Collins
by Mike Collins
April 17th, 2012

“Innovate or Suffocate”

Industry gatherings typically represent a microcosm of the overall industry itself. Fenestration Day, held last week in San Antonio, was no exception. This was a particularly interesting event, since it brought together both manufacturers and dealers in one spot. I tend to call more often on manufacturers, so it was interesting to get a chance to interact with and present to dealers as well. There were a number of interesting takeaways from the meeting.

One way in which my conversations at the meeting were reflective of the overall industry stemmed from my conversations with manufacturers. Representatives from two manufacturers asked me about possibly undertaking acquisitions. This is probably the best time since 2007 to arrange financing, including capital to acquire a competitor. It’s very difficult for companies to grow more quickly than is possible through making the right acquisition. The typical manufacturer that is contemplating buying another company correctly places a great deal of weight on revenue and cost synergies with the potential target. Such synergies include ways for the combined company to sell more by utilizing one another’s channels or to save money by combining their purchasing power.

Another topic that echoed a key trend in the industry at large was innovation. I attended a presentation by a representative of PPG, who carried a message that is on my mind a great deal lately. In underscoring the urgent need for companies to create new, disruptive products, he said that companies must “innovate or suffocate.”In this industry, truer words were never spoken. With the commodity portion of the business being fought over, in large part, by foreign manufacturers and low-profitability domestic manufacturers, innovative products carry stronger growth and profitability. One such innovation highlighted in his presentation was photochromic glass (automatically tinting in the presence of light) being replaced by thermochromic glass (which tints only when the glass reaches a certain temperature). This innovation will decrease the likelihood of blocking out badly needed, warming sunlight in the wintertime. And what is the tab on these and similar innovations at PPG? A cool $400 million per year. Sitting in the meeting, it occurred to me what a wonderful thing it is that a local door and window dealer, which might have 20 employees, can fully leverage the significant R&D expenditures of larger companies, simply by taking advantage of products that rely on the innovations they create. For the cost of a floor model, a dealer can put themselves in a value stream they could never have afforded to create on their own. Another advantage of attending industry events like Fenestration Day is learning about innovative products like these and making plans to add them to the suite of products one offers.

 

 

 

 

 

 

 

 

 

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