Long-term Specialty Outlook Strong

Mortgage rates may be on the rise, and the housing market cooling, but the home improvement industry remains strong, the latest statistics reveal.

Total home improvement product sales in 2005 reached a new annual record of $291 billion, up 7.5 percent from a year earlier, according to estimates by the Tampa, Fla.-based Home Improvement Research Institute (HIRI), a nonprofit organization of more than 70 manufacturers, retailers, wholesalers and allied organizations in the home improvement industry.

Due in significant part to continued hurricane rebuilding activity, 2006 sales are expected to increase an additional 4.6 percent, to $305 billion, HIRI said (see related graph, inset).

According to HIRI, housing starts and existing-home sales — strong coincident indicators for home improvement activity — stayed at a high level throughout 2005, as have sales to do-it-yourself consumers.

“With the housing market beginning to show a gradual slowdown, there has been some talk that the home improvement industry will suffer its effects,” states Fred Miller, managing director of the Home Improvement Research Institute. “But housing turnover is only part of the picture. A large piece of the home improvement market involves maintenance and repairs, as well as improvements to homes where there is no change in ownership. This makes the home improvement industry far less cyclical than new home construction.”

Continued hurricane rebuilding efforts will help to offset the effects of a market slowdown in 2006, HIRI said, adding that the long-term outlook for the market remains strong. HIRI projects an average of 4.6 percent total market growth in constant dollars for 2008-2010 — “below the pace of the past five years, but well ahead of the rate of overall economic growth,” the organization said.

Kitchens & Baths
Appliance Shipments Remain Strong

Domestic shipments of major home appliances increased 3.6 percent in January over the same month a year ago, the Association of Home Appliance Manufacturers reported. According to the Washington D.C.-based AHAM, January appliance shipments totaled 4.97 million units, up 3.6 percent from the 4.80 million units shipped in January 2005. The January gains, however, were uneven — with both advances and declines reported in key appliance categories, according to AHAM. Shipments of food preservation products and laundry products, for example, gained 13.2 percent and 10.5 percent, respectively; in contrast, shipments of kitchen cleanup products declined 7.6 percent, while cooking product shipments fell 2.5 percent, the association noted.

Roofing
New: High-Wind Asphalt Shingle Resource

A report from the Asphalt Roofing Manufacturers Association (ARMA), “New Wind Standards for Asphalt Shingles,” makes clear what consumers need to know when buying wind-resistant shingle products. It includes a new wind-resistance classification system, which is now incorporated in the International Building Code.

According to ARMA, consumers and contractors alike need to know the following before purchasing asphalt shingles:

1.) The wind zone location of the building being roofed. For most of the United States, the wind zone classification is 90 mph. Some coastal and inland regions, however, may have wind zone designations of up to 150 mph.

2.) The wind-classification of the shingle. Shingles are classified by letter: up to and including 90 mph, Class D; up to and including 120 mph, Class G; up to and including 150 mph, Class H.

To assure maximum wind performance, says ARMA, asphalt shingles must be applied to a properly installed deck following the manufacturers’ requirements for number, type and placement of nails. For nailing methods, see the Technical Bulletin, “Nail Application of Asphalt Shingles,” available on ARMA’s Web site, www.asphaltroofing.org.

Merger News
Simonton, Fypon, Hy-Lite and Dixie Pacific to be acquired by Fortune Brands

Fortune Brands, Inc. announced an agreement to acquire SBR Inc. through a tax-free merger. The acquisition includes the home products brands of Simonton Windows, SimEx, Fypon, Hy-Lite Products and Dixie-Pacific.

This merger marks the third major home products transaction in recent weeks, followed by the Koch Industries’ purchase of Georgia Pacific and the sale of Louisana Pacific’s vinyl siding business to Kaycan.

Fortune Brands intends for SBR to continue running independently, with support from its $4 billion Home & Hardware business that includes Moen, the No. 1 faucet brand in North America, MasterBrand Cabinets, the No. 2 supplier of kitchen & bath cabinetry and Therma-Tru, the No. 1 brand of residential entry doors, among other brands.

“Simonton, SimEx, Fypon, Hy-Lite and Dixie-Pacific are all successful brands. We are excited that SBR has chosen Fortune Brands to grow these brands,” says Bruce Carbonari, president and CEO of Fortune Brands Home & Hardware. “We will dedicate our efforts to building their brand awareness and making them even more successful in the marketplace.”

Managing
Free Web-Based Customer Relationship Management Tool Unveiled

RenEx Inc., the parent company of Renovation Experts.com, is set to announce a new Web-based tool for remodelers and contractors that will allow them to manage their leads and customers. The service is available free of charge at www.renexpro.com.

Two years in development, the Web-based software/tool is designed to be a robust method for keeping tabs on new and old leads. It can also be used as an internal sales management tool. Managers can assign new leads to different sales reps in the field. Each sales rep logs in under his own password and can only see and manage his or her leads.

Remodeling’s Impact
Local economies benefit greatly from remodelers

Remodeling generates substantial economic activity in the communities where it takes place, says a new research report from the Housing Policy Department of the National Association of Home Builders.

According to the report, which was issued in January, the estimated economic impact of spending $100,000 on home additions and alterations in a typical U.S. metropolitan area are $54,200 in local income, $4,900 in taxes or other revenue (including permit fees) for local governments and 1.01 local jobs.

The impact of $100,000 of spending on maintenance and repairs was nearly as dramatic. This type of home improvement spending amounted to $40,400 in local income, $2,900 in taxes and other revenue for local governments, and .73 local jobs.

The report, “The Local Impact of Remodeling in a Typical Metropolitan Area,” stipulates that the figures are for one year and include direct and indirect impacts. The research model produced impacts on income and employment in 16 industries and local government.

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