Funeral product company sees business evolve


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Although nothing in this world is certain but death and taxes, even the funeral industry is getting squeezed by the recession.

For Pittsburgh-based Matthews International Corp., one of the world's leading suppliers of caskets and bronze cemetery markers, that's brought challenges and opportunities.

"The economy has impacted people's willingness to spend on funerals and memorial services, and we see that being translated to lower-priced products being sold," said Joseph Bartolacci, president and CEO of Matthews International, headquartered at Two North Shore Center.

More families are shying away from top-of-the-line, hand-polished mahogany caskets and are opting instead for the budget-priced poplar wood models. Cremations, on the other hand, which can reduce the cost of a funeral by half or more, are on a steady rise.

But while Matthews International is best known for items it supplies for the death care industry, the company is benefitting from a lesser-known part of its business that has come to produce nearly half its annual revenue.

Matthews creates products that stamp expiration dates on toothpaste, liquor and other household items. It provides point-of-sale displays for national retailers.

The company also uses the skills used to make bronze cemetery markers in a plant on West Liberty Avenue to create custom products such as the Pitt Panther statue on the University of Pittsburgh campus, the big bowls in Mellon Park and the Willie Stargell Statue at PNC Park.

Matthews built the Elvis memorial at Graceland, all of the Baseball Hall of Fame plaques in Cooperstown, N.Y., and much of the bronze work throughout the streets of old historic Boston, where just about every lamppost and walkway marks some sort of landmark.

That diversity is important to the company's bottom line. Total worldwide sales for Matthews in fiscal 2008 amounted to $818 million and nearly half of that -- $329 million -- came from its brand solutions group, which provides equipment used to identify and mark consumer goods and industrial products.

With 4,500 employees worldwide, including 800 workers in the region, the 159-year-old public company is the oldest continually operating company in Pittsburgh. It was established in 1850 by John D. Matthews, who was a skilled engraver, and handmade stamps and branding irons.

That business evolved to the marking products division headquartered in East Liberty. The company now has operations around the world in 17 countries including China, Sweden and Australia.

Since Matthews went public in 1994, its annual sales from graphic images, branding and marking products has steadily grown from $65 million to its highest sales of $329 million last year.

Still, as the world's largest supplier of bronze funeral markers, the No. 1 provider of cremation equipment and the second largest manufacturer and distributor of caskets, the changing buying behavior of bereaved families has a big impact on the company's bottom line.

"One of the trends in the memoralization industry is a rising cremation rate," said Steven Nicola, chief financial officer. "Companies such as Matthews need to be aware of this trend and continue to develop strategies to support our customers."

In the United States, cremations are increasing by an annual rate of 4 percent with the national average close to 38 percent, according to the Cremation Association of North America, based in Chicago.

In 2008, there were 125,754 deaths in Pennsylvania and 40,097 cremations, which represented nearly 32 percent of all deaths in this state last year. In 2006, the state had 125,539 deaths and 36,516 cremations, which amounted to 29 percent of all deaths.

"Thirty years ago, you barely heard a Catholic mention the word cremation; now 30 percent of Catholics are choosing cremation," said Michael Nicodemus, vice president of the association.

"You have the increasing cost of funerals, environmental issues, and people are educating themselves more on what cremation involves. That's what I see driving the cremation increase. It's become a choice."

Through June 30, or the first nine months of fiscal 2009, total sales in Matthews' memorialization segment -- bronze, casket and cremation products -- fell to $336.8 million compared with $372.6 million in the same period in the previous fiscal year. While casket sales were down from $170.9 million last year to $155.7 million, those for the cremation segment increased from $19.6 million to $22 million.

Meanwhile, sales in the brand solutions segment -- graphics imaging, marking products and merchandising solutions -- rose to $243.9 million from $226.9 million last year, mainly on the strength of growth in the graphics imaging products.

Analysts are expecting total sales for the company to fall 11.8 percent in the quarter ended Sept. 30, but to increase by 4.3 percent this time next year.

The rising rate of cremations could represent an opportunity for Matthews through its bronze memorialization division. Cremations do not require a gravesite, but often the niche where ashes are stored for eternity include some type of memorialization.

"Almost everybody has a desire to be memorialized and remembered," said Mr. Bartolacci. "History has shown that through the ages since the pyramids and people placing their initials in wet cement. To not memorialize is to not have existed."


Tim Grant can be reached at tgrant@post-gazette.com or 412-263-1591.


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