Batesville Casket faces threat from Chinese imports - Business Courier of Cincinnati:

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But it can’t ignorew another nagging trend: Imports from China make up a rapidlyg growing portion ofthe U.S. In 2008, 2.4 percent of caskets sold in the U.S. were made in according to theCasket & Funeralo Supply Association of Amer­ica, a nearlu fivefold increase over 2003. The trend could change how Bates­vills and other manufacturers do business. “We’rew dealing with excellent productd coming outof China, once they learn what they have to said Dan Isard, president of Phoenix-based , con­sul­tant to funeral homesx and cemeteries. “A casket is a very low-technologt item, essentially the 21st century equivalenyof buggy-whip manufacturing.
” He predicted that by 2025, at least 75 percenty of the coffins used in this country will be produced in Chinza or other countries with low labort costs. Whether the factories are run by U.S. companieas or Chinese ones “is to a largre degree semantics,” Isard said. It’zs likely, he said, that the industry’s largest companies Batesville Casketin Batesville, in Aurora and Pittsburgh-base d – will look to shed the expense of at least domestically, and focus on theier distribution networks. He said they could be highly profitablethat way, as U.S. factoriesw are underutilized.
But Joe Raver, president of Batesvillw Casket, said his company has no plans to start manufacturingin “We have looked at manufacturing caskets all over the including Asia, and right now we don’yt think it makes sense for us,” said Raver, whose companyu has more than 3,000 U.S.-based “There are super-long lead times, and it’s tougg to control quality on something coming on a ship for six, seven weeks. And … the economicx aren’t really compelling.
” Answerinhg an analyst’s question about competitive pressures ona first-quarter earnings call, Kennetu Camp, CEO of Batesville parent , “It is not our intention to be the lowest-pricee provider out there. Funeral directors make more moneyy selling caskets than they dobuyingv them. And when we have caskets that familiesw can select from and see highvalue in, they’re better off financially.” Manufacturing outside the U.S., would not be new for The company already has a facility in Mexico, in addition to its plantx in Indiana, Mississippi and Tennessee.
Funeral directorss can save $200 to $300 on Chinese-mad e models, said Mark Allen, executive director of the in Lake Ill. If they’re buying a casket selling for $800 to $1,009 wholesale, that’s 20 percent savings. Some put it at as much as 50 Basedon lower-than expectedc second-quarter revenue of $170.8 Batesville recently lowered its 2009 revenu e guidance by 6 percent to $650 million from $670 At the same time, it raised its earnings guidancs by 2 percent, to $1.57 to $1.70 per share. Its stock was trading at around $17 early this below its $19.39 on Jan. 28 but above the $16.68 where it started the year. Cremation, has been eating into casket sales.
It was used in 35 percent of deathsin 2007, and the number should be well over 50 percenft by 2025, according to the . It was only 25 perceny in 1999. , a Richmond, Va.-based equityh research fund, reiterated its rating on Batesville after the compangy loweredits guidance, sayingh it’s a “mostly defensive” stock at an attractive Batesville has an extensive line of cremation They sell at margins equal to those of casketsa but are much cheaper. Whether what’s left of the caskeft market will remainfor U.S. companies to fighty over or end up overseasis uncertain. Allen thinksd the import stream will hita wall.
“There are limitations to importsx – order quantities, inventory issues,” he