High-end vs. low-end The millwork industry goes to extremes

upscale, Atlanta hotels that are looking to boost guests through an easy, elegant addition such as crown mouldings."

"Meanwhile," Duncan continues, "the d-i-y segment seems to be gaining momentum. Homeowners realize the economic situation remains to poor, but the initial shock is gone and people are gaining some confidence again. Many cannot afford to sell their homes, but they can undertake di-y and small remodeling projects to make their homes more comfortable or more competitive, should they decide to sell. Geographically, we have noticed a large upswing in Texas, specifically the Austin area, where the real estate market remains viable in these economic times."

fltelr ro A MoulDtruc and millwork company that's sur- viving the recession-or one of the few that's thriving despite itl-and you'll probably hear one of two seemingly disparate tales: They'll admit that the housing slump has killed their sales of low-end products typically used in tract homes, but they're flourishing with high-end products for custom, luxury homes. Or they might say that tough economic times have made low-priced millwork more appealing to cash-strapped do-it-yourselfers, forced to stay in and fix up their old homes. So which is it?

Windsor Mill, Cotati, Ca., provides both high-end and low-end products, but growth has come from the formerbecause those are the customers who have survived.

"For the space that we're in, the quality craftsman and the quality builder have survived over the last five years because of the quality of the wood," says president Craig Flynn. "They're our core customer, and we haven't seen them switch."

On the other hand, notes Dwight Duncan, owner and president of Century Architectural Specialties, Marietta, Ga., "From my viewpoint in the millwork industry, the slump continues with high-end new construction, unless it is large scale project related. For instance, we have had some recent success with commercial installations in

Jim Russell, president and sales manager, Russell Manufacturing, Hubbard, Or., agrees: "During recessions, homeowners elect to do repairs themselves, which boosts the home center business. Door shops and distributors typically purchase material for new homes, which is off maybe 40-507o from previous years, so they're slow. Banks have tightened money to contractors so it's harder for them to finance a spec home. Starter homes and multi-family housing has been hit the hardest; a new homeowner finds it difficult to secure a mortgage."

Some high-end business remains-but it already was a small slice of the pie. "People who have luxury homes have the money anyway and see that this is the cheapest time to remodel, as everyone is looking for work, but only maybe 57o of production goes to high-end custom homes," Russell says.

Richard A Ungerbuehler Sr., president, Federal Millwork Corp., Fort Lauderdale, Fl., has seen a recent uptick in demand, but attributes it to the loss of competing custom manufacturers rather than an increase in constrution. "To be sure, in our south Florida marketplace, the construction industry continues to lose jobs every month," he says. "The overbuilding, coupled with mortgage abuses, foreclosures, the shifting population, business closures adding to the unemployment numbers, and the lack of land for development all add to the malaise in which we all have fallen victim."

He thinks, percentage-wise, high-end may be holding up better than low-end. "The construction we see in the residential market is at the upper end of the construction eco- nomic scale," Ungerbuehler shares. "They seem willing to spend because of the stiff competition among builders fighting over contracts, lumberyards and manufacturers offering deep discounts, reduced land costs, and low interest rates."

He sees the trend, however, as dating back even before the recession. as "potential buyers (seemed) more discriminating when it came to profile, species and finish. The buying public was becoming more discerning in their taste for quality over quantity, highend instead of low-end products."

Yet, says Ungerbuehler, "there will always be a place for the low-end product offered to the public. Frankly, that is what the masses can afford. However. with the introduction of synthetics of all types, there seems to be a move to offer the appearance of high-end products at the low-end price. Flooring is a good example. Quality hardwood floors are being replaced with laminated products, both with wood and a form of plastic veneers. A quality hardwood floor will last the life of a home and can be refinished. The synthetics may last a generation, but offer no way to regenerate its appearance or functionality."

Moulding & Millwork, Ferndale, Wa., has been fortunate to have a healthy housing market in its backyard. "In Vancouver, B.C., housing prices have flourished," says Stuart Cuthbert, national sales manager. Construction "slowed down, there was a bit of a dip, but ever since housing values have shown a constantly upward graph. However, in the last 18 months, there's been significant pressure to be tight on cost. But that hasn't necessarily pushed people toward lower end profiles."

Although Dorris Lumber & Moulding Co., Sacramento, Ca., produces only premium solid pine mouldings, c.e.o. Joshua Tyler also sees cost as the key, no matter if one specializes in "high-value or low-value mouldings." Retailers who squeeze hardest on price are still buying. "I would say that if you sell into Home Depot or Lowe's, business is better than normal," Tyler explains.

Overall. both scenarios seem truemillwork companies are succeeding by focusing on low- and high-end. Everything's down, but sellers are improving their chances for serving the demand that remains by knowing their market and specializing in what it wants.

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