Well, that time of the year is here when CEO’s are finalizing sales forecasts and operational budgets for 2010. While in the process of making sales calls, I always like to get a read on what business owners see happening in 2010. In years past, most of these executives have had a fairly clear vision on how they see their organization faring in the upcoming year. Last year at this time, most were clear in forecasting gloomy conditions, and consequently there was absolutely no capital spending going on. I could see manufacturers in dire need of new equipment but totally refusing to buy anything, and telling their maintenance department to do whatever they had to do to just keep things running. Then, the 30-30 tax credit program became law, and I saw these same manufacturers scrambling to ramp up for the extra business that was certainly welcome but totally unexpected. So much for gloom and doom!This year, however, the attitude is way more positive even though somewhat cloudy as to exactly what type of growth, if any, the window and door industry will see in 2010. There are some very positive things happening that could provide quite a boost, but there are also some economic factors that could certainly have a dampening effect.

The 30-30 tax credit still has another year to go, but he question remains, “What percentage of homeowners have already taken advantage of it?” Just about all of the window manufacturers that I talk to have seen a significant boost in sales this year from the moment this program was out of the gate. However, has this program already run its course, or are there many more homeowners waiting to take advantage of this program in 2010? I think there is still a big percentage of the population out there waiting to take advantage of this program!

But here comes another factor that could put a damper on things. As we all know, many people use their income tax returns to help finance home improvement projects, including new windows and doors! Well, the news was just released from Washington today that as many as 15 million taxpayers could unexpectedly owe taxes next April when they are usually accustomed to getting money back! It seems the government was a little too generous with their new “Making Work Pay” tax credit which was part of the stimulus package enacted in February. New withholding tables which were issued by the IRS this year did not take into account taxpayers with multiple jobs, married couples in which both people work and those who also receive Social Security benefits. Consequently, these groups of taxpayers did not have enough of their pay withheld, and may be caught off guard when they go to file taxes, expecting their normal returns but instead finding out that they owe taxes!

Then there is the homebuyer tax credit. Good news has recently surfaced that the deadline for this program has been extended from the end of this month to the end of June 2010. And more importantly, the program has been broadened to include not only first time homeowners and those who have not owned a home during the last three years but also those who have owned a home for five of the last eight years. The latter group cannot get the full $8,000 credit, but a $6,500 credit is certainly nothing to sneeze at! Also, the income limits to qualify for the full credit have been raised substantially from $75,000 to $125,000 for single taxpayers and from $125,000 to $225,000 for married (filing jointly) couples. This could certainly have a significant impact on the new housing market and consequently on the market for windows and doors!

Oh, but then there is the issue of credit availability. This is a big issue that does not seem to be getting better. Community banks are still worried about their liquidity issues, and they are very careful about how much money they loan out of fear that they will be shut down or taken over. Until the commercial credit markets loosen up, and until the government has a solution for our commercial real estate problems, growth in the housing sector will be difficult to maintain. If this is the case, the homebuyer tax credit will result is a short-lived boost to the housing sector.

Well, as this year comes to a close, one thing is for certain. The outlook is definitely more positive for the coming year than it was 12 months ago. And in many respects, window and door manufacturers are now stronger than they have been in a long term. Many have been forced, for survival’s sake, to take a keen look at their costs and operational budgets, and are now running more efficiently than ever before. Capital budgets have actually loosened up a bit. Well, I even see window companies finally ordering that new equipment that they sorely needed last year at this time!

2 Comments

  1. Recovery?
    Interesting that people point to improvements in certain companies, yet fail to recognize that it may not be the energy tax credit or stimilus. Maybe it is the simple fact that where you have a stagnant to decreasing market and you loose competitors that someone “wins”. I believe in positive thinking, but looking through biased glasses is just as dangerous as being very pessimistic.

  2. Really great info, I thoroughly enjoyed it!

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