John Maynard Keynes once suggested that it would be possible for the government to bury money in bottles and then pay the unemployed to dig it up, excavating the country out of recession in the process. In fact, at least one American industry has beaten recession by effectively burying large amounts of wealth, with no intention that it should ever be exhumed.
During the civil war, the federal government trained thousands of embalmers to return the heroic departed in reasonable condition to their home towns. And with typical Yankee ingenuity, after the war those unemployed embalmers set about remodelling the dying habits of a nation, with the new, value-added profit-generating funeral.At first these entrepreneurs used arsenic solution to ply their trade, but then the authorities realised that many a domestic squabble might have ended fatally, and the cause could not be detected by post mortem. Along with the embalming came more and more elaborate and hermetically sealed vessels for the ride into eternity. No mere coffins, these caskets still boast ‘life-time guarantees’ in the trade press, and they are priced accordingly, which is why the American funeral industry grosses about $10 bn a year. If American morticians pursued a policy of ‘ashes to ashes, dust to dust,’ many of them would soon go bust.
Service Corporation International, the Texas-based billion dollar a year burning and burial giant that is buying up the British and French ‘death care industry’, offers the chance to invest in a business that is surely the wave of the future. In the 1950s Bob Waltrip took over his family’s funeral home. Instead of mummifying Mom & Pop-style practices he decided to expand and founded in 1962 what later became SCI when he attracted a group of investors to fund further expansion. Its recent acquisitions in France and Britain confirm its position as a multinational, multilateral business. Its success would repay close examination from business improvement gurus who probably think the funeral industry is beneath them.
Eschewing any suggestion that it would try to export the US way of death to its new overseas acquisitions, SCI investor relations officer Todd Matherne points out: ‘You won’t see any golden arches outside our establishments. Our only invariable is sensitivity.’ Indeed. And sensitivity to profitability and the economies of clustering are just as important.
‘Death hath ten thousand several doors for men to take their exits,’ said John Webster, and SCI will happily cater for an equal number of posthumous preferences. To cope with local vagaries and loyalties the retail fronts of SCI acquisitions remain ‘family’ businesses behind which are clustered a whole integrated structure of services. Vast fleets of hearses, industrial scale embalming shops, coffin and casket manufacturers and distributors, crematoria, cemeteries, mausolea and even flower shops, preserve all the variety and drive of entrepreneurial family businesses with the economics and profits of a large scale multinational corporation.
Family businesses marked for acquisition face an offer that is difficult to refuse. If they say yes, they will be kept on and given a large degree of autonomy: the group has fewer than half a dozen Americans in Britain to oversee its new acquisitions. If they say no, then SCI might buy a neighbouring rival which would expose them to cut-throat competition.
The company concentrates on metropolitan areas where economies of scale and clustering are available, which is what makes densely populated countries like Britain and France so attractive. They also have ‘favourable demographics’. In this case that means ageing and relatively affluent populations.
The company’s freedom from unprofitable prejudice has even escaped the visceral repugnance of cremation in the American industry, which sees every burning as cheating the embalmers. ‘Although a cremation typically results in less sales dollars than a traditional funeral, the company believes that funeral operations which are predominately cremation businesses typically have higher gross profit margin percentages than those exhibited at traditional funeral operations,’ SCI reports. And true to its word, it services far more of them than most of its competitors.
It is quick off the mark as well. Asked what it could do with the filled cemeteries of the European towns, Matherne immediately suggests possibilities like above ground mausolea, cremation niches and other ways to use the airspace. With such a combination of the quick and the dead, how can it fail?
The dead cow industry – McDonalds or Burger King – has limits to growth: vegetarians, taste, health concerns. But the dead people industry has a potential customer base of everybody, ensuring that this dying business is almost recession proof, a sunrise industry for the sunset populations of the industrialised world. Short of taking a hands-on approach and personally opening a funeral home, there have been limited opportunities for investment in the industry to date.
Benjamin Franklin compared death and taxes for inevitability. Giants like Service Corporation International are expanding across the globe to take advantage of that inevitability; and though not quite rivalling the IRS in its income stream, it is nevertheless doing very nicely thank you. It still owns only 10 per cent of the US death care industry, so there is plenty of room for expansion even in the face of stiff competition.
