More Insights on 2012

 

Todd Metz

 

Timeline Vinyl Products/Lincoln Windows

 

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?

The “new reality” is what we used for our summer sales meeting as the theme. This probably is the new reality for a while. The way people are doing business now, it’s going to stay the same. Consumers are wary. I don’t see a decline, which is good, but flat or slight increase is what we’ll see for 2012.

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

I see the challenges more along the lines of a continued downward price pressure, all the way through the supply channel. There’s a lot of supply channel stress. Companies are being pressured by codes and consumerism—consumers are finding info online. There’s a lot of pressure to provide better products and companies are afforded less margins at that point.

We’re fortunate that we’re in a sound financial position. The cash-strapped companies are going to create a gridlock. They’re expected to spend money but on the back-end they’re not going to be able to recover that in the field in terms of margin. Even if sales tick upward, every job they get might actually be for less margin. Their stress reliever—making more money—isn’t going to be there. You can maybe sell more product, but the margin’s not there.

What is likely to drive business in the remodeling/replacement segment?

We’ve put a lot of work into a remodeling program. We’ve created a series of products with a remodeling name, and we’ve gone to a point-of-sale model that includes the end user a little more.

That “stayed put” customer is identified in two ways—they have either remodeled, or they’re going to. There’s a lot of pent-up demand [in remodeling].

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?

With energy efficiency, it’s the flavor of the day. It depends on what orientation the project has. If it’s driven by an architect, energy efficiency seems to be paramount. But if you run into a historical requirement, energy efficiency might have to give. From our perspective, we are putting our finger on the pulse of the patient before we operate.

We pride ourselves on slow, measured, profitable growth. That’s how our company goes to market as an independent manufacturer. We sell to independent dealers. We don’t do Menards, or national retail chains. We have very few leveraged relationships. So we individually tailor ourselves to a one-owner business. That’s our best sales strategy.

When the building boom was on, that was the exact sales channel that was exited by most companies. They went after the big box. We maintained our relationships. And that’s why we’re happy to still be there. That being said, they’re the ones with the pressure on them. They’re being hammered with the margins.

On a (hopefully) positive note, do you see any particular product segments or geographic regions outperforming the industry as a whole?

I see the East, West and the middle. The Southeast is most desirable place to retire—from Florida to Carolinas. All of the people are on the East Coast, so with the population, that area has to grow. With the Northeast, they do a lot of city infill because it’s the most mature part of the country. On West Coast, they were the most hurt by the downturn, so they also have most room to come back. We haven’t seen that move yet, but that’s the one I’m looking forward to.

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?

It seems that the banking institutions reluctant to loan. I’m theorizing that the reason they don’t—but if I were in banking, I would caution my team to avoid tying up a lot of capital in 30 year mortgages with a historic-low interest rate.

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

I think our hyper sensitive customer right now—they get to us because we are a value-minded company. We have an average, or slightly above average energy efficiency and a value price.

We don’t have a huge hole in our program—we deliver on time, we offer a fair warranty, we offer adequate products, we’re priced right, we have excellent quote software, we service before and after the sale. I can take any of our competitors and find that hole. We don’t have that. Our customer finds us because we’re a super valued product. We make a great product at a good value.

They still expect the quality. Of course we’re going to give you a quality product. And of course we’re going to give you a warranty. You have to really trust the person you’re buying from. People buy from people.

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

We will not substantially increase but I think it’s going to be a status quo on employees. We’ve got our manufacturing team pared to what our output is right now.

This company has been very, very smart with its money. We only sign on customers that will pay us. We give our dealers a lot of latitude in the market to grow. And, product development—we’ve never stopped that.

We continue to support our industry by going to shows. That’s important. We want to be a model of consistency for people who see us.

 

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