Instead of Acquisitions, This Manufacturer Continues to Emphasize New Products and Improved Manufacturing Processes
Lee Schield, founder of Weather Shield Mfg., Inc., is an industry legend. He has built the company, started over 35 years ago, into one of the country's largest, most respected window manufacturers. He is also known for following his own path, a quality that was evident when Weather Shield became one of the first wood window manufacturers to embrace vinyl. That same characteristic can be seen in Weather Shield's current activities. While many large companies are now focusing on acquisitions, Weather Shield has opted instead to make its investments in plant expansions and automation. Window and Door Editor John Swanson sat down with Schield to get his insights into the market today and look at where it's going in the future.
Window & Door: I understand you started out in the storm window business?
Lee Schield: Yes I basically started in Detroit. When I got out of business school, I did canvass retail. On one side of the street and then the other side of the street, I knocked on doors, and sold aluminum storm windows and doors… And then when I made enough money, $2,400, I came back to Medford and started up here.
W&D: Did you start as a wood window manufacturer?
LS: No, I started doing aluminum storm windows and doors here. I sold them to all the wood window people back here, and then when they started making their own storm windows, I started making wood windows.
W&D: So Weather Shield has been manufacturing wood windows how long?
LS: About 35 years.
W&D: While people in the industry have a lot of respect for you, you have a reputation as being somewhat of a rogue or, at least, being someone who follows your own path. What is your reaction to that?
LS: I was always the one who didn't want to follow the crowd. I've always had the philosophy, "I want to do something different. I want to make it different. I want to make it better." And I want a product that's out there that satisfies the consumer, whatever house he wants, whether he's in the middle end, the upper end, or the lower end. He should get the highest quality product for what he's paying out… A lot of people used to call me "the Krueschev of the window business" when I started. But I had no network of dealers or distributors, so I went to the builders to get started. So they called me the "Krueschev of the window business" and "unethical." But once I got to (a certain) point, I changed my distribution.
Schield recalls being called "the Khrushchev of the window business"
when he started out with Weather Shield.
W&D: What makes Weather Shield different from other companies now?
LS: I think what makes us different is that we have an aggressive program for automation. We have high quality standards, giving the (most) in window value, and we deliver basically on time nationwide. We make any type window, any design you could want including all wood species and hardwoods, cherry, maple, hemlock… We give the consumer that much more. And we stayed on that upper end of the wood window line. In fact we've come out with a new window, the Legacy line. It's one notch above any window in the country. It sells for about 10 percent more. It can be used in any part of the country, including Dade County. We're changing the glass too. It has the best low-E coating now available in the country. It has real gold, instead of silver, in the coating. So we're going to call it ThermoGold. We're sticking to the high end of the wood market. We've held the quality up and the same is true in our vinyl windows. We don't sell the cheapest vinyl window. We give a good window.
W&D: Weather Shield was one of the first wood window manufacturers to break ranks and get into vinyl. What made you decide to begin manufacturing vinyl windows?
LS: Well, we could see a trend and I could see a trend and I made the decision to produce a good quality vinyl window to satisfy our own distribution, because we figured there were enough builders who wanted a good vinyl window. When I got into it, everyone said I was going in the wrong direction, but we took an aggressive line on it. We had been extruding for about 25 years prior to that, our jambliners and our weatherstrip, so it was just a matter of buying a dozen twin-screw extruders and designing a vinyl window, single-hung, double-hung, casement, patio doors.
We didn't know the complete outcome, but we knew it would take some of our business and it would probably take some other people's wood window business. But it was going to be evident anyhow in the market someday... It was a good move and today, we're making about 3,500 vinyl windows a day. It's been a growing business for us and we've been adding extruders every year-one or two-and we expect it to keep growing. Although our wood windows business has been growing every year, the vinyl one has added another $70 million.
And it really enhanced our wood window business, because now, certain (customers) that wanted to buy our vinyl windows took on our wood windows and our wood window people took on our vinyl, because they're all in the business to sell windows, whether it's vinyl or wood. It really was a good move.
W&D: In your years in the vinyl window business, is there anything that has surprised you or happened differently than you expected?
LS: It (grew) much faster than we expected…And the patio door business, that really surprised me. We're probably making 45,000 to 50,000 sliding patio doors this year. So that's been a good business. The one thing I think also is that the vinyl window business has given us the opportunity to enlarge our purchases of vinyl, which brought our cost of jambliners down. And it also allowed us to purchase glass and certain things, because our volumes jumped dramatically. So we have a little more volume power that way.
W&D: With the growth of vinyl, how has the wood window business changed in recent years?
LS: Well I think the biggest change we've seen…I guess we had about 8 percent growth last year in wood windows because we're in middle- to upper-end wood windows. Those houses nationwide continue to maintain their share of the market place and we're growing in that end of it. So I think the future for wood windows is still going to be great. No one has come out with a plastic or any kind of film that represents 100 percent what you can do with wood and what the consumer is looking for. Along with energy and substantial frames, I think wood is here to stay. The vinyl people have really taken the aluminum people and really taken that end (of the market) and shop wood windows have really suffered in the Southeast. And I should say we've lost a small share of the bigger builders that went from wood to vinyl.
W&D: One trend we've seen is that wood window manufacturers appear to be focusing more and more on upscale products and vinyl people are focusing on producing the lowest cost window. Is there still a market for mid-range products?
LS: I think there's room in the middle and our ProShield is the window that we think the consumer is going to buy in the middle end house. The reason is that it's priced right, not that much more than a good vinyl window, and we are placing it into a pre-finished market on the inside. Then we're going to add next to our ProShield cellular foam to the inside and vinyl extrusions to the outside, which will take all the ultraviolet and everything. So, it will have the look of wood, but it will be 100 percent maintenance-free. It will never rot out. And it will be priced definitely for the consumer in the middle market.
So, that's another change. The composites coming into the market. We want to head that up first. Instead of a completely exposed (cellular PVC) window, like some (manufacturers) have gone to, where they don't have the history of whether it will stand up or not…we didn't want to take that approach. So we're taking a PVC extruded product on the outside of the product and cellular foam to the inside. It's two completely different extrusions.
So we think there's always that market for that wood look and those that want wood with ProShield in middle end houses. I still say (the) most expensive window we make has got a market with the (mid-range) consumer who wants to spend money on a good window. There is market place there. We don't think all the upper-end houses are going to take our top window, but there are going to be some people who will put them in a $125,000 or a $200,000 home.
W&D: In general, do you see homeowners continuing to spend more on windows? Are window packages on homes still getting bigger?
LS: I think they're getting bigger. In the Southern states, there are a lot of big direct-set windows and I think you're going to see the greys and bronzes and those types of dark atmosphere houses going to low-E coatings. It's a big direction in the Phoenix area and different parts of the country. We're out to prove to the architects and the builders in that area that that's the way to go. We've done a job and our business in Phoenix has really grown because of that. Our light transmission is about 70, 72 percent instead of 40 and the consumers are recognizing that they also have the UV protection and everything with our low-E coatings.
"We've decided not to make acquisitions where there's big blue
sky," notes Lee Schield, commenting on the current industry
trend of consolidation.
W&D: You already mentioned cellular PVC, are there other new materials you are looking at?
LS: We use some pultrusions for sills and some places where we don't want to have condensation. We match a lot of pultrusions with aluminum for sliding patio door sills… I think pultrusions, as far as window components, they're expensive. They're hard to work with. They have outgassing where you can have one window that's fine or you can have many and then you can have a batch that will outgas and then the paint will come off them. They'll probably improve on that as time goes by. But construction is expensive on pultrusion…It's hard to be competitive. And I think that's the problem.
What we are doing right now is building a new factory here in Medford and we're adding two floors and putting a big addition on the front. We're going to a complete new phase in sliding doors and we're going to build a new entrance system door with oak or cherry and a new process. It's a complete change in our swinging door programs. We're going to build a complete robotic plant to fabricate and assemble the doors, put all the hardware on automatically, and come out with some unique features that no one else has on entrance doors and French doors.
Those drawings are mostly done. The protoypes are made and the factory is being built. This is a new adventure in high production swinging, sliding, and entrance doors. Our biggest competitors, which are Marvin, Andersen, and Pella, don't have an entrance door program to enhance their line (outside of a steel door). And we think it will be a good business for us. Actually, we are going to the job with the dealer now with the rest, so we might as well take the entrance door. A lot of the other entrance doors are sold by the Home Depots and the Menards. The steel doors are selling cheap, in the lower end, but the upper end houses, we're going to try that. That will give us a niche in the market.
W&D: Weather Shield is known as a fairly aggressive company, yet it has been relatively quiet on the acquisition front. Are you looking at buying other manufacturers to grow?
LS: We've done it all internally. We've taken a different philiosophy. We want to keep our hands-on manufacturing. We want to do it basically in two locations-Ladysmith and Medford. Two years ago, we added 350,000 (square feet) put on to the Ladysmith plant. We're building about 200,000 (square feet) on the millwork plant… We've looked at acquisitions, especially in the vinyl end of it. We looked at about 12 places. None of them were making money. They were either breaking even or not making any money and the blue sky they wanted was more than we wanted to pay. We looked at guys like Norco and Caradco. The prices they went for, we decided to spend that amount of money internally to highly automate our plants and bring the technology we need here. So we're keeping Weather Shield positioned for when cash will be king when the market falls and we'll take a look at it when the other guys are retrenching. Our cash will be king and that's the way we want to keep it. With our growth-we've had 38 percent growth this year in the first four months-we don't have to go out looking for outside acquisitions to keep us strong. That's where we're at in the market.
W&D: If not through acquisition, do you foresee Weather Shield expanding with more plants someday?
LS: We think we need one in the East. Not for wood windows, but we need one for vinyl windows, because it's more of a commodity-type product that has to be there tomorrow. Right now, we're delivering in about two weeks and we know that if we were in the East and we could deliver windows in two or three days we would just pick up more market share (along with our advertising).
So that's our intent-some day to have a plant. And we're working on all of the designs of the windows, the automation, the state-of-the-art window; something different that nobody else has. We're just about ready to go on it. We're waiting for the right chance. You know, you come in and find a lot of these guys who have been in the vinyl window business for six to 10 years, their equipment is all worn out, their products aren't, we don't think, up to where they should be. So we've decided not to make acquisitions where there's big blue sky.
I think it's a lot better to start a plant from scratch and put in the best automated equipment now and run it right here. We run our Ladysmith plant right out of this (Medford) office, right off our IBM equipment. It runs all the cutting and the fabricating and the welders all move. Everything is done and it's all paperless. We have screens. The guy doesn't have to measure, he just has to push a button and he's got it. He doesn't have to go running around the plant. So that's what we want to do out East-have a state of the art program.
We have bought state-of-the-art. We have 32 extruders now and extrude about 30 million pounds of PVC a year. We have high-tech German equipment, we fabricate our patio doors right off our extruders. So we know on that end of it we're ready. It's just getting the fabrication equipment and then combining that equipment with a state-of-the-art design and getting our productivity. We like to get more windows per man hour. We're at about two and a half right now.
W&D: More and more manufacturers appear to be placing greater emphasis on getting costs down and reducing labor. Is achieving certain productivity levels and bringing new levels of automation receiving greater emphasis at Weather Shield?
LS: It's something we've always done all these years, but it's become more of a goal of this company to produce windows of high quality with a lot less direct labor than any of our competitors. Like our new lines that we're starting up, the windows we are putting off them now, they are more consistent. The quality is higher because they are all done by machines. We think that will enhance quality even more. You know, you have people come in and one day they'll do a great job and the next day, they're not feeling right, and the quality can be variable. So we think robotic capabilities here and the software we use for order processing is the wave of the future and you can't do that if you're acquisitioning all over the place. It's hard to really get the right management with any type business, hold it down, and make it profitable. You can't do all these things.
W&D: What types of new manufacturing technologies do you find interesting?
LS: I think the biggest challenge I've had and the biggest expense was to acquire a robotic double-hung manufacturing line to produce 1,000 windows in eight hours with eight people and have them packaged and ready for a semi. And have them metal-clad and have them in oak or cherry or pine or true divided lites or simulated divided lites all coming off that line every 23 seconds. We're just getting to the point of launching that program. That's an exciting program because it's going to put us into a quality window that nobody else has and it's going to be made faster than any type of product in the country. And to me that's pretty exciting to keep our direct labor down. So, I think it's a whole new wave. Instead of producing 1,000 windows of one size and putting them in a big warehouse and hoping that you can convince the consumer that's what he wants, instead producing every window to order like we do today, whether it's oak or cherry or true divided lite; windows just keep coming off and go right to the semi. It's something we always wanted to do.
W&D: What do you see as the biggest challenges facing the industry?
LS: I think the biggest challenge the whole industry has is, if the vinyl window people cheapen up their vinyl windows like the aluminum people have, the consumer is going to have to pay. Because there will be a lot of (vinyl window companies), with all the acquisitions, going out of business. So the consumer is the one that will suffer, because he won't get parts or pieces. He'll have to replace the windows.
I think because of the big acquisitions around in the window industry, like never before, there are going to be people who don't know what they're doing in the industry. There's going to be massive failures of certain products that are going to be out there. Not that these companies are trying to produce a bad product, but they don't understand the industry. I'd say that the biggest window companies, the Andersens, the Pellas, the Weather Shields, and the Marvins of the industry and those people are probably the ones who will still succeed in the end. They still build a high quality product.
The one thing I don't like is how conglomerates can come in and make a profit in one end of a different market field and come into the window field and compete with people who are just in the window field. And they can try to get market share by losing money and keeping their prices down to get into it. All of a sudden, they're not there any more because they can't turn it around. So much of that is going on right now.
And I think what we're going to see, because of these blue sky acquisitions, is that when these guys have to depend on cash flow to meet their obligations, the only thing they can do to keep going if the market is declining is to cut their prices. It will really devastate certain markets, especially the low end-the middle to low end. It's inevitable. That day will come. You're not going to worry about the bigger companies that are well financed.
The opportunities for the wood window business are in new construction and the remodeling and replacement business is just in its infancy. If the world economy stays fairly healthy, you know the country is getting old and we have to replace more windows and someday energy is going to get more expensive. There's going to be people putting more resources into older houses. I think the market place is going to continually grow.
You can't put people in a prison or house without windows. You can't live that way. So I think they're going to buy windows and I think they're going to get better.