HOUSEWARE MOLDERS GEAR FOR SLOW GROWTH IN 1997

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CHICAGO — A ``slow growth'' retail climate combined with forecasts of stable resin prices — at least through the early part of the year — brought cautious smiles to the faces of molders exhibiting at the International Housewares Show.

What a difference a year makes. At last year's show, a period of seesawing resin prices and speculation that financial troubles could push Kmart Corp. into Chapter 11 bankruptcy cast a pall on McCormick Place. But Kmart pulled itself together. A more upbeat attitude prevailed at the 1997 show, which drew more than 60,000 people Jan. 12-15 to Chicago's McCormick Place.

Prices of polypropylene and polystyrene appear to be stable, although recent price hike announcements for polyethylene have created a confusing, chaotic situation. Makers of all three bedrock housewares resins have announced price increases, although many processing officials doubt the hikes will stick in the first quarter of 1997.

Housewares officials were interviewed for this story before resin companies issued the most recent announcements.

The price-sensitive housewares market is especially prone to resin price hikes, because of difficulty in passing increases through to retail customers.

``Raw materials are such a big part of your price and when it's an unknown price it just screws up all your planning,'' said Lambert Sheng, vice president of sales and marketing at Honeyware Inc. of Kearny, N.J.

Raj Bal, president of Zeta Consumer Products Corp., said, ``Resin is stable, but at much higher levels than it was eight months ago.''

Zeta bought Tucker Housewares of Leominster, Mass., in 1996.

``Housewares manufacturers have not recovered in the marketplace even 75 percent of the actual resin price increases,'' Bal said.

Still, most molding executives in Chicago said even if prices plateau out at a higher level, stability is critical.

``We'd rather get a nice stable playing field to compete,'' said James R. Schmidt II, vice president of merchandising at Anchor Hocking Plastics Inc.

Jay Rigby, president of Maidware Products Inc. of Hebron, Ohio, said planning is difficult ``when you go from 25 cents a pound to 45 cents a pound, then back down to the upper 30s in six months.''

Price hikes can hurt new product development, according to Yaffa Licari, president of Basic Line Inc. That is a sore spot for the injection molding company in Perth Amboy, N.J., which holds 65 patents, she said.

``I'm actually being told by the resin suppliers that the prices will be fairly stable,'' Licari said. ``It gives you a lot of confidence to introduce new items.''

The Chicago show's sponsor, the National Housewares Manufacturers Association of Rosemont, Ill., predicts slow growth in 1997 for the $57.9 billion U.S. housewares industry. Specialty stores and major discounters such as Wal-Mart Stores Inc. and Target Stores should continue to lead the industry, but midsized, regional retailers will continue to struggle, according to the association.

Housewares follow the overall economy. But Schmidt at Anchor Hocking said the plastics-intensive food storage segment has been growing faster than the general housewares industry.

Anchor Hocking of St. Paul, Minn., specializes in grouping several containers together in ``sets and value packs'' instead of selling them one at a time.

``Most retailers are indicating that open-stock sales are down, and most retailers are acknowledging the fact that sets and value packs are driving most of the growth in housewares right now,'' Schmidt said.

Resin hikes are not the only concern facing housewares molders. They have to invest money to develop products.

Costs are substantial even if a company redesigns a wastebasket, since that means a new mold, said David Stone, president of Sterilite Corp. of Townsend, Mass. Sterilite redesigned a number of products this year, adding curves and a rounded appearance.

Not all exhibitors at the show mold only housewares. A number of custom molders, with a line of proprietary housewares items, also talked to buyers in Chicago.

Honeyware's sales come about equally from housewares and custom molding, Sheng said. Honeyware displayed clothes hangers, wastebaskets, laundry baskets and bin organizers to hold screws and nails.

Sheng agreed with the slow growth forecast. But he said the 1997 show was more exciting than last year's event, in part because of the new McCormick Place south building. The Housewares Show was the first trade show to use all the space in the new building.

Making its first Housewares Show appearance was custom molder Mahoning Valley Plastics Inc. of Sebring, Ohio, which recently purchased molds for the old Joy line of housewares, said President Roland McKenzie. Joy products have not been molded since the late 1970s.

Both businesses can complement each other, McKenzie said.

``It's not like we're putting all our eggs in one basket,'' McKenzie said.