuel the momentum.

Number three on Builder magazine's top ten list of elements of home design in 2004 was the laundry room. This begins with a bit more space to fold the laundry, then expands to include a hobby or craft (storage intensive activities), then perhaps evolves into another place to log onto the computer and shop, pay bills, or check stocks. Builder handily captions it as "wash, spin, sew, surf." All of this necessitates a greater use of cabinetry to house the accoutrements in a room designed for true multi-tasking. Moreover, work areas in home offices; mud rooms or breezeway storage areas; home crafting centers; transitional workspaces near the kitchen, such as computer areas used for and in the kitchen; and even fitted bedroom components, are applications helping kitchen cabinets cross over to other areas of the home.

CURRENT TRENDS

Design

Traditional cabinetry still comprises the largest share of cabinetry manufactured for the U.S. market claiming 63 percent in 2006. The next most popular style is contemporary, which is gaining on traditional. It once represented 10 percent of market but by 2006 claimed 16 percent and rising. Contemporary in the broadest sense, represents a continuum of style choices, but can be defined loosely by clean, open lines and brighter colors on one end of the spectrum to tailored, but warm, and even deep-toned, and inviting on the other. Kitchen cabinets favor the warm end of the spectrum where it meets the more traditional old world style. Where contemporary was once thought of as bright and harsh, it now enjoys a much wider span of possibilities as palettes deepen, and less cluttered designs are emerging that favor warmer woods. Designers are even recycling older door styles and pairing them with contemporary finishes to bridge the gap and soften the look. This is helping the kitchen become contemporary, without losing its sense of tradition. Glass and aluminum accents on doors are seen in abundance, with clear, opaque, and patterned glass inserts making for limitless possibilities. Overall, contemporary will be expected to make inroads into the traditional market as well as stealing more market share from its next biggest style competitor, country, which claimed 12 percent of the market in 2006.

Finishes

Thermofoil manufacturers see white as a continuing trend, no matter what is happening in the larger wood cabinet market, mostly because they are still successfully selling it. However, where white thermofoil was once very popular in the residential market, it is losing ground there while making up volume in the general and medical office markets. Some tone-on-tone white finishes remain popular in residential installation because they are neutral canvases easily used as a backdrop for any number of decorating styles. However, the residential market is, by and large, seeing darker finishes and glazes on woods that give kitchen cabinetry a furniture-like finish. Consumers are also mixing different finishes and colors for a more eclectic look that mimics the rest of the home.

The darker wood species have been the trend in the early 2000s include black walnut, wenge, rosewood, and ipê, a dense, tropical, hardwood from Brazil. Nonetheless, the more tried and true oak and maple woods are definitely maintaining a hold on the market. Notably, trends in the larger furniture industry tend to precede those same trends in the cabinet market eventually, so the forces behind painted, lacquered, and dark stained finish choices in home furnishings, will afterward rise to prominence in the cabinet arena as well.

Funtionality/Features

Kitchens are bigger than they ever have been and consequently cabinet buyers are asking for more than they ever have. Copious use of open space has replaced the long, narrow galley kitchen of yore. Islands and double islands are a popular trend. Islands provide additional work surfaces while filling some of large spaces buyers like. Another trend is the more strategic use of cabinets: while kitchens are bigger, filling them with large banks of wall cabinets is not more popular. Instead designers are using cabinets as architectural elements such as in columns or as arch supports, and stacking them vertically to the ceiling, without the benefit of a soffit, such as a 48 inch cabinet topped with a 12 inch cabinet and finished with decorative molding.

Features that are in demand are those that maximize functionality. These include pull out shelves, tilt-outs that utilize shallow spaces with hinged drawer fronts that attach to the frame, two-tiered drawers with smaller pull-outs behind a single-drawer front, and multi-tiered vertical pull-outs that hold small items like spices or canned goods in small, otherwise unusable space. In answer to the call for no space used unwisely, Top Drawer Components produces a bank of drawers that fits into a corner, complete with 90 degree mitered drawer fronts rather than the usual flat front.

Business Relationships

Partnering of builders and cabinet makers is another trend seen in the industry. To attract more buyers, some builders are beginning to make the entire range of a given cabinet supplier's offerings available, instead of the smaller selection that is customary. Homeowners then deal directly with suppliers for the final products to be installed in the home as the finishing work is done. By taking themselves out of the process, builders give homeowners greater choice and control over customization, increasing the buyers' satisfaction with their new homes. At the same time they save themselves the aggravation of selling, ordering, and delivering the cabinets to the buyers of their homes. This is a trend seen in other areas of home buying as well. It is not uncommon for builders to ask their new home clients to deal directly with suppliers of lighting and flooring materials.

TARGET MARKETS & SEGMENTATION

Kermit Baker, director of the Remodeling Futures Program at the Harvard Joint Center for Housing Studies, explained at the National Association of Homebuilders semi-annual Construction Forecast Conference in late 2004, that the nation's residential remodeling industry should be expected to grow by 5 percent annually over the next several years. Of the estimated $138 billion spent on home remodeling in 2004, $60 billion went for interior space remodels and additions, including kitchen and bath upgrades and alterations. Remodeling and repair on cabinets specifically will claim some 70 percent of the homeowner's budget with the average homeowner buying 21 cabinets.

As to exactly which 21 cabinets arrive in the purchaser's home, the data is sharply divided. Of companies whose sales are more than $25 million per year, cabinet buyers favored stock cabinets giving them 49 percent of the market in 2005. In the same category, 32.5 percent of the market share went for semi-custom cabinetry, with the remaining 18.5 percent captured by fully custom cabinetry. For companies whose sales were under $25 million per year, the percentages were very different. Among these smaller companies, custom cabinets lead the pack snagging nearly 65 percent of the market, where stock and semi-custom cabinets split the remaining market, with 14 and 21 percent respectively.

A home's age is a key factor in remodeling decisions and in the decision to purchase new cabinetry. Homes built in the 1970s are now hitting the typical remodeling age of over 25 years: not only is the kitchen out of date, but it no longer functions well. In fact, the age of the aver-age U.S. home is actually going up, making remodeling increasingly necessary.

Also, the topmost spenders are supporting the growth of the whole category. The number of households spending $25,000 or more per year on remodeling doubled from 16 percent in 1995 to 31.2 percent in 2003. A homeowner's reluctance to buy a new home during a period in which the housing market is in flux is only likely to fuel their desire to remodel their current one.

Immigrant homeownership is another prominent factor in the remodeling surge, with Hispanics on the leading edge of home improvement spending. "This trend will only intensify," stated Baker, "as minorities increasingly become homeowners. They are expected to account for nearly half of the increase in the home-owning population by 2015."

Many factors, including aging homes, the high cost of new homes, the wide availability of high quality cabinets, rising mortgage rates, and a general desire to upgrade and improve will likely support the kitchen cabinet industry over the next decade.

RELATED ASSOCIATIONS & ORGANIZATIONS

Hardwood Plywood and Veneer Association (HPVA), http://www.hpva.org

Kitchen Cabinet Manufacturers Association (KCMA), http://www.kcma.org

National Kitchen and Bath Association (NKBA), http: //www.nkba.org

Wood Component Manufacturers Association (WCMA), http://www.woodcomponents.org

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see also Countertops, Wood Flooring