Will "Cash for Caulkers" Help the Industry?

John G. Swanson
December 8, 2009
THE TALK... | Markets & Trends

Survey Results for 12/09/2009:

Will Cash for Caulkers Help Your Company?

Yes

  

 

59%

No

  

 

41%

A sizeable majority of respondents think a government program to stimulate energy efficient upgrades would be good for their companies, and that’s what I heard from readers too. Many expressed a few reservations and cautions about the idea, however, but there is definitely some industry supporters for the idea.

“I cannot comprehend that many voters in your poll don't see that ‘cash for caulkers’ would help their business. If it passes, it has to help everyone's business,” says Wayne Gorell, CEO of Gorell Windows & Doors.

"There is an opportunity to get a lot of government money pointed at our industry for the next few years,” he continues. “I'm basically against the size of government and their out-of-control spending, but if they are going to spend, and they are, I prefer they do it on energy conserving windows and doors.”

Gorell points to a recent article in Inc. Magazine, which named Kevin Surace of Serious Materials its Entrepreneur of the Year. “Sounds like a very interesting guy,” Gorell says, adding that, “the important thing is the numbers (Surace) is quoting about energy conservation when it comes to buildings and housing, very dramatic statistics. I think the industry needs to really focus on this.

“We need to educate not only the public, but NAHB and the builders and remodelers, and all channels of window and door distribution about the tremendous opportunity for energy conservation with the resulting huge reduction in green house gases. From what Mr. Surace is saying, building energy improvements have a much bigger potential impact than the entire automotive industry, which has had all the focus,” Gorell states. “This industry needs to wake up and seize the opportunity.”

"This could be a good opportunity for the industry to take advantage of the projected increase in the number of homeowners looking for window replacements in the U.S.," writes Benjamin E. Myers, project manager/certification services for Architectural Testing Inc. "If this stimulus program is approved by the government, it will increase the replacement window business, but it may also increase the number of questionable, disreputable, and possibly dishonest window installers looking to cash in on the incentives. Windows installed improperly will not perform as expected, and may actually leak air and water, erasing the energy savings they are expecting, and thereby reducing the energy efficiency of the houses. The best way to provide some level of assurance that the windows will be installed properly is to mandate that the window installers who participate in the stimulus program are trained and certified to install windows and doors in accordance with the industry standard ASTM E2112."

One correspondent agrees that such a program could be good for the industry, but worries about the government spending involved. “This program will most likely spark sales and therefore create more business for the window and door industry,” says Tim Walker of the Arizona Division of ABS-American Building Supply Inc. “The energy efficiency will certainly be an improvement over the products being replaced, but at what cost? My concern is that this program will actually cost taxpayers more money in the long run than it generates. The ‘Cash for Clunkers’ program cost taxpayers $24,000 per vehicle sold using those rebates and the average sale price of the vehicles was just over $23,000. There are more efficient ways to stimulate the economy than losing money on each venture undertaken,” he continues.

“I haven't seen a government-run program or business that is run efficiently and profitably (or breaks even),” Walker concludes. “I hope this doesn't become another one on that list.”

Another reader, perhaps equally skeptical of a new government program, offers an alternative proposal for stimulating more demand. “Extend the $8,000 tax credit to any home, regardless of size (or) price,” he says. “This gives incentive for more affluent Americans to turn their dollars loose into the economy, and would create many more jobs.”

Given the economy, one respondent suggests that finding ways to lower costs for homeowners is key now. “Our main customer base two years ago was directed at high-end products and customers. That customer base had a tendency to want to pay more for a higher quality product and a professional team overseeing their project,” writes a Wisconsin-based dealer. “Now, it seems that even that type of customer has gotten scared, which causes them to be more frugal in their decision making. In the last year, we have had to expand our processes and policies to include the regular Joe Homeowner type customer.”

He adds (thankfully) that his staff has already adjusted to the new dynamics and his company is “poised to take advantage of what we think next year’s opportunities will bring.”

It's clear President Obama is going to continue to work to promote programs supporting energy efficient upgrades.  Speaking at a Home Depot in Northern Virginia on December 15, he called insulation "sexy" for the money it can save. He even put in a plug for windows and doors: 

 

And he's gaining traction with some groups. The National Association of Home Builders has commended him on the initiative to create jobs and make today's homes more energy efficient.

"This is the kind of thinking that is going to get America back to work—and make a big difference in many homeowners' monthly utility bills," says Joe Robson, a builder and developer in Tulsa, Okla., and NAHB chairman.  The organization estimates that 11,000 jobs, $527 million in wages and salaries, and $300 million in business income are generated by every $1 billion in new remodeling and home improvement activity. "That's a huge impact just in the short run. And in the long run, the energy savings for participating home owners can be quite significant," Robson notes.

"This also bolsters a very important message and something we have been saying for years: If we really want to make an impact on the nation's energy use, we need to take significant steps to make the existing housing stock more efficient," Robson notes.