Industry Taking Steps to Retool

Manufacturers may be ready to invest in new equipment again
John G. Swanson
May 14, 2012

Window and door manufacturers are retooling, with equipment suppliers reporting more activity of late. New machinery purchases are still limited by the wide availability of used equipment—and many companies remain cautious about the market outlook—but investment in production operations appear to be on the rise.

Opinions are definitely mixed on how big that increase may be. “We see increasing strength across the board—among larger customers and among smaller customers,” reports Morgan Donohue, VP of sales and marketing at Erdman Automation Corp. “The market is definitely stronger this year than last year. We’ve seen a pick-up in both inquiries and actual orders.”

“We have noticed a significant increase in equipment orders and quoting activity over the past several months, specifically to IG manufacturers and window companies making IG,” reports Jay Campbell, sales manager/residential and commercial products, Billco Manufacturing Co.

 Inquiries and orders are growing for IG and other equipment, according to suppliers like Erdman Automation.

Other suppliers are more cautious. “The market for machinery with door and window manufacturers is still very lean,” says Stephan W. Waltman, VP of marketing communications at Stiles Machinery Inc. Pointing to continued weakness in the housing market, he adds, “I expect all our door and window customers are still struggling.”

“We are definitely seeing interest, but the purse strings are still closed in most cases,” reports Mike Biffl, national sales manager at Stürtz Machinery. “Independently-owned manufacturers are more inclined to invest now, but the investor-backed companies seem to be remaining in a holding pattern until there is some steady increase in business volume.”

“We are seeing an uptick in interest and inquiries, but that doesn’t necessarily mean companies are going to start buying new machines again,” states Joe Shaheen, director of sales and marketing at GED Integrated Solutions. “We see the equipment market continuing on its challenging pace. We believe many people are looking ahead and trying to get a feeling for what’s out there.”

There is some demand and some capital available, Shaheen continues, but much of that is going into refurbishing and rebuilding machines. “Many manufacturers have equipment that’s sitting on the sidelines. They’re starting to develop new product lines, but they want to adapt and retool machines where they can.”

“One of the challenges in the equipment market today is the unfortunate, numerous plant closures across the country,” Campbell agrees. “This has resulted in manufacturers consolidating existing equipment and a surplus of used equipment in the market. Obviously, this has an impact on selling new machines.”

“Retrofits and rebuilds continue to be the bulk of the volume we are seeing,” Biffl reports. “Equipment orders are somewhat limited to replacement of old, worn out machines.”

“Looking at the U.S. market for the next several years, we don’t see that situation changing too much,” Shaheen says. “When manufacturers set up new lines, it’s likely that we’ll see scenarios where there will be a mix of refurbished and new machines to complete the lines.”

Donohue, however, sees the situation changing. Retooling and refurbishment have been the main story for equipment suppliers for the past three years. It’s still part of the business, but it’s becoming less important. “More manufacturers,” he asserts, “are ready to invest in the new.”

New Products
“The majority of new investments are coming from fabricators that are introducing new products to the market,” suggests Chris Cooper, senior sales engineer at Joseph Machine Co. He describes the overall market as fragile still, but points to a strong first quarter in 2012. Specifically, Cooper sees more companies buying new machines to produce vinyl windows and doors for the commercial market.

 Wood window and door makers are investing in new tooling to upgrade and expand product lines, according to Rangate.

Greg Godbout of Rangate Inc. reports that wood window and door makers are not in a mode to buy new machinery, but many are looking at new tooling. The investments they are making in cutting tools are “a sign that the market is in first stages of growth,” he says. “Companies are willing to invest in developing new products.”

Both Cooper and Godbout suggest at least some of the new windows and doors under development are designed to meet or exceed more stringent performance criteria. Shaheen also points to new codes and product criteria—most specifically upcoming changes in Energy Star--impacting product demand, and eventually impacting machinery demand (see sidebar). “We’re seeing people looking at designs that give them the option for triple glazing.” Not many companies are ready to embrace triples fully yet, at least in the U.S., but a real change will come when Energy Star requires triples, he predicts.

There was much discussion about the need for triple-pane capabilities a year or two ago, but that has faded, Erdman’s Donohue states. “It’s probably in the back of the mind for a lot of customers, but it’s not something they’re talking about a lot.”

Upgrading Operations
When the new construction and remodeling/replacement markets were booming, window and door manufacturers purchased equipment simply to expand capacity. That is rarely the main goal these days, most suppliers agree, but other traditional reasons to invest—increased efficiency, enhanced quality and reduced labor—remain true for companies today.

“The manufacturers who are investing right now are trying to improve efficiency,” says Stürtz’s Biffl. “In many cases, labor forces have been trimmed due to reduced manufacturing requirements. The companies that have the foresight and the financial wherewithal to invest right now want to streamline operations to avoid hiring large numbers of employees as soon as there is a spike in business.” The supplier of vinyl fabricating equipment sees manufacturers wanting to accommodate growth in demand without growing their labor force.

“Businesses continue to do more with less,” Billco’s Campbell states. “We have seen additional demand for machinery that minimizes maintenance costs and overall operating costs.” Some are purchasing more automated solutions to lower labor costs as well, he adds.

The unemployment rate may be fairly high nationally, but finding qualified workers is still a challenge for many manufacturers, Erdman’s Donohue states. In some towns and some regions, particularly where the economy has recovered more, it is difficult to compete with other industries, he notes.

Donohue notes two other factors for the increase in demand. First, it’s been a long time since many manufacturers have made capital investments. Machines are wearing out. Manufacturers can’t afford to put off reinvesting any longer. Second, he suggests, more companies see the value in the quality and consistency that machines can deliver.

Joseph Machine’s Cooper offers a similar perspective. Manufacturers understand they need to keep their products cost competitive and give their customers higher quality. They also need the flexibility to handle such changes as new hardware options that are being introduced.

 Sturtz is looking for some vinyl window manufacturers to start investing in new machinery to be better prepared as the market continues its rebound.

In the woodworking end of the business, the most popular machinery discussions concern CNC machines, automatic sanding and automatic finishing, reports Stiles’ Waltman. “These tend to have the greatest impact on cost and quality.” He also points to the importance of flexibility, noting that  companies purchasing machinery today are doing so to change their processes from volume to velocity. “Mass manufacturers are burdened with older technology,” he states. “New equipment allows them to respond to market demands of special production in quantities of one.”

Looking ahead, all these suppliers report continued efforts to develop new manufacturing technologies, with flexibility, ease of maintenance, reduced labor, and increased quality all cited as goals. They also agree that at least some window and door manufacturers are gearing up for market recovery. “Over the next 12 to 18 months, our biggest opportunities will be with companies who are strong in their markets and hope to grow their market share,” Biffl concludes. "The manufacturers who are open to investing now in a slow economy will come out the other side with an edge on the manufacturers who were more conservative and have taken the ‘wait-and-see’ approach."