Kitchen & Bath Design News

AUG 2019

Kitchen & Bath Design News is the industry's leading business, design and product resource for the kitchen and bath trade.

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of Adams Sales Group, in Cedar Falls, IA. "The imported-cabinet suppliers have had to increase their prices, thus American-made cabinets are now more competitively priced and positioned when compared to Chinese imports." "Rising prices have driven away budget-con- scious clients who would have benefited the most from purchasing Chinese imported prod- ucts. We offer a wide array of brand-name prod- ucts that are unaffected by the tariff situation, and we're big believers in promoting American- made products, so I do not believe we have taken as big of a hit as many people would like to believe," said Alex Perdomo, owner of ARS Countertops, Oakland Park, FL. "Sales have slowed down some, [but] we don't believe it has to do with our pricing, which we have held at current levels," said Boyd Lilly, president, The Stand-in, Littleton, CO. "There are a lot of factors to consider – cabinetry raw materials, wage increases, labor shortages, shipping cost and construction labor costs due to shortage of skilled trades. We don't believe it's all caused by tariffs. We know the hardship tariffs cause but believe that they're best for the long term." "As countertop fabricators, the tariff situa- tion has increased quartz slab prices for several of our suppliers based out of China," said Alex Perdomo of ARS Countertops, in Oakland Park, FL. "The current economic landscape has made for a more comp etitive industry, and many com- panies affected by the tariffs have made efforts to improve other facets of their organizations in order to retain our business. Our average consumer is well-educated on the tariff situation and is understanding of the increase in pricing." "We're open to alternative sources that our plywood distributor is bringing to us," said Kent Martin, president/CEO of Signature Custom Cabinetry, in Ephrata, PA. "We have built in the additional costs to our annual increases, but they've not taken us out of our normal range on increases. We're not losing business at this point as a result of the tariffs." "We offer both American-made cabinets and imported, knock-down cabinets, so we see both sides of the issue," said Dawn Zarrillo, of Zarrillo's Custom Design Kitchens, in Duanesburg, NY. "What I love is that the tariffs have made our American-made cabinets much more competitive, for a better-built and finished cabinet. I believe this is best for our country." "Tariffs are an important weapon in today's trade-war front," says Fred Bowen-Smith, of The Kitchen Strand, in Hobe Sound, FL. "If products are subsidized by a government to be cheaper than market value, and that product is dumped into our market, hurting our manu- facturing base, then something must be done. An attempt by a country to buy the market and destroy the competition is, in essence, a decla- ration of war and our efforts to level the playing field are fair," Bowen-Smith says. "It's about time we...stood for American workers." "Every one of my clients is pleased to know that they're helping to keep jobs and families together," says David Wagner, general partner at Pasadena, CA-based Go Green Solutions. "People are getting sick of saving dollars at the expense of others' livelihoods," Wagner says. "Some things are more important than money." ADVERSE REACTIONS Not everyone, however, is enamored of the tariffs – either in theory or reality. "The major problem is in having suppliers make price changes after quoting products on projects," says Mark Anderson, of Persona Kitchen & Bath Solutions, in Wichita, KS. "Many suppliers used to hold prices for 30-60 days, and now they're changing pricing every week, even when the tariffs don't affect the inventories they have on hand." "Customers were used to the affordable im- port cabinets and that set the bar for expected pricing on kitchens and baths," says Andrea Klemm, a designer at Knecht Home Center Sonny's Ace, in Canon City, CO. "Builders are now complaining and starting to shop around for other cabinet dealers because they have sticker shock at the new prices and hope to find a dealer who is somehow not hit by tariffs," Klemm says. "The tariffs are also resulting in lost sales, as homeowners who budgeted for ren- ovations are now facing substantial cost increas- es. I've had clients say that they want to wait a few years and see if prices return to normal after the trade war stops. "A lot of homeowners we've been work- ing with can now no longer afford their new kitchen," says Elana Riedel, president of The Cabinet Lady, in Jurupa Valley, CA. "Also, a lot of rental-property owners who normally update their houses every 5-10 years cannot afford a new kitchen. We're seeing a lot of them just paint the old cabinets and maybe install a cheap granite countertop." Adds Riedel: "We have raised our prices 25% to cover the tariffs, but even with the increased prices, the similar quality domestic cabinets are still two to three times the price of the imported products, so our customers are sticking with imported cabinets and counter- tops. Until domestic suppliers can find a way to lower their prices, my clients just won't be able to afford them. "We're a small company and operate on nar- row margins, so we can't absorb the increase, she observes. "Normally by this time of year, we would have sold and installed 12-15 kitchens. But this year, we've only sold and installed nine kitchens. "Raising the prices on the imported cabinets will not result in the domestic cabinet compa- nies getting more business, as people just can't afford them. For my clients, the choice is not between imported and domestic cabinets. It's between imported cabinets or nothing at all." According to Janet Jones, of Spokane, WA-based Great Floors, the tariffs are having a detrimental impact on business, since orders placed prior to the imposition of the duties can- not be fulfilled for the prices that were quoted. But despite the disruption, "it's a great move not to be so dependent on foreign goods," Jones says. "It's a costly inconvenience, but we all need more quality and less quantity." "It's impacting my business greatly. We don't have as many selections to offer as before the tariffs [and] price quotes are subject to change at any moment," said Joyce Rosenberg, manager of Renaissance Marble Work, in New Hyde Park, NY. "Current clients are not happy that these 'additional pass-through costs with no ben- efits' are being added to their project costs," said Robert Larson, president of Three Arch Design, in San Diego, CA. "The end result is a re-evaluation in terms of moving forward with many items." The majority of those questioned, however, tell KBDN that the impact of tariffs has thus far been minimal or non-existent – or that it's simply too early to tell. While a sense of uncertainty and volatility permeates the trade, and costs are clearly rising, business for the most part continues unabated, dealers and designers say. In many cases, purchasing and specifying practices remain unchanged. In some cases, rising costs or product shortages are resulting in diminished rev- enue, as consumers with limited resources balk at rising costs and/or defray remodeling decisions as they reassess available financ- es. In far more cases, however, alternative product options have been embraced by consumers who've accepted price increases, are generally happy to buy price-equivalent alternatives, particularly if they're American- made, and have been persuaded to focus on issues like quality, features and service rather than simply price. Most feel that, regardless of how the issue plays out, they will ultimately find a way to adapt – just like the industry has managed to do for decades. ▪ " What I love is that the tariffs have made our American-made cabinets much more competitive, for a better-built and finished cabinet. I believe this is best for our country." Dawn Zarrillo, Zarrillo's Custom Design Kitchens 84 Kitchen & Bath Design News • August 2019 SPECIAL REPORT

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