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Thanatology and Taphophile Issues, Cemetery,
Funeral Industry and Death Related News.
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China-made coffins pose threat to U.S. casket makers |
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Written by DeadGirl
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Wednesday, 26 May 2004 |
NEW YORK (Reuters) - Cheap toys, clothing, electronics, furniture ... now even coffins: Chinese exporters are serving American consumers from cradle to grave.
Low-priced caskets made in China still represent a small portion of the U.S. market, but are viewed as a serious threat by the domestic industry which, beyond a few major players, is highly fragmented.
U.S. casket makers -- affected by rising lumber and steel prices and sales declining along with the death rate -- can ill-afford a fresh wave of low-cost competitors.
"Higher commodity costs, falling death rates and imports from China are going to make it difficult for U.S. casket makers to compete," said John Connors, business development manager of H.B. Maynard & Co Inc., a consultant to some casket companies.
China-made steel caskets, priced 30 percent to 50 percent below a similar quality U.S.-made product, have been trickling in since 2001 via South Carolina-based automotive repair parts importer Excalibur Tool & Equipment Co. Inc.
Excalibur president, Troy Shockley, got into coffin-importing by chance. While on a visit to China to buy repair parts, he saw a business opportunity and took it.
"It is all about price and it is very competitive because everyone is looking at squeezing out another dollar," he said.
The Casket and Funeral Supply Association, a trade group, estimates Chinese imports at 2 percent to 3 percent of the 1.85 million caskets sold in 2003, and says that share could increase this year.
But importing from a factory thousands of miles away means funeral homes will have to buy in bulk and invest in warehouses. U.S. casket makers can guarantee next-day delivery.
It also means more standardized coffins instead of the custom-built ones many funeral homes now offer.
"They can certainly imitate our caskets, but they cannot innovate," said Joe Weigel, a spokesman for Indiana-based Batesville Casket Co., owned by Hillenbrand Industries Inc. (nyse: HB - news - people), a leader in health care and funeral services.
A SHRINKING MARKET
U.S. casket makers have reason to fear the entry of China-made coffins because new competitors can grow only by cutting into the share of existing players.
The U.S. market for caskets has been declining less than 1 percent for most of the last 20 years, as medical breakthroughs increase the life expectancy of U.S. residents, according to the Casket and Funeral Supply Association.
Sales are also down because of the rising popularity of cremation, which is cheaper because a casket is not always required and you don't need a cemetery plot.
Besides, margins are getting squeezed because of steel and lumber prices, which have recently climbed on a combination of China demand, the recovering U.S. economy and a long period of low production that reduced stockpiles.
Batesville expects to see a $7 million increase in expenses this year due to surging commodity costs, the company said.
And so, casket makers such as Batesville and the York Group, owned by Matthews International Corp., the maker of memorialization products and caskets for the funeral home industry, plan higher-than-usual price increases this year.
But this could backfire as funeral homes such as South Carolina-based Citadel Management Co. choose to buy cheaper China-made caskets.
"We have actually increased our market share because we offer much more economical products," said Bill Gaffney, a manager at Citadel, which runs 10 funeral homes in the southeastern United States. "One funeral home saw 40 percent growth in revenue in a period of 18 months since the pricing of the caskets was economical."
Currently, China-made caskets imported by Greenville Casket Co. make up about 20 percent of Citadel's stock. Gaffney started buying from Greenville in early 2002, after learning about the importer at a cocktail party.
Although the imported caskets are cheaper, longer delivery schedules have meant additional costs for Citadel. About a year ago, it invested in a 2,500-square-foot warehouse to stock about 200 imported steel caskets in eight standard designs.
Greenville's Shockley declined to divulge the location of his steel caskets factory in China, or its sales and expansion plans for fear of losing his competitive edge.
But as he plans to import ornate, more labor-intensive wooden caskets from China, he said the price difference will make it economically attractive for funeral homes to switch to his product.
"I am certainly not against getting products for less money," said Thomas Kearns, president of New York-based Leo F Kearns Inc., a family-owned funeral home now buying only from U.S. casket makers. "If I could get something of equal quality and get service and delivery... Heck! I will be all for it."
http://www.forbes.com/business/healthcare/newswire/2004/05/26/rtr1385614.html |
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Taphophilia?
taphophilia (taf′ō-fil′ē-ă)
ORIGIN:
From the Greek words taphos, meaning "tomb" or "sepulcher" and philia, meaning "attraction or affinity to something, in particular the love or obsession with something"
DEFINITION: 1. An excessive interest in graves and cemeteries. 2. A love or fondness for funerals, graves, and cemeteries. 3. In psychiatry, a morbid attraction to graves and cemeteries
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