What’s News November/December 2020

July 28th, 2021 by Nathan Hobbs

Leading News

Residential Construction to Remain a Key Sales Target

Door and window companies have their eyes on the residential market these days, where demand has so far held strong amid a global pandemic. Though analysts admit there are no guarantees going forward, surges among new home sales and low inventory suggest that demand should remain for products designed for new construction.

“Consumers are being driven by low interest rates, a growing focus on the importance of housing and a shift in buyers seeking homes in lower density areas,” said Chuck Fowke, chairperson of the National Association of Home Builders (NAHB).

Sales for new homes surged in July, rising to their highest pace since 2006, at a seasonally adjusted annual rate of 901,000 units. In August, they topped the one million mark, reaching their highest pace since September 2006, the U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported.

A portion of those transactions are attributed to earlier predictions that COVID-19 would drive interest in low-density areas, NAHB officials said. In the second-quarter NAHB Home Building Geography Index (HBGI), small metro suburbs accounted for the fastest growing geographical areas for single-family construction, up 10.6% on a four-quarter moving average basis. Close behind were small towns (9.3%), small metro core areas (7.5%) and exurbs (5.6%). Those changes typically are slow to develop, NAHB officials said, making a one-percentage point year-over-year gain noteworthy when compared to recent historical data.

With inventory levels for new homes hanging low, opportunities remain for home builders, but they’re riddled with challenges, suggested NAHB chief economist Robert Dietz. By September, however, builders remained undeterred, as builder confidence measured by the NAHB/Wells Fargo Housing Market Index (HMI) reached its highest point in nearly a decade and a half.

In order to deliver on that optimism, home builders must contend with the ongoing issues of labor shortages and lumber prices that have risen by more than 170% since mid-April, adding more than $16,000 to the price of new homes. So far there are indications that homebuyers are willing and able to absorb those costs as home prices have also climbed amid strong sales. By July, the median sales price was $330,600— more than $20,000 higher than the median price of a new home just a year earlier.

In the months ahead, officials for the Federal Reserve said they’re committed to using a “full range of tools” to support the U.S. economy and homebuyers, by keeping the target for federal funds and the prime lending rate within the zero to 0.25% range. At the same time, “the path of the economy depends significantly on the course of the virus,” officials warned, acknowledging that—for now, at least—there remains a level of uncertainty.

M&A

Builders FirstSource and BMC Announce Merger

Builders FirstSource Inc. and BMC Stock Holdings Inc. announced they will combine through an all-stock merger transaction, creating what officials are calling a “premier” supplier of building materials and services. The combined company will operate under the name Builders FirstSource Inc. and will be headquartered in Dallas, while maintaining corporate centers in both Raleigh, N.C., and Denver.

With the merger expected to take place in the final weeks of this year or early 2021, current CEO of Builders FirstSource, Chad Crow, will retire following a 90-day transition period. Crow will then be replaced by Dave Flitman, current CEO of BMC, who will serve as CEO of the combined company.

After the transition, Crow will continue on a consulting basis for a period of time to support integration and to ensure an orderly transition, officials said.

The resulting management team will be comprised of leaders from both organizations and the combined company’s board of directors will have 12 members, seven from Builders FirstSource and five from BMC. Paul S. Levy, co-founder and current chairperson of the board for Builders FirstSource will serve as chairperson for the combined company.

Compusoft to Acquire Soft Tech

Global software company Compusoft announced it will acquire Soft Tech, a provider of software for the door and window industries. The deal follows a strategic decision by Soft Tech’s board, officials said, which set out to investigate opportunities of capital investment to support growth strategies.

Compusoft is a private-equity-backed business specializing in kitchen and bathroom design and configuration software. It was founded in 1989 and has operations in 15 countries across Europe, South Africa and Australia, servicing customers in over 100 countries worldwide, officials said.

“We have been looking to expand into the window and door industry for some time due to compelling similarities with our existing business, such as the growing adoption of technology, complex configuration needs and the importance of data driven solutions,” said Tyron Ball, Soft Tech’s co-CEO.

Soft Tech will continue to run as a subsidiary under Compusoft, with the business operations and existing company name, branding and leadership remaining intact.

Trade

Court Sends Anti-Dumping Decision Back to Commerce

The U.S. Court of International Trade sided with Columbia Aluminum Products LLC (CAP) and Worldwide Door Components Inc. (WDC) in two separate decisions, demanding that the U.S. Department of Commerce revisit its decisions to include door thresholds within the scope of antidumping and countervailing duty (AD/CVD) orders on aluminum extrusions. In opinions published August 27, Chief Judge Timothy C. Stanceu rejected Commerce’s reasoning for including the thresholds, declaring that it rests on misinterpretations of language, giving Commerce 90 days to submit redeterminations.

While a single component in each of the involved thresholds is fabricated from an aluminum extrusion, Judge Stanceu said the inclusion of “door thresholds” in the scope language is confined to door thresholds that are in and of themselves aluminum extrusions.

U.S. Reverses Course on Aluminum Tariffs

Just weeks after reinstating a 10% tariff on aluminum imported from Canada, the U.S. backed off of those measures, declaring that trade in non-alloyed, unwrought aluminum is likely to normalize in the final months of the year. After citing a substantial increase in imports over the period from June 2019 through May 2020, the tariff took effect August 16. In a statement
issued September 15, however, the Office of the U.S. Trade Representative (USTR) said average monthly imports are expected to decline 50% from the monthly average experienced earlier in the year. In a sharp reversal, the U.S. resumed duty-free treatment retroactive to September 1, 2020.

Kudos

Window World Participates in 9/11 Tribute Honoring Veterans

As the nation reflected on the 2,977 lives lost 19 years ago on 9/11, Window World franchises joined the nonprofit organization Team Red, White and Blue (Team RWB), journeying 8,426 miles in remembrance. Headquartered in North Wilkesboro, N.C., the replacement window and exterior remodeling company helped to present “9/11 Moving Tribute,” joining donors and participants in moving American flags to honor veterans who served after 9/11. More than 25 Window World franchise locations participated.

The anniversary of September 11 marks an important moment for veterans, said Bana Miller, director of marketing for Team RWB, as many deployed or enlisted in response to the attacks. The event’s 8,426 miles represent the 2,977 lives lost in attacks on the World Trade Center, the Pentagon and United Airlines flight 93, plus 5,500 service members who were killed in action in the wars that followed.

PGT Innovations Receives Workforce Innovation Award

PGT Innovations received a Workforce Innovation Award from The Greater Sarasota Chamber of Commerce in Florida, during its annual Frank G. Berlin Sr. Foundation Small Business Awards.

Held on August 28, the virtual event recognized 21 finalists across seven categories for their meaningful impact in the community.

In receiving the award, PGT Innovations was recognized for its commitment to creating career opportunities in the region and strengthening its industry talent pipeline through programs and initiatives. The company’s leadership was also commended for acknowledging the importance of upskilling workers, creating access points to career pathways, and recruiting through education and outreach.

Legal

Masonite and Jeld-Wen Reach Settlement Agreements

A U.S. District Court granted preliminary approval in October for proposed agreements to settle class-action lawsuits against door manufacturers Jeld-Wen Inc. and Masonite Corp. In fi lings with the U.S. Securities and Exchange Commission, both door manufacturers announced that on August 31, 2020, they reached agreements with Grubb Lumber Company and Philadelphia Reserve Supply Company and a class of direct purchasers of interior molded doors, agreeing to pay $28 million each to the plaintiffs and the settlement class. The suit was fi led in 2018 alleging that, together, Jeld-Wen and Masonite conspired to fix prices by holding approximately 85% of the market for certain interior doors.

According to the terms of the settlement, Jeld-Wen and Masonite report they are to receive a full release of claims through the date of preliminary court approval. In a separate settlement agreement made September 4, both companies report they agreed to pay $9.75 million each to the named plaintiffs of a separate, pending consolidated antitrust class action, the filing says, also for a full release of claims through the date of the settlement agreement.

The court ordered that the proposed notice and plan be submitted by October 29, 2020, with a Final Fairness hearing scheduled for March 16, 2021.

Company Declared Liable for False Made in America Claims

A judge for the U.S. District Court of New Jersey ruled that Albion Engineering is liable for false advertising and unfair competition due to wrongly labeling its manual caulk dispensing guns as made in America. The claim was brought forth by Albion’s competitor, Newborn Bros. Co. Inc., under the Lanham Act in May 2012.

According to the Judge’s opinion, Newborn’s founder, Peter Chang, began producing caulking guns in his factory in Korea in the early 1970s before creating Newborn to distribute those guns in the U.S.

U.S. District Judge Noel Hillman’s opinion says Albion manufactured all of its guns and accessories at its plant in Philadelphia from 1929 until 2000 when the company began importing “low-cost overseas manufacturing alternatives.”

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