Funeral business survives downturn

August 31, 2009
| By Pete Daly |
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The funeral business is insulated to some extent from economic boom times as well as recessions, although right now customers are "more careful in their choices," according to an executive at a Holland area family-owned funeral business that has been operating more than 100 years.

"Some of what you might call the extras, they've cut back a little bit on. Maybe a one-time visitation instead of two, committal service at the church or funeral home instead of a procession to the cemetery," said John Sterenberg, president of Holland’s Langeland-Sterenberg Funeral Home.

The Langeland-Sterenberg business was known since the early 1900s as the Notier-Ver Lee-Langeland funeral homes, which has locations in Holland and Hamilton plus the Yntema Funeral Home in Zeeland. The change to a simpler name in August marks the company's remodeling and expansion of its Holland location.

It has been decades since any Notiers or Ver Lees were involved in the business. Sterenberg's father, Paul Sterenberg, bought into it and began working as a funeral director there in the 1960s. Sterenberg, 45, started working there as a young teenager, mowing grass.

He said the recession has seen families "being a little more careful on their spending (on funerals) than perhaps they would have been five years ago or so." However, he is not aware of any West Michigan funeral homes going bankrupt lately or drastically reducing employee headcount.

He said the impact of swings in the economy — up or down — tends not to be felt as hard in the funeral industry as in other types of business.

"Most (people) still see value in having some kind of ceremony, to acknowledge the passing and to express support to the surviving family members," he said.

There are many variables that determine the cost of a funeral. Sterenberg was reluctant to estimate the cost of the average West Michigan funeral but said it might be in the $8,000 to $10,000 price range.

The trend toward cremation rather than burial of the intact body has had an impact on the funeral industry throughout North America and Europe.

"There were religious biases and personal biases toward it at one point," said Doug Cogswell, an executive at Rest Lawn Memorial Park in Grand Rapids, a crematorium. "It's becoming more acceptable," he said, guessing that 10 to 15 years ago, only about 1 percent of funerals involved a cremation.

"I would say that is probably closer to 15 to 20 percent cremation, at this point. Maybe a little higher," he added.

Cogswell said he has seen indications in trade journals that in Europe, the percentage of people being cremated is closer to 75 or 80 percent.

Rest Lawn, one of three crematoriums in the Grand Rapids area, does about 500 cremations a year, he said. There also are memorial grounds where ashes can be interred, for additional cost, if the family wishes.

"They can opt to take the remains home with them," said Cogswell. "Some people will put them on the mantle and decide later what to do. Some will do an immediate burial here on the grounds."

"I think cremations have increased as a result of the cost overall, and people having tight money situations. I think the recession is one reason why cremation is building, but it's not the exclusive reason. I think personal opinions have changed on cremation."

Cremation allows the consumer to avoid the costs of a cemetery plot, a concrete vault and a casket, plus the fee for opening and closing the grave.

The base cost for a plot at Grand Rapids public cemeteries ranges from $525 to $825, and the cost of opening/closing a grave ranges from $475 for interring ashes to $1,100 for interring a body.

Many cemeteries are privately owned and operated commercial entities, so the cost of cemetery plots and services varies dramatically, depending on the location — like real estate. A crypt in a swanky private memorial park in Los Angeles, close to Marilyn Monroe's crypt, recently sold for $4.6 million at auction.

Michigan law requires cremations to be arranged through a licensed mortician. However, Michigan is also one of the few states to have an "anti-combination" law, according to Sterenberg, which prohibits funeral homes from owning crematoriums or cemeteries, or cemeteries from owning funeral homes.

The reason for the law is to prevent funeral homes and/or cemeteries "from pushing their cemetery or their funeral home on the customer in their time of distress," according to Sterenberg.

The increasing demand for cremation and low-cost alternatives to conventional funerals inspired one Grand Rapids area funeral business to set up Cremation Services of West Michigan in 2008. Its Web site advertises "simple direct cremation" for a fee of $1,200, which does not include a service or public viewing of the deceased prior to cremation. An urn for the ashes is extra.

Kurt B. Stegenga of Stegenga Funeral Chapels said Cremation Services of West Michigan acts as a referral service for the Stegenga funeral homes in Wyoming and Belmont. It is a family-owned business, almost 40 years old, which posts its fees for various types of services on the Web sites for each of its funeral homes. The basic cost of a burial through the Belmont Chapel runs from about $5,275 to $6,455, with discounts for prepayment.

"I'm one of two funeral homes in Grand Rapids that actually has pricing right out there online for everyone to look over, so that there is no misunderstanding before they come through the door," said Stegenga.

"I think there are certain people — families that walk through the door — that maybe would have chosen something different if the economy wasn’t the way it was," he said. "They might have chosen a little bit more of a traditional type service."

However, Stegenga said he does not think the recession has had a "huge" impact on the funeral industry. A bigger impact, he said, is the fact that there was a relatively low birth rate in the years before and during World War II, which means the death rate within the population is relatively low these days.

That would seem to imply that the situation about 15 or 20 years from now looks promising for the funeral industry due to the aging baby boomers. According to the U.S. Centers for Disease Control, the average life expectancy in the U.S. is about 78 years.

Most — but not all — funeral homes are family-owned businesses. There are several large corporations that own chains of funeral homes, the largest being Service Corporation International of Houston, which describes itself as "North America's leading provider of deathcare products and services."

As of June 30, SCI, a publicly held corporation, owned and operated more than 1,260 funeral homes and 365 cemeteries in 43 states and eight Canadian provinces. One of its properties is Reyers North Valley Chapel on Fuller Avenue in Grand Rapids. A call from the Business Journal to management at Reyers was not returned.

Sterenberg said he believes there was a movement toward mergers and acquisitions among funeral homes a couple of decades ago — "especially with national and multinational corporations."

"It isn't happening near as much as it used to, I think, for several reasons. I think a lot of those companies overpaid for their mergers and their acquisitions 20 years ago, only to find out that the savings they could generate from combining some of the operations weren't as great as what they were hoping. It's still a 24-hour, seven days a week, 365 days a year, holidays included business."

"The general public expects a very timely response to a death. It isn't something that you can say, 'We'll be there on Monday,'" he added.

Sterenberg also believes the big funeral chains "kind of misjudged their business model a little bit."

"The market has shown that people would much rather deal with a friend or at least somebody they know from the neighborhood or from church," when making funeral arrangements, he said.

"Acquaintances seem to win out over a total stranger that you’ve never met before."

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