What do dealers do if their manufacturer closes?

Christina Lewellen
January 28, 2009
THE TALK...

Talk Page Two...

Survey Results for 01/28/2009:

Who should take the bulk of the responsibility for displaced dealers?

The dealers, unfortunately, will have to fend for themselves

  

 

65%

Whatever the contract outlines

  

 

25%

There should be some new/additional laws to protect the supply chain

  

 

7%

The manufacturer going out of business

  

 

3%

This week's poll stirred up some emotions, including some pretty strongly-worded emails and voice mails from representatives of manufacturers going out of business. It's certainly not our intention to pour salt in wounds, but all I can say is we're not the ones who make the news—we're just the ones who are obligated to the industry to report it.

 

The poll results speak for themselves. Most of you feel that the dealers, unfortunately, will be left to deal with the ramifications of manufacturers going out of business. Here are some comments I received this week, presented confidentially, as promised, to those who prefer it that way:

No enterprise wants to discontinue business, ever. The cost to owners, shareholders and employees is incalculable. Loss of investments, lifetime savings, employment and yes pride causes almost all entrepreneurs to think an untold number of times about the consequences of "closure," or whatever form before the final step is taken.

We are all aware of the reasons for the many closures at this time. The financial malaise also affects our industry, severely. And I’m sure we have not seen the end of it.

Your dealer writes: “As always the dealers and the customers suffer." It’s not only the financial industry that is causing all these problems. It is also in no small measure due to the dealers.
It would be interesting to learn how many dealers have not paid their window supplier(s) There are far more manufacturers that suffer at the hands of the dealers, than dealers at the hands of manufacturers. They may state, “it’s always the dealers [that suffer]." However, a bit of research may show that it’s quite the opposite. It’s mostly the manufacturers that suffer.

Let me count the ways: Most dealers are not loyal, they will squeeze every supplier for the lowest possible price point. Once they decide to handle your product, they would like to have displays at no charge, brochures by the boxes and service for whatever ails, and of course a volume rebate. Their showrooms are often stocked with displays from many different manufactures, confusing customers and creating a careless attitude by sales staff. “We don’t care which product the customer purchases, as long as it’s from us.” The lowest price still too high? Call the manufacturer and squeeze a few more points!
The dealer does not want to lose the customer to “Joe down the block” so he will also lower his margins and raise the customers’ expectations some more. Final result, the dealer will have insufficient margins to sustain his business, and be unable to pay his supplier. The customers’ expectations have been raised to the extent that s/he will never be totally satisfied and carps to the dealer until his invoice is reduced, or may not pay at all.

Long ago I came to the conclusion that dealers are for the most part demanding, unstable and unreliable. And we found it best, as manufacturer, to market products direct to contractors through company sales staff and employees. This also has its share of problems, of course. However at least in a far larger measure we are in control of our own destiny.
Because in a manufacturer-dealer relationship it’s (almost) always the manufacturer that suffers in the end. At least that is the point of view of a manufacturer."

I run [name omitted] company in [location omitted]. We’ve been a [manufacturer name omitted] dealer for quite a few years and with them being local it was a nice fit. I thought we had a good relationship with them until we received a fax with the news of their closing. We had a really nice multi-family project going on at the time with [the manufacturer's] windows already on the job site. With phase two on order with [the manufacturer] at the time of the announcement, naturally my customer called nervous about their warranty. I considered myself pretty lucky in that [the manufacturer] did have a good product and we rarely had warranty issues come up. I wrote [the customer] a letter giving them [our dealearship's] personal guarantee that we’d honor the warranty in order to salvage the order. They were fine with that and the job went off without a hitch.

Finding a new window line wasn’t really a problem but I was shocked at how few companies (none) took advantage of the situation and approached us about taking on their line. We eventually settled on one and all is well now.

Now if someone would just build a house we’d get to try them out.

Christina,

 

Please forward to United any and all dealers in our trading area and we will help them with their repairs. We have made a habit of being in the "Yes" business. We can also help them to be more profitable with one of our many programs for replacement dealers. As you know we make a variety of products and we are an extremely flexible company.  Feel free to contact me with any questions.

 

Nick Derrico

nderrico@unitedwindowmfg.com

The point I’d like to build off of is from your survey and the bullet point that there should be some new/additional laws to protect the supply chain.

As a supply chain professional myself, I feel there are actions dealers can take to assure they are partnering with quality window and door manufacturing organizations. There are many factors to be considered when selecting a manufacturer to partner with: quality, delivery, service, aesthetics and performance to name a few. But one factor that is often overlooked is the stability of the manufacturer, both from a financial and organizational stability point of view.

I know there are situations where stable organizations have been adversely affected by the recent financial crisis, but typically whatever the problems may be within an organization, they are often visible through constant organizational changes within the leadership team. This should be a sign that something isn’t right with the organization and perhaps the dealer should look elsewhere for their product.

My hope is that as we work through these tough times, customers and dealers will look to the more stable manufacturers for their product. But, as things are going now they may not have a choice as the stronger and most stable of manufacturers will be the only companies left standing when all is said and done.

 

Contact Christina Lewellen, senior editor, at clewellen@glass.org.

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