festool state ofindustry

1 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com POWERED BYPOWERED BY

2 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com

Taken as a whole, the state of the American remodeling industry is recovering, and trending upward to its strongest point since before the recession began. In addition, there are key indicators that suggest continued improvement throughout the year.

There have been distinct changes within the industry that help us anticipate future trends, and give us insights to prepare for future economic uncertainties. The state of the industry discusses business strategies to overcome them.

Ultimately, we want our businesses to become successful, and stay successful, in good times and bad. It’s critical that we un-derstand the economic conditions of our environment to optimize our decisions and our strategies.

THE STATE OF THE INDUSTRY IS...

2 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com POWERED BY

IMPROVING HOUSING MARKET

Housing prices trending up in the majority of

metropolitan markets across the country in 2012

INDUSTRY OVERVIEW

Number of new homes built increased 30% in

2012

Home improvement and repair spending in 2012 is the second highest it’s been this decade

RRI predicts the number of remodeling projects to increase by 4% to 10.5 million in 2013

LIRA estimates the 4-quarter moving total on na-

tional homeowner spending on improvements to

reach $145.5 billion in Q3 2013

Existing homes sales surpassed the 4 million mark for the first time since 2007

FORECAST TRENDS IN REMODELING


LEADING INDICATOROF REMODELING ACTIVITY

14.5%2013 Q1-Q3 Forecasted

increase in homeowner remodeling activity

The Leading Indicator of Remodeling Activity (LIRA) model utilizes the following eight indicators:

• National Association of Home Builders’ Remodeling Market Index- Future Expectations• National Association of Realtors’® Pending Home Sales Index• Federal Reserve Board’s 30-Year Treasury Bonds Yield• U.S. Census Bureau’s Single Family Housing Starts• U.S. Census Bureau’s Retail Sales at Building Materials and Sup-plies Dealers• U.S. Census Bureau’s Manufacturers’ Shipments of Construction Materials, Wood Products and Household Appliances• Bureau of Labor Statistics’ Number of Employees of Residential Remodelers• Institute of Supply Management’s Purchasing Managers’ Index


SPENDINGLESSONS

2001-2007

53%

During uncertain economic times, older households’

remodeling spending is (more) stable, and during good

economic times, it grows more aggressively.

What does that mean for you?

INCREASED DEMAND FOR RETROFIT REMODELING PROJECTS

in average home improvement

expenditures for those 65 and overincrease

FOR

ECAS

T


$300Home improvement and repair spending climbed at a double-digit pace in the second half of 2012 (est.)

BILLION

$ Billion

Home Improvement Spending

Spending Share On Home Improvement Projects

Source: JCHS tabulation of 2007, 2011 American Housing Survey (AHS) and American Community Survey (ACH)

Sources: JCHS tabulations of the 2001–11 American Housing Surveys (AHS); US Department of Commerce Survey of Expendi-tures for Residential Improvement and Repairs (C-50); and Abbe Will, Estimating National Levels of Home Improvements and Repair Spending by Rental Property Owners, JCHS research note N10-2, October 2010


During uncertain economic times, Northeast and

Midwest represent more stable markets.

During economic upturns, the South and West

provide more opportunities.


400,000New Remodeling and Replacement Projects Forecasted For 2013

Return on Investment (ROI) is higher for replacement projects.When we look at discretionary spending even closer, we see that kitchen remodeling replaces room remodeling during a downturn. WHY? Kitchen remodeling offers a higher ROI for homeowners versus updates to rooms (ie. family rooms).

56% Of discretionary spending in 2011 was comprised of kitchen and bathroom updates

Source: JCHS tabulation of 2007, 2011 American Housing Survey (AHS) and American Community Survey (ACH)

2007 2011

DIS

CRET

ION

AR

Y SP

END

ING

Kitchen

Room RoomBath Bath

Kitchen

OutsideOutside


COMPETITIVE LANDSCAPE

INSIGHTSWhat characteristics define the remodeling industry?

FRAGMENTED

CUSTOMIZED

LOW BARRIERS TO ENTRY

CAPITAL DEFICIENT INDUSTRY

CYCLICAL

In 2007, the 50 largest remodeling compa-nies generated less than 8% of the total industry receipts

In 2007, 2/3 of all remodeling businesses were considered “specialty trades”

The total number of general remodeling establishments decreased by 8,000 and left 65,000 employees out of work between 2007-2011

The previously mentioned characteristics lead to a

Many players, fighting for financing scraps. Anyone can open a remodeling business, but small remodeler’s frequent lack of experience results in high failure rate and financing difficulties from traditional lenders.

The number of homebuilders who entered the remodeling industry during the downturn (‘08-’11) increased 7%


LABORSTATISTICS

2010-2020

Construction Laborers Projected Growth

Carpenters Projected Growth

Painters Projected Growth

Woodworkers Projected Growth

25%

20%

18%

18%Source: Department Of Labor Statistics


WHAT YOU SHOULD KNOW

Help Build Your Business In Any Economy

1. Shift to high ROI remodeling

work (replacement)

2. Rely on older households

3. Northeast/Midwest represent

more stable markets

1. Expect an increase in low ROI,

larger-scale projects

2. Embrace Baby Busters and

Echo Boomers

3. The Western/Southern regions

see better growth opportunities

Down Economy: Up ECONOMY:


Festool manufactures superior portable power tools to help professionals work faster, easier, and smarter. Festool’s unyielding commitment to quality, precision, and exceptional customer service has remained since its incep-tion in Germany in 1925.

Innovation has been the foundation of Festool. In 1929, the company intro-duced the world’s first portable chain saw, which brought the mill to the forest and transformed the logging industry. Other landmark products fol-lowed, including the first orbital sander, the first plunge cut saw with guide rail system, and the revolutionary CT Dust Extraction System.

Today, Festool continues its tradition of innovation by inventing tools the rest of the industry has never dreamed of—tools that save time and money, improve performance and cleanliness, and increase finished quality.

From high-performance dust extraction systems to long-life consumables, Festool’s cutting-edge products consistently raise the bar and break new ground. For remodeling, finish carpentry, cabinet making/installation, and professional woodworkers, discriminating professionals choose Festool.

The USA headquarters for Festool is located in Lebanon, Indiana.

ABOUT FESTOOL USA

festool state ofindustry

Documents

kitchen remodeling

new remodeling

remodeling businesseswere

home improvement spending

american remodeling

opena remodeling business

spending share

spending lessons2001