Wednesday, May 29, 2013
Top two U.S. funeral companies merge as baby boomers boost demand .... and an idea for those interested in 3D Printing
Blog Publisher’s comments:
Sorry, this one has nothing to do with reprographics!
But, I couldn’t help myself; I just had to “say something” about this news!
First, growth in demand has nothing to do with two companies in the same business merging together. Mergers of this sort are all about one thing – increasing profits. Those increased profits come from doing two things – a) economies of scale serve to reduce manufacturing and operating costs, and b) Increased market-share strength leads to “pricing power.” I don’t think any of us will be surprised, if, over the next few years, prices for funeral services and for coffins go up, not down. As that saying goes, “the only certain things in life are …. death and taxes.” Demand for funeral services or coffins have never been cyclical in nature (i.e., they are not affected by recessions); demand grows as deaths grow. (That’s a horrible thought, huh?)
And, now for a brilliant idea for reprographers. Last night on NBC Nightly News there was a segment about a craftsman, an artist, who creates one-of-a-kind coffins, coffins that are art! One of the examples shown was a coffin that looked like a Lion. It was beautiful …. and quite unique. When there’s a 3D printer that’s large enough to “print” a coffin, that would allow designers to come up with incredible ideas for “containers” to serve as coffins. After they are designed, print them “on-demand”, one by one. Will probably require a 3D printer that prints hard plastic objects. My grandson likes the yellow rubber ducks I bought for his bath-time. It might please him, when my time is up, if I was buried in a giant yellow duck coffin. At least that would give him some reason to smile.
Okay, here’s the press release:
Top two U.S. funeral companies merge as baby boomers boost demand
Wed May 29, 2013 12:42pm EDT
(Reuters) - Service Corp International (SCI.N) agreed to buy Stewart Enterprises Inc (STEI.O) for $1.13 billion, merging the two largest U.S. funeral home operators as the industry gears up to offer more services to aging baby boomers.
Large-scale consolidation in the highly fragmented funeral business has long been on the cards, with the industry looking to sell more pre-planned funeral contracts to the 76 million baby boomers in the United States.
Service Corp, which failed in a bid to take over Stewart in 2008, said on Wednesday the combined company would have a backlog of future revenue exceeding $9 billion from pre-planned bookings.
The group would own 1,653 funeral homes and 515 cemeteries in 48 states, eight Canadian provinces and in Puerto Rico, and have proforma revenue of nearly $3 billion.
Shares of Service Corp, which had revenue of $2.4 billion in 2012, rose as much as 11 percent, suggesting investors were happy with the deal, which was priced at 24.5 times Stewart's forward earnings.
The number of funeral homes and crematories owned by both the companies would be about 20 percent or less of the total in the United States, said Barbara Kemmis, Executive Director of Cremation Association of North America.
"I see this as evidence that there is room in this industry for economies of scale and consolidation," she said.
Just under 25 percent of the U.S. population was over the age of 55 in 2011, up from 20.4 percent in 2000, according to the Census Bureau.
Posted by Joel Salus at 2:02 PM