The 2007 outlook for the housewares market is pared down, as the sector in North America went through a shakeout in 2005 and is still in transition. Those left standing are looking at design as essential for staying competitive, and automating to remove as much labor as possible while maintaining efficient operations.
The West Coast is the hot region, according to at least two molders. Still, the end of 2006 saw continued signs of difficulty, as molder Home Products International Inc. of Chicago filed for Chapter 11 protection from creditors.
HPI said late last year that it expected to lose more than $30 million in 2006 on sales of about $224 million. In 2005, HPI lost $11 million on sales of $228 million. As part of its reorganization plan, the firm closed its molding site in El Paso, Texas, consolidating in its remaining plant in Chicago.
Other companies are finding other ways to redefine themselves in an ultracompetitive, low-margin business. Tupperware Brands Corp. of Orlando, Fla., is redefining its milky-white Tupperware containers with moves into high-tech microwaveable products made of polycarbonate.
``We went out and got some of the best designers in the world, who now work with us, and you start to see a fashionability in it,'' said Chief Executive Officer Rick Goings.
``Functionality still matters, but fashion is there. Hot colors, new and different things, different product categories. We went from food storage alone to microwave products to table-top to cutlery to high-tech cookware. So we're pretty much in most of the major categories.''
Now, Goings is focused on achieving profitable growth.
``This has been hard-fought,'' he said. ``You saw the commoditization of our category with Rubbermaid and Sterilite. We had to go to places where they weren't and not compete flat-foot in the center of the ring with them.''
Rubbermaid Home Products itself went through major changes in 2006, including the decision by parent company Newell Rubbermaid Inc. of Atlanta to relocate the unit's headquarters from Fairlawn, Ohio, to Huntersville, N.C.
There were some investments in 2006, including the decision by United Solutions Corp. of Leominster, Mass., to open a blow molding and injection molding plant in Gilbert, Ariz. It also added capacity at sites in Leominster and Sardis, Miss.
The industry has seen a shift largely led by the example of Newell Rubbermaid. The housewares major closed several plants during 2005, realigning its Greenville, Texas, molding site, in particular, to handle larger-tonnage presses for products that are more difficult for Asian competitors to ship to the U.S. In 2006, the firm announced plans to shut down a blow molding site in Centerville, Iowa.
Other competitors realigned via bankruptcy. Among them were Cornerstone Products Inc. of Durant, Okla., which ended up liquidating after filing for Chapter 11; and Laich Industries Corp. of Brook Park, Ohio, which also filed for Chapter 11.
At Doskocil Manufacturing Co. Inc. in Arlington, Texas, officials in 2007 will focus on upgrades in manufacturing operations for the firm's pet and sports products.
``That's all being driven by the want to increase efficiencies to mitigate raw material pricing,'' said Shannon McWilliams, vice president of sales and marketing. ``We're all concerned about economic conditions. Our biggest concern is resin. If it wasn't for resin, economically, we're probably doing OK.''
International competition is hurting processors in a variety of end markets, but it is nothing new to housewares molders.
``The housewares industry is as close to being fully globalized as it's going to be,'' said Perry Reynolds, vice president of marketing and trade development for the International Housewares Association in Rosemont, Ill.
``I think that has snuck up on us in the last 10-15 years,'' he said. ``Exporting continues to grow. I think that the product itself, if it's well-designed, will travel to many markets, regardless of where it's made. Design is extremely important, and I mean both functionally and aesthetically.''