Looking Ahead: Good Opportunities Require Fighting Headwinds

By Janice Yglesias

It’s well known that an unusual confluence of factors has brought an unexpected period of prosperity to residential construction over the last two years. Spurred by these factors, residential construction spending skyrocketed by a reported 25.3% last year, which more than offset a concurrent and precipitous 23.6% decline in non-residential construction.

FGIA’s most recent industry update, the September 2021 FGIA U.S. Market for Residential and Non-residential Windows, Doors and Skylights, offers some insight into 2022. Per the report, at its conclusion, 2021 was expected to register an overall increase of 14.3% on starts of new residential housing. Single family units have driven this growth, increasing by 15.5% in 2021.

Going forward, growth rates in all sectors should continue to cool off from the recent pace. For 2022, single-family starts should register a 6.1% gain, while multi-family starts will likely see retrenchment by 11%  to 2020 levels. Manufactured housing unit starts were up 6% in 2021, with similar yearly increases projected through 2023.

This has all been good news, but there have been significant headwinds to fully capitalizing on the opportunities presented.

Issues of Scarcity

According to the Bureau of Labor Statistics, as of September 2021, the overall economy had 10.4 million unfilled jobs, 333,000 of which were in the construction sector. Although the unemployment rate fell, National Association of Home Builders (NAHB) chief economist, Robert Dietz, observed that there are more open jobs than employable workers because of declines in the labor force participation rate.

Per the U.S. Chamber of Commerce, in its third-quarter 2021 report, 55% of surveyed contractors reported a high level of difficulty finding skilled workers. Nearly all expect the problem to stay the same or worsen into 2022.

Supply chain issues continue to plague the industry. A recent Associated General Contractors (AGC) survey found that, as challenging as the labor situation is, most disruptions have been due to poor material availability, with 52% reporting shortages.

At the same time, prices have been volatile to say the least. According to the October Producer Price Index (PPI), the price of all goods input to residential construction (including energy) rose 14.5% in 2021, climbing more than eight times faster than the first 10 months of 2020 the fastest inflationary pace in 11 years.

Glass is getting harder to find and more expensive to purchase, leading some insulating glass manufacturers to slow or halt production, frustrating efforts to meet demands.

What does this portend for door and window manufacturers? See the statistics from our market study on page 44 for planning guidance.

In the end, numbers vary significantly across different regions of the country. We should all do our best to be diverse and efficient, creatively countering material and labor issues to proverbially make hay while the sun shines, however intermittently.

Janice Yglesias is executive director for the Fenestration and Glazing Industry Alliance (FGIA).

To view the laid-in version of this article in our digital edition, CLICK HERE.

DWM Magazine

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