Switching to Factory-Built Cabinets

A Gulf Coast cabinetmaker has had good luck with a line of factory cabinets. His story triggers a discussion of today's market realities and the pros and cons of adding factory-made cabs to your business model. November 10, 2006

Question
I have been in the custom cabinet business for 20+ years here in the New Orleans area. I have seen ups and downs. Every time I think I have it figured out, something happens that reminds me how little I really know. This time it was vicious Katrina. Since the storm, my custom cabinet business has really flourished. This much of the story has been a blessing. The first wave of the increased business is beginning to slow a little. This was predominantly homeowners that had the money to rebuild without having to wait for insurance funds or government subsidies. These customers came in, paid the price, got their custom cabinets, and got on with their life. I assume that they will settle with the insurance companies at a later date, or fight them in court as so many people are going to have to do if they want any type of reasonable claim.

I am now noticing a severe shift in the needs of the customers that are coming through the door. This new wave of buyer does not have their own resources. They are dependent on insurance and other government subsidies that may be coming their way. They can not afford custom cabinets, and most of them do not want to wait for them, either. It certainly does not help that the cost of our custom cabinets have skyrocketed because we are paying floor sweepers and shop helpers $15 per hour to keep from losing them to McDonalds at $12 per hour. This is not to mention the increased prices of wood, and delivery charges with gasoline pushing $3 per gallon.

To help combat higher costs and be able to offer my customers something that they can afford, we have recently taken on a line of factory cabinets to accommodate this new type of consumer. I didn't think much of taking on this new line at first. I made a commitment to myself that I wouldn't waste a whole lot of time or money on this new venture until I could successfully sell, receive undamaged, deliver, and install 5 full sets without any major problems. Well, I did it. 5 full sets surprisingly went through the system without a single catch. Quite frankly, I am beginning to wonder why I have been beating my head against the wall for so long building these darn cabinets.

Granted, it took a lot of time and mental adjusting on my part to transition from custom cabinets to building kitchens from standard and stock size cabinets. With custom, there are virtually no limitations. With factory cabinets, it is like building a kitchen with puzzle pieces.

So, that is pretty much where I am at. I am liking the whole factory cabinet scene. What I like most about it is this: It takes the same amount of time to sell it, measure it, write the contract, and collect the deposit. At this point, with custom cabinets, the work is just beginning. With factory cabinets, the work is just about complete. All we have to do now is fax the order in and await the delivery. It almost seems too good to be true, especially considering that the profit margins are not all that dissimilar. Custom cabinets are a lot of work. Run the cutlists, order the material, sheet goods, hardwood, doors, molding trim, hardware, etc. Then we hope everything is in stock and gets delivered properly and on time. Then we shift our focus to hoping that everyone shows up for work, and on and on and on. I do not have to tell you what all is involved. You fight the same battles that we all do in the custom business.

So now I ask for advice. To all you great minds and gurus of wood, glue, laminate, plastic, and glass... Have I lost my mind? Is there something that I am overlooking? Can it really be this easy? These first 5 jobs went pretty smooth. Profits were good, customer satisfaction was good, no callbacks, and my workload/headaches were way down.

If I do go in the direction of more factory cabinets, is there any advice anyone can give? Do I continue targeting the homeowners, or go after the contactors? Are there any major issues lurking around the corner that I have not tripped over yet?

Forum Responses
(Business and Management Forum)
From contributor M:
I do finish work and light remodeling. I am not a cabinetmaker, so most of my experience is with what ends up in a home. There is a world of difference in the quality of factory cabinets. I've seen people go to one of the borgs and get their cheapest line that literally falls apart before it gets installed. I have also seen factory cabinets that are every bit as good as any custom built. If what you are using is solid built, good hardware, etc., I would continue as you are doing. Build custom for people that have the means and order/install for those on a budget. Keep in mind, though, that if there are problems with the cabinets, it will be your reputation, since you were the guy they dealt with.


From contributor T:
Our company also uses factory cabinets. We build about 50% of what we sell and buy about 50% of what we sell. It just depends on the budget of the clients. We have also mixed both on the same job: bathrooms are factory, kitchen is custom. This is a great way to stretch the budget and put the good stuff where it is important.

From contributor P:
No, you have not lost your mind. I supervise a production line in a large factory that does pretty much what you're thinking of. The long run cabinets go through the production line at a great rate of speed (hours to complete a job instead of days), while the custom units are constructed by either a single builder or a team of builders. In this method, the box cabinets can be blown out and the custom frills meet up with them at the dock. We don't do shoddy work and we don't use cheap materials. What we have done is study how to improve our methods and get away from Old School. Old School was great in its day, but it will kill you now. Time track every step of your process and see where your bottlenecks are and take action to improve (you will never be done with this step). If you work at this as job one, you will see a great difference in production/hour, you will be more competitive, and your competition will whine when you underbid them constantly. It will take time, as old ways die hard, but it does work, and works well. Keep your quality but look for speed, know exactly how many minutes it takes to build a foot of base cabinet and go from there.

From contributor J:
I build cabinets for the satisfaction it gives me. I build to my standards and if people like it, then that's fine. If not, they can go elsewhere. You can make money both ways, building custom and selling box cabinets. There is a market for both.

From contributor A:
The biggest kitchen company in the islands (I am in the US Virgin Islands) doesn't actually build anything except the occasional custom piece of trim. He uses factory made cabinets shipped in from the States. I've finished making cabinets myself - use only factory made doors; it simply is not cost effective to make them anymore.

From the original questioner:
Contributor J, I think you hit the nail on the head! The key word in your last sentence is "anymore". It is the market and current workday circumstances that are changing beneath our feet. I once did very well with custom cabinets. That was in a day and time that you could find decent dedicated help that actually would show up to work for a reasonable wage, and you could rely on competent suppliers to get your supplies on time without errors.

From contributor W:
I hope that everything doesn't go towards factory cabinets. If it does, then you will be strictly competing with installers. No more craftsmanship at all. All that will be left are a bunch of ex-McDonalds employees (not knocking them, mind you) who have seen that there is much more money being a factory cabinet installer than working at Micky D's. The same thing happened in the computer industry in the mid to late 90's. All that you heard was "get into computers." Everyone did. I have seen dishwasher jobs paying more than a Novell engineer with 5 years experience.

While factory cabinets may be the wave of the future, you may be selling your future as a craftsman to a bunch of greedy woodworker wannabes. Remember, it takes no skill whatsoever to order a house full of cabinets from the factory and all it takes to install them is a level, some caulk and some trim strips.

Good luck in your new career as a cabinet installer. Being in NOLA, you should realize that your new competition (installer) is coming from south of the border, amigo. Striving for the cheapest and quickest buck isn't always the best thing. You may be cutting your nose off to spite your face.

By the way, my small company manufactures cabinet doors and trim for the custom cabinet market. It wouldn't take much for me to shift my machinery to make "factory" cabinets.

One last thing; keep up this pace towards factory cabinets and the only cabinets you will be able to get will be from China before too long. They have the capacity and the will to undercut every American factory given the right circumstances. You are opening up the door.


From contributor V:
I would keep doing the custom as well as adding the factory cabinets. You could even sub out the install on the factory jobs. If you don't meet the budget and timeframe of the market you're targeting, then they will just go to someone else who can. Some people just need boxes to put stuff in, not something to define their lives.

From contributor G:
There seems to be this belief that "factory cabinets" are these cheap, poorly finished, junk boxes that only come in 3" increments. It is true that some are, in stock lines, but there are two other types of factory cabinets, semi-custom and full custom. As a cabinet dealer, I build nothing. My custom line will build anything I can dream up, out of any wood species, and in most cases, deliver in 6 to 8 weeks, whether it is one kitchen, or 20. Like anything, you get what you pay for. Don't get me wrong, I respect anyone who does it all. I have been there - it was just leading me to an early grave.

From contributor I:
My opinion is that there is a market for everything (heck - look at all the Dollar General stores springing up everywhere). If I have a client that can not afford custom built, then they are going to one of the borgs. I see no reason not to get a piece of that pie. As long as I am upfront with the client and they understand what they are buying, then I feel I have been a good businessman.

From contributor L:
I see nothing wrong with selling factory cabinets. As a matter of fact, you may have a considerable advantage over the typical factory cabinet seller in that you can provide modifications and additions from your shop that they can't. The only down side I see to good factory cabinets is their lead times. If they don’t improve that, the Chinese will kill them!
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