December 3rd, 2020
In 2021 Expect the Expected
This time last year, I was making predictions for 2020. I predicted that it was going to be a strong year for the window and door industry with single—if not double-digit—growth. The one factor that I said could stand in the way was an “unexpected” event. Well, as we all know, the unexpected did happen. The COVID-19 pandemic hit America in March. After a disastrous second quarter, it looked at first as though 2020 would be a bust.
But then the unexpected on top of the unexpected happened. As it turns out, COVID-19 is actually good for the residential construction industry—at least so far as the demand side is concerned. With vacations canceled and air travel at a crawl, people started doing one of three things: 1. remodeling their homes; 2. moving to areas of lower population density; and 3. moving from apartments to homes. It all boils down to this: If you must stay home, then you should be as comfortable as possible, as safe as possible, and as far away from crowds as possible.
So, as a result of these trends, there has become a shortage of residential housing in the suburbs and rural areas, as well as a boom in remodeling of existing homes—a proverbial shot in the arm for the door and window industries!
Ask any door and window fabricator what they are expecting for 2021 and most are highly optimistic, as far as the demand side of the equation is concerned. And this time the only thing that could happen that might change all of that is not the unexpected but rather the expected. Yes, it is expected that a vaccine will soon be a reality, which could put everything back to the way it was before the pandemic. With the virus held at bay, will people once again become more comfortable in urban settings and will they once again start using their disposable income on dining out and on vacations, as opposed to remodeling their homes? Well, the answer is yes to some degree, but things are not going back to pre-pandemic status overnight and may not ever! It is also expected that in 2021 labor shortages will continue to be a factor and this will also continue to drive shortages and increases in the costs of components and raw materials, as well as the cost of labor itself.
Also, even though it is expected that a cure is in sight, it does not mean that the demand side will slow. When wheels are set in motion, momentum is gained. So, even if the brakes are applied, it does not mean that the train will stop immediately. Many of my customers have a two- to four-month-long backlog of orders. So, even in the unlikely event that sales were to come to a screeching halt, they would still have enough to keep them busy for the entire first quarter of 2021. What is also expected is that the effects of the pandemic will leave a lasting impact upon the consumer psyche far after the successful cure of the disease. For one thing, if the home was once thought of as ones castle, it is now considered one’s fortress. Yes, the home has become the ultimate safe place—safe from disease, safe from noise, safe from crowds and safe from violence. So, the changes we saw this year will have long-term impacts.
So, once again I am predicting another strong year ahead for the door and window industries. I keep hearing everyone state that 2020 was the worst year ever, but I do not believe this to be the case. It was simply a year of change, and people inherently do not like change. Demand will stay strong. Meanwhile, severe labor shortages and higher costs of materials and labor will continue to define 2021. How do we adapt? The answer is a blog for another day. But those companies that find the solutions and learn to capitalize upon the expected will define the winners from the losers.