Housing recovery spills into manufacturing
Feb 17, 2013 (Star Tribune (Minneapolis) - McClatchy-Tribune Information Services via COMTEX) --
Up north in Warroad, where Marvin manufactures custom windows and doors for homes, the company has quietly hired about 140 workers in the past year. Production is creeping up, too, along with morale. And for the first time in years, officials have that giddy feeling in their guts that business is about to head up.
The long-awaited comeback in the housing market is finally making its way to Minnesota's battered manufacturing sector, with companies ranging from Marvin Windows and Doors to Honeywell International seeing notable jumps in sales. Area manufacturers are benefiting from an unprecedented 17 percent increase in home sales from 2011 to 2012, and they are hopeful that those kind of gains will continue to rub off on their businesses and offer stability.
"We saw new construction increase here in Minnesota and nationally and we expect that to happen again in 2013," said Marvin spokesman John Kirchner. "We are coming off of a very, very deep bottom."
Already, the tentacles of the housing recovery are reaching a plethora of manufacturers who specialize in furnaces, countertops, furniture, thermostats and an assortment of other goods that cater to the American home. The number of new houses and apartment planned for the Twin Cities rose almost 100 percent last year, leading to higher home-product revenues for many manufacturers.
"We've seen consistent growth across our residential business," said Beth Wozniak, president of Honeywell Environmental and Combustion Controls. "A rebounding new-home construction market certainly helps."
These days, Honeywell's home thermostats, furnace filters and air purifiers are shuffling out of its Golden Valley factory at a much faster rate. Renewed demand for automated home systems helped division profits climb 10 percent last quarter.
Even companies dabbling in home-decorating goods are seeing a comeback. Minneapolis-based Target Corp., which had flat December sales, recently reported a jump in its January same-store sales due in part to an increase in home merchandise activity. Luxury bed-maker Select Comfort in Plymouth and quartz-countertop manufacturer Cambria in Le Sueur are not only seeing sales growth but are even expanding. Select Comfort has moved several stores from malls to off-mall locations to better promote its specialty beds. The company also is renting out more space in some malls that house their stores.
The recovery in housing couldn't come soon enough for companies like Bayport-based Andersen Windows, which laid off hundreds of workers during the trough of the downturn. The company is now looking to add to its workforce.
"We definitely feel we are in a hiring mode right now, and not a layoff mode," said Jay Lund, CEO of Andersen, the world's largest home window manufacturer.
Andersen, which has 9,000 workers worldwide, including about 1,200 in Bayport, recently discontinued one of its long-running window lines, but it did not have to lay off any workers because business has been brisk.
But while manufacturers will benefit from a healed housing market, economists warn that manufacturing still is far from normal.
Minnesota manufacturers have regained just 17,000 of the nearly 51,000 jobs lost since the recession bottomed out in January 2010, said economist Robert Scott with the Economic Policy Institute in Washington, D.C. So while things are improving, "I don't think you have the recovery in manufacturing that you think you have. You have had some, but it's not as big as in other states."
Nationwide, recovery has been a long slog, acknowledged Michael O'Brien, CEO of the Window and Door Manufacturers Association.
Next year, his association expects window sales to jump 12 percent to 44.7 million units, despite continued softness in Florida, Nevada and other states still smarting from the worst economic slowdown since the Great Depression.
"There is a definite improvement in the market. And we anticipate 2013 being the best year since the housing market exploded," O'Brien said.
Still, some manufacturers suffered so much during the housing downturn that they ended up tweaking their businesses.
Pentair, which makes commercial and residential pool equipment, sump pumps, water softeners, and water filtration systems, used to generate 40 percent of its income from residential markets. But that mix hurt the bottom line during the recession.
By March 2012, Pentair -- which has operations in Golden Valley -- announced that it was merging with a Tyco division, better known for industrial oil and gas valves and controls.
The move softened the company's reliance on residential markets. Ironically, the deal was completed in September, just in time to smack into a fledgling housing recovery. Today, Pentair officials chirp about hope where there used to be angst.
"We are seeing continued signs of our North American residential recovery," CEO Randy Hogan recently told analysts. "While the growth in the fourth quarter in North America was modest, distributor inventory levels are relatively low and overall demand seems to be getting healthier. ... [This offers] positive indications for growth to accelerate as 2013 progresses."
Dee DePass --612-673-7725
___ (c)2013 the Star Tribune (Minneapolis) Visit the Star Tribune (Minneapolis)
at www.startribune.com Distributed by MCT Information Services
[ Back To Technology News's Homepage ]