2. THE STATE OF THE
INDUSTRY IS...
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.
2 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com
3. INDUSTRY OVERVIEW
IMPROVING HOUSING MARKET
Housing prices trending up in the majority of
metropolitan markets across the country in 2012
Number of new homes built increased 30% in
2012
Existing homes sales surpassed the 4 million
mark for the first time since 2007
FORECAST TRENDS IN REMODELING
Home improvement and repair spending in 2012 is
the second highest it’s been this decade
LIRA estimates the 4-quarter moving total on na-
tional homeowner spending on improvements to
reach $145.5 billion in Q3 2013
RRI predicts the number of remodeling projects to
increase by 4% to 10.5 million in 2013
POWERED BY
4. LEADING INDICATOR
OF REMODELING ACTIVITY
2013 Q1-Q3 Forecasted
14.5%
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
4 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com
5. SPENDING
LESSONS
2001-2007
53%
increase
in average home improvement
expenditures for those 65 and over
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
FORECAST
RETROFIT REMODELING
PROJECTS
POWERED BY
6. $300 BILLION
Home improvement and repair spending
climbed at a double-digit pace in the
second half of 2012 (est.)
Home Improvement Spending
$ Billion
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
Spending Share On Home Improvement Projects
Source: JCHS tabulation of 2007, 2011 American Housing Survey (AHS) and American Community Survey (ACH)
6 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com
7. During uncertain economic times, Northeast and
Midwest represent more stable markets.
During economic upturns, the South and West
provide more opportunities.
POWERED BY
8. 400,000 New 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
DISCRETIONARY SPENDING
2007 2011
Bath
Bath
Room Room
Kitchen Kitchen
Outside Outside
Source: JCHS tabulation of 2007, 2011 American Housing Survey (AHS) and American Community Survey (ACH)
8 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com
9. COMPETITIVE LANDSCAPE
INSIGHTS
What characteristics define the remodeling industry?
In 2007, the 50 largest remodeling compa-
FRAGMENTED nies generated less than 8% of the total
industry receipts
CUSTOMIZED In 2007, 2/3 of all remodeling businesses
were considered “specialty trades”
LOW The number of homebuilders who
BARRIERS entered the remodeling industry during
TO ENTRY the downturn (‘08-’11) increased 7%
The total number of general remodeling
CYCLICAL establishments decreased by 8,000 and
left 65,000 employees out of work between
2007-2011
The previously mentioned characteristics lead to a
CAPITAL DEFICIENT INDUSTRY
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.
POWERED BY
10. LABOR
STATISTICS
2010-2020
Construction Laborers
Projected Growth 25%
Carpenters
Projected Growth
20%
Painters
Projected Growth 18%
18%
Woodworkers
Projected Growth
Source: Department Of Labor Statistics
10 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com
11. Help Build Your Business In Any Economy
WHAT YOU SHOULD KNOW
Down Economy: Up ECONOMY:
1. Shift to high ROI remodeling 1. Expect an increase in low ROI,
work (replacement) larger-scale projects
2. Rely on older households 2. Embrace Baby Busters and
Echo Boomers
3. Northeast/Midwest represent
more stable markets 3. The Western/Southern regions
see better growth opportunities
POWERED BY
12. ABOUT FESTOOL USA
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.
12 | 2013 | STATE OF THE INDUSTRY | www.festoolusa.com
