Plumbing market to hit new heights
Plumbing wholesalers and manufacturers should have a lot to smile about in 2000. Continued growth in construction and remodeling is projected, although it may be at a slower rate.
Shipments of plumbing fixtures in 2000 are expected to increase almost 3%, down from 1999's 7% increase, according to the Commerce Department and Cahners Economics. As a result, aggregate construction market performance is predicted to remain positive in 2000 and through 2001 but slow down each year, according to FMI Corp., a consulting firm.
Plumbing fixture shipments were predicted to increase about 1% in 1999 but reached almost 7%. That figure includes fixtures shipped for the residential construction market, which grew 9% in 1999, and is expected to remain stable in 2000, according to FMI. New housing starts are expected to be down about 7%. Most of the drop should be in the lower end of the housing scale, which means the dollar value of new single-family home construction will not drop as steeply as the percentage. Multifamily construction will grow only 3% in 2000 compared with the 11% growth it experienced in 1999.
"We expect to see a slight slowdown or evening out on the residential side as we go forward into 2000," said Mark Gold, vice president/marketing at Price Pfister, adding that higher interest rates may slow down new construction.
Delta Faucet Co.'s projections for 2000 agree with the 2.7% increase projected by the Commerce Department, said Fred Barendt, director/marketing services, adding that the company met its projection of about a 4.5% increase for 1999.
Ron Grabski, vice president/marketing at Gerber Plumbing Fixtures Corp., said business was good in 1999 but not as good as for some other companies.
"We faced price pressure on toilets and vitreous china," he said. "We sold as many as we thought we would but not at as high a price as hoped."
Joe Poehling, president of First Supply Group (Madison, Wis.), said that available business in 1999 exceeded the wholesaler's projections by 5% and predicted that new construction will be even stronger in 2000.
"The construction industry is excellent," he said. "The only limiting factor is quality labor. Contractors are trying to find ways to outsource more and improve efficiency."
"Building out here has been phenomenal," said Mark Vadovich, purchasing manager for Phoenix-based Able Distributing. "We probably did twice what we projected for 1999, and the year 2000 looks strong."
Nonresidential building construction grew by 1% in 1999 and should rebound by growing 4% during 2000, marking an eighth consecutive year of growth. Office construction is predicted to increase 9% or $3.4 billion and hotel construction will rise 9% or by $950 million in 2000, FMI reported. After declining by 5% in 1999, the nonresidential improvement market should increase 3%. Double-digit growth also is expected for water supplies and sewer systems.
Jon Dommisse, national marketing manager for Bradley Corp., a manufacturer of commercial bathroom fixtures and accessories, predicted that nonresidential construction will be strong in 2000 because it is an election year.
"Government officials will support prison and school construction initiatives because they are hot buttons with voters," he said.
Retail growthManufacturers predict further growth for the retail segment.
"The retail side of the market is growing and wholesale is not," said Delta's Barendt. "What is changing is where contractors get their products."
Big-box retailers are continuing to grow and in some cases are taking business from smaller retailers, such as hardware stores, said Alan Danenberg, director/marketing services at Elkay Manufacturing Co.
Both Price Pfister's Gold and Delta's Barendt said retailers are capturing more of the small-contractor business. Gold added that the big trend, however, will be the build-it-yourself market, in which aging baby boomers decide they want to improve their home but hire a professional rather than doing it themselves. That translates into an increase not only in purchases of plumbing-related products but in installations, Gold said.
"The plumbing business is healthy," Gold said. "It has a good platform for growth. We expect an environment where everyone can find his own niche and prosper, providing a win/win situation for everyone."