Things should be looking up -- way, way up -- for kitchen and bathroom cabinetmaker American Woodmark Corp. of Winchester.
New-home sales in the United States hit a record in June. Sales of existing home also set a record. No surprise, then, that the home remodeling industry, crucial to any cabinetmaker's financial well-being, has been booming.
And last week, as if American Woodmark needed any more reason to cheer, its cabinets were featured on the home-decorating reality TV show "Queer Eye for the Straight Guy," publicity that's hard to buy.
Yet American Woodmark's profits dropped 11 percent from a year ago, according to the company's most recent quarterly report, mostly from the same culprit that has been bedeviling many Americans all year.
"It's those fuel prices," James J. "Jake" Gosa, American Woodmark chairman and chief executive, said in an interview last week. "The run-up in crude oil prices has affected us in a number of ways."
Few businesses in the Washington region depend on fuel as much as 25-year-old American Woodmark, which has 6,100 employees and 15 manufacturing facilities across the United States, each with specialized tasks and each requiring large trucks to haul away the cabinet components once they are made and assembled.
"Petrochemical costs account for a substantial portion of all of our costs," said Kent B. Guichard, the company's executive vice president. "A lot of what we do, after all, is move material. We are moving materials constantly between our plants and then ultimately to the consumer."
American Woodmark, the third-largest U.S. cabinet maker, hasn't had a general price increase this year, but Gosa suggested one may be on the way. "You have to pass on these costs," he said. His company targets middle-income homeowners willing to pay $100 to $200 -- or more if they want upgrades -- for a wall cabinet.
Typically, an American Woodmark cabinet ordered from a Lowe's or Home Depot in, say, Fairfax will be put together in four different plants, and its components will be hauled by as many as six trucks--most of them 18-wheelers that won't win any awards for fuel efficiency.
From start to finish, it can be a diesel fuel-guzzling, zig-zagging, 1,500-mile journey from the forest in the Appalachian mountains where the trees are felled and the wood is chopped to the townhouse in Arlington where the cabinets are installed.
American Woodmark is selling lots of cabinets. That's not the problem.
The company, which has 1,000 employees in the Washington region, had sales of $777 million in the fiscal year that ended April 30, a 16 percent increase over the previous year.
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