The North American housewares market will be challenged in 2006 by a steady stream of imports, challenges in raw materials, and a general overall shift as injection molders with domestically based operations redefine how they do business.
The industry has seen the shift largely led by the example of Newell Rubbermaid Inc. The Sandy Springs, Ga.-based housewares major closed several plants during 2005, realigning its Greenville, Texas, molding site, in particular, to handle larger-tonnage presses for making products that are more difficult for Asian competitors to ship to the United States.
Other competitors realigned via the last resort of bankruptcy. Among them, Aero Plastics Inc. of Leominster, Mass., and Cornerstone Products Inc. of Durant, Okla., which ended up liquidating after filing for Chapter 11 reorganization. Laich Industries Corp. of Brook Park, Ohio, filed for Chapter 11 protection as well.
Of course, there also was consolidation. Doskocil Manufacturing Co Inc. of Arlington, Texas, acquired Stylette Inc.'s assets. Aero Housewares LLC emerged out of the Aero Plastics filing, when President Jeff Goldberg bought the assets and added to that the assets of StyleMaster Inc. of Chicago. Aero bought the molds and business - and the machinery and building were being liquidated.
``Aero is projecting that there is business there for us to grow our company,'' said Russ Brillon, Aero's chief financial officer. ``We need to improve cost structure, and prove to the retail industry that we should be the vendor of choice. And we're projecting that we can do that,'' he said Dec. 12 by telephone. ``We'll be operating the business as cost effectively as possible. In many instances, that means automation.''
Tupperware Brands Inc. of Orlando, Fla., issued its outlook Dec. 13, predicting 2006 sales of about $1.8 billion, and projecting Tupperware North America sales to be down by a single-digit percentage point.
After a year of relentless price increases in resin, Brillon said his company has seen stabilization.
``Hopefully it means more than they're just taking a breath before another climb,'' he said.
Other economic barometers can somewhat predict the performance of housewares through the next year. The health of the industry in North America is based most notably on a careful mix of consumer confidence and performance of the housing market. Housing starts and housing inflation will fall next year if predictions by the National Association for Business Economics hold true. Its panel of 45 forecasters predicts starts will decline to 1.9 million in 2006, from 2.1 million in 2005.
Officials from the International Housewares Association said consumer confidence indices seem to be a moving target, sometimes up, sometimes down.
``But the indices don't seem to be predicting consumer behavior,'' said Perry Reynolds, vice president of marketing and trade development for the International Housewares Association in Rosemont, Ill. ``Consumer behavior seems to be stronger than indices tell us. Boomers are spending, and they're spending on the home.
``Our own consumer advisory council says there is no letup in spending requirements on the home. Boomers are leading the way in the purchase of home goods,'' he said Dec. 16.
Despite rumbles in the economy, the housewares and homegoods industry tends to have steady growth. Looking at it across all segments, the industry had 3-5 percent growth on a rolling year-end average over the last five years.
``There's no reason to believe that's not going to continue,'' Reynolds said.