Architectural Millwork and Retail Fixtures Manufacturers See Gains: FDMC 300 Special Report
Despite ongoing labor and supply chain issues stemming from the pandemic, wood product manufacturers in the architectural millwork and retail lighting segments remain relatively optimistic for 2022, with plans and higher revenue projections.
According to Doug Hague, CEO of Institute of Architectural Carpentry, “The initial thought was that Q1 would be slower, but I think it was stronger than some might have expected. That said, the rest of 2022 looks very solid and with the current momentum our industry should to carry beyond 2021. We are seeing greater percentages of larger contracts coming to market, which is encouraging.
Projections for 2023, he added, are also improving. “Given everything that is going on in the world, I would choose for good. Everything could change at any time, but in general it looks very positive with many backlogs being created for 2023.”
At 58.0, the Architectural Billing Index (ABI) for March shows that architectural firm billings continue to rise at a healthy pace despite supply chain disruptions affecting projects. Three of the four regions on ABI from the American Institute of Architects scored above 50, indicating growth: the South (57.2), the Midwest (56.2) and the West (54.0), with the Northeast slightly below at 46.3. The sector index breakdown also shows residential at 57.2, commercial/industrial at 55.3 and institutional at 50.5.
Although the shopfitting market has been among the hardest hit during the pandemic, it also appears to be bouncing back, with many retail and food chains such as Five Below, Batteries Plus, Dollar General and Popeyes which are rolling out expansions this year, while many others have announced renovation and/or concept store projects. A good omen also for the industry, the The Pulse of Mastercard Spending saw its retail sales increase 8.4% in March compared to 2021, with in-store sales increasing 11.2% for the same period. Placer.ai mall index also reported an increase in traffic in March, up 16.6% in indoor malls and 11.0% in outdoor malls.
See Strategies for Success – box below
A renewed optimism for 2022
The FDMC 300, an annual ranking of North America’s largest wood products producers, saw sales of the architectural millwork and retail millwork and fixtures segments reach approximately $2.7 billion and $1.9 billion respectively in 2021. Overall, sales in both segments are positive for 2022, with respondents expecting revenue to be the same or better than last year.
Mike Jones, president and CEO of 3C Store Fixtures (#223), said his company is already seeing an increase in orders from existing customers, as well as business from new customers coming online. The outlook for 2023, he added, is excellent.
The Washington Woodworking Co. (#209) is also optimistic for 2022 and beyond. “2022 sales are on track to exceed 2021 sales,” said Frankie Jordan, CEO. “We had a fantastic first quarter. There’s a lot of work going on right now, so we’re choosing jobs to add to the backlog wisely.
Jordan added: “It is still early to say what sales will look like for 2023, but we expect to enter the new year with a solid order book, around 50% of our annual turnover.
“We expect sales to grow 20% in 2022, primarily due to our existing product offering and the new line of ‘Primary Kitchen’ residential cabinetry we launched in 2020,” said Andy Wilzoch, President of First Eurocase (#181). He noted that the company’s vertical integration and strong supplier relationships “have also been a major reason we have fewer supply chain issues.” And barring a recession, Wilzoch predicts good growth not just in 2023, but “every year that isn’t interrupted by a negative financial event.”
Supply chain issues also haven’t stopped Mock Woodworking (#231), which had “a very strong year of sales in 2021,” said Andrew Dix, chairman, and so he anticipates a stronger 2022. gentle. “Projects that were stalled in 2020 or earlier due to COVID, all moved forward into 2021. This spike in activity was a one-time event and a tsunami of demand. He added, “We are normalizing our sales projections and seeing demand stable in 2022, but not exceeding 2021.” The outlook for 2023, Dix continued, is good.
“ROOMI Group (#158) is excited for 2022 and the future beyond,” said Faisal Hussain, Chairman and President. “We have a strong sales force serving multiple markets and are pleased to report that we have over two dozen projects in our pipeline of opportunities. Only $14 million of capacity remains in 2023 as we are well on the way to benefiting from the constant support of our customers.
Challenges and Opportunities
Labor, or lack thereof, is arguably the number one concern for many architectural millwork and retail fixture manufacturers, with supply chain issues coming next.
“For 2022 and 2023, I would say workforce,” Hague said when asked what AWI members see as the biggest challenge facing the industry. “While relief may come for supply chain issues or inflation may eventually come down, there is no solution – on the horizon or overnight – for the jobs that need to be done. be provided in our great industry. This is not a new problem, but we must work diligently to find solutions that can keep our industry vibrant for many generations to come.
Jordan agreed. “Many skilled artisans are approaching retirement age. With a lack of young talent to train, there is uncertainty about what our workforce will look like in 3-5 years,” he said.
Jones and Dix also cited labor availability, along with rising wages, rising materials, and material availability as key challenges facing the market.
“The economy has been very steady with not too much inflation or supply chain issues leading up to COVID,” Dix commented. “Today’s economy and market require our company’s team to manage and solve more complex problems that were not necessary before. Due to labor and material shortages across all trades, general contractors and projects are scrambling to meet deadlines. Off-schedule projects often have general contractors requiring trades, like ours, to make up time and shorten our durations.
“As in other trades, it has been difficult to find labor to increase staffing, as well as to keep the workforce with the increase in wages and the change of employment . It was equally difficult to contain the escalation of material costs in the next tender, especially when the projects ask for accelerated execution,” he added.
“As an industry, we see a need for young people [who have been] lose interest in woodworking and construction,” Hussain said. “ROOMI often recruits from local schools, but we are facing the social media technology boom and sawdust is not something everyone wants to undertake. As we lead our tribe, we develop local partnerships to help young men and women find value by dedicating their lives to one of the oldest crafts in history.
Hague also noted the industry’s need to “further adopt the technology and innovation explored during the pandemic.” Businesses have often been forced to adapt at all times, and elements of this adaptation process will strengthen them for the future. “Most of our members have been deemed essential during the pandemic, and many have found their equipment and skills transferable to the immediate needs of the world during the pandemic. Not every industry can boast that. Share the message and encourage new people to join our amazing industry with fantastic career opportunities.
The AWI also conducts an annual Cost of Doing Business survey that provides benchmarks for companies to assess their performance against industry peers, including expenses, staffing, profitability and productivity and helps keep up with industry trends. For information visit awinet.org/publications/codbs.
FDMC 300 offers strategies for success
We asked some of FDMC’s 300 architectural millwork and retail fixture manufacturers to share a tip for success in the coming year. Here’s what they had to say:
• “Think outside the box,” said Mike Jones, President and CEO, 3C Store Fixtures (#223).
• “Raise your prices and give nothing away. People pay for carpentry,” said Frankie Jordan, CEO of Washington Woodworking Co. (#209).
• “Having a strong balance sheet and investing in talented employees to help navigate the market this year will be key,” said Andrew Dix, president of Mock Woodworking (#231). Additionally, he said, “having a solid backlog of sales will help if the economy deteriorates due to inflation or outside influences like new variants of COVID, or the impact of the Ukrainian conflict.” .
• Make sure your “tribe” knows they are valuable to the business. “For the past two years, our leaders have chosen to work with low margins to help maintain full staffing without reducing EAP benefits. We have not stopped any contributions of 401,000 and we have not cut any company-wide health, vision or dental benefits,” said Faisal Hussain, Chairman and President of ROOMI Group (#158 ).
(You can find more tips from large, medium and small wood product manufacturers in the WOOD 100: Strategies for Success at WoodworkingNetwork.com/WOOD-100.)
About the FDMC 300
More than 50 architectural millwork and retail lighting companies are included in the 2022 FDMC 300, an annual report that tracks North America’s largest manufacturers and ranks them by sales. FDMC 300 company updates are available at WoodworkingNetwork.com/FDMC-300, with future issues also including industry snapshots and interviews. For more information on how to be included, contact [email protected]