Equipment Demand Down But Not Out

The decrease in window and door sales means new investment priorities among manufacturers
John G. Swanson
June 15, 2007
FEATURE ARTICLE | Operations

Strong demand for windows and doors spurred significant investment in new machinery and production systems by manufacturers looking to expand capacity over the past several years. “With the downturn in the window and door industry, the equipment market has followed suit,” reports Stürtz Machinery’s Mike Biffl.

Like most suppliers, however, he says spending has not come to a halt. With competition heating up further, manufacturers are taking steps to cut costs and develop new products—translating into a continued need to invest in their plants.

Window manufacturers continue to invest in new vinyl machinery, as well as re-tool and upgrade existing vinyl lines.Noting just how strong demand for equipment has been, Abe Diehl, director of marketing for Joseph Machine Co., suggests current activity levels are still healthy. “I certainly don’t see it as any sort of recession. The industry is simply returning to more traditional patterns.” 

“We are certainly off the frantic pace of the last couple of years,” says Dave Pirwitz of Urban Machinery. Similarly, he sees machinery sales returning to “normal” levels. “There is still a decent mix of all project types,” he continues. “While we are working on many retooling jobs and machine upgrades, there is still also a surprising number of expansion projects and even new start-ups.”

Others suggest, however, a bigger change has taken place in the attitude of many window and door manufacturers. “This is the first time in about 10 years we’ve seen a real downturn in window sales,” says Ron Auletta, president of GED Integrated Solutions. “There are guys out there who have never experienced this before, so they’re a little scared.” Some manufacturers, he adds, have gone into “survival mode.” “Our customers are waiting to see what’s happening, so they are not placing orders in anticipation of a coming need,” notes Biffl, who is national sales manager for Stürtz. “They are ordering equipment after the need is there.” The change for equipment suppliers, he says, is the increasing importance of being able to deliver the right machines in “an aggressive time frame.”

STILL SPENDING
These suppliers all agree that window and door manufacturers continue to spend money on new machines and production systems. “We’ve definitely seen an impact on capital spending,” Auletta states, “but it doesn’t mean manufacturers aren’t looking for ways to improve their operations.” “Activity levels aren’t what they were,” says Kevin Zuege, director of technical services for Truseal Technologies, “but there are lots of people still looking.”

Suppliers point to various segments of the market where window and door manufacturers are “still looking.” “Small and medium-sized replacement window manufacturers, particularly those with a strong niche in market—they’re still doing okay,” says Auletta. Some, he adds, now see real opportunities to grab market share and are looking to enhance their production. Zuege agrees, noting that while manufacturers focused on new construction are definitely struggling, those with a more diverse product line are “looking at ways to strengthen their position.”

In the replacement market, many companies have older insulating glass lines, notes Larry Johnson, executive vice president of Edgetech I.G. Most expect this segment to come back soon and they now have the time and resources to focus on that area of the plant, he continues. “They are exploring new niches too. Somebody focusing on the high-end, for example, may be looking now at something more entry level.” Those kinds of changes translate into interest in new IG systems, and new IG lines, in many cases.
GED officials report that manufacturers are looking for an “aggressive return on investment” in the form of lower manufacturing costs, which continues to spur demand for its IG equipment.
Urban’s Pirwitz points to remodeling-oriented manufacturers, but also notes that customers in the impact and DP-50 markets in the mid-Atlantic and Southeast, as well as markets where vinyl continues to take share from aluminum in the Southwest and Mountain states, as sources of strong demand for cutting, welding and corner cleaning equipment. Customers developing vinyl products for commercial market applications are also active in the equipment market these days, he notes.

Diehl points to strong demand from outside the vinyl realm. In fiberglass, he states, there are more players than there were five years ago, “and those companies that have been at it for awhile are growing rapidly.” With some complex fabrication requirements, fiberglass isn’t proliferating to as many other manufacturers as vinyl, but there’s a lot of growth potential in the market for the companies that have taken it on and “they’re investing in equipment to do that,” he says. With the commercial market strong, Diehl sees activity among manufacturers of aluminum windows and other high-end products as well.

Nearly every supplier points to Western Canada, in particular, as a market continuing to hold strong. “Western Canada is probably the most active arena at the moment,” says Biffl, citing the numerous manufacturers in the area adding new automated lines to expand capacity. “It’s the oil economy in Alberta,” explains GED’s Auletta. “Builders there still can’t keep up with demand.”      

CHANGING NEEDS
As the new construction market grew steadily the past five years, the need for more capacity was a big driver in the window and door equipment market. That need hasn’t gone away completely, but suppliers point to other priorities now when manufacturers look at new machines and systems.

“I think the biggest area of concern right now for our customers is making sure they are offering the necessary mix of products to gain market share while things are slow,” says Biffl. “We have seen a large increase in retrofit and new tooling orders to support adding products to existing machines and systems. Our customers are trying to offer additional products with a minimal investment.”

Product line diversification and upgrades remain big demand drivers for new equipment purchases, says Johnson. “The way the market is now, most manufacturers are looking to gain market share. That’s the only way to grow.” For many window manufacturers, the desire to add something new or different to their product line in turn creates new needs for their production line, he says. “Some manufacturers will tell you, ‘there’s not going to be any money spent on equipment now,’” he continues, “but some are willing to make the investment. They realize they need to upgrade. They need to automate and position themselves for when the market rebounds.”

The down window market definitely spurs manufacturers to look at alternatives, reports Bob Hornung, president of Sashlite Inc., which is marketing the relatively new integrated sash technology. “I’ve gotten more calls in the past three months than during the first three years we were out there,” he says. When the market was strong, manufacturers saw less need to change, but now they are really looking for ways to differentiate themselves, he continues. “The tougher it gets, the better of we are, quite frankly,” he states.

Auletta sees some interest in product diversification, but also caution. “There’s a lot of cost sensitivity out there. Customers are not willing to pay for a lot of upsells,” he says. Manufacturers, as a result, have “to differentiate where it makes sense.”

He points more interest in solutions that enable product cost to be less and still offer equivalent or better performance or some other benefit.

Competitive demands also remains a major driver of equipment purchases, according to most suppliers. Most manufacturers realize they can’t afford not to continue looking at new machinery, says Diehl. “Competition remains heavy and it’s not just domestic. The concerns about foreign competition are real, and that all pushes automation.”

“In a downturn, manufacturers are looking to protect their profitability,” says Truseal’s Zuege. While the window market may be down, he notes, the economy continues to perform well overall, which means the labor market remains tight. “The cost and hassle to find the semi-skilled labor means people continue to look to automation.”

Labor is one important element, but “manufacturers are taking a more holistic view of their production,” says Auletta. When it comes to efficiency, most manufacturers have grabbed “the low-hanging fruit” in the plant, he suggests. Now, they are examining all their processes. That means more emphasis on better material and product flow, reducing changeover times and work-in-process. “They are looking at all the ways to increase the velocity of their production and reduce labor and waste.” 

That “holistic” view has translated into strong demand for GED’s i-3 technologies, including both the equipment and software, he reports. Pointing specifically to the success of a module for IG remakes his company is offering, Auletta notes that manufacturers are gaining a clear understanding of the impact all their various processes have on the bottom line.
The down market emphasizes the need for a clearly differentiated product, which is bolstering interest in production equipment for windows incorporating integrated sash technology, according to Sashlite executives.
Pirwitz also sees manufacturers taking a broader view—a trend that began long before the recent downturn in the window market. “Many of our customers are on lean journeys these days,” he reports. “They are focusing on production systems that minimize or eliminate waste of all types. For equipment that means minimizing down time, material scrap, material handling, and product changeover time and maximizing overall equipment efficiencies, quality output and process visibility.”

At one point, the window and door industry may have lagged behind other manufacturing industries when it came to such process issues, but that’s changed, adds Diehl. “We see more manufacturing engineers coming from automotive.” He, too, points out that this trend dates back well before the downturn in the market, adding that “the more sophisticated approach is becoming the norm.”

When it comes to manufacturing systems and software, Ron Crowl, president of FeneTech Inc., suggests that window and door manufacturers have become sophisticated. “Most guys have a pretty good handle on the plant these days,” he reports. In the software realm, he sees companies looking beyond the production floor to increase efficiency of shipping and logistics operations.

EQUIPMENT TRENDS
Suppliers point to a wide variety of trends regarding the specific types of equipment in demand. “Return on investment has always been a primary factor in equipment decisions, but it is especially so in slower markets,” notes Pirwitz. As a result, his company is seeing a lot of activity for what could be considered “no-brainer” equipment. He points to CNC cleaners as an example, because they offer the greatest potential labor cost reduction and other benefits over the manual alternatives. “Many of the smaller to mid-size companies that hadn’t already made these investments are finding that they need to in order to be competitive,” he adds.

“We have seen a lot of interest in fabrication saws this year,” says Biffl. By combining more operations into one machine, manufacturers hope “to limit their exposure to labor pressures as unemployment drops to levels where basically everyone who wants to work already has a job.”

Pointing to another customer concern, Biffl notes that one of his company’s most recent introductions is a sash welding and cleaning line, designed to offer high output with a footprint less than 1,200 square feet. “In keeping with our customers’ desires, we have made this line very compact.

Labor and real estate are still both hard to find and expensive in many markets, Pirwitz reports. “Efficiency per operator-hour and square foot continue to drive high-output equipment purchases.”

In the insulating glass equipment arena, Zuege, like Johnson, notes that a lot of equipment currently used by manufacturers is getting old. As companies start to replace those lines, some will “re-up” as far as the edge seal and spacer system, “but others are deciding it’s time to look more broadly at what they’re doing” and that means some may look to alternative spacer products before investing in new equipment. One trend he sees is growing interest in equipment that can accommodate different IG platforms.

Despite the slow window market, Johnson reports that demand remains strong for automated IG lines, as manufacturers look to take labor out and deliver consistent quality. Zuege also sees a shift to more automation, noting that companies are looking for even higher throughput now, particularly in the area of grids.

One area of the plant where both manufacturers and suppliers continue to see potential is in final assembly. “Our customers are requesting that we focus downstream,” says Diehl. Equipment for a variety of functions has been available in the door market for some time, but the variations in sizes and styles of windows makes it a bigger challenge to address with standardized equipment, he notes.

“We are still very active in developing fabrication and assembly technologies related to all of our machine types,” reports Pirwitz, “but one of the biggest opportunities we continue to preach about is the design of automation-friendly profiles and hardware.” That requires involvement of the equipment supplier early in the product design process “so that manufacturability is an integral factor and not an afterthought,” he notes.

Many supplier efforts in the assembly equipment arena have been limited to custom systems designed to handle very specific applications. Pirwitz says one of his company’s challenges now is “how to make our high-end technologies accessible to a larger cross-section of the market.” 

Diehl thinks the assembly area of many window plants will see significant changes coming at a quick pace. “It was a big jump for some companies to go from chop saws to pusher saws. It was less of a hurdle to go from single-point welders to two-points to four-points,” he says. “When it comes to assembly, I think we’ll see a lot of companies forego the intermediate steps and go straight to highly automated, sophisticated machines.”
Urban Machinery points to steady demand for CNC cleaners, noting the companies that have yet to invest in them are seeing the need for them to stay competitive.
Looking at the market now, GED’s Auletta notes there’s less spending on machinery like vinyl welders, typically geared for expansion. Market conditions are also dictating “a pretty aggressive return on investment.”

On the other hand, some companies see the current slowdown in the market as a “long-term opportunity” to plan for future expansion, Auletta continues. When demand was strong and factory was running at full-tilt, a company “couldn’t replace XYZ because it would create too much of a disruption.”

“People are looking at us now,” says Sashlite’s Hornung. “A lot of them didn’t have the time to do it before.” 

“The companies that try to stay on the leading edge in their markets are the ones who continue to invest,” concludes Biffl. “The past few years have made all of us, equipment suppliers included, a little complacent. Right now, we are all getting a bit of a reality check as the market goes through a downward cycle. Everyone knew it would come eventually but none of us wanted it. Now that we are in the midst of it, window and door fabricators are looking for ways to be as attractive a supplier as possible. Whether it be new product offerings, improved service, better production methods or price incentives, our customers are focusing on ways of keeping existing customers and attracting new ones."