September 28th, 2010
Fourth Quarter 2010: Sink or Swim?
I can hardly believe the 4th Quarter is about to start already – where did the year go? Most of my customers have noticed that third quarter sales were a little soft, but the majority of those asked are optimistic about a strong finish for 2010.
I especially noticed the optimism in the air at the recent trade show in Vegas. Last year at this time, equipment sales were dead. Very few companies were willing to invest in new equipment, even if it was sorely needed. If they did need a glass cutter, a washer or some spacer application tables, they were not buying new. I cannot tell you how many times I heard, “I will just wait for the next manufacturer to go belly up, and then I will pick it up for pennies on the dollar at the auction!”
This year is a different story. Manufacturers are investing in new equipment! They aren’t necessarily buying everything on their wish list, but they are buying the latest in new equipment developments that will improve quality and make their businesses more efficient and therefore more competitive. Many are taking advantage of the Section 179 Deduction, which allows businesses to write off the first $250,000 in Year 1 on capital equipment purchased and put into operation by December 31st. This is a huge tax advantage for small and medium sized manufacturers, and something that should not be overlooked! Check it out.
Another program expiring on December 31st is the infamous but extremely beneficial .30/.30 Tax Credit for Consumer Energy Efficiency. This is likely to have a positive impact on 4th Quarter window and door sales as the laggards who previously thought about but delayed taking action on this program, which offers a 30 percent tax credit (up to $1500), come back into dealer showrooms before the “window of opportunity” closes on this one, presumably for good! There is no doubt that this program helped to spur a recovery in the window and door market by fueling demand for energy-efficient fenestration products.
But without the artificial stimulus created by this and other programs that were part of the American Recovery & Reinvestment Act of 2009, the real question is this….”what happens in 2011 when the life saver is yanked and we are left to swim on our own?”
Will we sink or will we swim? Will a real and sustainable economic recovery be in place to keep us afloat? The answer to this question will perhaps be determined with our votes on November 2nd.
So one might ask… “What do politics have to do with determining the future of the window and door industry?”
As the past few years have shown us … everything!