Hot in the kitchen business

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This article was published 30/09/2014 (4221 days ago), so information in it may no longer be current.

It was 15 years ago when the Buller family sold Kitchen Craft, but the family has never really given up on the cabinet-making business in Winnipeg.

When it was sold in 1999, Mark Buller was running the business his father, Herb, started in 1971. He stayed on with the new owner until it was sold again in 2002.

A year later, the family teamed up with some private-equity money and bought Minnesota-based Norcraft for a reported $315 million.

A year after that, it built a modest component factory on Springfield Road, just down the street from Kitchen Craft.

Since then, lots has happened in the business.

Norcraft is now the fifth-largest kitchen and bathroom cabinet manufacturer in North America, and last year it raised more than $100 million in an initial public offering.

This week, the company announced its first major expansion in 10 years, which will more than double its Winnipeg plant to more than 130,000 square feet.

And rather than just making components for Norcraft’s range of brands, the Winnipeg plant now makes the company’s full Urban Effects line, the smallest of its four independently run brands.

The expansion, expected to be completed in mid-2015, will mean doubling the Winnipeg workforce from 230 today to close to 500 when the additional capacity is fully operational.

“We’re spending more than $7 million here, and that’s the largest capital project since I’ve been with the company,” said Buller, 48, who still lives in Winnipeg and travels often to the company’s head office in suburban Minneapolis and all over North America.

(Norcraft also has production facilities in Minnesota, South Dakota, Virginia, Kansas and North Carolina, distribution in Florida, Arizona and California and a handful of retail stores throughout the U.S.)

It’s a big move for Norcraft to make as the North American cabinet industry is still working its way back up to pre-recession levels.

Richard Titus, executive vice-president of the Kitchen Cabinet Manufacturers Association (KCMA), based in Reston, Va., said his members’ revenue declined by as much as 50 per cent during the decline.

“There has been steady growth since 2010-2011,” Titus said. “It has been slower than some had predicted, but there has been steady improvement.”

“We had a great year in 2013, relatively speaking,” said Buller of the company’s $339.7 million in revenue last year, 17.6 per cent better than the year before. “We’re not back to our peak number, but we’re having a good year this year.”

Urban Effects accounted for $24 million of the company’s total sales in 2013. Its Mid Continent is by far the largest division, followed by StarMark and UltraCraft.

In 2006, before the U.S. housing market crashed, 52 per cent of Norcraft’s revenue was from new homes. Now, 63 per cent of its sales comes from the repair and remodelling business.

Urban Effects is responsible for virtually all of Norcraft’s Canadian sales.

A recent presentation to investors indicated the company believes there is a significant opportunity in the Canadian cabinetry market as Norcraft has less than three per cent market share, compared with about five per cent of the U.S. market.

As well, Bill Esler, editorial director of Woodworking Network magazine, said, “Urban Effects is a more modern design — it’s called frameless in the industry — and it’s apparently doing well and it looks like the company is positioning that factory to export more to the U.S.”

Buller, who has been in the business for more than 25 years, has probably seen it all and clearly understands what it takes to run a successful integrated cabinet manufacturing operation.

“We have the right colours, the right door styles, the right product at the right value with the right customer service,” he said.

And unlike other manufacturing segments — such as furniture, garments or footwear — where virtually all North American production has migrated to developing countries around the world with lower labour costs, cabinet manufacturing has remained in North America.

Titus said in addition to the handful of very large players — including Norcraft — there are thousands of small enterprises that may have cushioned the impact of pressure from offshore as well as the fact the cabinet makers might have been quicker to adapt to more efficient production techniques.

martin.cash@freepress.mb.ca