“Sometimes Bigger Isn’t Always Better"
At a time when many observers see consolidation as the defining trend within our industry, Window & Door thought it would be interesting to gain a different perspective. While much talk has centered around “the big getting bigger, and the smaller guy disappearing,” we know there are plenty of not-so-big companies doing just fine, thank you very much.
The window and door industry has traditionally been dominated by entrepreneurs. Whether that dominance remains, some may question, but there’s no doubt that the entrepreneur is still out there. We see their companies in our annual Top 100 Manufacturers issue, of course, but we also see success in smaller operations that may not yet make that list. That is why we decided in this issue to focus on some of today’s successful small companies.
What follows are several short profiles focusing on smaller manufacturers from around the country. Presented in alphabetical order, these profiles are not intended as any sort of ranking or to highlight the accomplishments of these firms, although we’re happy to do that. Rather, we offer their stories to provide a different perspective on what’s happening in the industry today than the usual discussions focusing on consolidation. We also hope to offer some insight into what makes for a successful company today.
We gathered recommendations for the past several months, looking for companies that were achieving levels of growth greater than the market overall in recent years. We weren’t necessarily looking for recent start-ups, but we wanted to focus on companies which outside observers viewed as successful and which retained the entrepreneurial attitude that is such a strong tradition in our industry. We then started talking to the executives at these firms to see what the strategies were behind that success. We asked them what they saw as their biggest challenges and opportunities. We also wanted to see what they thought of consolidation, what it means to these companies, and what they see as the outlook for their futures and the future of the entrepreneur in general in this industry.
Control. Service. Value. Relationships. These are the overriding themes that came back to us, whether it was a manufacturer with 12 employees or 150. Some also talked about market niches or unique products, but they all agreed that bigger isn’t necessarily better when it comes to delivering quality windows and doors and the services that many customers need.
Finding and keeping good workers is by far seen as the biggest challenge most of these companies face. Staying competitive from a cost perspective, of course, represents a challenge too, but most do not see consolidation and the economies of scale enjoyed by larger manufacturers as an imminent threat. In fact, controlling growth was cited far more often as one of the major issues to be dealt with in the coming years. As one executive notes, “We can’t afford to get ahead of ourselves. That’s where people run into trouble.”
“There is always room for a company that is innovative and customer oriented,” states Robert Hampson, president and founder of Clearview Industries in Orlando, FL. Employing only 12 people, his company was started about five years ago and offers vinyl windows specifically tailored to the needs of Florida and other Southern climates. When the company started, it offered a “niche” product that fit between the lower-priced builder windows common in the Florida market and the higher-end windows that came from national manufacturers, but often were not well suited to the needs of the region, he explains.
|“At the very beginning, they told us our windows would never sell,” he reports, and the biggest initial challenge has been the educational process. “When you’re selling better quality, the customer needs to be educated. We can explain why vinyl is more efficient, why insulating glass is more efficient, why solar low-E is important,” Hampson states. One of the reasons it sells directly to builders and homeowners is the fact that dealers were not willing or able to spend the time educating customers. The company has built its business, as a result, focusing on customers willing to be educated, whether it’s homeowners looking to replace existing windows or builders and architects willing to provide upgrades on their homes.|
“We don’t want to be the biggest. We are looking for consistent growth to our own parameters.”
Larger manufacturers have advantages, but its size offers Clearview advantages as far as flexibility, he continues. “We can achieve the look the customer wants. Each of our windows is a custom product,” he states. Particularly for higher end products, it might cost 50 percent more for a large manufacturer to make a window in a non-standard size, he notes, enabling his company to be, perhaps not the lowest cost option, but competitive.
The biggest challenge right now is labor. “It’s very hard to find skilled people,” he states. Trying to find people who want to be trained and stay with a company is a challenge. A great deal of effort is put into creating a positive work environment and assuring that employees are properly compensated. “We want them to care about quality as much as we do,” he adds.
Looking ahead, however, Clearview sees more opportunities than challenges. Florida has generally seen a shift to higher quality products, and a building code change is likely to spur even more activity in that direction. “We’re well positioned. Almost everything in our product line meets the requirements of the new codes. Manufacturers from outside the state can’t.”
Other reasons for its positive outlook, Hampson notes, include a growing export market. The company has sold windows in the Bahamas and in many other islands in the Caribbean. Dealers are also now expressing interest in the Clearview line. It’s already outgrown its current facility, he points out, however, and it plans to increase in size cautiously as it finds the right workers, in order to maintain current service levels. “We don’t want to be the biggest,” Hampson points out, however. “We are looking for consistent growth to our own parameters.”
Hayfield Window & Door
Making about 100,000 windows a year, Hayfield Window & Door, Hayfield, MN, is a good-sized window manufacturer, but not huge, particularly by the standards of its home state. Dating back to 1951, it has evolved to be a niche player, based on “value,” states Richard Rouhoff, president. The company, which evolved from, originally an aluminum storm door manufacturer, and then an aluminum window manufacturer, now offers vinyl windows and “hybrid” products featuring vinyl exteriors and real wood interiors, he explains.
Noting its emphasis on value products, as opposed to low-cost windows, the company’s first vinyl windows were supplied with pre-applied jamb extensions. Its hybrid lines now offer builders a choice of pine, oak, maple, or cherry wood interiors, which he points out, are real wood, not a laminate.
Selling primarily through dealers and distributors, these unique features have been important to this customer base. “It gives them something that is different. The builder can’t go to the lumberyard down the street and get the same product,” Rouhoff explains. “It gives them the opportunity to make money.
|Hayfield's Minnesotat plant and owner, Richard Rouhoff|
|Chief among the challenges faced by Hayfield is labor. Noting the low unemployment rate, Rouhoff states that the company has determined that its best strategy is to focus on automation. Growth continues at about 19 percent a year and the company is constantly looking for new equipment to enable it to make more windows with its 150 employees. This type of continued investment in equipment is also crucial to its ability to stay competitive, he notes.|
Staying competitively priced is important, Rouhoff states, but he doesn’t see any need to be the “cheapest.” Home centers have approached his company about its products, he notes, but it’s an arena he prefers to stay out of, pointing to distributors and lumberyards focusing directly on the builder as a
“The builder can’t go to the lumberyard down the street and get the same product. It gives (the dealers) a chance to make money.”
Rouhoff does not see consolidation and the rise of bigger players as a threat. Some acquisitions are going to work, some aren’t. Some people pay too much for a property and then don’t value that property’s most valuable asset, its people, he suggests. He expresses confidence that by motivating his people and empowering them to do the best they can in their positions, Hayfield will continue to succeed.
In fact, he continues to see tremendous opportunities, particularly for its hybrid products in the replacement market. “We could double our growth, but we like to keep it less than 20 percent a year. We feel that’s necessary to maintain our quality and real value.”
Primarily serving the replacement business in the San Francisco Bay area, Prima Products, Inc., manufactures Polybau vinyl window products. Based in Hayward, CA, the company was taken over by new ownership in 1992 and has grown as it moved from being a direct manufacturer-installer business to a manufacturer serving a dealer base, explains Cheryl Jacobsen, vice president and general manager. She credits the firm’s success in recent years to a number of factors, including a quality product, but cites a lot of creative marketing and providing support and marketing tailored to the specific needs of its different dealers as a key. “The relationship with the dealers is crucial. Instead of a blanket plan, we sit down and meet with them to discuss their individual needs.” Prima's Cheryl Jacobsen
|Also pointing to the importance of Prima Products’ relationships with vendors, Jacobsen suggests that the ability to maintain a relationship is one area where smaller companies have an advantage. “Dealers like the fact that they have access to the president or the vice president. They don’t have to go through a chain of command.” The lack of the chain of command also provides Prima with a great deal of flexibility. “We can offer the unique ability to respond to service issues very quickly,” she states. With some 50 employees and a 30,000-square-foot plant, Prima definitely faces many challenges as a small manufacturer, she concedes. National manufacturers can come into the market, they can offer dealers expense-paid vacations and other rewards that a smaller player can’t afford. “You lose some dealers, but some come back too. Time will tell whether the big companies will deliver all the things they say they can,” she notes.|
“Dealers like the fact that they have access to the president or the vice president. They don't have to go through a chain of command.”
Jacobsen cites labor and space needs as an issue for Prima also, noting the high cost of doing business in Silicone Valley. It has looked toward increased automation, but found in many cases that the available equipment will not truly meet its needs to reduce labor requirements, while enabling the company to retain its flexibility.
“As a small company, you really need to find what your niche is and capitalize on your strengths,” Jacobsen states. One important asset for the firm has been its participation originally in the California Association of Window Manufacturers and now the American Architectural Manufacturers Association. Selling a high quality product, it’s very important to have high quality personnel that know what’s going on in the market and are technically very astute. Involvement in these associations has been an important factor in providing that level of knowledge and expertise. “If you’re going to ‘talk the talk,’ she states, “you have to ‘walk the walk.’”
Asked about the future role of entrepreneurial type companies in the window industry, Jacobsen says, “I don’t know how strong a role they’re playing now.” Pointing to recent troubles at some larger manufacturers, she adds, however, “No one is immune from problems. Size doesn’t determine your future. It really depends on the people and the company.”
Ricketson Sash & Door
In the upper end of the high-end residential market, Ricketson Sash & Door remains somewhat isolated from consolidation and some of the other issues many smaller window and door manufacturers face. Yet it does share many of the same challenges, and many of its basic strategies, outlined by John Legere, who handles sales and marketing for the Avon, CT, based operation, echo those cited by manufacturers of more ordinary windows and doors. Dating back to 1904, Ricketson has grown steadily since its acquisition by the Legere Group in 1994. Legere explains that his family’s company initially got its start in the custom architectural millwork business. The millwork operation, which focuses on Connecticut, New York, and Massachusetts, still accounts for between two thirds and three quarters of its $20 million in sales. Legere expects, however, that Ricketson will account for a larger portion of the total operation’s sales as it continues to gain more sales in its efforts to become a “national” manufacturer.
|At the high end of the market his company targets, consolidation has not been a significant issue for Ricketson. It’s a relatively small market niche, with only a few major competitors, Legere explains. Differentiating the firm is somewhat difficult, he notes, however, as Ricketson’s two primary competitors both offer high quality products using many of the same materials. It does seek to set itself apart in a number of ways, he notes.|
One important factor, he states, is its warranty. Although manufacturers in this segment of the market typically offer a two-year warranty, Ricketson has a five-year warranty. Another important factor is diversity in its product line. While his competitors offer one basic line, Ricketson offers a traditional, a European, and a contemporary series of windows and doors. In putting together bids, he states, it also makes a great effort to provide options to customers, enabling them to get everything exactly the way they want.
“We emphasize that windows and doors are the only ‘furniture’ viewed from both inside and outside the home. The craftsmanship and details have to be there.”
He expresses confidence in the firm’s ability to do that, as well as confidence that its market niche, often involving homes from 15,000 to 20,000 square feet, will remain strong. “There will always be people building homes of this magnitude.” Noting that homeowners in this market will “fly to Italy to look at tile or fly to France to look at marble,” he states that it’s a very demanding market, where the people not only have money, but a lot of knowledge about what they want. “We emphasize that windows and doors are the only ‘furniture’ viewed from both the exterior and interior of the home,” Legere states. “The craftsmanship and details have to be there.”
Dating back to 1948, R.O.W. Window based in Joliet, IL, manufactures wood and vinyl windows, and has focused primarily on direct sales to builders in the Chicago area in recent years, reports Glenn Brooks, president. An important part of the firm’s success, he states, is service. “When someone needs it now, we can do it.” A builder can’t rely on a lumberyard to do the same thing, he adds, and they can’t wait for someone from a manufacturer two states away to respond and ship a product to them.
The transition to becoming a builder-direct sales organization presented some difficulties, but Brooks explains that the company believed it was necessary, not so much from a competitive perspective, but because it believed that the growing complexities of the window business required it. “We wanted to be a part of the builder’s team,” he states. With the many products to choose from, those needs have grown increasingly complex. Dealing direct enables R.O.W. to assist the builder in developing new styles and new designs. “In many cases, we are taking those ideas and incorporating them into our product line,” Brooks notes. It also enables the firm to meet builders’ needs in complying with codes, he points out.
|It’s not a strategy that works with all builders, he continues. R.O.W. primarily sells to custom and semi-custom homebuilders and stays away from the large tract developers. That market, he states, remains focused on the lowest price, even though the customer, in the end, may be disappointed with the product. “We’re much more successful when we talk to principals, not purchasing managers,” Brooks states.|
Asked about some of the bigger challenges facing his firm, he points to the difficulty in finding and keeping labor. With business as good as it has been for much of the past decade, it’s also disappointing that the market is still so price-sensitive, Brooks suggests.
“When someone needs it now, we can do it.”
With 125 employees and 200,000 feet of manufacturing space, R.O.W. would not necessarily be considered small by some, but Brooks doesn’t see any inherent disadvantages to not being the largest manufacturer out there. “I don’t see the advantages of being a big company. It’s a relationship business. People want to be able to call and talk to the owner.”
Vinyl Window Technologies, based in Paducah, KY, has undergone some major changes recently. Previously a fabricator and marketer of CertainTeed window products, ViWinTech decided last year it would have better opportunities marketing its own line. The change allowed the manufacturer to become a little more competitive, explains Ken Barman, sales and marketing manager, and opened its sales opportunities to new territories beyond Kentucky and Tennessee, where it previously marketed its products.
With a staff of about 100 and a 100,000-square-foot facility that it moved into two years ago, ViWinTech sells its products through building product distributors and lumberyards in areas ranging from Florida and the Carolinas to Michigan, Barman reports. Manufacturing products for both the new construction and replacement markets, the company offers a diverse product line with some unique elements, such as a vinyl window featuring a full 4 9/16-inch jamb, which he explains, enables it to install like a wood window and offer more of a wood window aesthetic. He also points to the fact that the company offers both a sliding and hinged patio door. Along with a quality product line, Barman states, ViWinTech’s service, warranty, and knowledgeable staff are its main selling points.
“I’m not the cheapest guy out there, but we have the resources to compete,” Barman states. More importantly, he continues, “I can sit down with a customer and show him a product that’s visibly better. It’s the thickness of the extrusion, the hardware. It’s more aesthetically pleasing. Plus, there’s the support we’re going to offer. They’re not going to have to worry about service.”
|This approach may not work for the tract builder, but, he states, in talking to distributors, they want a competitively priced product delivered when they’re told it will be delivered. “You can’t say two-week delivery and let it turn into three or four weeks. Trust is so important,” Barman emphasizes.|
Larger manufacturers do have some advantages, he admits. In some cases, where firms are vertically-integrated and do their own extrusion, it provides them with a cost advantage. Yet, generally, he does not believe the economies of scale are so great that it threatens to make smaller manufacturers uncompetitive. Currently, he states, ViWinTech has plenty of equipment and is only “scratching the surface” as far as capacity.
“I’m not the cheapest guy out there, but we have the resources to compete. I can sit down with a customer and show him a product that's visibly better. It's more aestheticallly pleasing. Plus, there's the support we're going to offer. They're not going to have to worry about service.”
The biggest challenge the company faces right now, he suggests, is expansion into new markets. “We’ve brought on 10 salespeople and we’re branching out substantially.” After marketing the CertainTeed name for 14 years, Barman notes, getting the company’s name out there is somewhat of a hurdle, but he sees getting people trained and educated regarding its program as more of an issue.
Window Products, Inc.
In the new construction market, where price is often considered king, Window Products, Inc., has never set out to be the lowest priced supplier, states Greg Lambas, technical sales and marketing manager. The management team of the Spokane, WA, based firm, however, has always understood the importance of being competitive, and, as a result, has made a real commitment to automation and being as efficient as possible in all areas of operations. “We’ve made a name for ourselves being on the cutting edge in manufacturing and order processing,” Lambas notes. “It’s unusual, particularly for a smaller manufacturer.”
With about 120 employees and a 70,000-square-foot plant, as well as a recently opened distribution center in Boise, ID, Window Products first entered the vinyl window manufacturing business in 1989. Previously it had acted as a supplier to local contractors of various other manufacturer’s window lines, but, spurred on by the passage of new energy codes in the Northwest, the company decided that vinyl would provide it with a new opportunity, Lambas explains. Since entering the vinyl business, it has grown steadily. With most of its business in the Pacific Northwest, it now has a dealer network which covers markets as far away as Las Vegas and Alaska.
The management team at Window Products
While automation is usually seen as an advantage primarily available to larger players, Lambas notes that, at Window Products, a closely-knit management team is very much involved in day-to-day operations of the company and has been able to foresee its future needs. At larger firms, he notes, this isn’t always the case. Management is often outside the day-to-day loop and may not understand what’s happening in the market. “We’ve been lucky. We have generally had the capacity before we needed it.” The level of automation it has achieved, Lambas explains, does require a commitment to reinvest in the company, but, he adds, “We haven’t had to make huge expenditures to catch up.”
|Being competitive is important, but having the lowest price is not the only factor that is important in his company’s market, Lambas states. Window Products starts with a single, high quality line, which is well suited toward a broad range of applications. With the company’s background as a window dealer, he notes, it is also very sensitive to its dealers’ other needs, including on-time delivery, complete delivery, and a reasonable lead time.|
Meeting all these needs is critical to the firm’s success with dealers, he notes. “We are very sensitive about staying ahead of our capacity. Before we add a new dealer, we need to see if it’s time to staff up,” Lambas states. “We’re conservative in our approach. We always make sure we can do what we say we can do.”
“As we continue to grow, staying on top of things and not letting it get out of control is our biggest challenge.”
When the trend of mergers and acquisitions first arose, Lambas admits, it did cause some nervousness, but now, he doesn’t have any big fear about big companies swallowing up all the smaller firms. “The more layers of bureaucracy that are added, the more likely it is to be a detriment,” he suggests. That is one concern Window Products will have to address as it continues to grow, he continues. There are many opportunities out there for the company to expand. It will approach new markets where it has yet to establish dealers, and over the next four to five years, he also sees potential in such areas as manufactured housing and the replacement window business. “As we continue to grow, staying on top of things and not letting it get out of control is the biggest challenge,” he states. “We have good checks and balances here. That will enable us to manage our growth properly.”