Manufacturers Beginning to Invest Again

Suppliers report demand for equipment and software is on the rise as the window and door market continues to improve
John G. Swanson
June 15, 2013
FEATURE ARTICLE | Management, Operations

Spurred by an increase in window and door sales, manufacturers are showing increased willingness to invest in production operations. Orders for new equipment and systems are up, and suppliers expect greater demand going forward.

“There is pent-up demand in nearly every area of the country and most every segment of the market,” says Morgan Donohue of Erdman Automation Corp., the Princeton, Minn., manufacturer of glazing, IG and assembly equipment for the window and door market. “We measure our business on orders, of course―and we are strong―but we forecast from inquiries, and we have not seen this level of interest in years. So, the signs are very encouraging.”

 
 Erdman sees pent-up demand for all types of its equipment, including its expanding variety of IG lines.

“We are seeing an increase in quote activity right now,” says Mike Biffl, national sales manager for Stürtz Machinery, the producer of vinyl window and door equipment with North American headquarters in Twinsburg, Ohio. “Customers are starting to look at tooling and equipment to increase new construction product capacity. It is not a strong trend yet, but seems to be going that way.”

“The window and door market is starting to show signs of life after a difficult four-plus years,” agrees Ron Crowl, president of Fenetech Inc., the supplier of manufacturing software for the fenestration industry, based in Aurora, Ohio. “Our leading indicator is website visits, and we currently see an uptick in that area.”

Crowl also reports that many of his company’s existing customers are investing more of their time exploring new software features and functionality options. “Many are upgrading to our latest version and training their staff so they can get the most out of what they already have,” he adds.

"We are seeing activity, but the spending is cautious. [It] is all tied to the high value that a software solution can bring to the manufacturer," reports Todd Oberg, senior manager, WTS Paradigm, Middleton, Wis. "We are seeing activity from existing customers interested in add-on modules to streamline their systems, and there is also interest from new clients looking to optimize their selling system."

Labor Issues
Biffl points to two main reasons companies are getting back into investment mode again: production capacity and automation.

“We are seeing some companies looking to expand their production capacity on key products that are [experiencing] strong current demand,” he states. “The other side seems to be those with a desire to replace older, manual equipment with more automation. The driving force in this second group appears to be [the desire to keep] the workforce numbers down after operations were streamlined during the market downturn. Organizations seem to be looking at capital investment as a more stable strategy than growing their workforce or adding shifts.”

 
 Saws and fabrication centers are a growth area for Stürtz as manufacturers look to build capacity without additional labor.

“The improving market and a dearth of qualified labor, along with a long period of below-average investment in the customers' product and companies, has led to a significant uptick in inquiries and purchases,” Erdman's Donohue says. “It is getting harder for people to find good help, and with the economy improving, that will only become more difficult.  New product introductions also seem to be a real focus, and capacity issues are not far behind.”

A Cautionary Approach
Despite increased interest, there is still a lot of caution among window and door manufacturers, suppliers suggest. The larger, more stable companies, and those who increased their market share during the downturn, seem to be the most active right now, Biffl notes. Smaller companies, and manufacturers focused solely on retrofit and replacement products, seem to be standing pat,  with no plans for expansion.

As a general rule, Crowl sees his company’s customers as proactive, forward-thinking companies. “These are the types of companies who have continued to find a way to gain market share during this recent downturn,” he says. On the other hand, Crowl says, “I've talked to many companies who know they need to make a change and want to make a change but who are very leery of a large investment in their business right now, as there remains a significant amount of excess capacity in the market still today.”

Biffl sees uncertainty with the Energy Star program impacting some manufacturer decisions. “We have some customers who have put projects on the shelf for now until the guidelines and implementation dates become more concrete,” he explains. “Some manufacturers plan to update their products when the new Energy Star program is implemented, so their equipment needs may change slightly. They want to avoid investing in machinery prior to knowing exactly what the equipment will be processing. In most cases, accommodations can be made for these future changes, but there is still some feeling in the market that things are too much up in the air to commit funds now.”

Among those window and door manufacturers beginning to make investments again, suppliers point to several areas of particular interest. In the software arena, Fenetech's Crowl sees continued strong interest in mobile technology for both quoting and selling tools, as well as delivery tools. “By using tools that allow for a real-time mobile workforce, companies are reducing their lead times,” he says.

"Manufacturers want to arm their sales team with tools to help them sell more," Oberg reports. "Modules to help present product, or that offer additional features or upselling capabilities, are something the market is hungry for."

WTS Paradigm is encouraging all manufacturers to advance a mobile strategy, Oberg notes as well, with market research indicating that mobile devices will exceed PCs in units sold in 2013. "The easier, and faster we can make quoting and selling for our manufacturers, the better off everyone is," he states. "It’s about streamlining cumbersome processes and making configuration of complex products fast and easy."

On the equipment side, “the main products we are seeing activity on are fabrication saws and corner cleaners,” reports Stürtz’s Biffl. “These are two areas where speed and accuracy can help beef up production operations without adding personnel.” A glut of used equipment still out there means more manufacturers are retooling old welders versus buying new, he also notes.

Erdman has only been involved in IG equipment for six or seven years, Donohue says, so that remains its biggest area of growth. “We have invented and brought to market lower cost automation for application, gas fill, sealing and pumping equipment,” he notes.  "We are continuing to focus our R&D dollars on the development and improvement of new, faster, less expensive ways for producing IG.”