Trend Tracker March/April 2021August 18th, 2021 by Nathan Hobbs
From Promise to Policy: What the President’s Plans Could Mean for Fenestration
By Michael Collins
Each election, we analyze the platform of plans and ideas under which our new president has been elected to determine how they will likely impact the fenestration industry. With Democratic control of both the House and Senate behind him, it is particularly important to understand President Biden’s plans. We reviewed a selection of policy proposals put forth by President Biden during his campaign, focusing primarily on those with the greatest potential to impact the door and window industry or construction and remodeling in general.
President Biden has pledged to improve the efficiency of American manufacturing by encouraging investment in new manufacturing technologies and equipment. In this effort, he will have as a template the tax credits put in place under President Obama. During his administration, numerous door and window manufacturers reported taking advantage of accelerated depreciation in purchasing manufacturing equipment. Many later credited having purchased equipment ahead of the next upswing with their abilities to fully participate in the post-recession recovery.
President Biden tightened standards of what is required for a product to be considered ‘Made in America’ modifying metrics in government procurement methodologies that allow foreign-made products to be selected more easily than products manufactured domestically. Hardware producers and door manufacturers, which have historically faced much stiffer competition from overseas than window manufacturers, stand to benefit from this focus.
In every great financial and economic crisis the U.S. has faced, capital availability—or a lack thereof—has determined the steepness and severity of the crisis. As we fight through the pandemic, the President plans to make available some $100 billion in low-interest business loans.
Companies with fenestration products that are geared to the proper price point will benefit if the planned $640 billion investment in affordable housing comes to pass. This effort is geared toward an emphasis on durable and energy efficient products, a perfect criterion for fenestration. There is also a discussion in the Biden platform of a first-time home buyer tax credit up to $15,000. The last such tax credit was highly successful in spurring housing demand.
Among the most ambitious goals put forth under the Biden presidency is ensuring that the U.S. derives 100% of its energy needs from clean energy and achieves net-zero emissions no later than 2050. There is a great deal of discussion in the Biden platform of solutions to this goal that don’t include fenestration, including concepts like appliance efficiency and on-site clean power generation. One Biden proposal does call for weatherizing two million homes over four years and singles out more efficient windows as a key solution. Given their central role in determining the energy efficiency of homes and buildings, we will hope that fenestration products receive stronger billing when these energy efficiency policies are actually enacted.
Lastly, with regard to the current difficulty in locating qualified workers, the Biden administration promises funding for community colleges and other “high-quality training programs.”
In terms of challenges created by these proposals, perhaps the most important one is the fact that none of these initiatives are inexpensive. Funding will have to come from somewhere, so businesses and business owners will likely see higher taxes in various forms. If properly executed, though, we can hope that these various changes will create enough economic and other opportunities to outweigh their costs.
Michael Collins is an investment banker and a partner in Building Industry Advisors. He specializes in mergers and acquisitions in the door and window industries.
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