Consumer confidence could buoy appliance sales for the second year in a row.
U.S. major appliance sales set an all-time record in the United States last year, according to the Association of Home Appliance Manufacturers. Preliminary figures for November suggest sales grew 10 percent or more over the 1997 total of 51.1 million units. Earlier in the year, AHAM forecast only a 6 percent increase.
``The primary factor has been low interest rates,'' said AHAM executive director John Jiambalvo. Low rates have spurred strong new housing markets and a flurry of remodeling activity, he said in an interview from AHAM's Chicago office.
Rising consumer incomes and high employment rates could keep the sales momentum going this year, according to Jiambalvo.
Strong sales are evident for all the major plastics-consuming appliances, including microwave ovens, clothes washers and dryers, dishwashers, refrigerators, room air conditioners and dehumidifiers.
Special features entice consumers to replace appliances before older versions break down. In clothes washers, for example, new front-loading models are a hit, Jiambalvo explained. Side-by-side refrigerators, although not a new concept, are more popular because suppliers offer more cold water and ice features. More advanced, user-friendly controls also convince consumers to upgrade their appliances.
``Consumers are stepping up [in price points],'' noted Jiambalvo. ``They're not just buying low-end products.''
One injection molder expects to benefit from appliance market trends.
``We're looking for a good year,'' said Martin Kelly, president of Lebanon Plastics Inc. ``There is a lot of bidding activity.''
The firm, based in Lebanon, Ohio, increased its appliance market stake late last year when it bought Futura Plastics & Engineering Inc. of Louisville, Ky. The Lebanon and Louisville operations do a lot of refrigerator parts and some washer and dryer components, Martin explained.
Martin said working with appliance makers appeals to Lebanon Plastics partly because some custom injection molders are rethinking their sales strategies and backing out of appliance work.
Not all suppliers to appliance OEMs are convinced 1999 will be a strong year. Thermoformer T.O. Plastics Inc. has seen orders in early 1999 flat or slightly down.
Last year was T.O.'s best ever in appliances, but the Bloomington, Minn., firm doesn't expect a repeat performance, said President Charles Goers Sr. He cautioned, however, that ``things could change at any time.''
The 1999 outlook also is unclear for Fabri-Form Co. of Byesville, Ohio, according to President John Knight. Fabri-Form makes custom material handling trays for appliance makers.
Fabri-Form observed healthy activity in appliances last year but it was hampered by flood damage in southern Ohio last summer. Its difficulties continued into the fourth quarter, but Knight said sales are recovering early in 1999.
Housewares makers are cautious about the new year's prospects after experiencing a good first nine months in 1998.
Companies dependent on exports fear global economic uncertainty could hurt foreign sales. Firms mainly geared to North America's domestic markets expect to feel the effects of cheaper imports from countries in economic turmoil, according to the National Housewares Manufacturers Association of Rosemont, Ill.
NHMA estimated U.S. housewares sales at $58 billion in 1997. The market includes myriad products ranging from plastic storage containers and kitchenware to small electric appliances and home office products.
Newell Co. projects modest growth in housewares in 1999, noted group President William Denton in a recent NHMA report. Office products, a major product line for Freeport, Ill.-based Newell, are a continued bright spot.
Housewares sales have grown modestly, partly because of expansion of superstores. A big challenge, however, is retailers' drives to reduce inventory.
``Order cycles are shorter — closer to the date of promotions,'' Denton said. It also is suffering from lack of new products.
``Successful retailers are willing to replace unproductive houseware items/categories with productive categories.''
Cleaning products are one category many consider nearly recession-proof.
``If the economy isn't good, people travel less, stay home more and clean their homes,'' said Robert Libman, president of Libman Co. of Arcola, Ill. Firms not tied to exports can benefit from global uncertainty because of low prices for raw materials and fuel. Libman said resin prices are at the lowest he can remember.
Competitive pressures in housewares are underlined by the planned merger of Rubbermaid Inc. and Newell Co.
Rubbermaid of Wooster, Ohio, a long-standing giant in plastic housewares and related products, agreed to the merger because global uncertainty threatens consumer purchasing. Newell's expertise in customer service can help Rubbermaid get the most out of its brand names and innovations.
The two companies expect to complete the merger early this year, creating a consumer products heavyweight with annual sales exceeding $6 billion.