Attendees at last week’s American Architectural Manufacturers Association (AAMA) 2018 Summer Conference in Lake Tahoe, Calif., saw several presentations relevant to the door and window industry. One focused on the latest AAMA market study, while another examined the forces shaping the global economy.

Nick Limb of Ducker Worldwide speaks at the recent AAMA Summer Conference. (Photo via Twitter user @AngelaDDickson)

Nick Limb, board member and managing principal at market research firm Ducker Worldwide, noted that the most recent AAMA Study of the U.S. Market for Windows, Doors and Skylights, which is produced by Ducker, shows that many sectors of the economy are  strong and stable, including  the fenestration industry. Limb said expect to see that continue for at least the next three years.

“Current and historic market assessments are conducted using multi-faceted primary market research throughout the value chain,” said Limb of Ducker’s methodology. “Manufacturers and suppliers are interviewed, and secondary research is used to support the overall analysis.”

Limb noted that non-residential growth lags behind residential, but the industry outlook remains strong.

While renovation activity is growing steadily, there has not been the same demand for doors and windows as other product categories in the renovation market. This arena is taken over more by exterior, kitchen and bath instead.

New home construction continued to grow 3.3 percent in 2017, and there is a growth forecast of 8.3 percent for 2018.

“We are still well below peak levels from back in the mid-2000s,” said Limb.

Ducker is now tracking building and construction material trade expenditures as published by the U.S. Census Bureau on a monthly basis. Combined expenditures were up 7.6 percent in 2017, although commodity price inflation factored into this growth.

When it comes to non-residential construction, Limb reported that contract awards are the leading indicator of demand  in that sector, and those were up 4 percent in 2017.

Limb said that Ducker forecasts 4 percent renovation demand growth in 2018, 3 percent growth in 2019 and 3 percent in 2020.

“There’s good growth demand across all categories for 2018,” said Limb. “We see that moderating somewhat in 2019 and into 2020. We see a healthy market and a strong forecast for the future.”

Keynote Address

John Manzella, a speaker and author on global business, risks and strategies, gave a global and economics-focused keynote address on topics ranging from the North American Free Trade Agreement (NAFTA) and the U.S. relationship with China to automation and the opioid crisis.

Manzella opened with a discussion of new construction, which he said are a huge driver of economic growth.

“New builds last year were 68 percent of what they were in 2005,” he said. “Even though real estate is doing well, we’re still digging ourselves out of the Grand Canyon created in 2008.”

Manzella focused on challenges including the skilled labor shortage. He recommended that companies invest more in new technologies and training for new employees because retirees take their skills with them when they leave. He also pointed out that industries on the cutting edge are the ones growing, such as cloud storage, energy storage, 3-D printing, artificial intelligence and more.

When it comes to employment, Manzella has noticed a strange trend.

“The participation rate for different age groups are the opposite of what they should be,” he said, adding that one in seven men aged 25-54 are long-term unemployed. “The opioid crisis contributes to this. We’ve got a skills deficit on our hands that’s becoming more severe, and it’s occurring at every skill level. Virtually every industry is finding it difficult to find qualified workers. And, this is further complicated since large number of candidates can’t pass drug tests.”

Manzella asked conference participants what they considered to have the most impact on manufacturing: globalization or automation?

“In 1979, there were 19.5 million manufacturing jobs in America. Today, there are 12.5 million,” he said. “Was it offshoring that caused this? I would argue it’s automation, which accounted for more than 85 percent of job losses in manufacturing from 2000 to 2010.”

He added that nearly half of existing jobs will be automated in the next two decades. Still, Manzella said, it’s not as frightening as it seems.

“The internet and new digital technologies decimated industries, but in the end, created more jobs than were destroyed,” he said. “This also boosted productivity, a major factor responsible for improving our standard of living.”

Manzella next looked at NAFTA and how it stimulated the development of sophisticated supply chains, advanced the spread of technology, increased the number of product choices and created more well-paying jobs.

“By combining our strengths with those of Mexico and Canada, we’ve enhanced North American competitiveness,” he said. “Terminating NAFTA would have severe consequences for all three countries.”

Manzella followed with a discussion of China’s struggles to transition from an export- and investment-driven economy to a consumer-driven one and the country’s current conflicts with the U.S.over trade  and tariffs. To change China’s behavior, Manzella said, we need allies.

“We need Mexico, Canada and the European Union on our side presenting a unified front capable of putting real pressure on China,” he said. “A trade war with China is a risky gamble.”

Manzella noted that, ultimately, tariffs on steel and aluminum likely will hurt the very workers they are intended to help.

“When tariffs are implemented, they increase prices,” he said. “In turn, consumers and industry buy less, production goes down and unemployment goes up.”

Manzella concluded that many factors are affecting the U.S. and world economies, so it’s important to understand these trends, their impact and how to adapt.

“High levels of volatility and risk will continue, but America’s ‘secret sauce’ of free market capitalism, entrepreneurialism, acceptance of immigrants and a brilliant Constitution will continue to provide strengths to Americans well into the future,” he said.

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