Offshore opportunities will be key to the modest growth predicted for 1998 in the housewares industry.
``Our members who rely solely on domestic business will do well to outpace inflation,'' said Phil Brandl, president of the National Housewares Manufacturers Association of Rosemont, Ill. Brandl expects inflation of about 3 percent this year.
Exports are one of the lifelines in an industry beset by retail store attrition and consolidation, a shortage of skilled and semi-skilled workers and increasing global competition, NHMA noted in its 1998 outlook paper.
Although the industry is relatively mature in North America, NHMA expressed cautious optimism for domestic markets because of low inflation and formation of new families among the 78 million people labeled ``Generation Xers.''
John Meier, chairman and chief executive officer of Libbey Inc., said in NHMA's outlook that international markets offer opportunities to U.S. manufacturers facing cost increases, pressure on margins and a shrinking retail customer base.
``Pending fast-track legislation in 1998, along with a further broadening of trade initiatives, will support the growing international thrust of many companies,'' predicted Meier, whose company makes a range of dinnerware and glassware. ``However, we must recognize that our trading partners around the world will be equally aggressive.''
Plastic housewares makers Rubbermaid Inc. and Tupperware Corp. are among the firms boosting their international presence.
Rubbermaid's goal is to swell international sales to 30 percent of its total. Its recent deal to buy European housewares major Curver Group should take it most of the way to the target. Rubbermaid estimated the Curver purchase will boost international sales to 25 percent of its total, up from 19 percent in 1996.
Tupperware, already heavily weighted to offshore sales, recently began selling in the potentially lucrative Russian market. It is training a home-based sales force and will supply Russia from several molding plants in western Europe. The Orlando, Fla., firm sees a need for its products in the country and expects underemployment there to attract a big marketing force.
Spokeswomen for each company say the Asian currency turmoil has had little impact on their respective firms or offshore strategies.
``We're just getting our feet wet [in Asia],'' said Rubbermaid's Lorrie Paul Crum. ``The proportion of our business there is very small.''
Crum said Rubbermaid is studying how to expand in Asian markets and the currency crisis ``is an opportunity to exercise more caution.'' Its biggest markets there are Australia and Japan.
``[Asian countries] are important and promising markets,'' Crum said from Rubbermaid's head office in Wooster, Ohio. ``Currency is just another factor we have to weigh in.''
Tupperware's Christine Hanneman said the Asian turmoil could actually help its sales in the region.
``In hard times, direct selling can provide an opportunity for a second job,'' Hanneman said from her Orlando office. Tupperware's sales in Mexico, for example, were especially strong when the country devalued its peso. Its sales force in the United States, however, has been shrinking.
Hanneman said Tupperware's bottom line should be little affected by Asian devaluations because they will be offset by appreciations in European currencies. Japan's market has been difficult for a number of years but Korea's was solid through 1997 and the Philippines' market strengthened in the second half of 1997.
Low resin prices could be a side benefit of the Asian crisis, predicted one analyst. Asian resin demand probably will decline, leading to extra supply globally, according to Justin Maurer with McDonald & Co. of Cleveland. He foresees resin prices slipping throughout 1998.
Housewares continue to be a hotly contested market. Recent, disappointing financial results from Rubbermaid and Tupperware bear that out. Rubbermaid's profit for the three months ended Sept. 30 fell 35 percent to $30.1 million and sales slipped 8 percent to $583.3 million. In the same period Tupperware's profit dropped 81 percent to $3.4 million while sales declined nearly 14 percent to $251.4 million.
NHMA estimated U.S. housewares sales totaled $53.7 billion in 1996. NHMA members' sales were $38.9 billion, up 3.5 percent.