More Insights on 2012

 

Keith Kometer

 

Masonite International

 

As Window & Door prepared its annual forecast issue, industry executives shared their thoughts and predictions for the coming year in much more depth than could be gathered together in one article. In "More Insights on 2012," we present their detailed answers to questions about the coming year.

 

First, let’s start with the most general question for a forecast piece. What do you expect 2012? Will 2012 finally be “the year” we start seeing some turnaround, or is recovery further off than that?

We’re anticipating very little improvement 2012 from a macro standpoint.  There may be some pockets of improvement; however, the financial drivers of the housing industry are still providing some serious head winds.  Mortgage availability, stagnant or declining home values, and significant equity shortfalls have left home owners with little reason, incentive, or ability to make significant changes in housing.  

What do you expect the biggest challenges for the industry will be in 2012?

As we have seen in 2011, we anticipate seeing the continuation of a commoditized market with price being a driving factor. We also see inflation being a major concern for many manufactures during the year, especially on many of the commodities utilized to build doors. Global economies will also continue to have a significant impact on business growth, especially the instability in European markets. We also expect to be challenged with growth if RRR (remodeling/replacement/retrofit) forecasts are correct, relating to a potential drop in business at the major Home Improvement retailers.

Let’s break it down a bit…What does new construction look like in 2012?

We see little improvement in the new construction market in 2012.  We anticipate another anemic year of residential building activity.  Our estimation is that we do not see a significant increase in housing starts in 2012 over 2011.

What about remodeling/replacement work? What is likely to drive business in this segment?

2011 will be another very challenging year in the RRR market.  The same financial forces negatively impacting new construction expansion will also hamper growth in the RRR market as well.  Further supporting the lower RRR spending expectations in 2012, the most recent Leading Indicator of Remodeling Activity from The Joint Center for Housing Studies at Harvard points to a level spending in Q1 of 2012 not seen since Q1 of 2004.

What’s going to be happening with energy efficiency in the coming year? Is the industry focus on ramped-up Energy Star requirements? Are retail channels gaining traction with “whole home performance” efforts? Is the industry chasing triple panes and other means of better energy performance numbers?

We don’t see any changes taking effect in 2012 on energy efficiency.  However, there will be discussions on criteria changes for Energy Star in both the U.S. and Canada that could have a large impact in 2013/2014.  Not only are the U-factors changing, but additional requirements for things like air infiltration.  Similar things are being discussed in Canada.  Certainly over the last couple of years there has been an increased usage of low-E and low-E Argon glass, mostly driven by tax credit initiatives, we anticipate that the growth of energy saving requirements will continue but the consumer push will not be there as it has been in years prior.

On a (hopefully) positive note, do you see any particular product segments or geographic regions outperforming the industry as a whole?
We anticipate seeing continued growth in our prefinished product segment. More so than ever we are seeing that consumers are purchasing steel and fiberglass special order doors that have been painted or stained by the manufacturer, as the industry perception changes, we anticipate seeing this trend growing. From an entry door standpoint, we are seeing consumers looking for opaque door designs or glass designs on the more obscure end of the spectrum adding to overall security concerns. Additionally, we are continuing to see a push towards more simplistic decorative glass designs and a move away from the more traditional cluster designs, although there are still geographic markets where this look is prevalent.

How much of an impact does lending (or lack thereof) have on the business? The National Association of Home Builders is making financing-related discussions one of its top priorities this year—are they on the mark?

The current stagnation of the lending market has applied an artificial yet potentially long-term drag on the entire housing industry.  Fundamental changes in the structure of lending institutions and processes are a must in order to reinstate growth within the housing industry.   
It’s understandable and appropriate that NAHB has flagged lending as a top priority issue facing the housing industry at this point in time.

For those who are buying, what window and door products are they selecting? What features are important?

Consumers tend to be looking for a product that requires little effort on their part in terms of finishing, maintenance and installation at a reasonable price. We are seeing a pick-up in sales of prefinished doors and doors being furnished with hardware included; in addition we are seeing traction in maintenance free features such as vinyl jambs. Energy efficient products seem to drive sales when the consumer understands the relationship of the potential savings with the price of the overall product.

Products that replicate the look of super-premium, traditional products are also picking up.  Even in high-end homes, consumers are looking for innovation to provide value.  We have seen a pick-up in our Avantguard doors, reflecting the need in the market for a high-end fenestration product that replicates the look of a real wood door with an extended life of the product finish.  Our new Cyma and Bolection router-carved mdf interior doors capitalize on this trend as well.

Is your company likely to be hiring, laying off, or maintaining the status quo in 2012?

Masonite has utilized a strong lean sigma culture to be very efficient with our resources during this significant housing downturn.  It is our priority to continue to deliver the same high level of quality product at industry leading service levels regardless of demand level.  At the same time we have invested strategically in new technology to bring this service and quality to new levels.  This includes an investment in a new, next generation, automated interior door production line in South Carolina that will raise both production and staffing levels at that facility.  This is a single example of how Masonite continues to drive to be the best suppliers of doors in the industry.

 

Window & Door's "More Insights on 2012" also features questions and answers about the coming year from the following people: