Good news! Oil dropped to $124 a barrel yesterday and looks like it is headed lower due in part to falling U.S. demand for gasoline. Economists sound relieved. Some of them actually sound surprised! Well, when prices go up, demand does fall, even when it comes to gasoline, the demand for which may be more elastic than we think. Aren’t you noticing more and more motorcycles and hybrids on the highway? People are making changes. They are buying freezers, making longer grocery lists, and are making fewer trips in general. We have had energy scares before, but this time, it seems, people are making permanent changes. The auto makers, sensing this, are closing SUV plants and are beefing up production of more fuel-efficient cars.

I am also seeing change among window fabricators, especially among those who have historically been entrenched in the new construction market. They are making dramatic changes. While visiting customers this week, I noticed more changes than ever. People are being moved into different jobs as vacancies were created due to the downturn. They are adapting to new roles and making the best use of their skills. Lean manufacturing is no longer just being talked about. It is being embraced. The marketing and sales management teams are also making dramatic changes. There is a definite shift away from a mentality where cost is the number one factor in component selection. Instead, cost is the number one factor in process orientation. However, engineers, materials managers and purchasing people are actually looking for ways to beef up performance in an effort to add value to their product lines. This is because the marketing and sales managers are shifting emphasis away from new construction product lines toward the replacement window market. Differentiation and value are now taking center stage over price.

Don’t get me wrong, the need to be competitive is greater than ever, especially with the reduction in market size. However, the mentality of switching components over pennies in cost seems to be replaced with looking for materials and components that provide the greatest value for the dollar. Quality, performance and uniqueness are now of prime importance. When the smoke clears, we will see that the companies who come out ahead will be the ones who have made the commitment toward change. Change is always difficult. But in today’s tough economic environment, it is absolutely critical to survival!