Record Numbers for Jordan, Knauff and Co.’s Latest Webinar
DWM columnist Michael E. Collins of Jordan, Knauff and Co., an investment banking firm in Chicago that specializes in the door and window industry, presented “Fall 2007 Window and Door Industry Update,” a webinar that was part of the company’s Fall 2007 Window and Door Industry Update series. The webinar was held yesterday, November 28, and more than 200 door and window industry professionals were registered (a record number of attendees).
Collins highlighted a number of areas in his presentation, including the current homebuilding market, different products on the market and trends among them, green building, competition from Chinese companies and more.
Hit Bottom Yet?
Collins said that the homebuilding market has reminded him of a concept that was popularized during the dotcom bust - the concept of capitulation. This is the idea that things have finally hit bottom and they can only get better. He says that recent news, such as that Ryan Homes no longer builds new homes in Michigan, Pulte’s report of its $1.3-billion loss, USG’s 95-percent decrease in earnings, etc., are possible signs that the market is at or near the bottom. He did, however, remind listeners that the consensus among building forecasters is that the homebuilding market will not feel better until the end of 2008 and will not see an honest recovery until 2009.
Some Industry Trends
Collins said that many window manufacturers are being pinched by fuel prices and energy surcharges. He said that another suspicion his company has had is that many manufacturers are contemplating an investment in the garage door area, and while the market is down, many companies are still looking to acquire other companies. He says that his company is seeing companies wanting to purchase other companies that have excess capacity, and this is a very positive sign.
As far as remodeling and renovation, Collins said many homeowners are reluctant to put money into their homes because they see them as declining in value. He said that remodeling will be flat in 2007 and 2008, but will recover in 2009.
Collins next discussed the door industry. Some of the challenges that the door industry faces are that some companies are self-labeling products in order to give the appearance that they are certified when, in fact, the label may just look like an AAMA label and say, “I certify that this is the best door on the market.”
Collins said that the door industry also needs to develop some stringent water penetration tests, and composite-based certification standards should not require door pre-hangers to test each door configuration (read more about the side-hinged exterior door standard in the January issue of DWM).
Collins also touched on the subject of garage doors. He said that buyers are looking for an economical way to set their homes apart from others on the block and one way is with their garage doors. He said that garage doors are grossly undervalued as compared to a home’s entry door. He also said that garage storage and organization is becoming a multi-billion dollar industry.
When Things are Slow
Collins had a number of suggestions for companies when the market is slow. He said that companies should be proactive about marketing. He said manufacturers should visit distributors that may have dropped off and ask, “How happy are you with your current manufacturers?”
He also said that companies should accelerate the use of green products, develop their websites and combine plants to make business more efficient.
Building Information Management (BIM) is an area that Collins believes is going to take off. BIM stores a variety of information regarding every part and component of a building.
He said that the next-generation 3-D building design system will replace Computer-Aided Design (CAD). He said while CAD was private to a given company, BIM will be accessible by multiple parties.
Collins said that he thinks BIM will be adopted quickly by overseas competitors because it will give them instant access to architects without the normal marketing and networking process.
A Fragmented Green Movement
Collins spoke about green products as well. He said the green industry needs to avoid fragmentation, meaning that right now there are differing opinions of what green is. He said that there needs to be some standards put in place so everyone knows what a green product is.
Collins also spoke about the rising competition from Chinese companies. He said many U.S. labor unions are trying to unionize Chinese workers. An average Chinese worker starts out making 43 cents per hour, where an average U.S. worker starts at $11 per hour. He says that if unions can unionize Chinese workers then their wages would increase, which would increase the price of products from China. Collins did note that 60 percent of all exported Chinese products have foreign funding.
Some other points Collins made about China were that if U.S. companies push a Chinese supplier too much on price, quality may suffer. He also said that it’s a myth that Chinese companies steal ideas. Usually, it’s a U.S. company that takes a competitor’s product to a Chinese company and asks them to make a knock-off.
CLICK HERE to e-mail Michael Collins for more information about the topics presented in this webinar.
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