It is a highly fragmented market place that is dominated by mostly small business entrepreneurs. Aside from a few industry giants such as Masco Corporation and Fortune Brands, many homeowners have historically turned to the small, privately owned local manufacturers who have been serving their community, in many cases, for decades. But as American importers and Chinese manufacturers began their charge into the multi-billion dollar kitchen and bath cabinetry industry, a detrimental combination of an economic recession, a failing housing market and high unemployment began to stack up against local manufacturing, as cash strapped consumers hunted for the highest quality cabinetry at the lowest price.
This perfect storm allowed Chinese imports of ready-to-assemble (RTA) cabinets to take hold of an already distressed market, putting many small businesses, out of business, as their inability to compete against importers grew. So why are the importers still around now? It comes down to simple profit and loss.
Manufacturing cabinetry here in the United States is expensive business, from overhead to equipment to personnel. And since most small business owner or entrepreneurs aren’t in the business to lose money, the cost of manufacturing is passed on to the consumer, either through lofty pricing or poorer quality. With local manufacturing, a company has to factor in significantly larger facilities to accommodate their production and manufacturing operations, which translates to higher rent and additional costs for the purchase and maintenance of equipment. The hiring of more personnel, means more highly skilled carpenters who require the manufacturer to carry additional, high risk insurances in addition to higher salaries. And although many local manufacturers turned to China for raw materials and equipment, the cost of operating was still enough to force them to close shop.
Manufacturing importers have been able to seize the opportunity of the lagging economy by operating with significantly lower manufacturing costs and lower overhead, allowing them to offer considerably lower pricing to the end users, whether it’s wholesale to industry pros or consumers at retail prices. When comparing to local manufacturers or large home improvement stores, this difference could be in upwards of forty percent or more. Additionally, value driven importers will take advantage of affordable raw materials and low manufacturing costs in China to significantly improve the quality of their cabinets in an effort to strengthen their competitive edge in the market. Opting for standards such as ¾ inch plywood boxes, higher quality hardware such as soft closing hinges and matching cabinet interiors to go with the customers color selection continues to give the importers a strategic advantage from manufacturing companies who offer these as pricey upgrades.