Building suppliers court the do-it-yourself homeowner
With the pace of new-home construction taking a nose dive, building material suppliers are chasing after the home fix-up market. ''People like Owens-Corning and Stanley are reorienting themselves to the consumer and pushing hard,'' says Larry Hayes, assistant research director for Building Supply News, a trade magazine. Owens-Corning Fiberglas Corporation makes insulation and Stanley Works produces carpenter's tools.
Wooing the homeowner is a strategy building supply companies have used in other housing recessions. But with single-family construction at its lowest point since 1959, construction suppliers are becoming increasingly ardent suitors.
For example, Owens Corning has increased its television budget for home insulation from roughly $8 million in 1980 to $10.5 million in 1981, says Joseph J. Doherty, Corning's vice-president for marketing communications. Next year, the Toledo-based company plans to spend another 20 percent to have the Pink Panther cartoon character sell its insulation.
And to stimulate demand for acoustical ceiling material, Owens this year started a $3 million advertising campaign in 23 television markets. ''That is up from zero'' spent for advertising ceilings on TV last year, Mr. Doherty says.
While Owens and others are spending more to tempt do-it-yourselfers, the construction industry's siren song is getting a lukewarm reception. Faced with stratospheric interest rates on improvement loans, homeowners are increasingly cautious about embarking on a flurry of major home repairs.
''In the past, when housing was depressed, repair activity would accelerate, '' says Merrill Lynch vice-president Jonathan Goldfarb. Due to high loan costs, home improvement ''hasn't been as countercyclical as in 1971 or 1974-75.''
Between 1974 and 1975, home improvement expenditures soared 17.9 percent, according to data from Building Supply News. But this year spending on home improvement is expected to climb only 8 percent from 1980 to $58.4 billion.
To offset consumer reluctance to spend on repairs, a number of suppliers are returning to television advertising. ''One of the reasons for using television is to plant the seed with a heck of a lot of people and get them thinking about new flooring or carpeting,'' says a spokesman for Armstrong Cork Company. The firm has just returned to television after a four-year absence.
Also returning to television after a similar absence is Manville Corporation, which has hired professional golfer Jack Nicklaus to pitch its insulation, according to Joseph Murphy, general merchandising manager for building insulation. The link between golf and insulation is that Nicklaus's nickname is ''the golden bear'' and Manville's insulation is gold in color.
In addition to boosting television advertising, suppliers change their message during a recession. ''The message in good times is educational,'' says Owens vice-president Doherty, talking about R values of insulation, for instance. When housing starts to slump,''the message changes to the action-oriented one of 'go out and buy it now.' ''
Building supply companies also have been using promotion and price cutting schemes. For example, Armstrong offered a jogging suit to customers who purchased ceiling material and trimmed the price of selected vinyl flooring material by 10 percent, a spokesman says.
Suppliers actually are trying to stimulate two distinct home-repair market segments. One segment is supplies for contractors who handle repairs homeowners cannot or do not want to perform. The second segment is the do-it-yourself market.
Home improvement suppliers would welcome business from either segment. But the do-it-yourself market is getting special attention. ''Contractors typically are called in to do bigger jobs which are often financed with home improvement loans,'' says Merrill Lynch analyst Goldfarb. ''With loans so expensive and difficult to get, those bigger alteration and repair jobs have been deferred.''
In fact, the do-it-yourself market has been growing as a share of total home improvement expenditures for some time. In 1970 the market accounted for 36.6 percent of total home improvement expenditures. Ten years later, sales to the handyman accounted for 50.1 percent of total improvement sales. By 1990, the do-it-yourself share is expected to be 61.2 percent of total home improvement expenditures, according to projections by Data Resources Inc. (DRI).
Along the way the amount spent on different home improvement projects may change. Kitchen and bathroom remodeling is likely to remain the most popular project. Americans now spend some $4.5 billion a year on kitchen and bathroom remodeling.
But insulation projects, on which Americans now spend some $573 million a year, may become less popular as an increasing share of homes are adequately insulated.
DRI expects total home improvement spending to hit $110.2 billion in 1985. Still, home improvement projects will not be able to make up for a depression in new construction.
Sales to homeowners ''do not equalize'' the effects of a recession in new construction, notes Owens-Corning executive Doherty. ''But they are a devil of a cushion.''