Working with DOE on R-5

Sam Jadallah, Haddon Windows & Doors
September 27, 2010
COLUMN : Another View | Codes & Standards, Energy Efficiency

In May, the Department of Energy launched the R-5 Window Volume Purchase Program with great fanfare. Under this program, homeowners and property owners would learn the value of R-5 energy efficiency and get the benefit of fixed and clear pricing on R-5 qualified windows. With some trepidation, we at Haddon Windows & Doors entered the program to be one of the inaugural certified vendors. While the level of manufacturer participation in the program was a positive surprise to DOE, homeowner and buyer participation has been lacking.

The reason is that DOE’s good intentions of generating a market for super insulating windows were muddled by an execution confusing to buyers and frustrating to manufacturers. The manufacturer frustration was evident at the GlassBuild America event in Las Vegas.

At that event, an open discussion between manufacturers and a DOE representative turned testy when that representative pointed out that the lowest priced qualified product was $174. Surely, the manufacturer of a $174 triple-pane window with krypton gas could hardly afford to fly to Las Vegas. We didn’t hear from DOE that most of the windows ranged from $500 to $600 and topped out at nearly $900 (based on my research). DOE, in its zeal to promote R-5 amongst homeowners, decided that price was the sole secondary consideration when selecting an R-5 window.

Clearly, all of us working hard to differentiate our products in this insanely competitive market were slightly annoyed that differentiation was reduced to two elements: the R-5 checkbox and price.

At Haddon, we are big fans of pushing the envelope of affordable energy efficiency. We’ve turned our company toward improving the energy efficiency of our products. Investments in energy efficiency have a triple bottom line–benefits for homeowners with reduced energy costs, benefits for our climate with reduced carbon footprint and benefits for our nation overall.

We are all in, but the current R-5 VPP will not drive the R-5 window sales DOE promises or wants. There is still time, however. DOE needs to actively solicit a constructive working partnership with industry and better align interests. To start the dialog, I’ll kick off with four concrete suggestions:

  1. Shift the focus to generating massive homeowner awareness. R-5 should become the super level of Energy Star. If DOE can’t cooperate with the Environmental Protection Agency, the new program owner of Energy Star, then focus on R-5 as a standalone highly energy efficient program. R-5 is for people who truly care about super insulating and above products. In other words, spend our tax money on creating demand and awareness for R-5.
  2. Promote federal, state and local programs to support R-5 adoption. Tax credits, rebates, subsidies or any such programs that encourage R-5 adoption over Energy Star. Once the .30/.30 tax credit ends at the end of December, introduce a variety of easy-to-adopt programs and incentives.
  3. Drop the focus on price setting. Everyone knows that a $174 window and a $900 one are not likely to be interchangeable. The race to bottom on price does not serve homeowners and increases the pressure on an already unhealthy industry. Roughly 50 million windows are sold each year in this large, segmented and diverse market. This industry has shown it is quite capable of overly zealous competition to meet the varied needs, desires and price points of its customers. Let us sell the value of our products.
  4. Create a working partnership with industry to develop R-5 and beyond energy efficiency. Solicit input on how to make R-5 the new standard for homeowners. Offer support for R&D efforts by manufacturers. Establish a working group of manufacturers interested in creating, promoting, and driving penetration of super insulating windows.

With the right dialog, R-5 will quickly become a very important segment of the market in which homeowners, industry and government will be the winners. It’s time for us, in industry, to be working hand-in-hand with DOE.

Another View is a guest column designed to allow dealers, distributors, manufacturers, suppliers and others share their views on important industry issues.  Sam Jadallah,  our contributor this month, is chairman of Haddon Windows & Doors, based in Philadelphia, Pa. In August, Haddon became  the first manufacturer to introduce an R-5 qualified dual-pane window. Haddon, which got its start with the acquisition of the assets of Accu-Weld Window & Door, offers a line of windows, patio doors and entry doors designed for energy efficiency and enhanced security through a dealer network covering much of the Eastern U.S.

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Contrary to most manufacturers I like the emphasis on R-5. The consumer understands that simple format and I spend too much of my time explaining U-Values. Time better spent selling something else.

Your comments and suggestions are spot on. The program should not be about setting the lowest possible price for a R-5 window but it should promote the benefits of more energy effecient windows. I believe there is a market for a "Super Star" window or whatever you want to call it but putting a manufacturers lowest possible price in front of the homeowner only makes it harder for a window retailer/installer to sell the product. There are too many variables in the market to put a one size fits all price on a website. The government does have a role in setting standards and promoting energy effeciency in the marketplace, however pricing is one area where they are probably not the best solution. 

The goals of the DOE are laudable and we as a industry do need a little nudge occasionaly but there is a fine line that appears to have been crossed. I do intend to participate in the program at some point but my goal will not be to sell windows direct to homeowners. That is the job of my dealers and or installers. I'd like to be recognized as a manufacturer of R-5 or better windows but not at the expense of my customer base.

  

Add to the fact that the government continues to pass legislation that significantly drives up the cost of installation for windows and doors.

I agree with Bob that my personal preference is to keep the government from intervening too much in our industry.  His R-Value/U-Value point is quite valid.  We've spent many years waving the U-Value flag with the NFRC program and EnergyStar.  Now all of the sudden, R-Value is acceptable?  That can be very frustrating.

But I do have to agree with Sam's points about the marketing focus.  Once we heard the focus of the marketing efforts was directed at institutions, we didn't hold much hope for the program to succeed.  The best method to get this programming up and running is to focus on the consumer.  We see it every day in the home, most consumers aren't even aware of the performance levels available with today's technology.  As a result of a strong in-home presentation, we've sold a significant portion of our windows with triple glass for the last ten years.

If we solely focus on price, no one wins.  Manufacturers and installers will start cutting corners and the homeowner will end up getting an inferior product that won't live up to their expectations.  Let us sell the value of the products and services we offer.  Don't assume that the consumer isn't wise enough to make up their own mind about the value of what is being presented.

First, I agree with Sam in that the R5 Program, as envisioned by the DOE, did not materialize. In full disclosure, I did not have expectations of any success, certainly not right out of the chute.

I clearly remember the meeting I attended many years ago when a member of the DOE made a presentation to the Northeast Window and Door Association, letting us know of this new "EnergyStar" program they were rolling out. He spoke of the branding, and showed us the cool logos.

When we questioned him on the logistics of the program, he confessed that they hadn't worked those out. I observed then that as manufacturers, we typically come up with a product or program, then worry about how to market it, whereas the DOE came out with a marketing program first, then set to work on the program. I see a lot of parallels with the R5 program.

I do disagree with Sam on spending tax dollars on promoting our (or anyone else's) products. I don't believe that is the role of government. In fact, I'd go so far as to recommend that the government stay as far away from marketing products as they possibly can. Already, just by virtue of the introduction of an "R" value to windows, they have created confusion where none existed. Their reason?  As it was explained to me in a meeting with the DOE last April: Consumers aren't smart enough to understand "U" values. And this is the level of thinking you want dabbling in our industry?

I believe that the NFRC has filled the role of providing the data an architect, builder, remodeler and homeowner needs in order to make an informed decision when purchasing fenestration products. By balancing the performance data against the selling price, THEY make the decision as to whether it's a good investment, from a green standpoint or from a ROI standpoint.

What role should the DOE play in our day-to-day operations? How about we start with accomplishing their original mission, when the department was created under President Carter: get the US off foreign supplied oil. Once that is done, we can talk about their future role.