May 31st, 2011
A Challenging Year: Will Manufacturers Rise to the Occasion?
My recent travels are putting me in front of many purchasing agents. Their schedules seem to be very open these days? Why? Many window fabricators are feeling the one-two punch of the combination of lower year to date sales figures combined with rising material and component costs. In many respects this is turning out to be quite a challenging year for many window and door fabricators. These purchasing agents are on a mission: “How can I help my company produce an Energy Star qualified windows at the least possible cost?”
Yes, sorry to say, I am seeing a less than robust window market so far this year. Why?
The significant tax credits that were in place for the past two years have now been replaced with a rather insignificant program that has been capped at $200. The R-5 Volume Purchase Program, which has been recently been renamed the “High Performance Windows Volume Purchase Program,” and that had many window fabricators quickly ramping up R values. But so far it has not generated much new business at all.
On top of this, we had a winter with record amounts of troublemaking snowfall across parts of the Midwest and Northeast followed by a very wet spring. It is not so easy to install new windows when it is either snowing or raining outside.
As if the weather isn’t enough to hamper window sales, we also have seen gasoline prices spike back up to near historical levels. I have seen some quite depressing looks at the pump lately from people who are struggling to make ends meet. They don’t fill up their tanks. They can only purchase $10 or $20 at a time and hope that they can scrape up some extra cash for the next trip to the pump. You can bet that even if these people have a broken window, they will not be ordering a new one anytime soon. Instead they will look to have it repaired or maybe even tape up some plastic across it and deal with it another day.
And what about homeowners that do want to order new windows? Many are still finding it hard to secure financing. The credit markets are still very tight. So many of the windows that are being sold are in the high-performance market segment. I visited a window company near Pittsburgh last week that is cranking out hundreds of triple pane krypton-filled windows daily. Who is buying them? Obviously, well established, financially secure consumers who have plenty of cash.
Yet despite these challenging and polarized market conditions, most window fabricators remain extremely optimistic about turning in a respectable year as well as moving into a better market in 2012.
That is what I love about the fenestration industry. We are such a resilient and dynamic bunch! Not only are companies responding by value -engineering components to provide the most “bang for their buck,” but they are also turning up the heat on the marketing side of their business as well. Despite lower than anticipated sales, I am seeing a greater investment in marketing, advertising and sales training, which, quite frankly is how it should be. Marketing expense should not be a luxury fueled by revenue, but rather a necessity that fuels sales.
I am also seeing companies experimenting with new distribution channels. Companies that have historically gone to market strictly via distributors are also looking at expanding their sales possibilities with dealer direct or even retail operations. They are looking at avenues to differentiate their window offerings to go after a new market segment without interfering with existing market channels.
And back to the purchasing side of the business – suppliers are responding with new components designed to increase window performance at minimal cost or lower material costs while maintaining performance. And equipment suppliers are bringing new designs to the market that can help fabricators improve operating efficiencies with lower capital investment costs! I cannot wait to go to Glassbuild this year as I am sure we will see plenty in the way of new window components and machinery in Atlanta!
One thing is for certain – stagnancy will not be the order of the day – we will see window and door companies making quite a few changes in the months ahead as they rise up to the occasion in this challenging window market!