Manufacturers Start to Look at Equipment Again

Big investments are few, but companies are adapting to stringent performance criteria in the market, and thinking about even stronger requirements on the horizon
John G. Swanson
June 3, 2009

Following a period of little investment in new plants and production lines, window and door manufacturers are beginning to look again. Some see signs that sales are creeping up, but the primary driver is the need to upgrade window and door lines to meet new, more stringent performance criteria, including the new 30/30 minimums set for new tax credits, revised Energy Star criteria set to go in effect in 2010 and a second phase of even more demanding Energy Star requirements pending for the not-too-distant future.

  Suppliers see demand fincreasing or equipment and modules geared toward triple-glazing. Demand for machines like this new Besten line will come from manufacturers adding triples or looking to increase triples capacity.

Manufacturers focusing on upgrading glass packages—and therefore, IG processing equipment—has been at the center of many recent conversations, suppliers report. That’s likely to continue, but with more stringent requirements on the horizon, triple-lite glazing is seen as a likely next step. Such a change might mean more complete product redesigns, prompting investments in equipment and tooling for frame and sash components as well.

The .30 U-factor/.30 SHGC maximums set for products to qualify for homeowner tax credits under the American Recovery and Reinvestment Act that went in effect in February had an immediate impact on the industry.  It served as bit of a “wake-up call,” says Bill Weaver, president/CEO of GED Innovative Solutions. “Most manufacturers now have little doubt there will be even more stringent criteria coming down the road.”

The stimulus tax credits almost immediately affected the equipment market itself, reports Larry Johnson, VP of Edgetech I.G. “We’re sold out,” he says, reporting a strong surge in demand for its manual IG equipment. The majority of his company’s customers already have products that qualify for the tax credit, but many didn’t have the capacity to meet new demand, he notes. The company is also seeing a “huge influx” of new customers as a result of the tax credit requirements.

There has been a surge of activty, agrees Dan Reinhart, GED's director of sales. "We're having a lot of conversations with manufacturers. They want to know, 'How do we upgrade?', 'What do we need to do?'," he states.  "We've really seen this open up the lines of communication."

“There has been a very significant start to new searches for warmer spacers since the 30/30 hit,” says Keven Zuege, director of technical services for Truseal Technologies. “Mostly on the spacers as the leading topic, but related right behind is how best to accommodate these warmer spacers, both in the nearest term and then also mid-term.”

Pointing to the impact of the overall weak economy and tight credit markets, Ric Jackson, Truseal's director of marketing and business development, notes, “I think that capital investment is in very short supply and most producers are looking for creative ways to redeploy assets they already have."

The impact of the new requirements has been quite surprising, Johnson continues. “The size of the credit is definitely convincing people that were already thinking about replacing their windows to go for products meeting the new performance numbers. It’s also increasing the number of homeowners who are thinking about replacing their windows.”

Demand for larger, highly automated lines is still weak, Johnson notes. Given the opportunities in the market, manufacturers would probably be more aggressive and would consider these higher-capacity machines if credit for that type of investment was available, he suspects. “Banks will have to start lending again before there’s much new activity on that front,” he notes.

Triple-Lite Production
While the tax credit requirements and the recently finalized 2010 Energy Star criteria can be met by most manufacturers using dual-lite IG units, the Department of Energy also released draft criteria for a second phase of Energy Star criteria to go in effect in a few years. Those DOE proposals included numbers that would push many manufacturers to use triple-glazing to qualify for Energy Star, spurring initial discussions among manufacturers about what’s involved in triple-glazing, according to Reinhart.

“The focus remains on the dual-glazed IG for the short-term horizon of the 30/30,” reports Zuege, “but asked right behind that are questions related to the spacers in triple-glazed IG, and how to process the IG on what equipment. Triple-glazed IG can be made with most existing equipment, but ‘throughput-reach’ is what people are asking for, too.”

“It certainly seems that the Northern zone producers are looking seriously at triples again with an eye to utilizing the same spacer options to maximize efficiency,” adds Jackson. “Platforms that support easy transition from dual to triple glazing options are being studied.” Current Truseal spacer products and equipment easily support both types of IG construction, he notes, but the company foresees higher demand in the future, and  its sister company, Besten Inc., is set to launch a new line geared to be “triples capable from the start.”

All the company's existing customers can make triples today, but future triples demand levels will spur new modules and more equipment that is updated, regardless of scale, Zuege reports. “In those that serve the much bigger/broader Northern zone, the mindset is: ‘Make warmer windows with new spacers and the equipment we have today, but see that the equipment of tomorrow will make much larger volumes of triples,’” he says.

Upgrading the material used for the Intercept spacer can get most manufacturers to the 30/30 level or the 2010 Energy Star criteria, but when "you start talking about the 2013 or 2014, or whatever year the next round of changes come, many companies will have to go to triples," Reinhart states. "Manufacturers can do that now, but they want to know what they'll have to do get there at high-volumes."    

As far as triple-lite production is concerned, Edgetech already has numerous customers doing it, Johnson says. He points to a strong customer base in severe weather areas like Western Canada. Many are already using automated lines to do this, and he says for those companies that are not, the switch to triple-lite can be accommodated fairly easily. Interest is rising among manufacturers, he notes, and he points to increased activity in the company’s technical support area as an indicator that many companies are attempting to add such a product line. Keeping the center lite clean is a challenge for many manufacturers introducing such products, he explains. Calls have been coming in on that topic, and Edgetech has also been working on a number of adjustments in its equipment to better address that issue, he adds.

There is definitely a need out there for a range of equipment to meet different production needs—ranging from automated lines, to semi-automated, to more manual units. One prediction Johnson makes is that when manufacturers do look to upgrade or expand capacity, “they will focus on automating as much as they can. If they’re going to invest, they’re going to invest in equipment that can deliver the best quality. “

Other Equipment
The impact of the 30/30 requirements or new Energy Star criteria on demand for vinyl and other frame and sash processing equipment may not be as profound. Most window systems that are capable of reaching these requirements do so with a change in the glass pack but no modifications to the frame or sash, states Ellis Dillen, VP of Stürtz Machinery. Still, some manufacturers, mainly in the Northern zone, are looking at changes to their frame and sash systems to accommodate triple glazing, he adds. “I think you will see a mix of companies changing glass thickness and airspace to allow triple glazing in existing window designs and some companies redesigning their frame and sash systems to accommodate triple glazing. We have not seen any manufacturers make the changes yet, but we are talking to some who are in the process of redesign and retooling.”

There will not be a great deal of change for vinyl equipment, Dillen predicts. “Most of the changes can be accommodated with new tooling for existing equipment. The only places we might see new lines is if companies choose to run a new system altogether rather than making changes to existing. At this point, we do not expect a lot of that.”

GED's Reinhart, however, does expect more activity on this front.  "We're talking to more manufacturers that want to get ahead of the curve," he suggests.  They may not be making changes in their product lines now, but they are looking ahead to the next round of Energy Star criteria changes. From an equipment perspective, he foresees not only more company's re-tooling existing equipment, but some moving to new lines. In particular, GED expects more activity in the realm of fiberglass and composite products, as manufacturers look to achieve higher performance numbers. In preparation, the supplier has been investing in development of new machines targeting manufacturers of those types of products, he reports.   

Still a Slow Market
With sales of windows and doors still off from the levels of a few years ago, “the market for new equipment is very slow,” Dillen says. With numerous plant closings and some companies closing their doors for good, he notes that a substantial amount of equipment has come up at auction in recent months. “We are doing a large number of rework and retooling projects on used equipment to run new products. This is the largest portion of the market at this time.”

Few of these suppliers see a huge surge in demand for new equipment, but they do expect to see some activity. Controlling labor costs remains a concern even in a tight market, reports Zuege. “No one wants to move backwards in regards to input labor and IG processing functionality.”

Dillen also points to manpower savings as the biggest impetus now for new equipment purchases. “Fenestration manufacturers, like most companies right now, are trying to streamline operations as much as possible. The main justification for capital investment right now is labor savings.”

How strong demand from manufacturers will be going forward, Johnson suggests, depends on what happens with banks and the availability of credit. “The companies that weathered the storm will be looking to upgrade,” but, he admits, new automated lines remain a pretty big investment. There are signs of improvement in the market, but it will take some time for manufacturers to get some confidence in the economy. “They’re not willing to pull the trigger.”

Some manufacturers are using this time to reevaluate their products and make changes to secure a solid market position when business improves, but Dillen sees continued hesitance out there as well, reporting that the majority of manufacturers indicate the they are going to “stand pat” for the time being. “We do see some progressive companies who have been well managed and are in good cash positions planning for and investing in equipment for the future. Unfortunately, the companies are few and far between.” 

Some manufacturers have stayed focused on increasing their efficiency and reducing their costs throughout the downturn, but the new performance criteria out there have produced a change in attitude in the industry, Reinhart says. He doesn't predict a wave of new equipment purchases in the near term, but, he concludes, the discussions and planning that's going on now should produce a lot more investment in the next 12 to 24 months.