Our recent analysis of activity in the door and window industry shows that plant closings and bankruptcies have slowed and merger and acquisition (M&A) activity continues at a reasonable clip. Plant expansions peaked in 2006 at 28 separately reported expansion projects. By 2008, that number had fallen to 12 expansions. We predicted last year that the number for 2009 would be even lower and we are on track for that, at five expansions in year-to-date (YTD) 2009. With regard to plant closures, there were 28 in 2008- a sign of the terrible outlook for the industry at that time. With the picture having improved somewhat, YTD 2009 has seen a slower pace of 10 plant closures.Turning our attention to company closures and bankruptcies, the picture in this area is improved as well. In 2008, 18 companies of various sizes ceased operations or entered bankruptcy. While many of these companies emerged from bankruptcy through acquisition or as stand-alone entities, the propensity of companies to enter the bankruptcy process at all is an interesting indicator of the relative health of an industry. In the YTD period of 2009, only six companies have shut down or entered bankruptcy. Given the improving general state of the industry, we would predict that 2008 will turn out to have been the worst year for both company and plant closings.

Finally, looking at overall M&A activity in the industry, we found that such activity continues at a relatively strong pace. We have determined that 2007 was the most active year for door and window company M&A since 2000. There were 37 separate transactions that year of various sizes. In 2008, there were a total of 31 transactions, with 7 of them completed by financial investors like private equity funds and 24 of them completed by companies in this industry. In YTD 2009, we have tracked 17 transactions (4 financial, 13 strategic). While financial buyers have likely been somewhat constrained by financing availability, the fact that overall activity is relatively on pace with our busiest past year, this is another positive indicator for the industry. Combined with the slowing of bankruptcies and company closures and other positive anecdotal evidence we have gathered from industry participants, the clouds appear to part.

Note: These and other statistics were included in our Spring 2009 Window & Door Industry Update webinar, which was recorded last week and will be available at www.jordanknauff.com/windoor by the end of this week.

Leave a Reply

Your email address will not be published. Required fields are marked *