the fireplace marketplace - omni- · pdf filedata (2004), 55 percent of the new one-family...

market analysis

et’s get right to the point. Todaythere are more than 37 millionhouseholds in the United States

with one or more fireplaces. Recenttrends predict that as many as 900,000new fireplaces annually will be sold/con-structed with new houses. During thelast year for which there are completedata (2004), 55 percent of the new one-family houses built had fireplaces. Theseare unbiased facts, just the facts with-out spin, marketing hype or agenda,and are supplied by the U.S. Depart-ment of Housing and Urban Develop-ment and the U.S. Census Bureau inpublic documents.

These numbers include wood-burn-ing fireplaces; B-vent, direct-vent andvent-free natural gas- and LPG-fueledfireplaces; inside and outside fireplaces;freestanding fireplaces; built-in fireplaces;masonry fireplaces; manufactured zero-clearance fireplaces; fireplaces constructedfrom kits; fireplaces with gas inserts, withpellet inserts, with EPA-certified catalyticand non-catalytic wood-burning insertsand with pre-EPA certification wood-burning inserts; wood-burning fireplaceswith gas log sets installed; and fireplacesin which manufactured wax/fiber anddensified firelogs are burned.

Besides the sale/construction of newfireplace units, the sale of new orreplacement inserts, the sale of gas logsets, and the sale of manufactured fuels,

a host of other hearth products are partof the market. Grates, andirons, screens,glass doors, mantels, floor protectors,chimney pipe, rain caps, flashing, wallthimbles, gas piping, gas flex lines, gasshut-off valves, creosote removal prod-ucts, fire starters and cleaning suppliesare all part of the mix.

Chimney sweeps, cordwood mer-chants, propane suppliers, homebuilders,masons and gas utilities also derive incomefrom fireplaces. The fireplace markettouches nearly every member of the hearthindustry – manufacturers, distributors,retailers and service providers alike.

There are some socio-demographictrends of note. These include the fact

that, among the various regions of thecountry, there are the most fireplacesper capita in the West and fewest inthe Northeast; and there are more fire-places per capita in suburbs comparedto either central cities or rural areas.

Forty-four percent of households inthe West census region reported hav-ing one or more fireplaces in 2003 com-pared to 33 percent for the nation as awhole. In contrast, only 26 percent ofhouseholds in the Northeast censusregion reported having one or more fire-places. Forty-one percent of householdsin the suburbs reported having one ormore fireplaces in 2003 compared to27 percent in central cities and 28 per-cent in rural areas outside of Metropol-itan Statistical Areas (MSAs). Ninetypercent of fireplaces are in single-unithomes, while only 7 percent are inmulti-unit structures and 3 percent arein manufactured/mobile homes.

While interesting, these types ofsocio-demographic statistics for fire-places can be recited ad nauseam, butthey are arguably superfluous for devel-oping a business strategy around fire-places – fireplaces are ubiquitous. Thedifference between 44 and 26 percentownership is not overly important formost fireplace-related businesses whenmany hundreds of thousands to literallymillions of units are involved. There isenough potential business to go around.

MARCH 2006 HEARTH & HOME 57

From sea to shining sea, and from city to country,fireplaces are everywhere and representan immense market and opportunity.

by James E. Houck

L

Year

Usable fireplaces (X1000)

Fireplaces with InsertsUsed for Heating (X1000)

Fireplaces without InsertsUsed for Heating (X1000)

MSA 2003

545.5

12.5

37.7

New York

So what is important for the future offireplaces and for developing a businessstrategy to capitalize on it? We wouldargue three key things: (1) consumerdemand and preferences, (2) fuel avail-ability and cost; and (3) regulatory impacts.

Consumer Demandand Preferences Unequivocally, consumer demand forfireplaces is high. They are the thirdmost popular household amenity aftera two-car garage and air conditioning.It is well recognized that they add tothe value of a home, and it has beenestimated that each fireplace adds$12,000 on average to that value. Fire-places are more common in newer andmore expensive homes and, not sur-prisingly, multiple fireplace ownershipis far more common in upscale homes.

The Hearth, Patio & Barbecue Asso-ciation (HPBA) conducts biennial sur-veys on home occupant attitudes aboutfireplaces and fireplace usage trends.(The HPBA provides these reports tomember firms; they can be obtained bycontacting Don Johnson, director ofMarket Research.) The most recent ofthese reports states: Fireplace ownerschoose as they do because “it makesthe room more attractive.”

There are certainly many subtletiesthat come to play when tailoring fire-place-related products and their sale tothe marketplace, but the overriding fac-tor seems to be that most consumers seefireplaces in terms of aesthetics, not in

terms of utility. Interestingly, some home-owners are passionate about burning “realwood;” others like the convenience ofwax/fiber firelogs or gas-fueled fireplaces.

The passion for wood fire is real anda strong marketing force. According toWalter Moberg, president of Moberg

Fireplaces, “What I see in my day-to-day work as I travel around the coun-try, and on several continents as well,

is that this natural, organic fire that peo-ple have in their psyche, if not in theirexperiences, is still a vital part of ourculture. I work mainly at a very high-end business with my custom work. Forexample, I just designed 10 wood-burn-ing fireplaces for Bruce Springsteen and5 for Steven Spielberg. Both are verywealthy and are looking for the best,the ultimate. And for middle class Amer-icans who are looking for somethingthat has quality and value in their home,the ultimate is still wood-burning.

“I believe that, for everyone, hav-ing a wood-burning fireplace in thehome, or in a special setting in a pub-lic building, brings a sense of commu-nity. It brings ambiance, and in thearchitectural world that I am in, it is

58 HEARTH & HOME MARCH 2006

Year




MSA 2004

593.1

134.8

92

Seattle

Year




MSA 2004

417.6

40.2

36

St. Louis

Big Numbers, Big Market

EEstimates vary, but about one-thirdof fireplaces are used for aestheticpurposes, about one-third are usedfor secondary heat and about one-third are not used in any givenyear. Less than one percent, evenincluding those that have heatinginserts installed, are used for pri-mary heating purposes. Generally,wood-fired fireplaces without insertsdon’t make very efficient heaters;even with glass doors and all thebells and whistles, efficiencies fallin the 30 percent range.

Fireplaces without inserts are mostappropriately used for aesthetics,or to take the chill off a room dur-ing a “cold snap” in milder cli-mates. An insert must be installedif the fireplace is to be used forserious heating, which is almostalways defined as secondary heat-ing, because a whole house isalmost never exclusively heatedwith an insert.

Inserts generally have high efficien-cies, just slightly lower than theirfreestanding counterparts. Their effi-ciencies are slightly lower due tothe fact that radiant heat is some-what restricted by the insertion ofthe unit and the exhaust pipe withinthe fireplace cavity/chimney. Insertscan be wood-, pellet- or gas-fueled.

Wood inserts must be EPA-certi-fied, as they are a wood heaterunder federal law. In practice, pel-let inserts, like pellet stoves, mayor may not require EPA certifica-tion, depending on their designand, in some cases, the discretionof the manufacturer.

Because many homes have morethan one fireplace, there are morefireplaces than homes with fire-places. The number of total fire-places is somewhere between 44million and 50 million; of that, about13 million are gas-fueled, and 7million and 200,000 already havecordwood and pellet inserts,respectively, in them. That leavessomewhere between 24 millionand 30 million wood-burning fire-places without inserts ready tohave one installed.

Additionally, of the approximate 7million cordwood inserts, fewer than10 percent of them are EPA-cer-tified, with the remaining units beingcandidates for replacement. Newexhaust pipes are required for gasand pellet inserts, and often theexisting fireplace chimney needsto be relined for a cordwood insert.

These are big numbers and a bigmarketplace.

market analysis


the ultimate expression of those things.It’s certainly not something that is goingto disappear, even with regulations.”

Fuel Availability and CostFuel is needed for fire, and money isalways the bottom line. In some partsof the country, and in many rural areas,natural gas is not available. Withoutnatural gas, gas-fueled appliances arenot as popular. The alternative, LPG,is more expensive than natural gas and,unless the home is already using LPG,the addition of that unsightly tank is adetractor and an inconvenience to install.

Therefore, if a manufacturer is sell-ing gas-fueled fireplaces or gas log sets,Maine – where only about 3 percent ofresidences use natural gas, according tothe American Gas Association – is not

as good a target as California, where 77percent of residences use natural gas.Conversely, cordwood is more readilyavailable and less expensive in rural Mainethan in southern California. Wax/fiberfirelog use is most prevalent in suburbia,where they are conveniently and inex-pensively purchased at mass merchants.The Los Angeles area is one of the biggestmarket for wax/fiber firelogs.

The use of wood-burning appliances,in general, has slowly gone out of vogueand has declined steadily since the 1950s,albeit with a slight and brief resurgenceafter the 1970 energy crisis. Followingsuit, the use of wood-burning fireplaceshas decreased relative to gas-fueled fire-places since the early ’90s. Counteringthis trend, the recent skyrocketing costsof both natural gas and propane appearto have slowed the trend a bit.

Retailers across the country havewatched the trend. For example, in north-ern Vermont, retailer Roy L’Esperancewatched the pendulum swing dramati-cally in 2005. “Last year (2004) we were70 percent gas and 30 percent wood,”he says. “This year (2005) it’s 70 per-cent wood and 30 percent gas.”

Regulatory Impacts Wood-burning fireplaces produce moreair emissions than gas-fueled units.Among the various air pollutants emit-ted from wood-burning, particulate emis-sions are of most concern because a

number of areas are, have been or areprojected to be in violation of federalparticulate air quality standards. Untilrecently, wood-burning air quality issueshave been focused in the West inresponse to the standard referred to asPM10, promulgated in 1990. Recently,the concern has spread to the East in

response to the particulate standardreferred to as PM2.5, mostly in place asof 2005. Even more significant for res-idential wood-burning is a proposalmade by the administrator of the EPAfor an even more stringent PM2.5 stan-dard. A decision on that proposal isscheduled for the end of September.

State and local air quality jurisdic-tions are tasked to develop and enforceregulations to ensure that the federal stan-dards are met. A spectrum of approacheshas been taken to regulate wood-burn-ing fireplaces. They have ranged fromno regulations whatsoever, to approachesthat can best be characterized as volun-tary and educational, to the outright banof new wood-burning fireplaces and therestriction on the use of existing ones.

Maricopa County in Arizona (Phoenixarea) and the San Joaquin Valley of Cal-ifornia have some of the most stringentwood-burning fireplace regulations.Wrongly, some folks have minimized thesignificance of the impact of the regula-tory treatment of wood-burning fireplacesin these two locations. The rationale hasbeen that they are, after all, only isolatedareas with mild climates.

According to the American HousingSurvey, there were 350,800 householdswith fireplaces in the Phoenix Metro-politan Statistical Area in 2002; mostlikely half of them were installed since1990 due to the rapid growth in thearea. The U.S. Census Bureau indicates

0

5

10

15

20

0

15.9%

1.8% 2.5%3.3%

9.7% 9.4%??%

Mill

ions

ofHo

useh

olds

1993 1997 2003Year

2006

Data Source: U.S. Department of Energy

Wood-Fueled

Gas-Fueled

Number of U.S. Housholds that useWood- and Gas-Fueled Fireplaces for Heat

Estimates for the last two years are based upon HBPA data that show the proportionof gas to wood appliance shipments has increased significantly.

Year




MSA 2003

1,121.5

74.9

173.2

Los Angeles

Year




MSA 2004

294.9

37

27.3

Pittsburgh

continued on page 64

market analysis


market analysis

Metro 4 represents the interests of 17local air pollution control agencies inthe southeastern states. SoutheasternStates Air Resource Managers (SESARM)represents eight southeastern state agen-cies in Alabama, Florida, Georgia, Ken-tucky, Mississippi, NorthCarolina, South Carolina andTennessee.

Historically, particulatematter has not been a majorissue in the Southeast. How-ever, several metropolitanareas around the Southeastwere found to be in violationof the fine (PM2.5) particleannual standard.

The newly proposed coarse particlestandard (PM10-2.5) and tightening of the24-hour PM2.5 standard, will add addi-tional areas of concern in the Southeast.

The southeastern agencies have anongoing project to evaluate the natureof particles to determine their origin,such as fossil fuels, wood smoke andmeat cooking. At this time, there areno known air quality regulations in exis-tence in the Southeast to address fire-

place emissions.Should fireplace emissions be iden-

tified as a significant contributor to non-compliance with federal air qualitystandards in a specific area, the stateagency, and the local agency, if any, could

very well suggest specific fire-place design standards forthe purpose of lowering theseemissions. Speculating justa bit, it is probably not highlylikely that such a strategywould be employed, but it iscertainly in the menu ofoptions available to agenciesif significant impacts were tobe identified.

Natural gas is not always available atrural homebuilding sites (althoughpropane is) but in metropolitan areaswhere particle problems are more likelyto be encountered, natural gas is usu-ally an option.

Air pollution control agencies havelong recognized that emissions from gasfireplaces are substantially different fromwood fireplaces – particle levels aremuch higher from wood fireplaces.

Solid-fueled residential fireplaces andheaters are significant contributors to theSan Joaquin Valley Air Basin’s (SJVAB)wintertime particulate problem. In orderto reduce this impact, the San JoaquinValley Air Pollution Control District hasimplemented a multi-faceted programthat includes voluntary and mandatorycurtailment of (wood-burning fireplace)usage when air quality is unhealthy, andrequirements to limit the density of(wood-burning fireplace) installation innew residential construction.

Editor’s Note: The key relevant state-ments in SJVAB rule 4901 are: “No per-son shall install a wood-burning fireplacein a new residential development with adensity greater than two (2) dwelling unitsper acre,” and “No person shall operatea wood-burning fireplace…whenever theAPCO notifies the public that an EpisodicCurtailment is in effect…”

The density regulation essentially pre-cludes the installation of wood-burningfireplaces in tract homes and in multi-family housing units, and limits the instal-lation only to more upscale homes.

“The Maricopa CountyAir Quality Departmenthas a federally man-dated goal of reduc-ing the emissions ofparticulate matter(PM-10). The county’sapproach includesallowing the installation of fireplaces onlyif they have permanently installed gas orelectric log inserts.

“When air quality degrades, the countyalso declares a ‘No-Burn’ day for solid fuel-burning. When wood fires are eliminatedand the smoke dissipates, it actuallybecomes possible to take evening walkswithout choking on the air.”

John E. Hornback,Executive Director, Metro-4/SESARM

The Regulators

Tom Jordan, Special ProjectsAdministrator, San Joaquin ValleyAir Pollution Control District (CA)

“Our anecdotal observations are that peo-ple with fireplaces do not try to use themfor heat and, therefore, use less woodover the season than people who usewood stoves for heat. However, we believethat fireplaces are often used on week-ends and holidays.

“During a period of wintertime air stag-nation that occurs over a weekend or hol-iday, it is very likely that fireplace emissionshave a much more significant impact onair quality than wood stoves. That is oneof the reasons why Washington State pro-hibits the use of fireplaces and uncertifiedwood stoves during a Stage 1 Burn Ban.

Because it is common for our stagna-tions to occur during the winter holiday

periods, it seems we are often the Grinchasking people not to use their fireplaceson Thanksgiving, Christmas, New Year’sor Super Bowl Sunday.

“In addition to our strategy of prohibit-ing fireplace use during Stage 1 Burn Bans,we also recommend that dedicated fire-place users upgrade to certified inserts(natural gas, propane or wood). They pro-duce lower emissions, actually provide heatand can be used during Stage 1 Burn Bans.

“For the casual fireplace user, werecommend the use of manufacturedfirelogs. While they don’t provide heatand cannot be used during Burn Bans,they do provide the ambience withmuch lower emissions.

James Nolan, Director-Compliance,Puget Sound Clean Air Agency (WA)

Bob Kard, Director Maricopa CountyAir Quality Department (AZ)


market analysis

that Maricopa County had the largestpopulation increase of any county inthe U.S. between the 1990 and 2000censuses – 950,048 new residents orabout 410,000 new households. Usingthese and other data and extrapolatingto the present, it appears that there havebeen on the order of 200,000 fireplacesinstalled with new construction in thePhoenix area since 1990.

Similarly, the San Joaquin Valley isthe home of 3.2 million people (about1.1 million households); a University ofCalifornia study in 2002 found that 30percent of households have a fireplace.Perhaps even more important than thedirect reduction in the market for wood-burning fireplaces and associated prod-ucts represented by these regulations isthe precedence that has been set. Airquality jurisdictions elsewhere may lookto them as examples in the future. Theslogan, “What happens in Vegas staysin Vegas,” probably doesn’t apply toMaricopa County and the San JoaquinValley, where wood-burning air qual-ity regulations are involved.

Finally, it should be noted that theregulations are only for wood-burningappliances, and the effect of the regu-lations actually appears to haveincreased the sale of gas-fueled fire-places and log sets. So, the effect isnot entirely negative for the hearthindustry, but there is certainly a shiftin the marketplace with clear winnersand losers. Manufacturers and associ-ated businesses able to provide bothkinds of fireplaces and related prod-ucts may not be really impacted, otherthan by shifting emphasis, perhaps.

For example, when Maricopa County(in which Phoenix is located) was con-sidering a gas-only ordinance for fire-places in new construction, DonRichardson, owner of Arizona Fireplaces,fought it strongly. He felt that going froma $500 wood-burning fireplace to a $1,500or so gas fireplace would knock the bot-tom out of the market.

To a certain extent, that did happen.However, his hearth sales expanded intotal dollars, and his gross revenues tripled.“That ordinance has been the engine thathas allowed us to expand,” he says.

The Future of FireplacesThere are many opinions on the futureof fireplaces. It does seem that the futureuse of wood-burning units in many areasof the country may be contingent onmodels with documentable low emis-

sions. The hearth industry’s programto develop an ASTM fireplace standardto measure and document low emis-sions is moving in the right directionto achieve that end. Some claim low-emitting models are just around the cor-ner. In contrast, some feel that alow-emission true wood-burning fire-place is not achievable and that thedevelopment of the ASTM standard isan exercise in futility.

One thing is certain: No low-emit-ting models have been produced, or atleast made public, as of the time of thiswriting. The attitude of some manufac-turers is, Who cares about wood-burn-ing fireplaces? We can sell gas-fireplaces;we can sell EPA-certified wood heatersthat are installed in the wall and look

like fireplaces, and we can sell inserts.Further, they say, it is unlikely thatwood-burning fireplaces will go awaycompletely; there still will be manyplaces where they can be sold andused. This might be a prudent andrealistic view.

Conversely, some feel passionatelythat the industry needs to keep the wood-burning option widely available becauseconsumer demand for a real wood fireand the nation’s demand for increas-ingly scarce and costly natural gas andLPG are not likely to go away.

James E. Houck is president of OMNIEnvironmental Services. He can be con-tacted at (503) 643-3788 or [email protected].

ASTM FIREPLACETEST PROTOCOL UPDATE

continued from page 60

FFor approximately two years now, asmall group of interested people hasbeen meeting to discuss and create astandard for wood-burning fireplaces.Although that standard still doesn’t exist,progress has been made. Last fall, theASTM Fireplace Task Group sent it’s emis-sions and measurement protocol to sub-committee members for ballot. Most ofthe returns were affirmative, with justone substantive negative that neededto be addressed. This has allowed theprocess to move forward, with severalindustry R&D and test facilities trying tofine-tune the processes and movetoward an agreed upon result.

Currently, there are two ASTM meth-ods being developed. The first is a stan-dard for emissions measurementcurrently being balloted. The secondis a fueling protocol. The emissions mea-surement method was designed for allsolid fuel combustion appliances,including fireplaces, stoves, furnaces,outdoor boilers and pellet equipment;it will measure what goes into the airfrom each appliance. The fueling pro-tocol will be specific to each type ofappliance being tested. EPA is await-ing the finalization of this protocol andmay accept and certify such a stan-dard as legitimate for testing emissionsof these kinds of equipment.

As of now, the emphasis is on the fuel-ing protocol for fireplaces. The TaskForce has come up with a crib that isdesigned to replicate the emissionsprofile of conventional fireplaces in thefield. It is hoped that agreement onthis protocol will be reached within thenext six months. When this occurs, man-ufacturers and designers who wish todevelop the next generation of fire-places that will reduce emissions andpossibly qualify for use in restricted airsheds will have a standardized methodto test to and a reliable tool to use forR&D. It is likely that some manufactur-ers and developers are already at workon this endeavor.

When new, lower-emission appliancesreach the market and prove the tech-nology developed with the use of thisASTM protocol, the EPA and/or indi-vidual states may use results to setemissions thresholds for allowabledevices.

The key to this whole exercise is the“passing grade” that EPA will recognize.Establishment of that passing grade maybecome contentious, as it will reallydecide which fireplaces, if any, will bedeemed low-emitting appliances.

— Paul Stegmeir


In September of 2005, Hearth & Homeissued the Vesta Challenge to hearth manu-facturers. Two new Vesta awards were cre-

ated for presentation to manufacturerswho could produce (A) a low-emission

wood-burning fireplace, with specialconsideration for those that burn

cleanly with doors open, and (B) wood-

fired retrofit technology that reduces emissions in existingwood-burning fireplaces.

September may have been too late to issue that challengefor an awards program that takes place in March. As of thiswriting, there are no entries for the Vesta Challenge. The goodnews is that a number of manufacturers are tackling the prob-lem in R&D and say they believe they will meet the challengenext year. However, not all are interested.

Walter Moberg

Kurt Rumens

The Vesta Challenge & The Industry

“Despite increasing airquality restrictions on theuse of fireplaces in west-ern states, sales of man-ufactured firelogs remainsteady. At the beginningof the fourth quarter 2005,

demand for packaged firewood, firelogsand firestarters spiked, as fear about

higher home heating costs drove con-sumers to seek alternatives. We actu-ally received a number of phone callsfrom consumers with gas fireplaces whowanted to know if they could either burnour firelogs on top of the gas log set ifthe gas wasn’t on, or remove the gas logset and use our logs in the fireplace.

“Fireplace manufacturers need to seri-

ously consider the longer term impacton the industry of increasing energyprices, and shift their emphasis to flex-ible fuel fireplaces. They should de-emphasize direct-vent gas fireplaces andreturn to marketing zero-clearance fire-places with chimneys and removablegas log sets that give consumers optionsin their choice of fuel.”

“We’re not interested in a low-emission,wood-burning fireplace. Our FPX line isselling great, and we’re staying with that.”

— Kurt Rumens,President, Travis Industries

“I absolutely believe that we can makea major improvement on the essence offireplaces. We certainly have in productsthat we’ve designed and manufactured.We’ve demonstrated an ability to improvethe fireplace even with doors open. Oncewe have a standard for wood-burning fire-places, we’ll have a product ready to test.”

— Walter Moberg,President, Moberg Fireplaces

“We will not be entering a product inthe Vesta Challenge this year. We are aparticipant on the (ASTM) committee anddon’t feel it can’t be done. We have itwithin our plan to have something withinthis product category and are trying tounderstand what that means.”

— Wendy Howells,Vice President & General Manager,

Lennox Hearth Products

“We won’t have a unit ready this year,but it certainly can be done. We’ll haveit ready for the Vesta Awards next year.”

— Alan Trusler,Vice President Retail Channel,Hearth & Home Technologies

“We won’t be entering a product inthe Vesta Challenge this year, but weare very interested in the subject andfeel that open, wood-burning fireplacescan be made more efficient and less pol-luting. It’s definitely the way to go.”

— Bill Tweardy,President, Monessen Hearth Systems

“We had identified the creation of alow-emission wood-burning fireplace asan area of opportunity for us some timeprior to getting the Vesta Challenge. It’sbeen on our radar, and we feel pretty goodabout the technology we’re working on.It will work. It won’t be ready this year,but we will have a Vesta entry next year.”

— Mark Kline,President, FMI

Another Perspective: Chris Caron, Vice President, Brand Development, Duraflame

market analysis

Alan TruslerBill Tweardy

Wendy HowellsMark Kline

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