Burial business has problems

Press, 24 April 1984, Page 35

Burial business has problems

“New York Times” through NZPA New York The burial business in the United States is not a dying industry, in spite of the problems facing the trade. Makers of coffins, beset by a slow mortality rate, the increasing use of cremations, and new Government regulations are trying to improve their marketing strategies to generate more revenue from what has become an essentially stagnant, SUS6OO million industry.

They are installing computers, hiring more sales personnel and putting more decorative mouldings and finishes on their coffins. In addition, they are improving their product presentations to funeral directors — their main customers — and speeding up delivery times. Not only are people living longer — the mortality rate in the United States has steadily declined, to 8.6 per 1000 in 1982, from 9.5 per 1000 in 1970 — but more are choosing cremation for when they die, and about 75 per cent of cremations do not use a coffin.

An estimated 11.7 per cent of those who died in the United States in 1982 were cremated, up from 4.6 per cent in 1970.

The result is that there are only about 400 coffin manufacturers left today, down from some 600 fifteen years ago. While their numbers have declined, their revenues have increased only 4 per cent a year in the same period and their average gross profit margin has been stuck at a bit more than 3 per cent. “If you take the increase in the cremation rate and combine it with a decline in mortality, you end up with a decreasing market,” said George W. Lemke, executive director of the Casket Manufacturers Association in Evanston, Illinois. “This makes a mature competitive industry even more competitive because you can’t rely on a growing market to increase your market share.” Pamela Singleton, a vicepresident at Merrill Lynch who follows the industry, agreed. “There has been tremendous attrition already. And the increasing cremation

rate will probably force more people out of business, leaving the big ones with a larger share,” she said. New Federal Trade Commission regulations, the result of a 12-year investigation into funeral industry practices, may also affect coffin makers. The manufacturers sell directly to funeral directors, who have been a principal target of the investigation. The rules, some of which became operative on January 1 while others take effect on April 30, dictate that funeral directors must offer customers an itemised price list for coffins and other services. Until now, the price of coffins in most states has been combined with other funeral-related services and goods such as embalming, flowers, viewing facilities and transportation. This has sometimes forced customers to pay for unwanted services, the commission said. The regulations also forbid funeral directors to suggest that certain coffins will preserve the body longer. Nor are they now allowed to tell customers that there is any legal obligation to

buy a coffin for a direct cremation. "People have been misled into thinking they have to have caskets for cremations,” said Marcia Goldberg, executive director of the Continental Association of Funeral and Memorial societies, a consumer group based in Washington. “Now, the funeral homes have just to provide alternative containers.” These might be plain cardboard or wood boxes, costing between $4O and $3OO. Coffins, by contrast, cost anywhere from $3OO to $lO,OOO or more. For their part, the coffin manufacturers say that product and price misrepresentations, if they occur at all, are limited to a “few bad apples” among the nation’s funeral directors. The manufacturers say many customers choose more expensive coffins even when presented with a less expensive choice. “I see no negative impact on us from the F.T.C. rules,” said Thomas Ward, a spokesman for the Aurora Casket Company in Aurora, Indiana. “I don’t know any funeral directors who would

hide their cheaper caskets. They base their whole career on serving whole generations and a whispering campaign would wipe them out." But Vanderlyn Pine, a professor of sociology at the State University of New York at New Paltz and a research consultant for the national Funeral Directors’ Association in Milwaukee, expects that the rules will have their greatest impact on the upper end of the price scale.

“One of the effects will be to force funeral directors to be much more careful buyers of merchandise,” he said. “They will have to be sure the casket is perceived by the customer to be worth the sale price.”

He concluded that while many “less effective” coffin makers had already gone out of business, “the weeding out will get even greater now.”

“It is the mid-sized manufacturers who are in jeopardy,” said Mel J. Volmert, vice-president of finance for the Funeral Supply Group of Amedeo.